Question

Questions

1. Evaluate American Express in terms of its competitors. How well is it positioned? How has it changed over time? In what segments of its business does American Express face the most competition?

2. Evaluate American Express’s integration of its various businesses. What recommendations would you make in order to maximize the contribution to equity of all its business units? At the same time, is the corporate brand sufficiently coherent?

3. Discuss the company’s decision to grow beyond its core affluent consumer base. What did this do for the company and the brand?

Answer 1

Evaluate American Express in terms of its competitors. How well is it positioned? How has it changed over time? In what segments of its business does American Express face the most competition?

Prior to the 2007/2008 recession in US American Express was very well positioned in the financial services market. They have a long history in the travel services market but have been forced to modify their product lines as market has continued to change over time. Positioning is so important as it helps to differentiate it from its competitors, American Express has done an excellent job of this in their business lines .Examples include partnering with other companies to offer rewards such as the Delta Sky Miles, and working with select merchants by offering special discount rates when a customer uses their American Express card .Their positioning within their target markets has changed over time, many would argue the changes have weakened their positions. Threats that have contributed to this include increased regulation and compliance laws, and increase in the number of competitors .Also from the SWOT analysis the weaknesses identified include weak profit management when compared to one of their top competitors MasterCard and they have a competitive disadvantage because they do not offer debit cards like as their competitors do

Evaluate American Express’s integration of its various businesses. What recommendations would you make in order to maximize the contribution to equity of all its business units? At the same time, is the corporate brand sufficiently coherent?

American Express created the first internationally accepted “Travelers Cheque” in 1891, which used the same signature security system and exchange rate guarantees employed today. In the 1960s and 1970s, American Express stepped up its marketing efforts in response to strong competition from Master Charge and Bank Americard .Ad agency Ogilvy & Mather created the now-famous “Don’t Leave Home Without It” During the 1980s, American Express expanded into a variety of financial categories, including brokerage services, banking, and insurance, by acquiring a number of companies such as Lehman Brothers Kuhn Loeb Inc. and E. F. Hutton & Co. American Express also responded to Visa and MasterCard’s increased pressure in the mid-1990s by re- branding its Small Business Services division as “OPEN: The Small Business Network” and adding benefits such as flexible payments as well as special offers, partner- ships, and resources for small businesses. The brand represents so much more than a logo, and that’s especially true for your users. Developing a strong and dynamic brand creates a solid foundation for your company, but the success of that brand over the long term depends on your brand equity. The first level of brand equity deals with your brand’s identity and how people recognize it. Salience refers to the prominence of your brand and whether or not it stands out. You need to have an accurate understanding of what your customers think of your brand, true or otherwise.Customers are going to judge based on their personal experiences and what they hear. And while you can’t possibly make sure every last person has a positive experience, but you can do damage control by making sure you respond in a positive way, show that you’re listening. Own up to your mistakes and fix what can be fixed, address complaints responsibly and appropriately. Give yourself a chance to actively reshape how customers think and feel about your brand because their opinions are necessary for a brand’s success.

Discuss the company’s decision to grow beyond its core affluent consumer base. What did this do for the company and the brand?

Things turned for the worse as the global economy collapsed in 2008 and 2009, significantly dampening American Express’s financial results. The company’s stock price fell 64 percent in 2008 caused by numerous problems, including increased default payments, weaker billings, and higher credit losses. In addition, many analysts agreed the company “grew too fast from 2005–2007.” The company had changed its core strategy of targeting wealthier, low-risk consumers with a prestigious brand and valuable rewards in order to increase its total number of card members. It’s newer products, which allowed consumers to carry over a balance and pay only the interest, came back to hurt American Express’s bot- tom line during the recession. Despite these disappointing financial results, Business Week and Inter brand ranked American Express the fifteenth “Most Valuable Brand in the World” and

Fortune ranked it one of the top 30 “Most Admired Companies.” This brand value was a testament not only to the company’s product and marketing innovation but also to its commitment to providing customers with outstanding service at any location in the world at any time of day. Today, American Express offers a variety of different personal cards as well as small business and corporate cards, each with a different level of customer service, fees, re- wards, spending limits, and special access or services.