American Express Brand - Case Study Example

American Express Brand American Express is a financial services card company with a rich history that continues to do extremely well on the global finance services market. A company that started out shipping packages quickly learnt that what people really needed to ship was money. From credit cards through to travelers’ checks to commerce financial management and social cause participation, American Express handles global business in a style that is simply unequaled and inimitable by other worldwide financial services companies. As of now, American Express is the fifteenth (15) most valuable brand on the globe. Its value is reckoned at a staggering $21 billion. It was set up in 1850 in Buffalo, New York by Henry Wells, William Fargo, and John Butterfield. American Express later relocated to Manhattan. Presently it is headquartered directly across from ground zero in downtown Manhattan. When considering the impact that American Express has on businesses and consumers alike, globalization is the notion that springs to mind (Joseph 29).   Brand equity is described as the identity, mark, expression, character or purpose of what makes the commodities or services unlike from those rivals and for vendor groups. Despite the fact that the import suggests that it is bestowed worth that has been conveyed with manufactured goods or service; ruminating the consumers’ reaction: gratification, anticipations, etc. In the 60’s, the American Express Brand was characterized with prestige, security, service, international acceptability and leisure. This perception was embedded onto consumers’ minds through blistering marketing campaigns rolled out at the beginning of this period. As the card business world wide persisted in expansion at a staggering pace, more offices were required to service the rising demand (Kapferer 210).   Although a late entrant into the card market, the American Express Brand built an aura of affluence around its card, by targeting the high end of the market segment; business travelers and the social elite. This strategy ignited a clamor for the charge cards, so much such that long before the card was available, thousands of clients had either written in or visited the American Express offices to apply for the card. The frenzy was so intense that by the time the card was launched, a quarter of a million cards had already been issued and almost eighteen thousand outlets signed to accept the Card (Upshaw et. al 175). American Express is a financial card service, which has been known as the predominant brand among high-end clients. They have continued to develop their brand in a steady and consistent manner which is a strength that the service has. Americas Express’ global labyrinth networks of offices, travel agents, and associated banks have been critical in building the cards’ membership exponentially fast. That the American Express Brand had thought of introducing a card three years earlier than Diner’s Club, but held back with concerns about fraud and “dilution of American Express Brand prestige” and actually launched it seven years later is firm confirmation to this (Davis 65 ). It is acknowledged to be one of the few truly differentiated brands within the financial category, charging a $6.00 annual fee on its initial card, a fee that was $1.00 more than Diner’s Club fee for “prestige”. They currently have four different cards including the Optima card which is a true credit card, permitting consumers to really borrow money. American Express prides themselves on their knack to evolve and match the demands of the consumers. American express creates a balance where the brand becomes accessible, although at the same time remains special through its variety and differentiation. The object of the financial service is positioned behind earned success, accomplishment, making a difference, and the kind of people that do that (Aaker and Biel 69). They began as a simple American Express card for business-one green card-this expanded exponentially into a variation of cards, not only of card colors but also of functions and features for a variety of commercial needs. However, because the brand holds such a dominant position, American express faces many hurdles. Challenges from rivals, who are fighting ever harder to protect the segments of the market that they claim as their own turf. Competition is hardly the only issue, but the loss of retail outlets due to the high fees charged by the company. American Express must differentiate themselves from their competitors through their innovative product offering and unique marketing offering (Capon 32). They should develop an enhanced version of their new blue card targeted for specific segments of the market. From a historical perspective, store credit cards were the “modern” thing when they were introduced as unexampled and commodious. They presented an extra touch point for stores with customers, and some actual stability early on too. But in light of the introduction of more broadly used (and advertised) cards, like VISA, Discover, and MasterCard they have become relics (Clancy and Krieg 76). The integration of its variant business units involves an attempt to change consumer perceptions of a brand, usually because the existing position that the brand holds has become less than it was before. There has been a change in trend standpoint and in terms of adding vitality and relevance. The marketing has drawn a new and more youthful group to the franchise as well as helping to promote more everyday usage; which is the main aim of American express. It has attempted to rebuild toward a more contemporary lure to the young mind set. It wants to expand its services to students and teens. Of course it seems logical; as American express is already a family service is wants to “invade” and provide to everyone within the family. With the ability to do this, they are able to gain more loyal customers. For example, a 23 year old who subscribes for his first American