1
American Express Case Study
Running head: American Express Case Study
Marketing Case Study Analysis: American Express Company
Lameka Fields
Ariel Shead
Nicole Outen
Shavon Dempsey
Marketing 3175
Dr. A Arora
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American Express Case Study
Table of Contents
Executive Summary.................................................................................................................................................3
History and Background.........................................................................................................................................4
Corporate Culture....................................................................................................................................................5
Code of Conduct.....................................................................................................................................................5
Customer Analysis...................................................................................................................................................6
VALS......... ............................................................................................................................................................7
Product Market & Segmentation and Targeting.....................................................................................................8
Company Mission....................................................................................................................................................8
Competition & Competitive Market Analysis.........................................................................................................8
BCG Analysis..........................................................................................................................................................9
BCG Matrix...........................................................................................................................................................10
External Market Environment...............................................................................................................................11
PEST Analysis.......................................................................................................................................................11
S.W.O.T Analysis & Matrix..................................................................................................................................12
Marketing Plan Objectives.....................................................................................................................................13
Differential and Positioning...................................................................................................................................14
Marketing Strategy................................................................................................................................................14
Porter’s Strategy & Five Forces Model.................................................................................................................15
Marketing Mix.......................................................................................................................................................15
Implementation and Control.................................................................................................................................16
Financial Statistics................................................................................................................................................17
References.............................................................................................................................................................18
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American Express Case Study
Executive Summary
American Express is the world’s largest credit issuer by purchase volume and the largest provider of
travel services globally with assets totaling $153 billion,$30 billion in annual revenue and 62,500 employees
worldwide (www.americanexpress.com, 2012). American Express processes millions of dollars of transactions
daily. It operates through four segments: U.S. Card Services, International Card Services, Global Commercial
Services and Global Network & Merchant Services (www.marketwatch.com, 2012).
Its card services offer a variety of credit and charge card products and services to consumers and small
businesses making up over 90% of its company’s value and its travel services business making up the rest
(www.www.americanexpress.com, 2012). The Global Network & Merchant Services segment is responsible for
managing merchant services globally, which includes signing merchants to accept Cards as well as processing
and settling Card transactions for those merchants. It also offers merchants point-of-sale products, marketing
information programs and services (www.marketwatch.com).
A major factor threatening the company includes the most recent uncertainty in the U.S. employment
and housing market which has caused consumer spending to be down and the deepening economic crisis in
Europe has worried American Express stockholders (Johnson, 2012). Small business which is a major segment
of American Express’ target market has been greatly impacted by economic downturn. Despite the sluggish
economy loan performance has remained strong because many consumers have worked to pay off their bills
rather than take on more debt (Johnson, 2012).
To the company’s advantage it primarily lends to affluent
customers, which has allowed it to maintain financial strength, unlike many counterparts in the financial sector
industry.
The rising global threat of economic and cybercrime fraud is a growing concern facing the financial
sector as whole and American Express must be vigilant with this issue by assuring the security and integrity of
it services and maintain the built confidence and trust it has established over the last 150 plus years of existence.
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American Express Case Study
American Express has a longstanding history of sustainability and longetivity, strong global presence
and is a trusted brand leader in the financial and credit industry. It is a recognized global leader in customer
service earning five consecutive J.D. Power and Associates awards for highest customer satisfaction among
credit card companies (Young, 2012).
History and Background
American Express Company has unique beginnings that have played vital role in the company’s values
and operations today. Since American Express’ 150 year inception “reinvention” has been the word used to
help establish its brand, overcome challenges and meet the growing and unique needs of its customers
(2012,www.americanexpress.com).
American Express founded by Henry Wells in 1841 began it existences as a New York express and
freight business, providing the safe transport of valuables (www.americanexpress.com, 2012).
