Marketing Strategy of American Express Company - December 9Th, 2010

Marketing Strategy of American Express Company - December 9th, 2010 American Express Company (NYSE: AXP), sometimes known as AmEx, is a diversified global financial services company headquartered in New York City. Founded in 1850, it is one of the 30 components of the Dow Jones Industrial Average. The company is best known for its credit card, charge card, and traveler's cheque businesses. Amex cards account for approximately 24% of the total dollar volume of credit card transactions in the US, the highest of any card issuer.[4][5] BusinessWeek and Interbrand ranked American Express as the 22nd most valuable brand in the world, estimating the brand to be worth US$14.97 billion.[6] Fortune listed Amex as one of the top 30 Most Admired Companies in the World.[7] The company's mascot, adopted in 1958, is a Roman gladiator.[8] whose image appears on the company's travelers' cheques and credit cards. Statistics: Public Company Incorporated: 1965 Employees: 88,378 Total Assets: $148.51 billion (1999) Stock Exchanges: New York Chicago Pacific London Paris Ticker Symbol: AXP NAIC: 52211 Commercial Banking; 52221 Credit Card Issuing; 52222 Sales Financing; 52232 Financial Transactions Processing, Reserve, and Clearinghouse Activities; 52311 Investment Banking and Securities Dealing; 52312 Securities Brokerage; 52313 Commodity Contracts Dealing; 52314 Commodity Contracts Brokerage; 52321 Securities and Commodity Exchange; 52391 Miscellaneous Intermediation; 522291 Consumer Lending; 522293 International Trade Financing; 522298 All Other Nondepository Credit Intermediation; 523999 Miscellaneous Financial Investment Activities Company Perspectives: Reinvention. For 150 years, American Express has continuously transformed itself to meet changing customer needs. What began as a rough-and-tumble freight forwarding company in 1850, later became a travel company, and today, a leading global financial and travel services company. What remains constant are the hallmarks of the American Express brand--trust, integrity, security, quality and customer service. In many ways, the history of our company and the evolution of the American Express brand over 150 years have shaped the actions we take today. Our commitment to providing extraordinary service to our customers around the world is unwavering and now extends to the Internet. The attributes on which American Express was built are key competitive advantages that we continue to bring to bear with every product and service we offer. Key Dates: 1841: Henry Wells founds Wells & Co. 1850: Wells, William G. Fargo, and John Butterfield form the American Express Company. 1852: Wells Fargo & Company is founded. 1868: American Express Company merges with Merchants Union to form the American Merchants Union Express Co.; Henry Wells retires. 1881: William Fargo dies. 1891: The American Express Traveler's Cheque is introduced. 1910: Mann-Elkins Act makes express companies subject to the scrutiny of the Interstate Commerce Commission. 1914: George C. Taylor becomes company president. 1915: American Express opens its Travel Department. 1919: The American Express Co. is established to expand the company's international banking operations. 1958: The American Express travel-and-entertainment card (the 'green card') is introduced. 1981: American Express acquires Shearson Loeb Rhoades Inc. 1982: American Express is reorganized under American Express Corp. 1987: The Optima Card is introduced. 1993: Harvey Golub becomes CEO; American Express wins federal government's travel and transportation system contract. 1999: American Express launches Blue, the first 'smart card' offered in the United States. Company History: American Express Company, a multibillion-dollar holding company whose subsidiaries provide travel and financial services worldwide, traces its roots to a New York express business founded by Henry Wells in 1841. From the safe transport of valuables it grew naturally into money orders and traveler's checks; from there its travel service operations, including its credit card services, also grew naturally. In the 1980s, American Express expanded into financial planning through Investors Diversified Services, Inc. (IDS) to merger and acquisition advice from Shearson Lehman Hutton. Faced with intensifying competition and poor public relations in the early 1990s, American Express divested itself from many of the businesses it had acquired in the previous decade. Throughout its history, American Express has enjoyed a reputation for innovation, profitability, and integrity. Westward Expansion in 19th-Century America Henry Wells began his expressman career as an agent for William Harnden, who had founded the first express company in the United States in 1839. Express companies were in the business