Product Differentiation in Asia-Pacific Credit Cards

Countries covered: Asia, Oceania

Product Differentiation in Asia-Pacific Credit Cards

Introduction
In Asian card markets issuers are using various strategies to achieve differentiation including price based strategies such as risk based and delinquency pricing, and non-price based strategies such as premiumization and altering the appearance of cards. This briefing considers which of these strategies is likely to be the most successful and what else issuers can do to achieve differentiation.

Scope
Covers major markets in Asia-Pacific including Australia, Hong Kong, New Zealand, Malaysia, India, Singapore, Taiwan and Thailand

Focuses on strategies ranging from risk based and delinquency pricing to premiumization and altering the appearance or shape of a card

Benchmarks strategies and illustrates their effectiveness

Report Highlights
Historically Australian consumers have not been overly rate sensitive towards credit cards instead choosing cards offered by their own bank or failing that, cards that offer loyalty scheme access.

Asian card issuers have been prevented from employing risk based pricing by the absence of sufficient credit record information. Yet, going forward, as credit reference agencies become more entrenched and the regularity of their use increases, sophisticated risk based pricing based should become a reality.

Datamonitor believes that platinum cards will lose more of their exclusivity over the next few years as card issuers continue to widen the eligibility criteria. Datamonitor therefore urges issuers seeking differentiation via premiumization to consider cards above platinum.

Reasons to Purchase
Improve customer acquisition and retention levels in your cards business

Learn from innovators from across the Asia-Pacific region

Consider the advantages of price and non-price based differentiation strategies

TABLE OF CONTENTS
CHAPTER 1 INTRODUCTION 5
What is this briefing about? 5
Who is the target reader? 5
How to use this briefing 6
Related reports 6
CHAPTER 2 PRICE-BASED STRATEGIES 7
Low rate pricing 7
The advantages of low rate pricing 7
Low rate pricing in action 8
Other price-based strategies 14
Risk-based pricing strategies 14
Differential pricing 17
Delinquency pricing 18
Pricing on secured credit cards 20
Conclusion 21
CHAPTER 3 NON-PRICE-BASED STRATEGIES 23
Premiumization 23
The features of a premium card 23
Why issue premium cards? 24
Premium cards in Asia-Pacific 25
Targeting consumer segments 27
Cards for females 27
Cards for Generation X 29
Loyalty schemes 37
The aims of a loyalty scheme 37
Loyalty schemes as differentiators in Asia-Pacific 38
Loyalty schemes as differentiators outside of Asia-Pacific 42
Flexible credit cards 44
Flexible credit cards explained 44
Flexible credit cards in Asia-Pacific 45
Conclusion 47
CHAPTER 4 APPENDIX 49
Definitions 49
Future readings 50
Relevant links 50
Datamonitor’s custom research capabilities 50
Asia-Pacific SPP writing team 52
How to contact experts in your industry 53