Company Overview
NextCard was an internet-based provider of consumer credit founded in 1996 with a mission to revolutionize the credit card industry with its online application and approval process. Their product, NextCard Visa, was promoted as the "First True Internet Visa" and was marketed exclusively through the company website. The NextCard Visa could be used for both online and offline purchases and offered product and service enhancements specifically designed for the internet enabled consumer. At the company's inception these unique services were not offered by their competitors. These services included: a customized application process that provided a 30 second approval process, ability for consumers to personalize credit cards, internet account management, reward points program, and 24/7 online customer service representative. NextCard was able to provide a differentiated Visa product and offered services to increase customer loyalty and profitability.
Problem Definition
From its inception, NextCard received accolades from the marketing and financial communities. The company won multiple awards for their marketing practices and branding campaigns, as well as their ability to process applications with patented 30 second approval rating system. As a result of online direct marketing efforts and co-branding initiatives, NextCard increased the number of consumer accounts from 40,000 in 1998 to 708,000 accounts in 2000.
During the dot.com period, internet companies routinely spent more on sales and marketing than they collected in revenue (Bonanas, 2001) and NextCard fell into this category. Their marketing expenses alone were approximately equal to their revenue (Net of Interest charges) in 2000. The company's aggressive marketing strategy practices cost over $3 million per month for advertising expenses. In addition, their tracking system used to calculate an affiliates' commission was erroneously reporting data that erred in favor of the affiliates. After NextCard realized the mistake, they announced they would continue to base commissions on this data - effectively doubling their expenses.
In this paper, we have identified the main contributor to the demise of the company as NextCard's failure to identify that the web-based marketing programs employed by the company targeted lower credit quality consumers that defaulted on their accounts and did not implement effective corrective measures. Ultimately, NextCard's collapse was attributed to the banking subsidiary loan losses, brought on by approving too many people through online promotions. The company and investors believed that the company had developed a "better mousetrap" for lending - that its systems and credit scoring allowed it to capture quality borrowers through its 30 second approval process and aggressive Internet marketing (Noland, 2002).
Through the use of statistics, expert testimony, appeals to emotions, and a few comparisons, Scurlock tries to convey his message saying that because the lending industry’s main concern is maximizing profits, they have made it impossible to not have a credit card and avoid being taken advantage of. He accomplishes his goal of clearly relaying his argument to the audience with the high amount of credible support he provides.
A majority of mortgage defaults that Americans used were on subprime mortgage loans, which were high-interest-rate loans lent to people with high risk credit rates (Brue). Despite knowing the risks, the Federal government encouraged major banks to lend out these loans to buyers, in hopes, of broadening ho...
Capital One saw direct marketing as a means to record every interaction with a customer electronically. It allowed them the ability to customize products to each customer and to ensure each interaction was unique. Direct marketing gave Capital One the ability to turn a business into a scientific laboratory where every decision about product design, marketing, channels of communication, credit lines, customer selection, collection policies and cross-selling decisions could be subjected to systematic testing using thousands of experiments. It also enabled the ability to roll out products on a national scale and at full speed once they had been found to work without incurring the large fixed costs that accompany brick-and-mortar operations. It gave them the potential to reinvent the entire economics of a business. Capital One realized that few products were direct marketed and that even fewer firms were fully exploiting the power of statistical analysis.
American Express has been known as a commodity to most business travelers. In order to build its customer base, other consumers need to see the card as an indispensable convenience in their lives. American Express offers convenient methods to obtain account information, pay bills, find discounted products, and even make travel plans via the Internet. The Internet site offers these options, as well as other services, such as on- line help and assistance for small businesses. American Express realizes the need for many consumers to save time and money, but to still feel important and respected. The ingenuity and thought put into the services offered on the web site shows that American Express is genuinely concerned with the satisfaction of its customers.
