Thesis

Introduction Chapter

Credit card and Debit Card promotions for retail brand outlets
Who is in profit?

By

Mohsin Rahim (1235253)

Mohammad OvaisAslam(1135251)

MBA Evening (36 credit hours)

Thesis
Fall 2014

Research Advisor
Mr. Hammad Masood

ShaheedZulfiqar Ali Bhutto Institute of Science & Technology (SZABIST)

90 Clifton, Karachi
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Thesis

Introduction Chapter

Contents
Chapter 1: Introduction..................................................................................... 3
1.1.

Background............................................................................................... 3

1.2.

Problem Statement................................................................................... 3

1.3.

Objectives................................................................................................. 4

1.4.

Justification............................................................................................... 5

1.5.

Limitations................................................................................................ 5

1.6.

Scope........................................................................................................ 6

1.7.

Assumptions.............................................................................................. 6

Thesis

Introduction Chapter

Chapter 1: Introduction
1.1.

Background
Today the concept of any product offering revolves around the comfort and satisfaction of

consumer, and making goods available for them to purchase. The use of debit and credit cards
has become widespread among the masses. According to the figures of State Bank of Pakistan,
More than 1 million people are making use of credit cards in every walk of life. Credit and Debit
cards provide convenience to consumers in shopping, dining, travelling and making online
purchases without any hassle. The inception of electronic commerce has brought many changes
in the preferences of consumers. In this fast moving life, credit and debit card play pivotal role in
meeting the financial needs of the people. Commercial Banks in Pakistan announce enticing
promotions on the use of these cards at various retail brands outlets. Every now and then banks
announce new promotions and discounts on the use of these cards to allow consumers to spend
money and avail discounts on shopping, dining and so on. Banks enter into various partnership
agreements with retail brand outlets to increase their business. Moreover, retail brands also find
it an easy way to increase their sales through various card promotions. Most prominent retail
outlets and restaurants in Karachi such as Meat One, Khadis, Butlers Choclate Caf, BBQ
tonight, Alyanto and others have formed strategic partnerships with a multitude of commercial
banks in order to facilitate them by providing discounts to their customers.

1.2.

Problem Statement

With reference to the discussion above, we see that there is a need for a framework that
describes and evaluates the relationship between the bank, the branded outlet and the
consumer to see who is making most of it, the motivation for banks to form these strategic
alliance; and the roots of co-branding in sales of the two associated brands, keeping in mind
the strategic advantages being offered to both i.e. the banks and brands. Therefore, the
following problem statement was derived:
To identify and evaluate the strategic decision making process through which credit
card and debit card promotions and discounts are offered to branded outlets by forming
brand alliance and to find out who is in the profit? The bank, The branded Outlet or
consumer only
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Introduction Chapter

The problem statement is divided into two parts. Firstly, the research will look at strategic
partnership decisions made by companies who have sought alliance with banks and the vice
versa. This part of the research will determine what factors companies/banks have to consider
before seeking a long-term alliance and how do those factors influence their partnership
decisions.
Secondly, since a credit card and debit card is a banks product, it will only be appropriate to
take into account sales aspect from banks perspective. Therefore, the research will
encapsulate changes in trends of sales revenue and customer base after the introduction of
credit cards and debit cards promotions by the respective bank such that growth patterns can
be traced. So that in the end it can be concluded that who is making the profit from these
promotions and discounts, the bank, branded outlet or is it the consumer only.

1.3.

Objectives

The purpose of study is:

To examine the growth trends in market share of the bank as a result of co-branding on
credit cards and debit cards. Simultaneously, we will study the variables of customer
loyalty that are influenced by co-branding in credit cards and debit cards such as repeatpurchase.
To discuss the performance of credit cards/debit cards in Pakistan in terms of sales
revenue. Also, the research will discuss impacts of this alliance branding on the customerbase of both the brands under alliance
To study the motivation for the banks to provide such large discounts on purchases done
at certain retails stores.
To find out how do banks earn from these promotions and discounts
To analyze the selecting and decision making process of banks in terms of discount rate
and selection of brands to align with.
To increase the awareness of the consumers about the whole process of promotions, its
costing and increases their knowledge by our research report.

Thesis

1.4.

Introduction Chapter

Justification

This research will be conducted to study in order to have a detailed insight on the branding
alliance done by banks with large Retail outlets, Restaurants e.t.c for offering discounts and other
promotions for a certain credit card holder, also to educate the consumers about the pricing
strategy of the banks and the retail outlets as to who bears the cost of these promotions and in
what ratio. The study will also determine the factors due to which the discounts offered are
different for credit cards of the same bank and how are those rates calculated. There hasnt been
any detailed research conducted in past on why do a single bank needs to offer promotions to its
consumers of credit card so that they can avail discount by shopping at retail outlets, what and
how much banks gain from that transaction if any.
Also this study will give a brief overview of credit cards and offerings of multiple banks in terms
of credit card limit, discount offers, number of outlets where one can avail these discounts e.t.c.
which will help the consumers to understand the products and the pricing mechanism. Apart
from that it will be a research paper which will be beneficial for organizations and the
stakeholders as the research will study the subject of credit cards and all the mechanisms related
to it so that it becomes simple for consumers to choose and decide as to which product suits them
more.

1.5.

Limitations

Following are few limitations of our research:

1.6.

We will conduct the research only in Karachi city.

Limited time constraint, as we have only time period of 4 months for this research
Banks might not share complete information with us as some of it might be confidential.
The financial data gathered from the companies is strictly private and confidential and
not to be quoted on a public forum, therefore the figures that will be used will be a
representation of the original data but may not be quoted as-it-is;
The study is limited to the chosen credit cards only;
Law and order situation of the city of Karachi will be taken into account at all times;

Scope

This study will be conducted in Karachi only on those individuals who are eligible for the credit
and debit cards and on those commercial banks who offer both the cards and promotions. The
banks would be Karachi existing and the study will apply to only those who avail this facility
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Thesis

Introduction Chapter

from these commercial banks as it does not apply to the whole population. We will also try to
contact some to executives in the chosen banks to get their perspective regarding the offering of
promotions and discounts to different brands in different areas.

1.7.

Assumptions

In this research, we have assumed that the credit and debit cards facility is availed by only those
individuals who have monthly income of more than 50000 PKR, it is also assumed that the
banks, consumers and the executives in their interviews will provide us accurate information
which is the requirement of this research. Also we have we have assumed that the bank managers
will give us appointments and their through feedback on the questions that we will ask.

1.8.

Significance of the Study

After studying various secondary tools such as journals and articles, it was observed that
few research has been done on the frozen foods category in Pakistan. Keeping in view that
Pakistan is a very lucrative market especially in the fast moving consumer goods; we decided to
conduct the study in order to re-invent the shopping experience to align with shopper perceptions
and behaviors.
The shopping pattern has evolved overtime, changing the way shoppers shop, yet close
observation and study of their path to purchase can yield us many useful insights Rubin, R.
(2012, July 2012). This study will help us re-invent the shopping experience to align with
shopper perceptions and behaviors. The study will also identify the barriers that exist when
shopping for frozen foods. The recommendations will suggest how can marketers and retailers
work together to overcome those barriers. This report tends to examine the market for frozen
food products, focusing on the products being sold through retail stores. The study will also
identify the triggers and barriers that exist when shopping for K&Ns ready to cook range in the
frozen foods category.This will assist K&Ns to identify the necessary factors pertaining to
gaining or losing a consumer in the ready to cook segment.