It then
progressed into money orders and traveler's checks and there its travel service operations, including its credit
card services emerged. Several key historical events challenged the company including major regulatory
changes in the express and travel industries, competition after the Civil War, the Card Revolution of the 1950s,
the International monetary crisis of 1971, and the Credit Card Wars: 1980s-90s (www.americanexpress.com,
2012). However the hallmarks of the American Express brand which are trust, integrity, security, quality and
customer service have remained constant (www.americanexpress.com, 2012).
Demonstrating a niche for global diversification and market development in early 1999 American
Express formed a branch of American Express Financial Advisors in Japan. In 2000 it established a strategic
position in the burgeoning Chinese economy by opening a headquarters in Beijing (www.americanexpress.com,
2012).
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American Express Case Study
Despite intensified competition American Express has enjoyed a reputation for innovation, profitability,
and integrity (www.americanexpress.com, 2012).
Corporate Culture
American Express website proclaims that “As a company whose primary mission is to take care of
customers, American Express has created a culture with service at its core. We dedicate extensive resources and
effort to satisfying and surprising customers with thoughtful, creative and personalized solutions. You’ll find
the same level of personal attention, respect and support for our people as well. We place great importance on
doing what is right, what is best and what is innovative (“Working at American Express| Culture,” 2012).”
American Express also places great emphasis on creating a comfortable, flexible environment for their
employees, which includes those entering retirement and ones on maternity leave as well. American Express
states “We strive to create an environment where people are respected, feel personally and professionally
fulfilled, and look forward to coming to work. We empower our people to do the best job possible, while
creating a life that’s truly extraordinary (“Culture| Work Environment, 2012).”
Code of Conduct
The American Express Code of Conduct is a fifty-three page document expressing the need for
employees to remain integral throughout the company, especially since regulations are tightening. It also
includes reliable information about who to report violations to when an employee suspects or witnesses a
violation. Additional information centers around the brief outline and summary from the “Blue Box Values” in
the document.
“Customer Commitment- We develop relationships that make a positive difference in our customers’
lives.
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American Express Case Study
Quality- We provide outstanding products and unsurpassed service that, together, deliver premium
value to our customers.
Integrity- We uphold the highest standards of integrity in all of our actions.
Teamwork- We work together, across boundaries, to meet the needs of our customers and to help our
Company win.
Respect for People- We value our people, encourage their development and reward their performance.
Good Citizenship- We are good citizens in the communities in which we live and work.
A Will to Win- We exhibit a strong will to win in the marketplace and in every aspect of our business.
Personal Accountability- We are personally accountable for delivering on our commitments.
The Result- By acting according to these values, we will inspire the loyalty of our customers, earn a
sustainable leadership position in our business, attract and retain a highly talented and engaged workforce, and
provide a superior return to our shareholders. This, in turn, will enable us to achieve our vision of becoming the
world’s most respected service brand (Employee Code of Conduct, 2012).”
Customer Analysis
American Express distinguishes itself as the world’s premier credit card and financial service provider
and contributes it success to it premium customer base and direct relationships with millions of consumers,
businesses and merchants worldwide. American Express card members on average spend about four times
more
than
those
of
MasterCard
and
three-and-a-half
times
more
than
Visa
(Young
&
www.americanexpress.com, 2012). In 2009 personal card members spent on average $11,213 and have the
highest credit ratings among the major card issuers (Young, 2012).
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American Express Case Study
Customers see American Express as business partners and not just the issuer of credit and see value in
the products and services offered.
“We earn the loyalty of our high-spending customers by providing them
with industry-leading products, services, rewards and benefits” (www.americanexpress.com, 2012).
VALS
Leading in product innovation and technological advances, American Express cardholders would be
typed on the highest level of the VALS framework as “innovators”. On the VALS types innovators are
described as highly successful, sophisticated with an abundance of resources, receptive to new ideas and
technology and enjoy a cultivating experience (www.strategicbusinessinsights.com, 2012). American express
has a signature for offering a valuable product and rewarding experiences for it users.
