Professional Documents
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By: Akshita Badola, Katrina Bargas, Michael Mendelsohn, Sofia Schena, Giorgio Thomas
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MKTG 361 Phase 2: Market Analysis for American Express
American Express is in the Credit Card Issuing Industry (NAICS 522210). The Credit Card
Issuing industry is in its mature stage of its lifecycle. The industry is growing in terms of
participants and the number of people who own credit cards is increasing. American Express is
American Express is a global services company that provides a range of products and services to
its customers and businesses. American Express Co. provides consumer services and global
commercial services. The global service company offers credit card products and travel-related
services to consumers and businesses. The services include merchant acquisition and processing,
There are noticeable increased credit card usage phases throughout a typical year. Consumer
usage spikes from mid-November through late December correlating with the holiday season.
There is also a temperature drop during this time, which supports spending growth at indoor
shopping malls and online shopping. There is a substantial decrease in spending in Q2 (April 1
June 30), as consumers typically save for summer vacation during this time and children have
been in school for a while, so parents are not purchasing school supplies.
American Express fees are high in comparison to its competitors as seen in Figure 1. To retain
customers, it must provide a unique selling proposition (USP), which is its rewards program.
Business customers can utilize The Pay with Points Program which allows membership reward
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MKTG 361 Phase 2: Market Analysis for American Express
points to purchase travel expenses, including airfare, lodging, and transportation. Through
American Express sizeable outlet of partnerships, customers can purchase countless products
SWOTT Analysis
American Express provides customers with a large amount of reward points which can be used
towards travel, discretionary goods and repayment of credit card bills. As seen in Figure 2 this a
key strength of American Express. American Express offers points based on total spending not
volume of usage. This has helped American Express establish its prestigious brand name, by
attracting individuals with high income. As seen in Figure 3 the annual fee for American
Express most popular card is significantly higher than its competitors, something that many
consumers cant afford. This is represented in Figure 1 as American Express has the least
amount of cardholders compared to its competitors. This is because its competitors are providing
comparable benefits at a lower cost, a key weakness displayed in Figure 2. As seen in Figure 4,
this has led to a decrease in market share for American Express. Also there has been growth in
electronic currencies, a new form of payment which is a substitute for credit cards. This has led
to a decrease in global credit card use, a threat to American Express ability to attract new
Target Markets
American Express has 3 major target markets, the difference between each one is based on the
consumers age, income, and willingness to spend monthly. These 3 target markets make up
82.67% of total revenue so understanding their desires is key in driving our success.
Primary Market
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MKTG 361 Phase 2: Market Analysis for American Express
As seen in Figure 5, our primary market are individuals spend between 3,000 5,000 monthly.
This market is responsible for 45.78% of our revenue. Since our primary market travels 40 days
a year, we want to provide benefits in that space, since that is the segment in which they spend
the most money. American Express cardholders receive 5x points for every dollar spent on
hotels and flights. Our strong rewards program incentivizes affluent customers to use their
Secondary Market
Illustrated in Figure 5, our secondary market is a younger population but still values being
rewarded for spending. This group enjoys eating out at restaurants and are frequent drivers so we
offer a card that provides them 2x points for food and gas spending. This group makes up
21.24% of our revenue so it is important that we appeal to their spending habits. More
importantly, they will graduate into our primary market, so we want to secure a lifetime
Tertiary Market
Most of these customers are very junior in their professional career and have lower monthly
spending, as shown in Figure 5. Since they dont have as much money to spend, they need to see
the diverse benefits of an American Express card. By providing valuable benefits early on, it
allows American Express to cultivate strong relationship with them early in their professional
career. Our tertiary market is an investment in our future revenue, so we want to provide benefits
Competitive Analysis
Micro Competition
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MKTG 361 Phase 2: Market Analysis for American Express
American Express competes internally to deliver the best credit card products and services by
maintaining strong and trusting relationships with corporate partnerships. If companies were to
stop accepting points as a form of currency, American Express could a lose a significant
customer base who take advantage of this benefit. Micro competition allows American Express
to internally grow as a company, so it can remain a top competitor in the credit card industry.
