Capital One Case
1. What is Capital One’s business and who are their competitors?
Capital One is a financial services company, whose banking and non-banking subsidiaries market a variety of financial products and services.
The Company operates in Credit Card, Commercial Banking and Consumer Banking segments. It issues credit cards, loans, banking and savings products, while determining rates to charge, and which customers are risky.
Its competitors consist of banks, investment banks, and other credit card companies like Bank of America Corporation, American Express, MasterCard, and Discover Financial Services.
2. What is their strategy to grow profitably, and to compete? Give examples.
Primary Market research, and information-based strategy and testing to determine the right products and customers.
Customer retention
45,000 tests conducted in yr 2000
Consumer focused company
Internet advertising, test to help identify fraud
People behavior, monitor to see more likely to default (accept high-risk bracket)
Tailor products and prices, offer credit to those who cannot get it easily
3. How do they use information to implement their strategy? What kinds of information do they use and where does it come from?
Gather information from standard places: the post office files and credit checking agencies
Gather as much info as possible
Analyze and test hypotheses, make different products that appeal to more customers
Perform constant tests and using info gathered to understand customers and carry out pricing and retention strategy
Working data and understand it to make profits of high risk customer
Perform background checks on consumers
Info gathered
Many different sources – providing it’s legal and ethical
General information - Post office address file
Previous credit history - credit checking agencies (Equifax, Experian)
Information for lifestyle products - organizations that target specific people
Customer history – from own database of transactions
Customer preferences – online web
Capital One is a financial services company, whose banking and non-banking subsidiaries market a variety of financial products and services.
The Company operates in Credit Card, Commercial Banking and Consumer Banking segments. It issues credit cards, loans, banking and savings products, while determining rates to charge, and which customers are risky.
Its competitors consist of banks, investment banks, and other credit card companies like Bank of America Corporation, American Express, MasterCard, and Discover Financial Services.
2. What is their strategy to grow profitably, and to compete? Give examples.
Primary Market research, and information-based strategy and testing to determine the right products and customers.
Customer retention
45,000 tests conducted in yr 2000
Consumer focused company
Internet advertising, test to help identify fraud
People behavior, monitor to see more likely to default (accept high-risk bracket)
Tailor products and prices, offer credit to those who cannot get it easily
3. How do they use information to implement their strategy? What kinds of information do they use and where does it come from?
Gather information from standard places: the post office files and credit checking agencies
Gather as much info as possible
Analyze and test hypotheses, make different products that appeal to more customers
Perform constant tests and using info gathered to understand customers and carry out pricing and retention strategy
Working data and understand it to make profits of high risk customer
Perform background checks on consumers
Info gathered
Many different sources – providing it’s legal and ethical
General information - Post office address file
Previous credit history - credit checking agencies (Equifax, Experian)
Information for lifestyle products - organizations that target specific people
Customer history – from own database of transactions
Customer preferences – online web