Cofidis Case Study

Cofidis Case Study

Executive Summary:

In 1981, Cofidis was established as an offspring of leading French direct marketer 3 Suisses international. Before 1981, 3 Suisses used to pay Cetelem FF 5 million per year for using Cetelem credit system. The restrictive credit regulations in France forced Cetelem to withdraw from that deal. In order to satisfy its customers needs 3 Suisses international was forced to create an independent credit company called Cofidis. In two year's time, Cofidis became a profitable company. One of the key to the company success is Libravou which gave customers a revolving credit line which allowed them to purchase what they wanted, whenever they wanted, without any explanation.

Customers liked Libravou because it offered them a pre-determined monthly payment where part of the money was used to re-fill the balance when accessing the FF 5000 to FF 25000 credit line. The Libravou application process was also simple which encouraged customer to apply for it. The loan application is usually processed immediately and if applicants are approved a contract was mailed the same day for signature.

Cofidis has custom-tailored each aspect of its marketing campaign by conveying its message through company sponsored events such as sports events as bicycling and sailing. Cofidis aimed to be more than just a credit line but a life style. The event sponsorships were a reflection of the Cofidis spirit and a reason to reinforce the sunny Cofidis brand. Cofidis also sponsored prominent athletes such as Lance Armstrong to increase the company's awareness.

Cofidis strength is gained through focusing on the needs of its clients regarding the financial product that best fits their needs. The business concept of offering customized consumer loans either by phone or over the Internet has been successfully exported to other countries - Belgium, Spain, Portugal, Italy and recently also the Czech Republic and Greece (Otto Group). Cofidis is a simple company with a simple plan and simple approach; they need to continue highlighting this strength through their website services in order to continue being a profitable company with great organization culture.

Situation Analysis

In order to analyze the current marketing situation for Cofidis it is important to understand the different environments which the company operates in and how it needs to communicate to its customers by better understanding the dynamic forces and trends which are driving the market environment in each of the countries it operates in. In Cofidis case by assessing each of the environmental factors below and by conducting a SWAT analysis we will be able to determine what are the next steps for Cofidis interim of online brand concept and what the next move for the company is.

A. Environment

By applying the PESTEL environmental forces to the current marketing situation we are able to determining how external forces such as population, economics, socio-cultural trends, technological advances and political-legal legislation influence the organization's performance.

Population

Cofidis is spread from France and Belgium to Spain, Portugal, Italy and Greece, with the Czech Republic (International Herald Tribune, 2004). Due to this Cofidis targets different segments of people with different consumer credit market and product needs. Consumers in each country are sensitive to the products which are presented to them do to their perception of them for example The population of North Europe is a greater credit user than Southern Europeans for example British consumers use credit cards as easily as cash. Revolving credit is not as welcome in certain parts of Europe and therefore the perception of the company is correlated with the products which they offer. The perception is usually negative in Cofidis' case when they enter a market where the customers are not used product their offerings.

Economic

I. We can see from the case that the growth of the consumer credit was negatively correlated with the unemployment rate and positively correlated with the GIP (gross interior product) and household consumption. Another economic force is related to the way consumers used the credit card and therefore affected Cofidis bottom line. For examples Italians rarely carry checks with them, they pay everything by cash. Only 70% of Italian household have banking accounts. Also an important benefit for the cardholder is the reinsurance that he will never go over the credit limit that he has fixed (Visa).

Cofidis company economics is determined by the type of customers that they have which are based on the following categories:

 The enthusiast: who does not mind bank over drafts and is economically well off.

 The Specialists: one who does not tend to rely on bank overdraft and is slightly older than the enthusiast.

 The receptive: one who does not use consumer credit and has a negative attitude towards credit products

 The adverse: Typically female, age more than 55 with modest resources.

Social -Cultural Environment:

Tastes and preferences of COFIDIS consumers are highly influenced by social and cultural believes and trends which direct and shape their purchasing power. Cofidis targeted and positioned itself in different countries according to culture and environment. In 1986 when Cofidis launched itself in Belgium, at first, they used the same print copy which was successful in France but failed in Belgium. Later with the help of Belgian agency, a new copy was written, that was not very attractive and very clustered with information but it appealed to the consumers. In later years, Cofidis was introduced in Spain, Portugal, Italy and UK. Cofidis later started to adapt every bit of cultural character to appeal to its customers such as adapting the product name, to local cultures to capture new markets.

Technological Environment:

In 1999 approximately 50% of Cofidis loans were initiated online, by voicemail, or though the website, without any body intervening to capture consume data. Cofidis manager knew the rise of the internet placed their product one click away form the competition, facilitating price-driven shopping for the best loans. Cofidis possess an advanced website that is alerted to each segmented market (national market) which is equipped with the