of transporting money and other valuables safely. Wells was an ambitious man who repeatedly proposed expanding the business westward&mdashø Buffalo, New York; the Midwest; and the far West. When Harnden refused to leave the East Coast, Wells struck out on his own, organizing Wells & Co. in 1841. At first Wells and his associate, Crawford Livingston, served only New York City and Buffalo, then an arduous route by five rickety shortline railroads and wagon or stagecoach for the last 65 miles into or out of Buffalo. A few years later, Wells and William G. Fargo launched an express service from Buffalo to major Midwestern cities. Although appreciated by the Midwestern business community, the new express service simply did not pay. In 1846, Wells decided to retrench and focus his energies on the growing routes serving New York City, Buffalo, Boston, and Albany, leaving the express business west of Buffalo to Fargo's company, Livingston, Fargo and Co. In 1849 John Butterfield, a wealthy and experienced transportation mogul, entered the express business with Butterfield, Wasson & Co., a direct competitor to Wells & Company on New York state routes. Later that year, Butterfield proposed that he, Fargo, and Wells eliminate their wasteful competition by joining forces. On March 18, 1850, the three companies consolidated to form the American Express Company, a joint-stock company with initial capital of $150,000. Wells was elected the new company's first president; Fargo became vice-president. Under Wells's leadership American Express was immediately and unexpectedly profitable, expanding rapidly and acquiring small competitors in the Midwest, negotiating contracts with the first railroads, and running packet boats on the Illinois Canal to connect Ohio, Illinois, and Iowa with steamship lines on the Illinois River. In 1851, American Express reached an amicable agreement with its major rival, Adams and Co. (reorganized as Adams Express Co. in 1854). American Express was to expand north and west of New York while Adams was free to grow south and east. This agreement was kept and renewed over the next 70 years, buying American Express time to establish its business solidly. Despite the agreement with Adams and Co., Wells and Fargo still distrusted its rival and feared the company would gain a monopoly in the California gold fields. When Wells proposed his old dream of a transcontinental express service to the American Express board of directors, they rejected his idea. But in 1852 Wells and Fargo got the board's blessing to launch an independent venture, Wells Fargo & Company, to provide express and banking services in California. In 1854, trouble developed with the New York, Lake Erie & Western Railroad (American Express's link to the Midwest) when Daniel Drew, the railroad's owner, became outraged that American Express had picked off the Erie's most profitable freight business by shipping light, high-rate freight on the Erie under its express contract. Drew was determined to award the express rights to others. In response, American Express created an affiliate and presented it as a bona fide competitor. American Express loaned the funds to start a new company to Danforth Barney, then president of Wells Fargo. Barney's new company, United States Express Co., then acquired the Erie express rights from Drew and split the lucrative Midwestern business with American Express. American Express's first decade saw two other noteworthy accomplishments. In 1857, American Express launched the Overland Mail Co. as a joint venture with Wells Fargo, Adams Express Co., and United States Express Co. The Overland Mail Co. (later controlled by Wells Fargo) won the first transcontinental mail contract from the United States Postal Service, which led to its involvement with the Pony Express. Also, James C. Fargo, William's younger brother, proposed the establishment of a fast, bulk freight express service for merchants. Merchants Dispatch, created in 1858, proved immediately successful. The Civil War was enormously profitable for American Express, as it was for the express industry generally. American Express shipped supplies to army depots, took election ballots to soldiers, and delivered parcels to parts of the Confederacy taken by Union forces. During this period, American Express distributed huge dividends to its shareholders. Competition After the Civil War After the war, the express industry attracted the attention of financial raiders. The first raid, by National Bankers Express Co. in 1866, was thwarted at relatively low cost. American Express quickly reached an agreement with Adams Express and United States Express to neutralize the threat by giving National Bankers Express shares of the established companies and a seat on the American Express

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