EllisCase 3 PaperMMKT 5371

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1 Case #3 Questions - Chase Sapphire: Creating a Millennial Cult Brand LT Rian Ellis Army-Baylor University Graduate Program in Health and Business Administration MMKT 5371 Marketing Management MAJ Bruce Barnes, Ph.D. and MAJ(P) Kyle White August 13, 2023
2 Case #3 Questions - Chase Sapphire: Creating a Millennial Cult Brand 1) Why has Chase Sapphire Reserve been so successful in acquiring customers? Will this success continue over time? Why or why not? What changes would you make to their customer acquisition strategy going forward? The Chase Sapphire Reserve was extremely successful with its goal of adding new customers by creating and implementing a great marketing strategy plan. They effectively used segmenting, targeting, and positioning (STP) to market this new premium card. Chase segmented based on age, and type of credit card user. Using that, they targeted millennials and promoted their product through influencers, and let "word of mouth" spread in different social media channels. Influencers bragged about how Chase created a credit card that offered a wide range of rewards with the flexibility to choose how to spend those rewards points, knowing that millennials were savvy purchasers who liked affordable travel. Additionally, the initial promotion was a huge deal for most new consumers as it offered 100,000 points sign-on bonus. Based on the research conducted in the article, Chase should remain successful in acquiring new customers over time, especially as it created a product that generates the majority of the credit card market and is expected to continue growing. Moving forward, I believe Chase can do a better job of differentiating its products. All three cards offer similar benefits, however, they all differ in the annual fee, as seen in Exhibit 5. One specific change to the Chase Sapphire Reserve I would make is to add airline perks as well as Hotel Elite Status. This adds more benefits to the Sapphire Reserve card and makes it more valuable than its competitors. 2) The behavior of individual adopters of the card will vary in how much they spend, whether they pay all of their charges in full each month, and whether they churn (renew
3 annually or not). As noted on the top of page 3 in the case study, three customer archetypes were transactors, revolvers, and dormants. Assuming the following for each type of customer, Which are the right customers? how can the Chase Sapphire Team best design its product and brand to attract the right customers? Has it done so successfully for the Chase Sapphire Reserve? Why or why not? Revolvers and transactors are the best consumers as Chase Sapphire products earn "70% of its revenue from interest payments and 30% from cardholders and interchange fee" (Santana, S, et el., 2018). The Chase Sapphire Teams can best design its product and brand to attach the right customers by segmenting the market and understanding who they're targeting. Based on the article, the 26-60 age group account for 59% of the industry revenue, while they also tend to be more loyal. An affluent group of people earn between $100,00 to $500,000 and put most of their spending on credit cards. Additionally, credit cards with annual fees ranging from $25-$550, attracted consumers who value rich rewards and benefits, such as the Chase Sapphire Reserve. Finally, the Chase Sapphire Team knew they wanted to target millennials with an annual income of over $120,000. Understanding those key points, the Chase Sapphire Team knew to target their customers through influencers vs traditional TV ads. They also created a card that was minimalist in design but a heavier card, increasing the dopamine level when purchasing products. The Chase Sapphire Team was extremely successful as they stuck to their DNA and offered a wide variety of high- quality rewards. 3) If you are a competing credit card provider, how do you respond to the Chase Sapphire Reserve? How should Chase position itself to be ready for these competitive responses?
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