Abstract

In February 2014, American Express launched a new credit card targeted at students and housewives called ‘Amex EveryDay Credit Card’. American Express had also launched some other products like Serve and Bluebird as part of its new strategy to expand its reach to the mass market. Since the time when American Express entered the financial services business, the company limited its focus on a limited number of affluent customers and operated a closed-loop network. It charged higher commissions from merchants than other card companies as it offered them access to rich customers with higher spending power. However, the company started facing new competition from other players in the market since the mid-2000s. Credit card companies and banks started offering premium cards which offered similar features to that of the cards from American Express. Online payment processing companies like PayPal gave heavy competition to American Express with their cheap and safe payment solutions. In order to face the new competition in the marketplace, American Express changed its business model. Other than launching new products at the mass market, American Express also started focusing on emerging markets like India with products like American Express PAYBACK Credit Card. The company increased its focus on banking business and converted itself into a banking holding company. Its banking services focused on providing banking products like savings accounts with low balance requirements. New products launched by the company were received well by the customers and started gaining a good market share. While some analysts opined that the shift in the business strategy of American Express would help it in overcoming the new competition in the market, others opined that it might result in the loss of its brand value.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Challenges faced by market leaders in their areas of business
• How market leaders can face competition from new entrants into the market
• Need to change business strategies depending upon the changing market conditions
• Impact of latest technologies on the business models of companies

Keywords

American Express, Credit Cards, Charge Cards, Brand Value, Visa, MasterCard, JPMorgan Chase & Co., Online Payments, Banking, Financial Services, Traveler’s Cheques, Centurion Card, Business Model, Serve, PayPal