Case Study: Capitec Bank's Market Entry and Growth Strategy

This case study analyzes Capitec Bank's strategic approach, focusing on its early market entry into the base of the pyramid, competitive analysis, and innovative strategies. The analysis examines the reasons behind Capitec's focus on low-income earners, its competitor analysis, strategic group map, strategic profiling, strengths and weaknesses, and competitor evaluation. The study explores the origins of Capitec's founding idea, its methods for minimizing uncertainty, and the role of frugal engineering in developing its market offerings. The case study also considers cooperation with competitors, coopetition analysis, and complementor analysis. References from academic sources support the analysis, providing a comprehensive overview of Capitec Bank's growth and market strategy in the banking industry.

CASE STUDY: CAPITEC BANK
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Reasons why Capitec Bank aimed for the base of Pyramid market in the early years
Capitec Bank was branded as the bank of the common people and served its customers with a lot
of passion. Most common low-income people or earners got associated with Capitec Bank and
relied on the bank to take care of their monies that were never banked. This made the Capitec
Bank to have a constant growth for past ten years. It had a unique advertising strategy, affordable
credit terms to its customers and was aggressive in reaching out to its customers that made it
look much better that its other competitors. End to apartheid rule made the Capitec bank to make
a lot of progress in the banking industry as well as the need for capital (David, David & David,
2017).
1. Competitor analysis
It was difficult in granting loans in the past but with the establishment of Capitec Bank, many
low-income earners customers were able to access loan at an affordable interest rate. It is the
setting of this interest rate that had set of economic rivalry. Many banks became rivals with the
Capitec Bank due it constant growing market base. Capitec Bank also took advantage of this
economic rivalry situation by making better price cuts and serious advertising campaign in the
banking industry. It introduced a paperless policy having realized that its competitors had a lot of
complex paper work in the banking sector (McDonald, 2016).
2. The strategic group map analysis
Capitec Bank had developed a good pricing system that attracted most of its suppliers. Suppliers
like insurance companies enjoyed the competitive terms that made them be associated with
Capitec Bank as compared to other banks in the banking industry. The supply of banking license

to Capitec Bank became so easy, simple, appealing and affordable due to its good relationship
with its suppliers as compared to its competitors in the industry.
3. The competitor strategic profiling analysis
Most of customers of Capitec Bank were low-income earners. Capitec bank was racially neutral
a micro-financial institution. Customers preferred Capitec bank to other bank because of quick
and fast services that were being driven by various technological growths. For instance, the
development and establishment of electronic banking and use faster Automatic Teller Machine
was key to its automation of its services (Kaynak & Meulenberg, 2017). This attracted a number
of customers as compared to other banks in the industry.
4. Competitive strengths and weaknesses analysis
Capitec bank was associated with several alternative product networks that even made it change
it brand name. Capitec bank witnessed an upward trend in its growth due to racial mix. The
development of several integrated services made it to do away a number of old-style methods of
doing business in the banking industry (Varadarajan, 2019).
5. The competitor relative evaluation (weighted scores)
Capitec bank just any other had its own economic and challenges that made other key industry
players in the banking industry takes advantage of such kind of weaknesses. Due to collapse of
small low-comers banks, Capitec bank had a lot of problems in dealing customers from such
financial institution (Ho, Plewa & Lu, 2016). This contributes to general entry by other firms in
the industry posing a lot of threat. Capitec bank entry in the banking industry led to the decline
and withdrawal of some banks in the banking industry for example, the decline of Mzansi.

Cooperation with the competitor analysis
Capitec bank became one of the best banks that cooperate well with other large financial
institution due to its simplicity, best and good working enabling environment.
Where the Management found the idea of the new bank and type of bank formed or
created.
Capitec bank was immensely driven by the general of low-income customers. Between the year
2000 to 2001, acquisition and sale of some banks took place and as a result of this Capitec bank
had a new listing in 2002 after a serious crisis by others (Ghosh, Kotekal & Chakraborty, 2018).
Integration of service offered to the inherited customers became very difficult after acquisitions
of other businesses. The drive for improvement of services, more so handling of payroll
deductions led to the formation of new bank. This made the management of Capitec bank come
up an integrated service in the banking sector hence the simplicity name.
How Capitec bank limited the uncertain situations associated with the new bank
Capitec bank worked on its four founding pillars like simplicity, affordability, efficiency and
accessibility. The implementation of this issues and automation of services made Capitec bank
become the market leader.
Through frugal engineering, Capitec bank has been able to ensure reduced admiration costs.
Most processes were automated for example, use of electronic banking especially biometric
based customer traction systems were developed, use of ATMs, debit cards and introduction of
many transaction points including supermarkets. This led to reduced costs in overall transactions
of Capitec bank thereby attracting large customer base for its innovativeness, simplicity and user
friendly.

References
David, F. R., David, M. E., & David, F. R. (2017). The Integration of Marketing Concepts in
Strategic-Management Courses: An Empirical Analysis. SAM Advanced Management
Journal, 82(1)
Ghosh, A. K., Kotekal, P., & Chakraborty, G. (2018). Attribute-based sentiment analysis in
marketing: Application and strategic implications. Model Assisted Statistics and
Applications, 13(4), 311-318
Ho, J., Plewa, C., & Lu, V. N. (2016). Examining strategic orientation complementarity using
multiple regression analysis and fuzzy set QCA. Journal of Business Research, 69(6),
2199-2205
Kaynak, E., & Meulenberg, M. (2017). Strategic Marketing Objectives in Mergers and
Acquisitions in the Greek Food Industry. In Food and Agribusiness Marketing in Europe,
CRC Press, 47-64
McDonald, M. (2016). Strategic marketing planning: theory and practice. In The marketing book,
Routledge, 108-142
Varadarajan, R. (2019). Theoretical underpinnings of research in strategic marketing: a
commentary. Journal of the Academy of Marketing Science, 47(1), 30-36