American Express also has extremely high value sets that model the company’s operation.
The
company has strong ideals and believes in providing excellent customers service, community responsibility and
global leadership. Product development is highly involved in providing financial solutions and strategies for
business owners. Therefore other levels of the VALS segment such as “thinkers”, “achievers”, “experiencers”,
"believers”, “makers” and “strivers” can all be American Express’ target customer.
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American Express Case Study
Product Market & Segmentation and Targeting
American Express has a brand and reputation that attracts customers and business partners from around
the world. American Express strives to differentiate its brand from other credit card companies by making a
commitment to provide a variety of products and services that offer flexibility, promote financial responsibility
and support communities with common interests.
A significant difference in the American Express’ product brand is the spend-centric model. Unlike
traditional credit cards, revenue is driven by card member spending and the business from merchants rather than
from lending fees and revolving credit balances (www.americanexpress.com, 2012). This places American
Express in the unique position to focus on product development and lead as an innovator in the market place.
Company Mission
American Express has three operation principles that are used to guide the daily action of the company
which are 1) offering superior value propositions to all customers 2) providing products, services, benefits and
rewards that deliver more value than any competitor and 3) supporting the American Express brand by striving
to always provide the world-class service and personal recognition that customers expect from the company
(www.americanexpress.com, 2012).
Vision
We work hard every day to make American Express the world’s most respected service brand.
Competition & Competitive Market Analysis
In the financial service industry there are many competitors. The top competitor of American Express is
cash. The company is still trying to figure out how to obsolete cash because there is always a need for cash in
the world, but from a company aspect the top competitors would be J.P. Morgan Chase, Visa, and MasterCard.
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American Express Case Study
One of the biggest competitors of American Express next to cash would be J.P Morgan Chase which is
an American multinational banking corporation of securities, investments and retail. It is the largest bank in the
United States by assets and market capitalization. It is a major provider of financial services, with assets of $2
trillion. It is also ranked number 28 on the Interbrand Top Global Brands. The platform of “The Way Forward”
keeps them relevant to customers and they continue to be a valued expert in the unstable markets (Interbrand,
2011).
Next, Visa which is a global payments technology company that connects customers, businesses, and
banks in more than two hundred countries worldwide. According to the Interbrand Top Global brands it ranks
number 75. Visa’s brand idea is “Better Money for Better Living” which supports the company’s vision of
being “The Universal Currency of Life.” They are also committed to innovation and continue to launch new
products and services. They have built one of the world’s most advanced processing networks with the
capabilities of handling more than 24,000 transactions per second securely. (Interbrand, 2011)
Finally there is MasterCard, According to them they have been a leader in the global payments industry
for over four decades. They have accepted commerce at an unsurpassed network of more than 28.5 million
locations worldwide. MasterCard has also streamlined an intelligent approach to processing enabling efficient
commerce on a global scale. This is the largest VPNs in the world which is based on an agile network with
speed, integration and reliability.
BCG Analysis
American Express would be considered a cash cow. It continues to be a leader in the financial services
industry being ranked number 23 on the Interbrand Survey. American Express customers on average spend up
to 2-4 times as much as customers using competing cards; the average American Express cardholder spent
$11,213 per year, excluding cards issued by affiliates. This allows American Express to charge a discount rate
over twice as high as either of its main competitors (an average of 2.54%). American Express posted a net
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American Express Case Study
income of $4.1 billion from its total revenues of $27.8 billion. This was an increase from its net income of $2.1
billion and revenues of $24.5 billion (wikinvest).
J. P. Morgan would be considered a star. The firm has a significant amount of international exposure,
with operations in over 50 countries and clients in every major financial market in the world. JP Morgan Chase
reported a full-year total revenue of $115.5B and a net income of $17.4 billion (wikinvest).
There are more than 1.7 billion Visa branded cards in the global market. Visa would be considered a
border line question mark and cash cow because they are continuing to grow and expand. Visa's operating
revenue reached $8.1 billion, and its net income was $3 billion (wikinvest).
