Chase Sapphire - Creating a Millennial Cult Brand – Individual Case Analysis

Chase Sapphire: Creating a Millennial Cult Brand – Individual Case Analysis #1

Introduction and Brand Structure Evaluation

For the longest time, the Chase Sapphire was the stand-alone best card for people looking to gain the most perks in the travel rewards. This changed when Chase announced a new, game-changing sub-brand known as Sapphire Reserve. While American Express has always captured the wealthy, mature, high net worth consumers for the past few decades in branding their identity towards one that represented exclusivity, success and elitism, the emerging affluent segment remains untouched. In comparison to the Platinum card offered by American Express, the Sapphire collection focuses on targeting the younger, emerging affluence consumers – one that possess enormous potential for growth if the products are positioned correctly.

Since the introduction of Sapphire Reserve, the Chase Sapphire portfolio now holds 3 products: Sapphire (zero), Sapphire Preferred, and Sapphire Reserve.

It is important to reanalyze a company or product’s brand portfolio and structure upon the introduction of new products into the line or profile. This would allow Chase to attain a clear understanding and vision for each product and how they could match up with corresponding customer segments without cannibalizing one another. Hence, when companies have a strategic change in direction, or when the introduction of an additional product will potentially blur the lines amongst other products in the portfolio, they should revisit the brand architecture.

Product Portfolio

The Chase Sapphire brand operates on a branded house architecture. According to Exhibit 5, the main differences between the three credit cards lie in their rewards benefit and the annual fee

From evaluating the branded house structure, there are several factors to keep in mind, including coverages, efficiency, separation, risks, cost of development, synergy, and brand distance. In analyzing the Sapphire product portfolio, here are relevant areas applicable to the case:

• Brand distance

• Brand distance various by brand structure. In this case, Chase Sapphire is a branded house that falls under the house of brands of Chase Community Banking.
• In a branded house, the products inter-reply on each other to create a brand reputation. Chase Sapphire aims to transform the credit card industry by exuberating a sense of identity towards cardholders of an exclusive and fun class of affluent young individuals. All three of the products signify to consumers that they are part of something exciting in the credit card industry.
• Brand distance also applies in relative context within the Sapphire collection. As deducted from the chart, the distance between Sapphire and Sapphire Reserve is much greater than their respective distance with Sapphire Preferred. The Sapphire Preferred is an intermediate step between the other two products, and this card leans closer to Sapphire than Sapphire Reserve.

• Synergy

• Amongst the three cards, Chase Sapphire must ensure that the cards enhance each other’s branding collectively, not exhausting customer growth in either product.
• Sapphire Preferred holds great synergies with Sapphire and Sapphire Reserve respectively. As part of Chase’s customer acquisition strategy, customers begin the Sapphire Preferred membership with zero annual fee. In situations where customers find a misfit the next year, they may easily switch to the Sapphire basic or upgrade to the Sapphire Reserve. This “middle man” card serves as a path to the other two products and creates synergy with the entire collection.

• Risks

• With the structure of the product portfolio comes with risks associated with the brand architecture.
• Specific to the Sapphire Preferred, Chase could lose profit if majority of customers churn to the basic profile.
• The Sapphire Preferred also blurs the lines of the other two credit cards, offering less benefits as Sapphire Reserve but a bit more compared to Sapphire basic, with an annual fee less than the Sapphire Preferred.

• Coverage

• Chase Sapphire must cover the market and all types of customer segments in the fewest brands possible.
• Serra saw an untapped potential into the emerging-affluent young adult consumer market and positions the Sapphire collection well to compete with other high-end target market products from different credit card companies.
• Within the Sapphire Collection, all products are targeted towards the same customer segments, but all products are repositioned differently, making their target sub-segment unclear. Chase must refine or sub segment the emerging affluent consumer market, and brand each of their products within the collection tailored specific to those sub-segments. This will be more elaborated in the recommendation section.

• Separation

• Chase Sapphire must ensure clarity and transparency between the unique characteristics of each product such that customers can quickly categorize themselves into the product of their own fitting.
• In relation to coverage, Chase Sapphire does not divide itself into niche segments that are separated from another, but rather offers a level of escalation amongst the three products. There is fair separation of rewards and features for each card, but whether or not the products are branded in ways specifically towards different customer behavior within the emerging affluent segment is questionable.

• Efficiency

• Chase Sapphire must maximize profitability amongst all three products and operate well to increase customer benefits while minimizing management costs. For the context of this case, profits and managerial costs will not be quantitatively analyzed.

Overall, there is little difference between the Sapphire and the Sapphire Preferred, aside from the annual fee. The distinctiveness of the portfolio lies in Sapphire Reserve and Sapphire. With the current wave of rewards savvy millennials who tries to consistently game the rewards system through collecting perks that outweigh the cost, it is not preventable for those to switch to Sapphire (zero) upon the completion of the introductory year in using Sapphire Preferred. The Chase Sapphire product collection needs additional revision to distinguish and clarify the lines amongst the three products. They must keep in mind the customers’ needs of the emerging, affluent individuals: having flexibility, and ease of rewards. More in depth strategy will be discusses after the next section.