Capital One Financial Corporation 1. How is Capital One’s use of IT different from other mass customization strategies? Capital One uses IT through its information-based strategy (IBS) to “record, organize, and analyze data on the characteristics and behaviors of their customers,” as stated by CEO Richard Fairbank. Their philosophy was to exploit information by constructing scientific models that could be used to both assess the creditworthiness of potential cardholders through FICO scoring, and to customize product offerings for existing ones. This was done through data mining, sorting, customizing offers and marketing campaigns, and then analyzing this data to see what campaigns worked – for what reason and what it returned in revenue and profit generation. This differs from other financial institutions in that these other institutions were compiling data manually, accepting applicants based upon debt-income ratios and were all charging the same interest rate and annual fee. 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. In 1994, Jim Donehey was brought in to update Capital One’s IT system. His solution was to replace their aging mainframe computers with an object-based system, but this technology had never been used on such a large scale. In contrast, two-thirds of Capital One’s competitors outsourced their IT functions. Within 5 years the company had the world’s largest Oracle database with 23 terabytes of data – winning them the Gartner Group’s Excellence in Technology Award. 2. How sustainable is Capital One’s advantage?
This book details the “adventures” of Jim Barton, the head of Loan Operations for IVK, Inc. Barton was the head of Loan Operations until his boss, CEO Carl Williams, asks him to become the CIO in order to help turn the IT department around. The only disadvantage is that Jim does not have any kind of background or extensive knowledge of IT.
Ally Financial Inc. is an independent financial firm that was founded in 1919. They are a leading automotive financial company, provide mortgages and other commercial financing and also became a bank holding company in December 2008. Ally Bank is a subsidiary of Ally Financial and raises deposits from customers through the internet, over the phone and through mobile applications. As a direct bank, Ally does not have any bank branches and strives to grow its business through direct channels (internet, phone, mail, and mobile). The percentage of customers who prefer to do banking via direct channels has increased by 41% between 2007 and 2012, while the number of people who prefer traditional branch banking declined by 21%.
...eresting for Vanguard because of the exponential increase in the number of potential clients, whom Vanguard doesn’t have to directly advise and serve about their products and services, combined with the high potential for profitability. The development of this broad qualified sales force could also be done at relatively low development cost. The positive aspects of this alternative are somehow strongly counterbalanced by the fact that huge efforts of mass advertising would be required in order to inform the potential customers about Vanguard’s brand, and over whom Vanguard would have no control in the sale process. Vanguard would also have to face some strong competition in its relation with the intermediaries, who are not always the most loyal sales representatives. This weakens the expected return on investment for this alternative, and finally led to its rejection.
“Consumers today is on the go, multitasking and reaching them is much more difficult than it used to be. Habits are changing high tech gadgets are a must and music and TV is dialed up on demand dictated by the consumers. Consumers are choosing how they want to interact with the environment on their turns. A trend that has created many challenges for companies that are seeking new customers. No longer do American Express has just a captive audience watching three networks or going to the mailbox as their only incoming source of information and correspondents. Consumers are choosing how they want to interface and interact. Marketers need to be where consumers want them. Consumers have various cards to choose from and repeat offers in the mailbox all over ruined with options and as a result, finding a good time to talk with marketers require more creativity. Today, there is too many messages, and American Express trying to figure out if anything getting through” (Kotler & Keller, n.d.).
Capital One is a financial institution and handles confidential information for customers. Employees have access to this information and the company is liable for any misuse of customer information. Therefore a background check must be done for every employee. “In addition to ensuring job qualifications, conducting background checks can help employers protect themselves and the public from individuals who pose an unreasonable risk of harm and may shield employers from potential negligent hiring lawsuits.” (Dwoskin, 2013) The applicants’ information is run through the screening software. The software runs the applicants’ information through the Department of Correction database. It searches for any criminal history or charges and reports it back to the recruiter. If the background comes back clear then the applicant is hired. If the background comes back with some information that was not listed on the application, the legal team would need to research further.
