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The BDO JCB 4Gives Credit Card*
“Magaan sa budget, pay in 4Gives”
Background
In January 2008, Rhoda Tatco was appointed product manager for BDO JCB credit
cards. Before she assumed the post, the only JCB brand carried by the bank was JCB
4Gives. Because of the poor performance of JCB 4Gives in the preceding periods,
funding for marketing efforts were focused on the JCB International Gold card and the
previous year's low budget for the JCB 4Gives has been reduced further for the year
beginning April 2008.
In 2007, its limited budget afforded the product minimal exposure and a two-pose
contract with its endorser which may be used in marketing collaterals only within the
year. The new budget is now even lower at 20% less than the endorser's fee alone.
Ms. Tatco feels that JCB 4Gives could do well in the market if only she could come up
with a suitable marketing strategy.
The Company
BDO Unibank is the product of a rare event in the banking industry - the acquisition of a
significantly larger bank by a smaller player - Equitable PCI Bank being acquired by
Banco de Oro Universal Bank in early 2007. A feat precedented only by Equitable
Bank's acquisition of PCI Bank.
Prior to the acquisition, Banco de Oro has already built a remarkable reputation as a
universal bank, providing a wide range of corporate, commercial, retail, and investment
banking services in the country. On the other hand, EPCI laid claim to a proven track
record in commercial banking, middle market and SME lending, trust, leasing, and
remittances. Both have reaped numerous awards from prestigious international
publications. The merged institution is now the second-largest bank in the country with
a vast distribution network of more than 680 branches and over 1,200 ATMs nationwide.
It has also recently acquired the American Express business in the Philippines,
including the American Express Philippines US Dollar and Peso Card portfolios through
its purchase of 100% equity in the American Express Savings Bank.
BDO is an affiliate of the country's biggest department store chain and mall developer,
SM Investments Corporation, and is owned by the country’s second wealthiest
individual today, Henry Sy, Sr.
The Product
* For a better understanding of the case, a briefer on how credit cards generally work is attached as
Exhibit 1. The case focuses on the card-issuing function.
Among the varied corporate and consumer financial
services offered by BDO are commercial credit cards
for private individuals. It carries a number of credit
card brands tied up with any of the four different
providers: Visa, Mastercard, JCB, and
American Express. (Exhibit 2 shows the
various BDO credit card brands along
with their general target markets.)
“JCB 4Gives” credit card is JCB Easy
Pay, rebranded and repackaged after
Equitable PCI was acquired by Banco
de Oro. JCB Easy Pay was first launched
by Equitable PCI in 2004 and offers the
same cashless payment convenience as any other credit card but with a different
payment scheme. The card is modeled and branded after the “hulugan” scheme which
is almost always present in workplaces in the Philippines. In order to capitalize on the
idea, payment due dates are set on paydays, the 15th and the 31st of the month. Hence,
unlike the regular credit card, it has two billing cycles each month with fixed cut-off
dates (3rd and 18th of the month) and an automatic add-on interest rate of 8% for two
months. Payment for purchases are divided into four billing periods (two months) and
total amount due for each bill are demandable in full.
With the JCB Easy Pay's sluggish performance since it was introduced, BDO saw the
opportunity to repackage and improve the product as the recent acquisition and change
in company name made product relaunch inevitable anyway.
Hence, the new JCB 4Gives was redesigned and positioned as the 'perfect starter card'.
It primarily targets the minimum and regular income earners with regular standards of
living who generally fall under the bank's mass market category. It attempts to segment
this category further by appealing to the lower C and upper D classes, particularly those
with blue-collar jobs.
The card’s tagline, “Magaan sa budget, pay in 4Gives”, is intended to emphasize the
product’s chosen position, as “the affordable credit card that offers the lightest and most
flexible way to manage expenses”.
BDO, through the revitalised product, aims to tap the vast market of “uncardables” –
those without credit history and/or with income that do not meet the required minimum
for regular credit cards.
In fact, it claims to provide the following benefits to the cardholder:
z Extends spending capacity
z Provides discipline in spending i.e., avoid long term credit with high interest
z A first card that offers cashless payment convenience
The look o
f
the new JCB 4Gives Card
Apart from its distinct payment scheme, JCB 4Gives also offers the following features:
• 4 Installments - Purchases are automatically divided into 4 installments spread
over 2 months with an add on-rate of 1.5% for every 15 days.
• Simple Membership Requirements - Minimum monthly salary requirement is a
low P7,500 with no guarantor required (unsecured). Or a deposit of at least
P3,000 for a Secured JCB 4Gives and a minimum monthly salary of P5,000.
• Annual Fee of P300 which can also be paid in four (4) equal payments.
• Worldwide Acceptance
• Peso Billing
• Cash Advance of up to 30% of credit limit
• 24-hour Customer Service
• SMS Statement of Account rendition
• Lowest credit limit floor of P3,000
Approved cards are delivered by courier to the clients’ preferred address. (Exhibit 3
shows the welcome kit that is sent along with the credit card.)
Targets
The primary objective for launching JCB 4Gives is to expand BDOs total card base by
40,000 on its first year by the tapping the mass market which accounts for 60% of the
working class. This addition to the card base shall be used as a source of prospective
“real” credit card customers, hence providing the bank with a reliable channel while
taking a relatively lower risk (with the assignment of low credit limits) than issuing
regular cards or personal loans to “uncardables”.
The Launch
Roll-out date for the product was on April 23, 2007. It was launched simultaneously at
BDO and Equitable Card Network (ECN).1 Radio (DZBB AM radio, 90.7 Yes FM) and
print advertisements in major newspapers/magazines (Philippine Daily Inquirer,
Philippine Star, Libre, YES magazine) as well as posters, standees, flyers, (in branches
and frontlines2) and public transport-related collaterals (FX stickers and MRT coach
wraps and tube cards) were used to promote product awareness. A page each was
also dedicated to the product in the bank's BDO and ECN websites. (Some of these
marketing collaterals are shown in Exhibit 4.)
Upon roll-out, card application forms were made available through the following
channels:
1 Despite the integration of Equitable PCI Bank operations into BDO, the Equitable Card Network could
not be fully assimilated due some technicalities with respect to Equitable's existing co-brand cards.
2 Booths set-up by Direct Sales [Unit] at malls and other high-traffic areas
1. Direct Sales Agents - main acquisition channel
2. “BDO Frontline” - kiosks located in high-traffic areas, e.g. SM malls
3. 700 BDO Branches nationwide
Results
Based on data compiled by the end of the sixth month (October), year-end targets are
unlikely to be met. Where cards in force (number of cards issued) should be about 75%
of the targets, actual statistics show that they have approved only about 47%. Total
number of applications received is only about 26% of the expected/targeted turn-ins.
Total amount of billings (revenue) for 2007 was also below target since card volume
was way below projection. However, it is twice the projected amount on a “per card
basis” while receivables are four times the amount expected because of delinquencies
resulting mostly out of the JCB Easy Pay cards issued in the past.
The bigger concern for Ms. Tatco remains to be the actual number of cards-in-force
since this product is primarily aimed at generating a bigger card-base for the company
by tapping a segment of the market that is currently untapped by competitors.
The Competition
Other credit cards available in the market and their features that may be of significance
to JCB 4Gives's possible target markets are:
