Capital One Financial Corporation is one of diversified banks in the United States of America that provide a range of fiscal services and products to their clients who include “consumers, small businesses, and commercial entities” (Capital One Para. 1). The corporation is rated among the top 10 banks in America that specialize in deposits. The company’s headquarter is at McLean, Virginia. It has various branches spread across the United States including “New York, Texas, New Jersey, Maryland, and District of Columbia” (Capital One Para. 2) among other areas.
The company is also listed in the New York securities exchange. Richard Fairbank and Nigel Morris formed the company. The idea of forming the company came after they noticed the potential market that credit cards had in the US. Therefore, they carried out various tests on the matter. After facing many challenges, they finally emerged victorious thus forming a company called Capital One Financial Corporation. Even though it performs better, the company requires a lot of marketing to ensure that it competes favorably with other financial institutions that provide similar services. This paper focuses on the marketing plan of the company for the next three years 2013, 2014, and 2015.
Information-based strategy was an idea and a vision that was developed by Rich and Nigel in the late 1980s. Information-based systems transformed the credit card business in banks. Before the information-based strategy, banks relied on the uniform pricing strategies to manage their diverse customers. Rich and Nigel saw an opportunity in this and developed information based systems to gain a competitive edge. They used test-and-learn approaches in the early stages until they succeeded in their quest. Information-based systems enabled the customization of much information of clients. The case enabled capital One to access or identify those customers who were promising and those who could not add value to their business. This strategy played a critical role in uplifting the profit margins of the company making it one of the best performing banks in the credit card section.
The company gained a competitive edge over other traditional banks, which had earlier rejected the idea (Capital One Financial Corporation 12). The information-based system has many benefits compared to other traditional methods that the banks used. It stood out as a technology approach that was concerned about information. The system has proved helpful in identifying worthy and profitable customers to serve because the system is able to customize or store information of every client thus making it easy to retrieve information besides assessing those customers who are of significant importance to the company. Many banks are not aware of the profitable accounts in their banks. Such accounts are vulnerable to competitors in the market, as they can be hacked by other banks that may need to access some confidential information. The information-based strategy is a technology that is able to identify such accounts in a bid to put measures in place to retain them to remain competitive in the industry.
Relationship marketing is a marketing strategy that is aimed at fostering customer loyalty, long-term engagement, and interaction. It is aimed at retaining customers, as opposed to acquiring them. It is also aimed or designed to ensure/develop strong connections with customers /clients through the provision of services or products that meet their needs that are of interest to them. It is achieved or promoted through open communication between customers and the business owners. This relationship helps the customer to provide information that can be used by the organization to have a competitive edge over its customers (Capital One Financial Corporation 9). Capital One Financial Corporation relied on this approach of marketing to woo customer to buy their credit cards.
The company used consumer-to-consumer transactions during its entry points. The company intended to collect some fees for the transactions though many competitors providing such services offered their services free. However, this matter did not worry Capital One Corporation because it viewed these as short-term competitors who wanted to widen their market share. The company used statistically-based scoring systems in its evaluation of both parties in a certain transaction. This case gave it an upper hand. They could identify those clients who were profitable to concentrate on them. The company can still improve on its relationship marketing strategy to attract many credit card customers.
Learning the Customers
Customers are very important components in any business. In fact, marketing plan and strategies are aimed at attracting many customers to trigger profit maximization in an organization. For the case of Capital One Corporation, it is faced with a lot of competition in the market. Many companies that offer the services they provide have cropped up. The company has nevertheless managed to perform better over the years. It has edged out its competitors in the industry because of the vision and strategies that it has embraced in their organization. The company’s strength has been focusing its services to customers. It has understood the market and its customers better.