Citigroup is one of the most well known financial companies in the world. The company has been one of the pioneers of the business financial world. They have contributed in many contemporary ways in the use of banks, and many other financial systems. Citigroup was a representation of the financial market success of the United States, Wall Street, and the financial world. The company has more than 200 years of history, and had been receiving high credibility from worldwide customers. However, after the company’s merger of Citicorp and Travelers Insurance the company was put under new management. Following their boss’ lead, the corporation began to make decisions that were only made with the best interest of the maximization of Citigroup’s profits in mind. This eventually led to the Recession of 2008 and a very rocky road for Citigroup. The company’s actions were similar to that of Netbank, but the end results of the companies differed due to Citigroup’s size. The financial crisis of Citigroup could have been avoided had the necessary precautions been taken, had these provisions been taken it could have possibly helped to avoid the economic recession of the United States as well.
The banking industry is under pressure in today’s business climate. Banks have been through big changes. There is opportunity, but there is also increasing competition. To be the preferred bank means changing “good enough” into a unique value proposition. And that means changing the way people have always done things, change on this level requires cutting edge technology. Change cannot be achieved with a simple directive or surface adjustment especially within the banking industry. It requires an innovative rethink of the entire system, in a strong partnership between bank leaders and their change agents. New systems and policies must support the strategy to be successful. The real test of a good strategy implementation plan is whether the people understand the strategy, are motivated and enabled to implement it, and actually start achieving its goals.
During the last decades the Marketing was consumer-centric with some mixes of product-centric marketing. According to Kotler (2010) in some way the consumers are passive targets of marketing campaigns where the advertising tries to satisfy and retain the consumers thru the information technologies, where the consumer became smarter thanks to the possibility to approach the companies thru their websites (one to one relationship).
Beckerle, p. 282, (2008) states "Now, and throughout the history of data warehousing — going back to the mid-1990s, there was an awful lot of outsourced data warehousing. Lots of companies outsourced their data warehousing to big companies like Acxiom
Citigroup Inc. was the largest company in the world in December, 2007. It had total assets of $2.2 trillion. Citigroup Inc. was formed on October 8, 1998 when Citicorp and the Traveler’s Group merged. By 2008, it was the world’s largest bank by revenues with over 358,000 staff and 200 million customer accounts in 100 countries. The Citicorp piece is a multinational banking corporation which operates in more than 100 countries. Travelers Group businesses include credit services, consumer finance, brokerage, and insurance (Wikipedia 2008).
The Name of the company which I choose, is Citigroup. I’ve been interested in the company for a very long time. Since the day I first met my brother in-law eight years ago, I’ve been at awe in regards to the sophisticated manor in which employees carry themselves and the company name as a badge of pride and accomplishment.
Conclusion Companies are better able to market their products to consumers if they have a good Understanding of the consumers and the basic purchase decision process. By understanding the consumer and the type of purchasing behavior associated with different products, marketers are more likely to create a marketing campaign that positively impacts the consumer’s purchasing decision.
Customer Relationship Management primary purpose is customer retention and the firm’s profitability. This is accomplished through the use of personal, technology; in addition, different tools process, and activities. To be successful at customer relationship management the firm must be selective with their investments. The focus of customer relationship management shifted from just new customers to retaining the customers. This is to build up their loyalty to the firm’s brand. The relationship between the two impacts both parties and can be affected by individual and several transactions. This style of management emerged from relationship marketing which has focused on the lifetime connection with the customer. This type of marketing became popular in the 90’s because firms began to realize the value of their customers as tangible assets they could control.
In the 1990s direct marketing became the most important tool in the mix because technology had enabled a form of communication by appealing directly to the target customer. This change led to new media formats, and the subsequent development of the Internet. Digital technologies have accelerated change in the marketing communications
...cular market. Companies that conduct market research normally save a lot of money by understanding what type of product or service is needed, other than entering the market blindly without knowing what to expect.