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Free «Case Study» Essay Sample

The Decision Facing American Express

Over the period of thirty years, American Express changed its strategies only three times. Between 1974 and 1987, the company launched the campaign titled “Do you know me?” In the period between 1987 and 1996, the organization promoted the “Membership has its privileges” campaign, and from 1996 to 2004, American Express was known by the strategy called “Do more”. “My Life, My Card” lasted for three years up to 2007 marking the shortest period, over which the company considered switching its campaign to the “Are you a card member?” strategy.

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While changes are inevitable, switching campaigns quickly may ring alarm bells among loyal members of the company, as well as prospective customers who may react by losing faith in the brand and reducing the company’s customer loyalty ratings. On the other hand, American Express is facing stiff competition from Visa, MasterCard, Capital One, and Discover brands. Thus, American Express is faced by a difficult decision on whether or not it should change its campaign’s focus.

Factors Important in Understanding This Decision Situation

To make a decision, American Express has to consider the impact of the growing competition on the one hand and the effect that a quick switch of campaigns may have on customer loyalty and trust in the company on the other hand.

 The level of customer loyalty indicates that American Express led in its product category from 1997 to 2007, but afterwards its card yielded to Discover, Capital One, Visa, and Master Card brands in the given order. Statistics indicate that the company has been losing ground to the competitors. Nevertheless, customers liked the “My Life, My Card” campaign. If these were the only conditions, the company would change its marketing campaign.

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From the customers’ perspective, a change in the campaign may indicate that the company is unsustainable in the long run. It is because although a switch in the strategy may indicate an improvement in a weak or poor product, it may also mean panic on the part of the company, assuming that customers already know that it has been losing its competitive edge to the competitors mentioned earlier. In addition, Visa and MasterCard have not changed their campaign strategies, and they appear to be doing better than American Express. The organization may therefore choose not to switch the campaign in the nearest future.

Alternatives

American Express can choose any of the two alternatives available at the present. On the one hand, the organization may choose to switch its campaign to the new one called “Are you a card member?”. However, it can be at the risk of losing some customers, who may consider that the change has been caused by panic in the firm. It may confuse customers in relation to American Express’ positioning, and as a result, the company may lose some clients due to reduced customer loyalty levels. However, it would have a chance to try and get new customers.

Secondly, American Express may opt to wait before it can change its campaign. It means that the company has a chance to retain its loyal customers and maintain customer loyalty ratings, but given that it has been losing ground to its competitors. Failing to change the campaign strategy may mean no growth of the number of customers.

 
 
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Recommended Decisions

Changes will always be inevitable, and as a result, I recommend American Express to consider switching its campaign to the new one called “Are you a card member?”. Changes involve uncertainty, and one of the risks connected with it is reduction of customer loyalty levels simply because customers may be confused in regard with the brand positioning of American Express. However, potential risks should not lead the management of the company to sticking to retrogressive marketing strategies, overlooking possible returns that may accrue from the change. For instance, customers may like the new “Are you a card member?” campaign more than the current “My Life, My Card” strategy. In the process, there is a possibility that the company can increase its customer base and customer loyalty to supersede those of its competitors.

Ways to Implement Recommendations

Changes come with uncertainty, and thus, the first way in which American Express can implement the quick switching of the campaign is managing the change effectively. The company can do the latter by involving the present and potential customers. It can ensure that the organization will boost customers’ confidence. As a result, people will be able to embrace the change, and customer loyalty levels are likely to improve.

Secondly, the company should engage in extensive marketing, seeking to penetrate new markets. It can only be possible if American Express uses the opportunity to switch its campaign as a means to convince new customers to join and acquire its card and assure the current ones of the better quality of its service. It will require the company to design the campaign strategy in such a way that the current and prospective customers will perceive the change as a way, through which American Express seeks to improve the quality of services provided to people.

   

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