One of the things that made the company have a competitive edge is the ability to access the customers’ information for use in determining the profitable customers. It also provided or tailored its services according to the needs of its customers. This step played a crucial role in making the company gain a competitive edge over its competitors (Capital One Financial Corporation 9). Currently, many companies providing such services in credit cards are aware of the potential of information-based strategies. In fact, any have already incorporated them into their organizations, which is a challenge that Capital One Corporation is facing. To remain competitive in the next three years, it is required to build on this strength to use technology to make its services even better to surpass its competitors.
Use of the Internet
The internet continues to play a pivotal role in the field of marketing. Many companies have adopted or changed from conventional methods of marketing to the Internet. This shift is due to the increasing number of customers or, Internet users. Secondly, the Internet is a cheaper form of marketing compared t other conventional methods of marketing. At Capital One Corporation, Nigel and Rich believed that technology, especially information infrastructure, provided a great potential that was not being exploited. Therefore, they used information-based strategy to put their ideas into practice. They developed the largest oracle database at the Signet bank where they were working. The database contained details of customers including their demographic information, purchases, and many other activities (Capital One Financial Corporation 9). The database also supported the regressions and other analyses besides having the capability of storing results.
The capability of the information infrastructure to generate, analyze, and store data on its clients made the company stand above other banks, which, at the time, relied on outsourcing non-branch customer contacts because they could not maintain their own database. This advancement made the company have a competitive edge over its rivals. The company has many online channels it uses to market its credit cards. During the late 1980s, the Internet was not expensive. Therefore, it was a very good media of direct marketing. Many cardholders used the Internet to check their accounts often calling customer care for clarifications. Most online transactions used credit cards for payments. At one point, Capital One Corporation faced a stiff competition from other credit card providers such as Nextcard, which used the Internet to get cardholders that were more new.
At that point, Capital One Corporation used testing as Nextcard gave its clients discretion to choose their own desired features that they wanted their card to have (Capital One Financial Corporation 9). Further, it evaluated its client based on their responses using proprietary statistical modeling systems that made it have a high customer base. Further, it provided instant approval and accessibility for credit to its customers. However, the company did not make any profit for three consecutive years in 2000. Capital One Corporation identified three opportunities on the Internet. The company discovered that customers visited the company’s accounts once in a week. They visited to check their balances, to pay bills, and to see whether their transactions were cleared or not. The company had 124 million accounts, which grew at a rate of 7 million per year (Capital One Financial Corporation 9).
The company created portals that would enable customers to shop for various services and products. The company managed to attract many clients through information-based strategy. The company also engaged in joint ventures as its marketing strategy. The major aim of involving in joint ventures was to train and teach other companies on information-based strategies. Many companies did not know about customization. Through such joint ventures, companies would be able to gain an advantage to incorporate the strategies in their organizations. Capital One Corporation has a competitive advantage over the other companies. These companies have already rolled these information-based strategies into their organizations.
However, technology is advancing. Thus, there is the need for the company to put measures in place to remain competitive. Information is the key and most important thing in ensuring that information-based strategies succeed. So far, the Internet has played a big role in elevating the company to its current position. The company still needs to exploit other avenues in this information to reach many customers in a bid to store their details in the database. One of the modern technologies that the company can employ to achieve its objectives in the coming three years is to use apps, a software application that can run on a computer, phone, the Internet, or any other electronic device.
The Role of Customer Service
Customer services refer to the composition of all aspects that pertain to the interaction of customers within an organization. Customer care is essential for an organization because a satisfied customer is likely to come back for the same services. Companies that invest in their customer services have an advantage over those without plans or customer care services. There exist various roles or advantages of Capital One Corporation investing in its customer care services. Even though the company has talented employees and enough systems to respond to clients, it is required to upgrade and introduce some changes to ensure that its customer services are at par with its requirements. Some roles of customer care include ensuring that customer queries are answered quickly, which enhances customer trust.
Thus, such a customer is likely to remain loyal to the company. Furthermore, customer care is important because it allows the company to provide services and products that meet the interests and the needs of the clients. The goal can only be achieved if the system requires customers to provide their rating on the capability of the company. For the coming three years, Capital One Corporation needs to improve on its customer care services to boost its growth to enable it survive the stiff competition from other rival companies. The company needs to come up with adequate strategies such as ensuring that it eliminates all flaws in its customer care systems to ensure that customers are well attended.
