Case Study Description of Capital One: Leveraging Information-Based Marketing
In November 1997, Richard D. Fairbank, Chairman and CEO of Capital One Financial Corporation, was reflecting on the success of his company since its initial public offering (IPO) in 1994. The success had come primarily from one business: credit cards. Despite the phenomenal success of the company in this one market, Fairbank's vision for the company was not limited to credit cards. He wanted to diversify to reduce Capital One's vulnerability to consumer credit market saturation and downturns. Fairbank also saw an opportunity to extend Capital One's capabilities into other markets. He saw Capital One as not just a credit card or financial services company but rather as an information-based marketing company. Because Capital One's strategy would work well in other information-driven industries, Fairbank's idea was to concentrate on growing, data-rich industries--large enough to contribute significantly to the company's growth trajectory--and focus on products and marketing channels where Capital One could leverage its capabilities in scientific testing and mass customization. Despite having investigated over 50 diversification opportunities, Capital One was not pursuing any, largely because they were a poor fit or failed to capitalize on Capital One's core competencies. A recent hire, Mike Rowen, and his team, however, had just finished a four-month long investigation into the auto financing industry. It was up to Rowen and his team to decide whether to present auto financing as the right opportunity for leveraging Capital One's information-based strategic capabilities. The team knew that if it recommended going ahead, it would have to put forth a plan that would address any concerns or objections raised by Fairbank.
Swot Analysis of "Capital One: Leveraging Information-Based Marketing" written by James Lattin, Michael Rierson includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that One's Fairbank facing as an external strategic factors. Some of the topics covered in Capital One: Leveraging Information-Based Marketing case study are - Strategic Management Strategies, Growth strategy, Performance measurement and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Capital One: Leveraging Information-Based Marketing casestudy better are - – increasing government debt because of Covid-19 spendings, wage bills are increasing, there is backlash against globalization, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing commodity prices, central banks are concerned over increasing inflation, customer relationship management is fast transforming because of increasing concerns over data privacy,
technology disruption, increasing energy prices, etc
Introduction to SWOT Analysis of Capital One: Leveraging Information-Based Marketing
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Capital One: Leveraging Information-Based Marketing case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the One's Fairbank, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which One's Fairbank operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Capital One: Leveraging Information-Based Marketing can be done for the following purposes –
1. Strategic planning using facts provided in Capital One: Leveraging Information-Based Marketing case study
2. Improving business portfolio management of One's Fairbank
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of One's Fairbank
Strengths Capital One: Leveraging Information-Based Marketing | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of One's Fairbank in Capital One: Leveraging Information-Based Marketing Harvard Business Review case study are -
Highly skilled collaborators
– One's Fairbank has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Capital One: Leveraging Information-Based Marketing HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Innovation driven organization
– One's Fairbank is one of the most innovative firm in sector. Manager in Capital One: Leveraging Information-Based Marketing Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- One's Fairbank is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at One's Fairbank is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Capital One: Leveraging Information-Based Marketing Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Organizational Resilience of One's Fairbank
– The covid-19 pandemic has put organizational resilience at the centre of everthing that One's Fairbank does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High brand equity
– One's Fairbank has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled One's Fairbank to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For One's Fairbank digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. One's Fairbank has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Operational resilience
– The operational resilience strategy in the Capital One: Leveraging Information-Based Marketing Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Cross disciplinary teams
– Horizontal connected teams at the One's Fairbank are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Low bargaining power of suppliers
– Suppliers of One's Fairbank in the sector have low bargaining power. Capital One: Leveraging Information-Based Marketing has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps One's Fairbank to manage not only supply disruptions but also source products at highly competitive prices.
