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Reforming Business Classification Systems of Merchants: A Case of S-Card's Customer Segmentation Strategy  

Park, Jin-Soo (College of Business Administration/Graduate School of Business Seoul National University)
Chang, Nam-Sik (College of Economics and Business Administration University of Seoul)
Hwang, You-Sub (College of Economics and Business Administration University of Seoul)
Publication Information
Information Systems Review / v.10, no.3, 2008 , pp. 89-109 More about this Journal
Abstract
Korean card firms suffered harsh setbacks due to high credit defaults in 2002 and 2003, after issuing cards recklessly. Their key principle is changed to grow without damaging profitability and financial soundness. However, competition in the credit card market is heating up rapidly. Bank-affiliated card firms, having stronger sales networks and more capital than independent issuers, have increased their investments in card affiliates in a bid to develop new cash cows. Moreover, newly emerging independent card firms have waged fiercer campaigns to raise their credit card market share. In order to overcome these business conditions, S-card has settled on a strategy that focuses on stepping up marketing aimed at increasing charge card spending rather than credit card loans or cash lending services. Accordingly, S-card reformed the current business classification system of merchants, which was out-of-dated and originally built for the purpose of deciding merchant service fees only. They also drove customer segmentation planning to deliver the right customers to the right merchants. In this paper, we emphasize the problems of business classification systems of merchants with which most credit card firms have faced, and the need for reforming them not only to provide customer-tailored services but also to raise their business promotion excellence by reviewing S-card's process of customer segmentation.
Keywords
S-Card; Business Classification Systems; Customer Segmentation; Merchant Management;
Citations & Related Records
Times Cited By KSCI : 2  (Citation Analysis)
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