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Case analysis: American Express
American Express is a global financial services company known for its credit cards, charge cards, and other services. It targets wealthy, elite consumers and positions itself as a luxury brand through exclusive benefits like impeccable customer service and an elusive image cultivated through celebrity partnerships and promotional events. While competitors like Visa and MasterCard issue cards through banks and have a broader target market, American Express self-issues cards and differentiates itself through a membership experience for cardholders. To grow, American Express has expanded its merchant acceptance network and launched new products while maintaining its reputation for quality service and focus on core competencies over a diversified set of financial offerings.
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Case analysis: American Express
- 1. CASE ANALYSIS: AMERICAN EXPRESS -VrushabhBhaskar RAIT Mumbai Prepared during internship under Prof. Sameer Mathur at IIM Lucknow
- 2. Brand name: AmericanExpress American Express (abbr. Amex) is a multinational corporation, globally known for its credit card, charge card, traveler’s cheque and financial services
- 3. Prestige & Affluence InternationalAcceptability Impeccable Customer service Trust Security Integrity
- 4. How did the Companybegin?
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- 6. BusinessWeek and Interbrand rankedAmex the fifteenth Most Valuable Brand In the World
- 7. How did Amexposition itself so well as a Global Financial Services Brand?
- 8. Determining the Competitive Frameof reference Target market of Amex: Wealthy, elite consumers less prone to market risks Product mix for Amex: Charge cards, credit cards, travel services, financial services
- 9. Competitors of American Express Althoughthese brands are the competitors of Amex, they target the less affluent consumers
- 10. Analyzing Amex’s Competitors PotentialCompetitor Actual Competitor MasterCard, Visa • Compete with Amex in the credit card space. • Act as intermediaries in the credit card space. • They allow financial institutions to participate in their networks and issue credit cards that bear the “Visa” or “MasterCard” brand name. • Target Market: Less affluent market segment. Discovery Financial Services • Issue cards itself and thus bear the financing risk. • Competes with Amex in both credit and financing services. • Charges customers for the use of the card and also charges merchants a fee. • Target Market: Less affluent market segment.
- 11. Points of Differencefor American Express Attributes or benefits that a consumer strongly associate with a brand, evaluate and believe that could not find to the same extent with a competitive brand are known as Points-of- Difference (PODs) for the brand. Luxury credit and charge card service Elusive image Membership feeling to the customer Up-market customer base association Self-issuing of cards Impeccable customer service
- 12. Criteria to determinethe given associations truly function as PODs Association Desirable to Deliverability Differentiable Luxury credit and charge card service Affluent customers Issued first charge card in 1958; collected higher fee Competitors charged less annual fee Elusive image Ads featuring celebs; elite promotional events Minimal endorsement campaigns and less elite events Membership feeling Cardholders addressed as “card members” No such membership strategy Impeccable Customer service 24-hr personal service; invitations to elite events Moderate Customer service even to affluent class
- 13. Points of Parity Pointsof Parity (POPs) are attributes that need not be unique to the brand. It might be shared with other brands.
- 14. POPs for Amex •Quality Customer Service for credit and charge cards. • Global acceptability • Efficient Travel service and travelers cheques services • Select Banking
- 15. “American Express’ brandmantra is world class service and personal recognition. To effectively deliver this, we need to service our clients online, and every year we make multi million dollar investments enhancing our service.” -Andrew J. Buckley Andrew J. Buckley Vice-President for Marketing & Strategy EMEA (Europe, Middle East & Asia), Global Commercial Card Division American Express
- 17. American Express’s Business Integration •Expansioninto variety of financial categories during 1980s: brokerage, banking, insurance; acquired companies like E. F. Hutton & Co. • Encountereddifficulty in integrating these broad financial offerings. • Consequent decision of divestingmany of offerings and focus on core competencies: travel services, credit and charge cards, travellers cheque and select banking services. • Expandedby increasing Amex card accepting merchants, like Walmart. • Launchedan ad campaign called, “Do More”.
- 18. Decision Of Amexon growing beyond its affluent customers •Recession of 2008: The stock price fell by 64% • Caused by: increased default payments, weaker billings, higher credit losses. • Decided to target beyond its affluent customers, to low-margin customers. • The newer products allowed consumers to carry over the balance and pay only interest hit Amex during the recession. • As a result, both the profit bar and brand image got seriously affected.
- 19. • Expanding themulti-user model can accommodate growth in foreign markets which will and provide future growth in developing economies. • Enhance business partnership across industries to expand target market, attracting exclusive members by brand awareness and recognition strategies. • Explore the advancement in technology aligning with the banking sector • Leveraging technology to make transactions and payments simpler. Recommendations for American Express
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- 21. Disclaimer Created by VrushabhBhaskar, RAIT Mumbai, during a marketing Internship by Prof. Sameer Mathur, IIM Lucknow