Wednesday, November 25, 2009 VOLUME 1 ISSUE 15   HOME CI and corporate strategy: a case study at SMI. Carter Warren, Executive VP and Chief Marketing Officer, First USA.   ********** Summary: At First USA, CI is tightly integrated into corporate strategy. Top management uses the CI function to understand the different approaches that competitors take in the marketplace, what their decision makers’ are thinking, and how that strategy is articulated into action. In this article Carter Warren, executive vice-president and chief marketing office of First USA,  provides an advance overview of her SMI keynote presentation, which includes a competitor case study.   ********** CI folks need to understand what they do is important; they can be a source of value creation for the entire organization. Everyone in a competitive environment needs to understand what others in that marketplace are doing. Over the four years our CI group has been in existence, they have become increasingly important to our strategy development, to the point where we are planning to add resources to that group.    Competing with knowledge The credit card industry is in an intensely competitive situation. Our primary means of soliciting potential and current customers (both small business and consumers) are high volumes of direct mail. For example, the top 4 credit card issues will spend $5 billion this year to solicit and keep their customers. In this environment it is critical to constantly understand what your competitors are doing, to stay on top of where the markets are, and where they are heading. To compete, we have to have the knowledge that will help us stay ahead in this market, where the facts of competition are at all time record highs.    To a large extent, marketing drives everything we do as a company and, in turn, Competitive Intelligence drives much of our strategy development. In our environment we are faced with the constant need to break out of a commodity situation and differentiate ourselves in the marketplace. Having a good understanding of our competitors, marketplace, and customers is critical and our success is dependent on how well we interpret and respond to that environment. CI drives corporate strategy   At FirstUSA, we receive a high value return from our investment in CI. It is integral to and drives the corporate strategy. The CI group is an essential part of marketing, since an important part of the marketing mix is understanding the competitors. CI helps us integrally link our understanding of the market and the consumer. This understanding drives our corporate decision-making.   At SCIP’s SMI, my presentation’s goal is to impart a basic understanding of the importance of what CI can contribute to the organization’s success by identifying opportunities and drive strategy creation by look externally at what the competition is doing. It is critical to understanding what others will be doing in the future so that you are not just reacting to what has happened in the marketplace, but leading the market. In my presentation, I will also use a competitor case study to provide an example of how we gain specific value from our CI investment. I have spent the last 18 years in credit card marketing and have watched the market move substantially in that time. In 1985 we were in an open market that was easy to compete in, and we had a wide range of competitors. Over time it has changed to where the majority of the market is centered on a group of 5 national competitors, and virtually all activity is price driven. With this market change we have had an increased need for CI and a growing appreciation for its value to our company.   We use the CI function to understand the different approaches that our competitors are taking in the marketplace, what the decision makers are thinking, and to identify their mindset. We need to not only understand the strategy of each of our competitors, but also understand how that strategy is articulated into action. Some of these strategies we will duplicate, others we don’t. But we need to understand them to make an effective decision. A commodity industry   The dynamics that have impacted our industry include consolidation, market saturation and intense price competition. For example, in 1990 the top 10 credit card issuers held 50% of the market in terms of outstanding loans, with the remaining 50% in the hands of about 2,000 other competitors. Today, almost 65% of the market is in the hands of the top 5 competitors with the remaining share falling to several hundred other competitors. Over 82% of all US household have at least one credit card and the average number of credit cards in a consumers wallet is 4.2. This has created a situation where we have seen industry direct mail response rates drop from 1.5% in 1998 to about .3% in the spring of 2002. This is with introductory rates that have fallen to 0% with some competitors offering that rate for over a year. CI has become critical to succeeding in this industry. There is little room for error and the market changes so quickly that what was considered unique one month is copied by the industry the next.  The challenge for CI is to identify market gaps and unique opportunities to offer differentiated products into the market and to do it before our competitors do.       Background:   Carter Warren is executive vice-president and Chief Marketing Officer at First USA, a Bank One Company. She reports directly into the CEO’s office and the CI group reports to her senior vice president of marketing. First USA is the largest issuer of VISA credit cards in the world and one of the top direct marketing companies in the United States.  Carter is accountable for the management of all of the marketing activities of the company including product management, new product development, new customer acquisition and customer management. Prior to First USA, Carter spent 10 years at Citibank in the card division, where she held numerous marketing positions, including group product director. She expanded her category expertise through positions at MCI and BellAtlantic before returning to the card business at First USA 7 years ago. Carter received her bachelor’s degree from Mary Baldwin College.   Copyright Society of Competitive Intelligence Professionals SCIP.online, volume 1 number 15, September 4, 2002. [PRINTER FRIENDLY VERSION] There are no letters available. [POST]

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