MasterCard is the second largest electronic payments processor by purchase volume behind Visa in the
world. MasterCard reported an income of $1,847 million, a 26% increase over the previous year's $1,463
million (wikinvest). They would be considered boarder line between dog and cash cow because they are still
profitable and establishing position within the top financial services.
BCG Matrix
J.P. Morgan Chase
V
IS
A
American
Express
Master Card
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American Express Case Study
External Market Environment
The top brand name credit cards that have been established have been around for decades. In the financial
service market it is very competitive and it is hard for new entrants to enter and become leader. The market can
be challenging at times because of the economical state and that may have a negative impact on the financial
service industry.
PEST Analysis
Political: President Obama signed the Credit Card Act of 2009 into law May 22, 2009. Millions of
credit card users will avoid interest rate increases on existing card balances and have more time to pay their
monthly bills, greater advance notice of changes in credit card terms and the right to opt out of significant
changes in terms on their accounts. The law has fundamentally changed the way credit card issuers market, bill
and advertise credit cards. American Express along with many other card issuers warn it will drive up the price
of and limit the availability of credit cards at a time when the country needs more spending to stimulate the
economy.
Economic: With the economy not being so stable it has had positive and negative effects on peoples
borrowing habits. There has been a cut back with borrowing suggesting that people are concerned about the
economy. Household are borrowing less and saving more. Some household have increased borrowing by
deciding to go back to school. So the economy can have positive and negative influences on American Express.
Social: Some American Express’ demographic and socio-economic characteristics are age, gender,
marital status, the level of education, the number of dependents in the family, and monthly income.
Technological: Technology has had a big influence in the credit card industry. In 2011, dealers saw the
development of the new mobile technologies that promise to change the way they accept payments. Mobile
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American Express Case Study
processing has become very popular with many developing companies. American Express should make sure
they are up to date with all the technology advances that are happening worldwide.
S.W.O.T Analysis & Matrix
Strengths: American Express has many strengths which them a competitive company. They developed
many products and services over the years which show their diversity. They have travel cards to cater to
their customers who travel extensively. With multiple fraud cases happening in the US they have
established a Fraud protection program to protect their customer from having to experience this
problem. American Express also is highly profitable because they target high income customers.
Weaknesses: Like all companies American Express does have weaknesses. The financial credit crisis
affected profits due to decrease in consumer spending. There is also an overall lack in consumer
confidence because of the economic crisis.
Opportunities: American Express could take advantage of some of their opportunities to increase
profits for the company. They could market to new customers along with continuing to expand globally.
Threats: In this industry there are threats that could negatively affect American Express. One threat that
could affect American Express and its customers is the growing global rise of cybercrime and credit card
fraud. There is also a lot of competition to compete with along with the new government regulations
which can negatively affect the company’s bottom-line.
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American Express Case Study
SWOT
MATRIX












Opportunities
Global expansion
Diversify customers
Threats
Growing global threat
of economic cybercrime
& fraud
Competition with other
companies
New government
regulations




Strengths
Diversity
Innovation
Travel services &
operations
Brand loyalty
Stability
Fraud Protection
Guarantee
Target high income
customers
SO - Strategies
Market to different
customers
Continue to innovate
but also expand
globally
ST - Strategies
Continue to provide
security and protection
to prevent fraud and
cybercrime
Be aware of
government
regulations and
continue to build brand
loyalty






Weakness
Financial Credit Crisis
High membership &
annual fees
Consumer Confidence
is low
WO - Strategies
Lower fees to appeal to
new customers
Continue to build
consumer confidence
WT - Strategies
Continue to build
customer loyalty by
waiving or lower
membership fee to
prevent competitors
from moving in on
customer base
Marketing Plan Objectives
For 2012, American Express entered the prepaid debit card market wanting to eliminate fees and
increase rewards promotions to court customers. They desire to see growth through customer focus and
interaction. They plan to implement this through connecting with banks and partnering with social media sites
such as Facebook.