express card is highly unlikely to change to another financial product later in life (Hasanali et. al 213). Challenges of new competition can be tackled through overcoming the barriers presented by building of Networks. A network is the most critical thing in the competitions. Ordinarily it is pretty difficult to break into mature market and build new networks. Building a strong association with merchants and consumers will ensure success. America Express must convince traders to accept its card and make them become loyal consumers in the future. The card services never cover all the brands and most often it relies on the word of mouth and commercial to advertise. Upping quality of services will further enhance usage. Moreover, the new merchants could use other bridge and media such as banks to aid it to extend the service. Sometimes it is vital for the company to pay higher fee to the banks to attract them to use their card. Moreover, most competitors would set barriers to the company but should negotiate individually with ATM networks and banks to persuade them to use their service (Machubert et. al 123). Strong brands are able to hypnotize customers by the power of their brand. Through gaining some sort of control over customers; it can be seen that branding is a sort of restriction of free competition. This is precisely the motivation of brands marketing their product or service: locking consumers in and competitors out. The main benefit of American express is "Ownership experience". They have created happier and loyal customers by the "member since" date on their card. It seems that this is important to for the customers and is also a guide to let both parties know when is something is wrong. American express provides a multiple number of categories of cards; charge cards, credit cards and partner cards (Keller et. al 225). Each category has several subcategories as well as different rules that underlie in the meaning of the card (e.g. charge cards pay in full each month). Depending on the card, there are other services such as reward systems and exclusive privileges. The higher your card, the higher the status and more exclusive privileges you are granted. The good thing about the service is that is provides to all individuals meaning working individuals as well as small and large businesses. Within the membership, the brand claims that it’s “more than have an American express card”. The service provides customers protection, when traveling and shopping. The membership also allows account management options, as well as, 24/7 service support for any problems such as identify theft. With the variation of card is has put service near the top, meaning that customers are satisfied with the “value”. American express knows that you can either keep or lose a customer for life depending on what kind of service the cardholder gets (Kapferer, 32). The credit card industry has expanded to allow transactions through both web and physical. They have even expanded to ATMs allowing up loads on prepaid phone cards, although it is not very satisfactory due to the fact that many individuals in the US use phone networks, such as AT&T. Credit cards have been becoming more and more popular in the world for the past two years. Everywhere people go, they tend to use credit cards more. There have been reports of the sudden figures increasing on consumer credit card usage. Due to this, there have been improvements in credit card consumer protection, which is competition for American express. Although American express, partners with other companies in order to gain the benefit of the doubt. They have recently launched their “plum card”. American express has also created the “smart card” which is similar to the concept of proton in Europe; also the smart card is only applicable for blue card member and only in the U.S (Hastings and Saperstein 65). One of the things that American express has been trying to do over the past several years is to make the balance of advertising and promotions more seamless. They have tried to do this from an organizational standpoint, which has helped. The financial service is also trying to do fewer (sports and entertainment) properties. In the past few years, the service has been scattered with a number of different things. “Execution is strategy” they are looking at fewer properties with a real emphasis on creating experiences for their card member. They want to reinforce the issue of what it means to be an American Express card member. Even with strong brands such as American express, too many activities for the service are meaningless, it requires really getting into them and trigger the best (Hasanali et. al 45). It is vital that Americas Express have a marketing department that understands their critical role in being able to market their products successfully and therefore profitably. When a marketer sells a product, they must take into consideration the three levels of a product; the core, the actual and augmented. Kotler et al. 77describes the ‘core product’ as core benefits which act as problem solving services that consumers are buying when they attain a product. The ‘actual product’ is a combination of the product’s features, styling, quality, branding and packaging (Kapferer 76). And lastly, the augmented product is the additional consumer services and benefits which are included to increase competitiveness. In respect to the American Express the core product is that it is a credit card providing the ability to purchase goods on credit. The credit card is able to give social status as it enables the consumer to appear to be more socially acceptable and is also used for convenience purposes (Davis121). Furthermore, the actual product is the ability to purchase personalized credit cards and the branding of American Express, which is a well known and trusted credit card company (Capon, 41). With this delivers a responsibility to ensure the service and quality of this product is matched up with the customer’s expectations