[MUSIC] So let me begin by giving you a very simple framework of analysis for tackling marketing challenges. We can think of this framework as the 5 Cs framework that includes customers, context, company, competitors, and in some cases when you're not going direct, also channel partners, or other kinds of particular allies or suppliers. In the case of Santander Serfin, let me go in order starting by the context, company, and competitors before I get to the most fundamental part about how to think and segment customers. So let me walk you through this framework by first using the case of Santander Serfin and talking about the company. The Bank of Santander was the largest bank in Spain and one of the 15 top largest banks in the world by assets. The bank had a very strong presence in South America, and particularly in Brazil. But it had very, very high ambitions for all of the Americas, which was its next growth main project. However, it entered the Mexican market relatively late in the year 2000, and it was able to acquire the financial institution Serfin. Serfin, although it was the third largest financial institution in Mexico, it was a very distant third. In fact, its name was not recognized by Mexican consumers amongst the top three financial institutions in the country. And worst of all, in the year 2001, Serfin only had 570 branches spread in 250 cities. For a country the size of Mexico with almost 100 million people in population, clearly this was not a very large branch network. So the main problem that the bank was facing was actually how to enter the customer's home before the days of online banking. Remember? We're talking of 2001. So, if you had a problem accessing customer's homes and how to reach them, what kind of retail banking product do you think is more appropriate to launch in the Mexican market first? Mortgages? Checking accounts? Savings accounts? Loans? Or credit cards? I leave that question up to you to assess whether launching credit cards was a very good idea. Next, let me move to the context. These were some more favorable situations, chief amongst which is because the interest rates in the country had been dropping consecutively for the past five years, and they were expected to drop even more in the upcoming years. The country had 5.5 million credit cards in 2001, and it was one of the most widely used forms of payment. In addition, the credit card transactions were expected to grow significantly at about 8% for the upcoming years. And Santander had qualified up to 14.5 million customers that were the ideal target customers for addressing them with their credit card offer. Given that there were only 5.5 million customers in the country, that means that roughly speaking, two-thirds of the overall penetration was still unaccounted for, which gave the bank a lot of room to grow within the Mexican market. Let's continue analyzing the context, and in particularly, that of the credit card market. So as I said before, there were 5.5 million credit cards in the market, which accounted for, roughly speaking, 155 million transactions. These transactions had been going for the past three years at the rate of 8%, and they were expected to continue to do so in the future. On average, every credit card would spend, roughly speaking, 19,000 Mexican Pesos per year. And the credit portfolio amounted to 25 billion Pesos, or roughly speaking, 4,500 Mexican Pesos of outstanding credit portfolio per the average credit card. In addition, credit cards were the most profitable financial product in the market. [MUSIC]