Mullard, M. (2012). The Credit Rating Agencies and Their Contribution to the Financial Crisis. The Political Quarterly, 83, 77-95
In 1995, Target began offering credit which was known as the Target Guest Card (Target Through the Years). This was a big step for the company in establishing customer loyalty and relations through the use of technology. By 2004, the cards were renamed REDcards and were able to create data portfolios to help Target figure out product demands and create different routes to satisfy their customers even more (Target through the Years). This was a huge step for Target and their use of technology to better their
Credit cards are something that are almost needed in everyday life now, as most dont have the money available to purchase a car or house and so need credit, thus needing credit cards to help build that credit. Those cards are hard to handle, and receiving applications in the mail daily, and commercials appearing on television don’t seem to make the struggle of staying away any easier. This starts to spark an interest. So people begin to think, "I think I 'm responsible enough to get a credit card, I 'll only use it for emergencies." Then the application process begins and it may take a couple times to finally be approved for one. This only makes it worse, of course, because realizing how long a credit card wasn’t applicable to life, but now
The "subprime crises" was one of the most significant financial events since the Great Depression and definitely left a mark upon the country as we remain upon a steady path towards recovering fully. The financial crisis of 2008, became a defining moment within the infrastructure of the US financial system and its need for restructuring. One of the main moments that alerted the global economy of our declining state was the bankruptcy of Lehman Brothers on Sunday, September 14, 2008 and after this the economy began spreading as companies and individuals were struggling to find a way around this crisis. (Murphy, 2008) The US banking sector was first hit with a crisis amongst liquidity and declining world stock markets as well. The subprime mortgage crisis was characterized by a decrease within the housing market due to excessive individuals and corporate debt along with risky lending and borrowing practices. Over time, the market apparently began displaying more weaknesses as the global financial system was being affected. With this being said, this brings into question about who is actually to assume blame for this financial fiasco. It is extremely hard to just assign blame to one individual party as there were many different factors at work here. This paper will analyze how the stakeholders created a financial disaster and did nothing to prevent it as the credit rating agencies created an amount of turmoil due to their unethical decisions and costly mistakes.
Ninety percent of Canadians are enrolled in at least one loyalty program. Market research has shown that loyalty programs are growing to be very popular in today’s market. A loyalty program is a program offered by a company to customers, who make frequent purchases. Loyalty programs are of benefit to both the consumers and the business. The consumers benefit by receiving coupons, special access to sales and new products whereas the company benefits by gaining an abundance of knowledge about the consumers, through their purchasing habits. Loyalty programs have proven to be very successful for several companies such as Target, Starbucks, and Shoppers Drug Mart. The senior management in sales and marketing believe that initiating a loyalty program
Statistics suggest about 32% of consumers are going to over estimate the rating on their credit, while only around 4% are going to under estimate the rating on their credit. Ones who will overestimate the quality of their credit are most likely less informative about finances overall, and will be more likely to have learned about their financial knowledge, unfortuanately, the hard way. Also the consumers who are going to overestimate the ratings of their credit will be less likely to properly budget, effectevely save their money, or learn to invest it often. With another example, in 1999 it was found that about 40 percent of mortgage borrowers didn't understand what the interest rates that were associated with their loans were.
...: A Critique of the Global Credit Card Society." International Journal of Comparative Sociology 38:1 June 1997, 77-82.
Mortgage loans are a substantial form of revenue for the financial industry. Mortgage loans generate billions of dollars in the financial industry. It is no secret that companies have the ability to make a lot of money by offering a variety of mortgage loan products. The problem was not mortgage loans but that mortgage companies were using unethical behavior to get consumer mortgage loans approved. Unfortunately, the Countrywide Financial case was not an isolated case. Many top name mortgage companies have been guilty of unethical behavior. Just as the American housing market was starting to recover from its worst battering since the Great Depression, a new scandal, an epidemic of flawed or fraudulent mortgage documents, threatens to send not just the housing market but the entire economy back into a tailspin (Nation, 2010).
Initially the bank’s core banking system was product oriented, but the need of the hour was to develop a customer oriented system, because the challenge is to build customer loyalty, cross sell, and enhance repeat business.
This paper will analyze the mission and vision statements of JPMorgan Chase & Co against the performance of the organization. An evaluation of how well the company lives out its mission and vision statement will be provided. The organization’s strategic goals link to the company’s mission and vision will be assessed. An analysis of the company’s financial performance to determine the link between the company’s strategic goals, strategy, and its financial performance. A competitive and marketing analysis of JPMorgan Chase & Co will be conducted to determine its strengths and opportunities.
Too often, a marketing function is misunderstood, because many people do not understand what is meant by ‘Marketing’.