Macro Competition
At the macro level, American Express top credit card competitors are Discover, MasterCard and
Visa. They are competitors because they all also offer credit cards to consumers and businesses.
Figure 1 displays a breakdown of cardholders for American Express and the transaction fee that
its each company charges. Figure 6 provides detailed information on American Express,
Discovers, MasterCard, Visa, financial performance over the past 5 years. American Expresss
American Express has differentiated itself from its peers by providing premier benefits for its user base.
They have charge more money to offset their ability to compensate its users. Now its competitors are
providing cheaper cards with comparable benefits, which has lower American Express market share as
shown in Figure 4.
When an American Express card is used at a store, the merchant encounters a transaction fee. American
Express fee is much higher than its peers, as shown in Figure 1. This has deterred many individuals from
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MKTG 361 Phase 2: Market Analysis for American Express
Millennials are driving our economy and American Express has a tough time enticing them to acquire a
credit card. Many Millennials like to save their money so there is no incentive for them to get a credit
Suggestions
For American Express to remain the top credit card company in the industry, we need to
It is important to remain an exclusive company for our loyal customers, and a decrease in
discount fees could positively influence potential customers to join, as more companies will
accept our credit card. While our revenue per transaction may decrease, we will see a rise in
American Express needs to partner with the current most influential and prominent companies,
which will lead to an increase in credit card usage from all target markets. This will incentivize
more individuals to use their American Express cards so they can recognize the benefits.
American Express prides itself on providing premier benefits for its customers. With an increase
in benefits from competitors, such as cash back, American Express needs to create new
Conclusion
By implementing these suggestions American Express will be able to expand their services to a
wider group of consumers, specifically younger ones; helping American Express create a
lifetime partnership with consumers, ultimately driving its revenue growth moving forward.
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MKTG 361 Phase 2: Market Analysis for American Express
Appendix
Figure 1
Figure 2
Strengths Weaknesses
- Prestigious global brand name - Lack of Debit Cards
- Over 50,000 employees and has strong employee retention - High fees for merchants
- Provides great benefits to customers, such as large amount of - Declining revenue growth
reward points
Opportunities Threats
- International expansion - Competitors increasing benefits to customers
- Rising interest rates - Rise of electronic currencies, a competitor to credit card use
- Credit Card breaches, driving individuals to use electronic
payment providers
Trends
- Personal debt increase
- Investment in cyber security
- Growth in e-commerce
Figure 3
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MKTG 361 Phase 2: Market Analysis for American Express
Figure 4
Figure 5
Figure 6
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MKTG 361 Phase 2: Market Analysis for American Express
Works Cited
American Express Company. (2016). 2016 annual report of American Express Company.
American Express Company. (2017). Choose a personal credit card. Retrieved September 17,
2017 https://www.americanexpress.com/us/credit-cards/view-all-personal-
cards/?eep=25330&linknav=US-Acq-CCSG-Prospect-CardsLanding-AllCards-
GlobalNav
American Express Company. (2017). Company Details. Retrieved from Mergent Online
database.
Dwyer, B. (2012, January 26). American Express costs and discount rate. Retrieved September
Forbes (2014, March 13). How American Express gains a competitive advantage from its closed-
https://www.forbes.com/sites/greatspeculations/2014/03/13/how-american-express-
gains-a-competitive-advantage-from-its-closed-loop-network/#1d3fd02d4be7
Gambardella, A. (2017, August). IBISWorld Industry Report 52221.Credit Card Issuing in the
Holodny, E. (2015, September 15). Here's how much the average Amex, Visa, MasterCard, and
Discover owners spend per month. Retrieved September 17, 2017, from
http://www.businessinsider.com/amex-visa-mastercard-and-discover-card-owners-spend-
per-month-2015-9