Msc Strategic Marketing Assignment
Visit www. americanexpress. com to learn more about the different cards that American Express offers. Discuss the target market and positioning strategies for each and suggest other segments that American Express might be able to successfully target (20%/630-770 words) American Express manages a wide variety of products but their cards can be classified in two main card types if cards: personal and business cards. For each card type they offer a wide range of different utilities and privilege and can be sub divided in credit and charge cards.
The difference between the credit and the charge cards available in each category is that the credit cards charge the card holder at the end of the month while the charge cards charge the card holder instantly. The American express business model is aimed at a very narrow premium customer base, which frequently make large transactions. As their customer base is narrow they are able to provide a higher customer service than their competitors (pp). The AmEx brand also holds a huge cultural value.
Because of the brands positioning and corporate branding being the owner of an AmEx automatically improves this persons role as opinion leader for the personal social group. Personal Cards Card The range of personal AMEX cards is designed for personal use. The holder pays an annual fee depending on their card and in return they get the corresponding American Express services. Generally such services include no preset spending limits and luxury rewards for collecting points.
Other cobranded American Express cards such as the British Airways American Express card also offer additional travel related advantages such as travel insurance or priority on waiting lists. (American express. com Target market In comparison to some of its competitors such as Visa and Mastercard, American express does charge for its services. This naturally shifts it away from these competitors and into a segment of its own. The target market of the personal AMEX cards are high earning individuals, because they are high earners they are likely to be individuals professionally hold roles of esponsibility.
Their personality is extravagant, extroverted and exploring yet sophisticated lifestyle. Small Business Cards Card The small business card range is designed by American Express to help small businesses manage their finances and reduce stress of running a business. The card holder is expected to pay a monthly fee and in return get the American Express services of no preset spending limit, the card can be extended to other business employees, access to airport lounges and a generous membership reward program.
Target Market As the card types name suggests American Express targets small businesses segment with this range of cards. But they don’t target the whole of the small business segment. The card is designed for those businesses that regularly need to make payments for business purposes. The co-branded American Express and British Airways card suggests that they are targeting businesses whose employees are frequently traveling and would like to centrally control their company expenses. Missing segments,
The existing range of AMEX cards target the high profile person and business that need to make large and regular payments. Though the product range can also be use online it’s mainly intended to be used offline with the physical card. Many of today’s payment transactions are made via the world wide web of which services such as Pay Pal and Citadel EFT. These 3rd party services are sometimes considered to be unreliable and no provide the exclusivity that American Express provides. This can withhold AMEX users from using their AMEX card online.
An exclusive online payment service for AMEX users to provide payment services can increase the company’s online presence and stimulate the cards use. 2. How has American Express been able to help consumers shift their attitude toward usage of the card? Is American Express taking a proactive approach to managing its marketing environment? How? (20%/630-770 words) Shift of attitudes Proactive in managing its marketing environments? 3. Based on your knowledge of online buyer behavior – provide a proposal for an effective e-marketing campaign for American Express, using social media: Facebook, twitter, blogs etc.
Critically discuss different ways to attract and retain consumers using different social media in the UK market. To answer this you may choose any two appropriate models of consumer behavior. (20%/630-770 words) Currently American Express is present of the World Wide Web’s main social networks. On Facebook AMEX? s global page got 7 Million who “like” them, they also have separate pages for each country they have commercial activity in which on average tend to have some 7,000 likes each.
The AMEX main Twitter account got 600K followers, on LinkedIn approximately 136,000 professionals are following the company and on YouTube they got 12,000 subscribers. American express also attempts to connect with small businesses and professionals through offering business advice to them through blogs. In comparison American Express? s closest competitors Master Card and Visa both got 4. 5 million likes each on Facebook. On twitter Visa got 38,000 followers and Master Card 16,000. On Linked in MasterCard for 43,000 followers and Visa 48,000 and on YouTube 1000 and 4000 subscribers respectively.
Because of the niche market targeted by American express and the enormous reach and noise of the World Wide Web, planning a carefully targeted campaign is of great importance to ensure the campaign is using resources efficiently. In their study Cap Gemini Ernst & Young (2002) found that modern day online consumers, when considering buying, are looking for the human values behind products and services, such as honesty, respect, dignity trust and fairness behind the products they buy.
Since American express has two card types and thus two target markets its only logical that the online marketing campaign also be divided to target the two markets separately. Since AMEX got two quite specific target markets the use of social networks is recommended. Social networks allow you to target users on a wide variety of demographic, psychographic, lifestyle information and interests supplied voluntarily by its users. American Express brand is virtually universal, and a single geographic market is quite small.
Therefor it is suggested that it is better to focus an e-marketing campaign, via social media, on a global or regional scale than national. The online marketing campaign directed towards the private users will focus on creating a worldwide viral marketing campaign on the popular social networks. For a period of 45 days, using a designated app on the AMEX Facebook page, users can enter a lottery to win one of five free Platinum American Express cards and an additional €2000. Users will be able to increase their chances of winning one of these cards in multiple ways.
