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Capital One: An analysis

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Paul B.
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  1. Introduction
  2. Critically evaluation of the business model and the information based strategy
  3. An evaluation of Capital One's approaches to customer retention and customer termination
  4. Capital One's approach to internal marketing
  5. Evaluation of elements of the service profit chain
  6. Conclusion
  7. References & Bibliography

Capital One's business model recognizes that each customer requires a different product and service benefits from a credit card provider, and acknowledges that if customers are offered what they want and need as opposed to what banks want to offer them, they will choose the provider that gives them choice and individuality. According to Egan (2001), a business model is a method of doing business and how it is sustained. In the case of Capital One, its business is sustained with the help of its information-based strategy (IBS). In other words, the business model of Capital One is fundamentally built on its IBS ? a strategy that enhances Capital One's ability to better comprehend a customer's specific and unique credit risk and potential revenue profile (i.e. how to better manage its customer base), as well as enhancing its responsiveness in unraveling customer specific requirements (i.e. understanding what values customers seek from credit card providers), via the collection and analysis of customer data.

[...] & Gronroos, C. (1989), ?Developing Customer-Conscious Employees at Every Level: Internal Marketing,? In C. Congram & M. Friedman Handbook of Services Marketing, New York. Heskett, J.L., Earl Sasser, W. Jr., and Schlesinger, L.A. (1997), The Service Profit Chain, The Free Press, New York. Morgan, R.M. and Hunt, S.D. (1994), Commitment-Trust Theory of Relationship Marketing,? Journal of Marketing, Vol July, pp. 20- 38. Mohr-Jackson, I. (1991), ?Broadening the Market Orientation: An Added Focus on Internal Customers,? Human Resource Management, Vol No pp. 455-467. [...]


[...] Last, but not least, Capital One also supports the concept of a ?flatter' organization and a ?top-to-bottom' culture, as opposed to the conventional ?bottom-to-top' philosophy. This business philosophy (i.e. ?top-to-bottom' culture) encourages employees to engage in open communication, and to freely contribute their ideas or present feedback to top management, which in turn translate into employee satisfaction as employees feel that their opinions are being valued by the organization (Stone, 1998). Drawing on Figure management behavior has a significant influence on employee attitudes and satisfaction, which in turn generates higher level of customer satisfaction, thereby enhancing financial performance. [...]


[...] Otherwise stated, the organization-wide practice of customer retention is based on two economic arguments: it is less expensive to retain an existing customer than it is to acquire a new customer (Rosenberg and Czepiel, 1984); the longer the association between the organization and the customer, the more profitable the relationship for the organization (Christopher, Payne and Ballantyne, 1991). In the case of Capital One, its retention programs segment customers according to their potential lifetime profitability, as well as their specific and unique credit risk profile (i.e. [...]

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