Calling all business majors and / or aficionados

[Ilikeshinythings]

It is required that I figure out either:

1. A new strategic business unit for Capital One Banking.

or

2. A new marketing campaign for an existing business unit of Capital One.

I considered the travel industry, where American Express excels, and I considered student loans, where Bank of America really seems to excel. But as Sun Tzu said, you should never attack strength, only weakness, so trying to out-maneuver Amex and BofA at their own game would be foolish.

Plus, we want to avoid a "price war" where lowering interest rate causes other companies to do the same, thus messing up the markets potential. in a "blue ocean" strategy, it is better to create new market space than to try and fill up already established market space and take shares from competitors, but we're having trouble coming up with the afformentioned.

Any help is appreciated, though not expected, but I know there are a lot of bright people on CPF. Thanks!

 

[Manzerick]

Marketing makes more sense with limited liquidity in the current banking sector (anywhere for that matter) whereas setting up a new SBU could be too costly right now.


Also - Get crazy.. A viral campaign that differentiates your product in the market such as being a "foreclosure friendly" bank or something like that. LOL


Just a thought

 

[Ilikeshinythings]

Nice! I like that "foreclosure friendly" motto of viral marketing! Thanks for the tip. Got anymore funny and potentially viral ad ideas?

Setting up an SBU would be quite expensive, and all the competitors already have core competencies in basically all other aspects of banking. The only core competence that CO has above the others is it's "IBS" or information-based system. This system is by far the best in the industry, with enough information to fill up 200,000+ household computers. The information they receive when people call is routed through the phone system and straight to the person who will be handling the case all within 1/10th of a second. This way they can offer products with better rates to potential customers, help previous customers with issues before they even have to explain it, and also keep tabs on which customers talked to which employees and put them in contact with eachother.

Is this a core competence that would be worth exploiting in a marketing campaign, or would people be MORE skeptical after learning about it?

 

[Lightraven]

I'm invested in COF in the low 5 figures, have a COF money market in the low/mid 5 figures and have studied the company in annual reports, case studies and stock analyses to a limited extent for some years. Owner/customer/aficionado, I guess. My MBA is the 10 day variety from a book (trade paper) by a Harvard MBA, so judge accordingly.

IBS is more of a competitive advantage or "moat" than a core competence, although it can be argued the other way. That's assuming that IBS is really all it's cracked up to be. It gets good play by the Morningstar analysts--but I'm less convinced. Risk analysis is a very tricky game when dealing with humans who have to decide whether to pay the mortgage, the car payment, the student loan or the credit card balance.

My philosophy, as a customer, is that businesses do well by giving the customers everything they want except free product/service. If I call CapOne for anything, they should get it to me for a price that is profitable. Realistically, I'm only going to call them for a loan, credit card or money market account. Those are all commodities. One bank's money is worth as much as another's which explains why I have many accounts for credit, banking, and stock trading. What isn't a commodity is convienience. I dumped my Amex (Ameriprise) money market for a CapOne money market because it was easily obtained through Costco with a higher interest rate and minor cash incentive.

CapOne's money market interest rate was meaningfully higher than Ameriprise (Amex at the time), probably due to lower overhead. Higher interest, easy to start up, bingo. Ameriprise still has my checking business (requiring overhead to service and I maintain a low balance), but I'll bet they weren't happy to lose my money market that requires nothing more than processing my occasional deposits for high four, low five figures and sending me a letter saying they got the money.

I have no doubt that CapOne doesn't have the highest money market rates, but I don't have the inclination to shop around for basis points on a cash account. I leaf through a Costco flyer and the higher interest rate is in my face with a cash incentive. Good advertising. CapOne's business is to sell me time. I have more money than time (as most profitable customers do), and I'm willing to buy that time.

Commodity businesses have a bad rap, but they can be very profitable for the company willing to cut costs to the bone. I don't know if that is COF or not. Otherwise, they must find a value added service. IBS isn't a service, per se. It is algorithms to predict human bill paying behavior from limited data (isn't car accidents in there?) That may or may not be an actual long term advantage. Better to keep working towards value added or cut costs, in my opinion.

 

[Manzerick]

No problem at all sir!! I love this stuff!!

Any positive differentiator that can assist a customer in choosing you over the competition is worth the marketing dollars (all things being equal). Are you doing a project with a budget and real media and other associated costs factored in? (Example.. you would chose the Radio spot over the TV advertisement due to a constraint)


If it's "Pie in the sky" we can get really crafty!!!!

 

[Ilikeshinythings]

Well I met with my group yesterday and we have decided upon a strategy for COF. I know liquidity is limited now adays, but we will be acquiring ZionsBancorp. in an acquisition strategy. The reason for this is that the price is down, but they have a strong presence in Dallas, where COF is really trying to succeed, and they will also put a foothold in 9 other states that COF is not yet in. The beauty of it is that the foothold in the other 9 states will be at the local level. The next step is to figure out how much ZionsBancorp would cost to acquire. Hopefully mr. Hinckley, the Investor relations manager at ZB, will e-mail me back with that figure before Tuesday.

I'm not sure IBS IS all it's cracked up to be, and it really wouldn't make for a good marketing campaign, so we decided to scrap that idea. I'm kind of bummed that our group didn't get a better business to research. Another group got WD40..imagine a marketing campaign for the "other 50 uses"! Lucky punks.

 

[Manzerick]

Best of luck sir!!

 

[Ilikeshinythings]

50 collective hours and 47 solid pages later, the project is complete. Our strategy consisted of the horizontal merger of Zions Bancorp for Cap. One. Insane project!

 

[bullfrog]

Congrats - sounds like quite an accomplishment!

Might be a great supplement to your resume depending on the field you try to go into once you graduate...

Are you undergrad or going for your MBA?