American Express Marketing Mix
American Express Company, with its consolidated subsidiaries is a global financial services company which offers products, insights and experiences that are made to enrich people’s lives and to help businesses become successful. Its main products and services include charge and credit cards and travel related services that are offered to consumers and businesses globally. Founded in 1850 as a joint stock association, the brand was incorporated in 1965 as a New York Corporation.
It is headquartered in Lower Manhattan, New York and the financial services company also has office in several other locations throughout the globe. Its 2016 business mainly constituted four business segments that include – U.S. Consumer Services, International Consumer and Network Services, Global Commercial Services and Global Merchant Services. While 2016 did not start on a very strong note for American express, by the end it had done some brisk business. The year remained full of tests but the brand still earned a net income of $5.4 billion. This is an analysis of the marketing mix of the brand analysing the four P’s in its mix – product, place, price and promotion.
American Express’ range of products and services includes the following:
- Charge card, credit card and other payment and financing products – The brand offers a wide range of charge cards and revolving credit cards to consumers in US as well as throughout the globe. Charge cards by American express are designed mainly as method of payment. The customers pay the full amount billed each month. There are a number of factors that are considered before membership approval. Some of the factors include the member’s credit record, spending pattern, payment history and financial resources. In case of the revolving credit cards, the members can pay the full bill each month or they can carry a monthly balance to finance their purchase of products and services.
- Network Services : The brand uses its US consumer Services (USCS) and International Consumer and Network Services (ICNS) to deliver its charge card and revolving credit card services. Its Global Network services which comes under its ICNS segment establishes and maintains relationships with banks and other financial institutions around the world. These institutions issue cards and in several nations also acquire merchants onto the American Express network.
- Merchant acquisition and processing, servicing and settlement, and point-of-sale marketing and information products and services for merchants.
- Other fee services, including fraud prevention services and the design and operation of customer loyalty programs.
- Expense management products and services – Under its Global Commercial payment services, the brand offers a wide range of payment and expense management solutions for companies and organizations of all sizes. It provides card and other payment solutions as well as cross border payment services and commercial financing solutions. Its suite of B2B payment solutions helps the companies manage their expenses as well as realize other benefits like higher cost savings, process control and efficiency and even better cash flow management. In 85 countries American Express provides currency corporate cards and other expense management products. It has made global US dollar and Euro corporate cards available in more than 100 countries and territories.
- Travel-related services
- Stored value/prepaid products (Source: American express, Annual report).
Global network services (GNS) business has established and maintained 150 card-issuing and/or merchant-acquiring arrangements with banks and other institutions in more than 130 countries and territories (Source: American Express, Annual Report). Its GNS is the main segment that strengthens the brand’s visibility around the globe. Amex is headquartered at Lower Manhattan, New York. Apart from it the brand also has offices in other locations throughout the world. In 2016, it had approximately 56,400 employees.
The privilege of being an American Express card holder comes for some extra price. The privileges are offered to people that have a good credit history and source of income. However, these privileges can also be mind blowing. Still, they have been priced in a manner that they are accessible only to the upper end customers. American express charges fees on its cards that can include membership fees and charges on certain optional transactions like balance transfers and cash advances. Apart from it, other kinds of fees are also levied when the card member violates the terms of card membership.
The interest rate that American Express charges on its cards is known as APR. These interest rates or APR can be revised from time to time. However, the company offers variety of cards and the annual fees on them can vary. On some cards there can be a low entry APR rate of only 0% for the first year and then it can range between 13.99 and 24.99% for subsequent years. Those who pay their bill in full each month can avoid paying interest on cards. Despite the high charges, the privileges too can be just as mind-blowing for the members and therefore the charges appear justified.
There is an important role of branding strategy in the promotional strategy of American Express. The American Express card is like an exclusive privilege, not available to all. Amex runs promotional and advertising campaigns and also promotes its products through its partner banks and financial institutions. Digital media and digital marketing is also an important part of the brand’s marketing strategy. The brand also uses point of sale marketing to promote its products and brands.
The system of membership rewards is also a very good promotional strategy. Its marketing and promotion expenses equaled $3,650 million in 2015 which was $541 million or 17 percent higher than 2015. To grow its presence and influence Amex has also used social media through which it engages its customers and promotes its products and brand. It has uploaded more than 1000 videos on YouTube and has around 16 K followers there. On Facebook too, it has got more than 7 million followers. In this way, the brand stays connected with its followers through an effective social media strategy.