Effective Research and Development (R&D)
– One's Fairbank has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Capital One: Leveraging Information-Based Marketing - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Sales & Marketing field
– One's Fairbank is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled One's Fairbank in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– One's Fairbank is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by James Lattin, Michael Rierson can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Weaknesses Capital One: Leveraging Information-Based Marketing | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Capital One: Leveraging Information-Based Marketing are -
Workers concerns about automation
– As automation is fast increasing in the segment, One's Fairbank needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Capital One: Leveraging Information-Based Marketing, it seems that the employees of One's Fairbank don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Lack of clear differentiation of One's Fairbank products
– To increase the profitability and margins on the products, One's Fairbank needs to provide more differentiated products than what it is currently offering in the marketplace.
Skills based hiring
– The stress on hiring functional specialists at One's Fairbank has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Slow to strategic competitive environment developments
– As Capital One: Leveraging Information-Based Marketing HBR case study mentions - One's Fairbank takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Aligning sales with marketing
– It come across in the case study Capital One: Leveraging Information-Based Marketing that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Capital One: Leveraging Information-Based Marketing can leverage the sales team experience to cultivate customer relationships as One's Fairbank is planning to shift buying processes online.
Products dominated business model
– Even though One's Fairbank has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Capital One: Leveraging Information-Based Marketing should strive to include more intangible value offerings along with its core products and services.
Capital Spending Reduction
– Even during the low interest decade, One's Fairbank has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Low market penetration in new markets
– Outside its home market of One's Fairbank, firm in the HBR case study Capital One: Leveraging Information-Based Marketing needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Increasing silos among functional specialists
– The organizational structure of One's Fairbank is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. One's Fairbank needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help One's Fairbank to focus more on services rather than just following the product oriented approach.
Interest costs
– Compare to the competition, One's Fairbank has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Opportunities Capital One: Leveraging Information-Based Marketing | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Capital One: Leveraging Information-Based Marketing are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, One's Fairbank can use these opportunities to build new business models that can help the communities that One's Fairbank operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Buying journey improvements
– One's Fairbank can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Capital One: Leveraging Information-Based Marketing suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Leveraging digital technologies
– One's Fairbank can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Developing new processes and practices
– One's Fairbank can develop new processes and procedures in Sales & Marketing industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Using analytics as competitive advantage
– One's Fairbank has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Capital One: Leveraging Information-Based Marketing - to build a competitive advantage using analytics. The analytics driven competitive advantage can help One's Fairbank to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, One's Fairbank can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Capital One: Leveraging Information-Based Marketing, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Redefining models of collaboration and team work
– As explained in the weaknesses section, One's Fairbank is facing challenges because of the dominance of functional experts in the organization. Capital One: Leveraging Information-Based Marketing case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for One's Fairbank in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. One's Fairbank can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects One's Fairbank can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. One's Fairbank can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Manufacturing automation
– One's Fairbank can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Loyalty marketing
– One's Fairbank has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Threats Capital One: Leveraging Information-Based Marketing External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Capital One: Leveraging Information-Based Marketing are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, One's Fairbank can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Capital One: Leveraging Information-Based Marketing .
Stagnating economy with rate increase
– One's Fairbank can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Increasing wage structure of One's Fairbank
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of One's Fairbank.
High dependence on third party suppliers
– One's Fairbank high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents One's Fairbank with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of One's Fairbank business can come under increasing regulations regarding data privacy, data security, etc.
Technology acceleration in Forth Industrial Revolution
– One's Fairbank has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, One's Fairbank needs to keep up with the evolution of technology in the Sales & Marketing sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Regulatory challenges
– One's Fairbank needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Sales & Marketing industry regulations.
Consumer confidence and its impact on One's Fairbank demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for One's Fairbank in the Sales & Marketing sector and impact the bottomline of the organization.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. One's Fairbank needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Environmental challenges
– One's Fairbank needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. One's Fairbank can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Weighted SWOT Analysis of Capital One: Leveraging Information-Based Marketing Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Capital One: Leveraging Information-Based Marketing needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Capital One: Leveraging Information-Based Marketing is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Capital One: Leveraging Information-Based Marketing is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Capital One: Leveraging Information-Based Marketing is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that One's Fairbank needs to make to build a sustainable competitive advantage.