Situation Statement

The main focus throughout this case study was whether Chase Sapphire should move ahead

and increase its competitive advantage in the areas in which they were advanced. The situation

has to do with consumer banking and entering and pushing the credit card market. Chase

Sapphire ranked second in credit card issuance in 2016. Its revenue reached almost $45 billion

and its net income almost reached $10 billion. They launched the Chase Sapphire Reserve Card

in 2016. Two weeks later, they had met expectations for the entire year, although revenue

decreased.

SWOT

Chase showed a lot of strengths in this case study. Throughout the years and especially in 2016,

they excelled in different areas of their market. They had the lowest interest rate out of all of

their competitors and the highest travel credits and sign-up bonuses in the market. Compared

to other credit card companies, they used a system that offered reward points for the usage of

Chase cards. This helped relate to their millennial targets.

Though they had these facets going for them, Chase still struggled with the utilization of their

revenue. They ranked second in credit card issuance, as stated above, but struggled with the

utilization of its fees. Their different divisions of Chase Sapphire made it confusing and
cluttered. Chase had a hard time differentiating the needs of their customers. They thought

that splitting up Chase Sapphire into different parts (Chase Sapphire, Chase Sapphire Preferred,

and Chase Sapphire Reserved), but it lead to the inability to predict sales accurately and retain

churners.

In this situation, there is plenty of room to expand. There are multiple opportunities to grow

into the more affluent segment in the United States. Instead of boasting about having the

lowest interest rate, they could increase their APR% and begin to establish a credible credit

system. Chase Sapphire can mold their credit rewards to fit certain segments. This will increase

the value of their credit cards.

There are some things that threaten this expansion. In 2016, the industry margin dropped from

31% to 25%. There are government regulations that they must follow and their competitors are

constantly challenging them with their innovation.

Marketing Problem

This situation has multiple marketing problems, but the focus should be on Chase’s profitability

and retaining their customers. While meeting their 12-month quota in just two weeks, Chase

still experienced a decrease in revenue. This has to do with the cost of entering a new customer

into their company. It costs anywhere from $250 to $500 to do so. Once they have this
customer, they must keep the customer. Chase charges an annual fee. This doesn’t attract the

customer to stay put.

Recommended Solutions

To fix these issues, I believe that Chase must implement a Relationship Marketing Strategy.

Communication between the client and the partner should be its top priority. They could build

a system that helps the customers give them feedback about what they like and what they

don’t like. To help the decrease in revenue, Chase could offer a discounted start-up cost. This

would cut costs and increase net income. Even if revenue stays put, the net income would

increase with the cut costs. Maintaining the relationships is the next important factor. If they

have 24-hour access to an advisor, they should be able to be helped whenever they need it.

They could also lower the annual fee.