Capital one

1. What was the state of the market (segments) and the state of the products at the start of the case?

Before Fairbank (1991) the credit card market was homogeneous; 19.8% annual percentage rate, $20 fee. Products were also the same, no customization no innovation. Half of America couldn't get a credit card; banks rejected anyone who didn't fit their "one price fits all approach".

2. What were the two initial business stratergy used by Capital One to grow profitability and compete in the different segments?

The first strategy was the invention of the "teaser rate"; subprime cards charging just 9.9% interest plus thousands of options for customization. Their second business strategy was the "teaser-rate-balance transfer", it offered potential customers a low initial interest rate if they consolidated debts from other accounts. These two innovations captured the attention of many customers it contributed to grow profitability and gave them a competitive edge in the credit card market.

3. How did they use information and information systems to implement their stratergy? What kinds of information did they use and where did it come from?

Information is the base of their strategy, with it they are able to get to every part of the business. Information enables Capital One to understand how their customers work; as a result they can deliver the correct product at the right price and at the right time. The success of this stratergy relies on the efficient use of their information systems and their robust data base. This database stores information from credit checking to a list of people's hobbies. As pointed out in the paper data comes from whatever sources are available providing that they are legal and ethical. Standard places such as the Post Office address file, credit checking agencies and hobbies organization. The stratergy was also supported by an important investment in data warehousing, business intelligence and analytics technologies.

4. List and describe the information technologies used to support their stratergy.

The stratergy was supported by an important investment in:

Data warehousing: Trillium used to store and normalize data.

Business intelligence: Used to generate analysis on clean data software from SAS.

Analytics technologies: Brio for deep analysis.

5. Why did the internet initially appear difficult to use to respond to potential customers? How did they eventually use the internet successfully?

Internet initially appeared a difficult task, research showed that people who pursued cards through the web were worse credit risks than mail applicants and 10 times

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