Marketing Planning Process
Various stages must be completed to arrive at a strategic marketing plan. These stages are important in ensuring that the company or an organization achieves its objectives in marketing. For Capital One Financial Corporation to achieve its market objective for the year 2013, 2014, and 2015, it must have a marketing planning process (Valeriu, Tudor, and Andrei 730). For the marketing process to be effective, there is the need to set goals. The goals of an organization are identified in the mission statement, which also stipulates the corporate objectives that the organization wants to attain after a certain period.
The next stage is to analyze the current situation, which can be done through market auditing and carrying out of a SWOT analysis besides coming up with market assumptions. The third stage is to create a marketing strategy, which entails knowing the marketing objectives and strategies, forecasting the expected results, and creating an alternative plan in case the first plan does not go as planned. The fourth stage is to allocate marketing resources besides monitoring how the progress of marketing is going on. This stage encompasses drafting of a marketing budget to come up with a detailed action plan on how the process of implementation will be carried out (Valeriu, Tudor, and Andrei 730)
Situational Analysis SWOT
SWOT analysis is an acronym that means strength, weaknesses, opportunities, and threats. It is important for any organization to analyze its strengths, weaknesses, threats, and opportunities in a bid to know the areas that require adjustments and or where to focus investments. In marketing, this concept is equally important. Capital One Financial Corporation should use this to evaluate itself in preparation to achieve its goals in the coming three years. Strengths and weaknesses are internal forces while opportunities and threats are external forces.
Strength comprises the area that that gives the company a competitive edge over other companies (Gilligan and Wilson 245). Capital One Financial Corporation has a number of strengths that should be strengthened further to ensure that it achieves its objectives in the coming three years. One of the strengths of the company is that it has an already established positive image. Its brand is positive. Therefore, it has the potential of attracting more customers. The company’s history and current performance is meticulous, a case that makes it have an advantage compared to other companies.
The company is listed on New York securities exchanges. As such, it has shown a continuous improvement. The second strength is that it has well-established information-based strategies that have given it a competitive edge over other companies (Wrick and Matt 3). The strategies have enabled the company to identify customers’ profitability since their information could be captured and stored in the company’s database. Thirdly, the company has managed to employ high-skilled managers who possess a vast experience and knowledge in information-based strategies that have continued to provide good leadership thus making the company achieve its objectives.
Weaknesses are internal forces that affect the smooth operation of an organization. Capital One Corporation is not an exception. It has some challenges, which the marketing teams need not to overlook. Some of them include issues with organizational structure and organizational culture. The company should portray itself as a national entity besides portraying a positive image to the public to appear as a national bank. Therefore, it should employ staff from all backgrounds to appear to be nationalist
Threats are external forces facing the company. Identification of these forces is important for a company because it helps it to come up with strategies that can minimize or eradicate them. Threats in Capital One Financial Corporation include increased competition from other companies dealing in the same services. The concept of information-based strategies has been rolled in many companies thus putting the company at a risk of losing its customer base. Depending solely on technology is a risk because sometimes the systems may fail bringing the company to a standstill.
Capital One Financial Corporation has many opportunities that it can adapt to have a competitive edge over other companies. The opportunities include the increasing population requiring cards that the company can exploit to increase its profits. The company can expand its services to foreign markets to maximize on the wide market available in other foreign countries such as the UK and many other countries.
For the company to achieve its goals, it needs to know what it wants to achieve and how it is going to achieve it (Gilligan and Wilson 245). Capital One Financial Corporation seeks to gain more customers to make it competitive. The company will achieve these goals by expanding its branches and services to other foreign countries where there is a ready market for its customers. Therefore, the company will have to reserve considerable amounts of money to carry out extensive marketing in the various regions where the market is promising. Furthermore, the company will be required to increase its avenues of marketing.
