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Capital One Case Study Essay

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1. What is Capital One’s business and who are their competitors?

Capital One’s business deals with a bank financial servicing company. They specialize specifically in banking, credit cards, home loans, auto loans and savings products. Capital One was founded by Richard Fairbank and Nigel Morris in 1988. Fairbank highly focused on the marketing and customization of credit card use and information. The company is very analytical and is very technological when gathering data information. They were basically put together centering around the idea of technology within the company itself.

Some of their direct competitors would be against Bank Of America, American Express and Barclay’s bank. 2. What is their strategy to grow profitably and compete? Give examples.

Capital One was put together with technology right at the core of their business. This makes them different from their competitors since most other companies had a business model first before technology was every involved. The technological part of their company is very important since they use it to analyze and comprehend their customers characteristics such as credit risk.

This is basically their way of improving customer service and to increase profitability. Fairbank developed a data machine that was able to access a customer risk factor from each product as well as detect fraud. At Capital One’s point of inception, the online communication was making its way in our society so the company focused on highly internet marketing. This strategic action lead to 2.5 millions customers signing up as this online banking systems was the new and improved way to make payments.

3. How do they use information to implement their strategy? What kinds of information do they use and where does it come from?

They vastly use their information system and technology to help during day to day activities. Their main use of this information is to analyze customer
data and make appropriate suggestions and choices regarding their marketing strategy. They implement many “tests” and have used their idea of diving up their customer population by segmenting their data. This was a success and was a high profit for capital one.

This lead to their improvement of customer relationships since they had vast information of them and had technology that could easily access and identify their customers through a digital fingerprint. This company focuses on personal information from their customer base to make decisions and access which one of them will be able to pay them back after a loan. One of the ways capital one has access this information is through the post office’s file and other checking agencies as well. Capital one basically takes information from any pertinent source that can provide then with reliable data.

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

Information-based strategy
– company focuses on high credit risk\low credit risk
– this helps them comprehend their customer’s data and to make sure that their choices are made with those people who are actually going to pay them back – their information-based system collects and analyzes the information which helps them market to their customers as it attracts various aspects of customer’s needs

Data Warehouse & Mining Infrastructure

– this is to support their information based system while having shared communication between different branches – Their offices in UK and US can have clearly make accurate decisions since they can both have access to each others database

Trillium Software

– This software analyzes their customer data with such intelligence that it is used to help them with final decision making – It is also used for customer service support

5. Describe their notion of a “scientific test”. Contrast this approach to product development and launch with a more traditional approach that a manufacturing company might use.

Capital One’s scientific test was used with their software to collect test data information while enhancing the data they already had as well. They used this software to analyze and collect information from potential customers. They conducted over 45,000 tests at one point which helped them comprehend customer information while identifying any fraudulent activity as well. They grew every day and had millions of customer signed up online at the end. Capital One had a great relationship with their IT department since technology was part of its core competencies. Fairbank even allowed anyone to propose an idea for a test if it was profitable looking enough. This showed that the company wanted to involve each and every employee to work with them on their marketing strategy.

The process for product development occurs when an idea is started, to the design and then with the actual product being manufactured and engineered. Capital One way of working with this process involves having their marketers research and access the information and data to understand their customers tendencies and preferences. A more traditional approach that a manufacturing company may use is having Capital One is started with a strict business model and then having to computerize it later on. Everything is first manually done and analyzed in this case. The technology and use of software would be used later on in terms of Capital One’s informational strategies.

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