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American Express Case Study
Differential and Positioning
American Express's position is interesting. People might feel that it is lost on the perceptual map by
being perceived as somewhat expensive and not widely available. However, you must use caution when
interpreting these maps. American Express's target audience is more upscale than the other cards, particularly
the Discover Card. Thus, "prestige" could be an important attribute for this segment but it was not investigated
in this study. The lesson is that the map is only useful for a set of brands that are appealing roughly to the same
target group.
Profitability
J.P. Morgan Chase
American Express
Lowliness
VISA
Prestige
MasterCard
Non Profitable
Marketing Strategy
American Express marketing strategy has shown a great deal of evolution from the days of “don’t leave
home without it” to its global campaign featuring a new tagline – “WELCOME IN- the power of all of us” and new
digital and cable broadcast brand campaign entitled the “Membership Effect”. The objective of this marketing strategy is
to educate about the rewards, benefits and experiences of card membership. Encouraging existing and potential members
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American Express Case Study
to “unlock the possibilities and power” of the American Express card. The campaign also emphasizes a macro-marketing
approach of working together to build community relationships, support small businesses and promote an eco-friendly
lifestyle.
Porter’s Strategy & Five Forces Model
The Bargaining Power of American Express customer/buyers is high. There are many choices in the
market place. One could always choose a product from the competition.
Bargaining Power of Suppliers is moderate. This is due to the rapport American express had with its
suppliers.
Threats of substitutes are high, due to unwanted interest rates and fees. Therefore, customers choose
substitutes like prepaid debit cards. Not to mention cash is still the leading threat to American Express.
The potential of new entrants to the industry is low. Most consumers are familiar with the established
brands in the market and are loyal to their brands because of customer rewards and other incentives.
The rivalry amongst competitors exists with American Express, Discover, MasterCard, and Visa. They
offer many similar items to increase brand awareness as well as attract and keep customers who are brand loyal.
The overall value chain of American Express brings value to its product through brand loyalty and the
service behind this product which establishes excellent customer relationships. This also gives them a fair
competitive advantage.
Marketing Mix
American Express has over 22 personal charge, credit cards and small business charge card types that
all offer unique features and flexibility to best meet customer needs. Features which include no pre-set
spending limits, no annual fee, no interest and an array of rewards programs which include travel and flight,
gas, and cashback benefits and rewards.
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American Express Case Study
Marketing Mix/4Ps
Product
Place
• over 22 credit&
• Apply online or by
charge cards
phone
• Business Services
• Direct mailing
• Financial planning &
management and
Marketing tools
Price
Annual fees &
Membership fees
• Annual Percentage
Rates (APR %)
• Card agreements
•
Promotion
• Special introductory rate
offers
• Specialized Membership
Reward Programs
• Other industry
Partnerships
Implementation and Control
The major weakness facing the company is the financial credit crisis which affected American
Express’ profit a great deal. During this time customers spent less and saved because of increased
concern about the status of the economy. Customers need to be assured that they have financial stability
before they will continue or began using credit to make purchases. American Express needs to continue
to build their existing customer’s confidence and loyalty by ensuring stability and offering valuable
products and services. American Express should continue its efforts to maintain positive relationships
with it global partners as wells as gain new customers.