to ensure satisfaction. Finally, the augmented product level of an American Express card involves many additional services. With the use of this credit card, the consumer is able to use traveler cheques; making international travel more convenient as it allows the customer to avoid the hassle of exchanging money in each country (American Express website, 2007). Another additional service is travel insurance as there is increased financial security for the customer in regards to property, accommodation, etc. And lastly, the American Express credit card is able to be personalized with different images for gift cards. To develop a successful and effective marketing strategy, America Express marketers must realize that its card product is classified as unsought consumer product (Kotler et al., 54).A credit card is a product that the user either knows or does not know about and generally does not consider buying (Kotler et al. 69). Hence it is products like the credit cards which require heavy advertising and other marketing efforts as to inform the potential users that this product is crucial to satisfying a consumer need, when the individual may believe it is unnecessary (Capon 47). In every market, the buyers will differ in many ways. Hence, because buyers have unique needs and wants, a marketer may develop a marketing strategy for a group of buyers who entail similar needs and wants. This is noted as marketing segmentation (Kotler et al. 67). Segmentation can be done by using the geographic, demographic, behavioral and psychographic variables. The American Express credit card marketers ordinarily target an older crowd of around mid 20s -50s. Generalized as business men with average to slightly higher incomes who wish to “compliment their life” (American express website, 2007). With the use of credit card, the consumer is able to receive many rewards relating to airfares and travel and this would be very beneficial to the business person who tends to travel a lot for business or recreational reasons. Such benefits include a free companion airfare when a domestic coach-class flight is purchased, complimentary access to airport clubs, discounts on tourist attractions and the redeeming of points to attain flyer points for free flights. Furthermore, there is then the benefits provided with dining, entertainment and shopping. There are discounts at gourmet fine dining, designer shops and events such as Broadway performances. Such rewards are those which would be most appealing to the older generation whom has an appreciation for such things. And lastly, the largest benefit sought by a client is the privacy plan which ensures increased security for the customer (Joseph 30). The use of the latest technology to keep the account number secure and also to execute a Fraud Protection Guarantee (American Express website, 2007) means the customer won’t be held for any fraudulent charges with the use of this particular credit card. Also, there is a system of Account Alerts (American Express website, 2007) where you can choose to be notified when and where your payment was made. This allows for irregular spending activity to be detected and then the notice to be sent to your PDA, mobile or email. This is very convenient for those who are busy and don’t want to be worried if their money is being used unwillingly (Aaker and Biel 116) The American Express credit card is aimed at those who are of an older generation; between the ages of 25 and 50. These are people who aim to work full time and are then therefore generalized as being business people. It is this age group of people who would be able to appreciate and experience the additional rewards; being travel discounts, fine dining, privacy protection etc. Moreover, it is this age group who are most likely able to afford this kind of credit card service. Whereas the American Express credit card users are more concerned with the use of their money and the rewards benefited to improve their different lifestyles (Clancy and Krieg 56) Works cited Aaker A.D, Biel L.A. Brand equity & advertising: advertising's role in building strong brands Volume 1 of Advertising and consumer psychology. 1993 100-156 Capon N. Capon's marketing framework. Wessex Publishing. 2009 (2) 45-54 Capon N. Managing Marketing in the 21st Century. Wessex Publishing. 2008 Clancy K., Krieg P. Your gut is still not smarter than your head: how disciplined, fact-based marketing can drive extraordinary growth and profits Audio-Tech Business Book Summaries. John Wiley and Sons. 2007 43-167 Davis A.J.. Competitive Success, How Branding Adds Value. John Wiley and Sons. 2009 103- 156 Hasanali F, Leavitt P, Williams R., Branding: a guide for your journey to best-practice processes. Passport to Success Series. APQC. 2005 23-77 Hastings H., Saperstein J. Improve your marketing to grow your business: insights and innovation that drive business and brand growth Safari Books Online Wharton School Publishing 2008. Kapferer N.J,. Strategic brand management: creating and sustaining brand equity long term. Kogan Page Publishers. 1997 (2) 201-257 Kapferer N.J,. New Strategic Brand Management: Creating & Sustaining Brand Equity. Kogan Page Publishers,2008 (4) 62-107 Joseph J. The Experience Effect: Engage Your Customers with a Consistent and Memorable Brand Experience. AMACOM Div American Mgmt Assn, 2010 20-71 Keller L.K., Apéria T., Georgson M.. Strategic brand management: a European perspective. Financial Times Prentice Hall, 2008 105-345 Kotler P, Brown L, Adam S, Burton S and Armstrong G, Marketing Pearson Education Australia 2007 (7) 54-91. Machubert J., Capon N., Piercy F. N. Total Integrated Marketing: Breaking the Bounds of the Function. Kogan Page Publishers 2005 43-178 Upshaw B. L, Taylor L. E, (2000). The masterbrand mandate: the management strategy that unifies companies and multiplies value. John Wiley and Sons, 2000 156-202. Websites: /American Express 2007, American Express Credit Cards, viewed 9th June 2010, http://home.americanexpress.com Read More