It should take advantage of apps that is now accessible on mobile phones to market its products besides getting the details of customers to enable it to achieve its objects. The marketing objective of the company in the three years is to maximize profits by increasing its sales. The increased sales can only be achieved when the market share of the company is big enough. High profits will also depend on the brand equity and the level of efficiency of its services. Therefore, the marketing team will base their success on the efficiency and the image of the organization, a step that will contribute positively to the company’s quest of accruing more profits.
The marketing strategy that the company should employ should ensure that the company becomes competitive in the market. There are many companies in the market. All of them are going forwards to attract more customers to their companies. Therefore, the choice of strategies to use is important in ensuring that the company achieves its objectives. Various strategies can be adapted by the company to enable it have a competitive edge over other companies.
The company will have to categorize the needs of its clients into various market segments. For instance, it will carry out market analysis to determine the needs of every segment of the target market to ensure that the segment is provided with the services it wants. Market segmentation will also enable the company to provide services effectively and efficiently hence enabling it to achieve its objectives in the three years. The segmentation will enable the company to position its services in a manner that will enable it to realize its goals. In market segmentation, Capital One Financial Corporation needs to calculate the percentage sales it wishes to get in the three years, what it wants, and how the market uses the products or services besides being aware of price sensitivity to know how it will reach the target markets or customers.
In the marketing mix, the company should consider the four P’s of decision making. These will enable the company make appropriate decisions to promote its products in the three-year period (Gilligan and Wilson 246).
Decisions concerning products should consider the advantages of the products, as well as how to leverage the products. The factors that will be considered in leveraging the products include the kind of the brand, the quality, warranty, packaging, and scope of the product line. Capitals One Company should consider these factors when marketing its services and products to customers to gain a competitive edge over its rivals.
When it comes to pricing, the company should know what it expects from the sale of its products and services. Therefore, it should consider whether it will offer discounts, sales in bundles, know the lists prices, which should be competitive, payment terms, financing options, and leasing options available for its products among many other issues pertaining to pricings.
Distribution includes considering things like the distribution channels that it will use in its marketing such as direct, retail, intermediaries, or distributors besides considering the criteria for evaluation. The company should also know the locations where it will supply its products, logistics including order fulfillment, and transportation costs among many other issues.
The company should be aware of the strategies it will use to promote its products to the markets. In this case, for Capital One Corporation to achieve its objectives in the three years, it will use many ways to promote its products, which include promotional programs and advertising through the media that has a wide mass of followers besides employing public relations among many other ways.
There are various environmental challenges that need to be considered in the marketing strategies and plans for the Capital One Financial Corporation. Even though the company has come up with the strategies, they may not work as planed because of various environmental challenges that may happen in the US during this time lag. Three years is a very long duration. Various issues that may affect the execution of the plans ad strategies may crop up. One of them is the economic crisis, which may lead to inflation thus affecting the marketing strategies because the funds reserved may not be adequate to ensure that all areas are covered. Other challenges are changes in government policies and regulations such as taxes, which may affect the smooth operation of the business.
In conclusion, given the role of a marketing manager, I will guarantee customers a quick accessibility of the company’s services. Once the customer places an order, the processing period will be short thus enabling customers to get their services and products within the shortest time possible hence making them enjoy the services. Further, I will ensure a good customer care whereby all queries and issues raised by employees will be addressed immediately to ensure that they remain loyal to the company. The market currently requires security enhancement due to the rising cases of cyber crimes and account hackers. The business is majorly based on the online platform, a very critical issue that requires to be done to block any unauthorized persons from gain entry to the accounts or databases of the customers to access to the confidential information. Therefore, employees will be required to have high integrity to ensure that the database of clients’ information is safeguarded.
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Wrick, Clemons, and Thatcher Matt. Capital one: Exploiting an information-Based Strategy, 1998. Web.