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American Express Case Study
Financial Statistics
Dec 31
2008
Restated
Dec 31
2009
Restated
Dec 31
2010
Restated
Dec 31
2011
Other Revenues
3,215.0
2,265.0
1,938.0
2,148.0
TOTAL REVENUES
22,567.0
19,024.0
25,375.0
28,850.0
Cost of Goods Sold
4,931.0
4,553.0
5,591.0
6,934.0
GROSS PROFIT
17,636.0
14,471.0
19,784.0
21,916.0
Selling General & Admin Expenses, Total
12,574.0
9,663.0
11,671.0
12,383.0
Other Operating Expenses
2,017.0
2,693.0
2,899.0
3,091.0
OTHER OPERATING EXPENSES, TOTAL
2,017.0
2,693.0
2,899.0
3,091.0
OPERATING INCOME
3,045.0
2,115.0
5,214.0
6,442.0
Currency Exchange Gains (Loss)
-35.0
35.0
-4.0
48.0
Merger & Restructuring Charges
--
-161.0
-98.0
-96.0
Other Unusual Items, Total
571.0
852.0
852.0
562.0
Legal Settlements
571.0
852.0
852.0
562.0
3,581.0
2,841.0
5,964.0
6,956.0
710.0
704.0
1,907.0
2,057.0
Earnings from Continuing Operations
2,871.0
2,137.0
4,057.0
4,899.0
EARNINGS FROM DISCOUNTINUED OPERATIONS
-172.0
-7.0
--
36.0
NET INCOME
2,699.0
2,130.0
4,057.0
4,935.0
NET INCOME TO COMMON INCLUDING EXTRA ITEMS
2,684.0
1,802.0
4,006.0
4,877.0
NET INCOME TO COMMON EXCLUDING EXTRA ITEMS
2,856.0
1,809.0
4,006.0
4,841.0
Currency in
Millions of US Dollars
EBT, INCLUDING UNUSUAL ITEMS
Income Tax Expense
As of:
Graph provided by Investing.businessweek.com
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American Express Case Study
References
American Express Company. (2012). Working at American Express Culture. American Express. Retrieved June
13, 2012, for http://careers.americanexpress.com/working/culture/index.html.
American Express Company. (2012). Culture Work Environment. American Express. Retrieved June 13, 2012,
for http://careers.americanexpress.com/working/culture/work-environment.html.
Johnson, A. (2012). American Express says spending growth dips. Retrieved on June 13, 2012 from
http://www.marketwatch.com/story/american-express-says-spending-growth-dips-2012-06-13-16485231
Young, R. (2012). Top 10 Common Stocks You Want to Own. Financials, manufacturing, railroad and energy
stocks to buy. Retrieved on June 13, 2012 from http://www.investorplace.com/2012/03/top-10-common-stockscountdown-amex-pg-utx-eca-lmt-trow/
Positioning Guide for Market Brands. (2012).Retrieved on June 12, 2012 from
http://healthandfitnessbay.blogspot.com/2011/09/positioning-decisions-guide-for.html
http://www.marketwatch.com/investing/stock/axp/profile
http://www.cardpaymentoptions.com/credit-card-processing/top-credit-card-processing-trends-for-2012/
http://www.usatoday.com/money/economy/story/2012-06-07/consumer-credit-april/55445348/1
http://www.govtrack.us/congress/bills/111/hr627
http://www.strategicbusinessinsights.com/vals/ustypes/innovators.shtml
http://www.wikinvest.com/stock/Mastercard_ (MA) (Retrieved 12 June 2012)
http://www.wikinvest.com/stock/American_Express_Company_ (AXP) (Retrieved 11 June 2012)
http://www.wikinvest.com/stock/J_P_Morgan_Chase_ (JPM) (Retrieved 12 June 2012)
http://www.wikinvest.com/wiki/Visa (Retrieved 12 June 2012)
http://www.interbrand.com/en/best-global-brands/best-global-brands-2008/best-global-brands-2011.aspx
http://www.mastercard.com/us/company/en/ourcompany/the_mastercard_story.html
http://investing.money.msn.com/investments/stock-balance-sheet?symbol=AXP&
http://investing.businessweek.com/research/stocks/financials/financials.asp?ticker=AXP:US&dataset=incomeSt
atement&period=A&currency=nativeInvesting.money.msn.com