The first way would be though on a daily basis entering the application and participating in a multiple choice quiz, for every correct daily an additional entry is gained. The daily quiz will consist of questions related to the AMEX products and brand, designed to increase the knowledge about the AMEX products and aid the correct positioning of the brand in the mind of the consumer. The estimated marketing costs for the target market of private users is approximately €17,000, and has a potential reach +1,000,000 resulting in a maximum price per impression of €0. 17, much more efficient than the Facebook adds which recommend a charge of €0. 65 per click. Rivero, J. (2012) suggests that credit card marketing to consumers should be done “where your consumers and their friends are hanging out”. This campaign attempts to do just that: to get potential new users interested in and reinforce the connection that existing consumers have with American Express through cultural influences. The people who have already like the American Express Facebook page will be the ones kicking of the campaign by being the first ones to enter the draw.
Then when they invite their friends to join they are seen as opinion leaders within their social group. Those who are really interested in winning will engage in the daily quiz elaborating their knowledge of the brand and its products and in turn also convert them into 2nd generation opinion leaders for their social network. Facebook users will also be able to increase their chances of winning by inviting their Facebook “friends” to enter the competition via the AMEX application. For every friend that they have invited and has also entered the competition they will also gain an additional entry.
For the business segment of the American Express target market linked in will be used to gain the public’s attention. This campaign will also take the shape of a competition but not a lottery. Entrepreneurs will be invited to submit start up business proposals. After initial screening, through popular vote on from the linked in community the most popular idea will gain a three year backing of American Express experts, full financial support and of course the AMEX cards and benefits to get up the new business idea. This campaign focuses gaining new business customers through having them engage with the brand through LinkedIn.
The social role that AmEx would be taking on, of financing the best business idea, should be interpreted by other users and business as an act of social charity and an attempt to help the business world encouraging them to also use American Express for their business as they understand they provide better and premium services to businesses. Critically analyze and evaluate consumer and customer management practices adopted by American Express and how consumers react to individualized consumer-organization interaction. (20%/630-770 words) . Discuss potential trends in buyer behavior in the Credit Card market over the next ten years. Identify companies in this sector which are responding well to the trends, and make recommendations how your company can update the way it engages with current and potential customers. (20%/630-770 words)
Innovations One of the main innovations currently in the credit card market is the move to pay via smart phones. Systems are being developed to use a person’s smart phone as a mobile wallet without having to take out a physical credit card. 0 percent of people expect that their smartphones will eventually replace cash and credit cards. (Farrell, B. M. , 2013) Mastercard, Visa and Paypal are already experimenting with this alternative payment method though it must be mentioned that people or 35 or younger, are more inclined to use this innovation than the over 35? s. (Farrell, B. M. , 2013). Amex bought the online payment system Serve for $300 million in 2009 and launched its e-wallet service in 2011 (Pepitone, J. , 2011) in a reaction to Visa and PayPal launching a similar service first.
The service is currently only available in the US (Johnson, A. R. , 2011) Since in many emerging markets they are taking a technology leap, i. e. directly starting with the latest technology, there exists a realistic possibility that they might also skip the credit card phase and move directly into having an e-wallet. American express could well establish their brand in these markets by providing e-wallet services as well as methods to accept e-wallet payments to local businesses. Competition,
The standard credit card market is becoming saturated and its becoming increasingly difficult to obtain new customers or to make customers switch credit card issuer. Card issues have to offer increasingly more incentives to attract new customers and retain exisiting customers. American Express has the advantage of having a unique brand within a select group of customers. But there are no restrictions for MasterCard or Visa to launch a cheap premium or platinum range in order to target and gain market share right in the heart of American Express? core business. Multi-Function cards. First Data Corporation (2011) suggests that in Brazil Banco Bradesco and in France Credit Agricole have been offering a card type that has the ability to access both credit and debit accounts. But neither have been considered a game changer. Multi-function cards are being increasingly interesting as consumers are starting to shift their preference to the debit card instead of the credit card. This is partially related to the currently ongoing financial crisis.
With shifting trends and no game changing alternative this will be a future point of focus for credit card issuers to successfully introduce a hybrid card of this type as long as the demand proves sufficient. Co-Branded Cards Some of American Express? s biggest competitors are teaming up with other large multinationals to offer exclusive co branded credit cards. For example IKEA and VISA have launched the IKEA Visa card allowing consumers to finance their purchases for up to three years among other benefits.
American Express already hs a co-branded card with British Airways but with competition becoming increasingly tougher it is likely that card issuers will also try to issue cards via large multinational organizations.
Bibliography:
- Farrell, B. M. , 2013, Not paying by smartphone? You soon will, many bet. The Boston Globe. Retrieved from http://www. bostonglobe. com/business/2013/03/20/payment-industry-executives-eye-mobile-future/XHi4XtUT9zkoloMd0m2biO/story.html
- First Data Corporation (2011) Four Important Trends Shaping the future of Credit Cards. Retireived from ttp://www. firstdata. com/downloads/thought-leadership/cc-trends-wp. pdf
- Johnson, A. R. (2011). “AmEx Looks Beyond Credit Cards”. The Wall Street Journal. Retrieved from http://online. wsj. com/article/SB10001424052970204552304577112611696189378. html
- Pepitone, J. , 2011. American Express dives into mobile payment with Serve. Retrieved from http://money. cnn. com/2011/03/28/technology/american_express_serve/index. htm
- Rivero, J. (2012). 3 Big Trends in Credit Card Marketing. Retrieved from: http://thefinancialbrand. com/22348/three-trends-in-credit-card-marketing/
