American Express Redefines Its Strategy




Case Details Case Introduction 1 Case Introduction 2 Case Excerpts

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INTRODUCTION

In February 2014, American Express launched a new credit card called the ‘Amex EveryDay Credit Card’ (Amex EveryDay). This card did not have any annual fee but had a unique rewards program that rewarded frequent users. Unlike the other offerings from American Express which were traditionally targeted at busy executives and entrepreneurs, Amex EveryDay was targeted at housewives and students.

The card was part of the strategic shift at American Express to target the mass market rather limiting its offerings to premium customers. Since the time it entered the card business, American Express had operated a closed-loop network and focused on a limited number of profitable customers. It also charged higher commissions from the merchants than other banks and card companies. Despite offering its products to a limited group of customers, American Express enjoyed a higher share of the total card spending.

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In the mid-2000s, American Express started facing new challenges from online payment processing companies and other card companies. The online payment processing companies offered safe and cheaper payment processing services which lured customers from the conventional card companies. Big commercial banks and credit card companies that processed transactions through their open-looped networks too started giving higher competition to American Express by offering super premium cards. Cards like the Visa Infinite and Sapphire Card from JPMorgan Chase & Co. offered features similar to that of high-end cards from American Express........

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