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Chase Sapphire: Creating a

Millennial Cult Brand

Submitted by: Group 3

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About company

 In 2009, Chase launched Chase Sapphire, its first Chase proprietary card marketed to the affluent consumer
 In 2011, Chase launched Sapphire preferred with an annual fee of $95 and offered cardholders 50,000 points
after they spent $4,000 during the first three months and access to film festivals, restaurants
 With amazing benefits like 1 point per dollar on general spend and 2 points per dollar on airline travel booked,
10,000 bonus reward points after they spent $500
 In 2014, Chase Sapphire Reserve card was launched, this gave a new view to credit cards, a flexibility to set
their own rules. The emphasis is on what you can do, rather than what you can buy
 Chase Sapphire didn’t use mass advertising and turned into social media platform and influencers, and hosted a
media event to discuss their unique perspectives on the evolution of travel
 In 2016, the U.S. general purpose credit card industry sales of ~$3 trillion. annual revenue growth was expected
to grow 4.5% between 2016 and 2021
 The market was dominated by six issuers that accounted for 78%of industry sales
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Contd.

 JPMorgan Chase had a market share of 21.7%

 The behaviour and attitudinal segmentation was done to understand how customers utilize the services of the
card
 In January 2017, Chase preannounced that the 100,000-point sign-on bonus would be reduced to 50,000 points,
now the challenge was to stop the churning and maintain the bundle of value and benefits
 Keeping the fierce competition from American Express’s and Citi’s reward programs Chase sapphire reserve
need to design and plan to maintain its competitive differentiation
 To maintain differentiation among the two most desired product Chase Sapphire Preferred and Chase Sapphire
Reserve card
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Problem Statement
How to create a more engaging brand along with creating a differentiation between
segments to prevent cannibalization
 Porter’s Five Forces
The Bargaining power of suppliers
is Low as the procurement of
Plastic and metal for the card was
done in high quantity
• The rivalry among the competitors is “high”,
as the presence of competitors such as
American express that dominated the
proprietary card and other issuers
• Threat of substitute is high as competitors
were coming with card with higher sigh-on
bonus points to attract the customers
Threat of new entrant was Low, as the
market is dominated by the six issuers
that covers a good amount of markets
share
Bargaining power of buyers is Low, while
Chase cards apart form Preferred and
Reserve do not have any annual fee, but
for preferred and reserve the customer
needed to pay $95 and $450 respectively
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1. The segmentation of
households was done as 1. The Chase Sapphire
• Prosperous and Preferred card was
content considered to
• Deal chasers 1.The AFF/ HNW showcase ones identity
• Financially stressed customers were
• Recovering credit targeted as this group 2. It wasn’t considered
users represents ~ 15% of showy but a
• Self-aware avoiders the 200 M U.S. Card conversation piece
holders
2. The 26-60 age group 3. Chase Sapphire
accounted for 59% of 2.Millennials were Reserve was positioned
industry revenue considered as a as a credit card for the
perfect target group young and successful
3. Wealthy segment with based on their
$500000 to $1 Million , spending habits 4. Positioned for people
affluent with $100000 to who wanted to be
$50000 in asset viewed as interesting
not rich
4. New affluents aged 25-
44 and income $150000+
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Alternatives

Exit or maintenance of the No fee Sapphire Card

Whether to increase reward or to maintenance of current levels

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Evaluation of Alternatives
Differentiation of Sapphire Reserve Managing Sapphire Portfolio

 As Sapphire Reserve has positioned itself as a  Chase Preferred card is positioned to attract a larger
brand which understand and facilitates lifestyle of customer base, so offer on travel, dining will do the
millennial, it should continue to focus on giving
work
rewards for availing exquisite experiences
 Increase reward for everyday spend and  Additional perks like access to lounges, no foreign
entertainment as millennial seek value from a deal fees and broaden the ‘travel’ definition to include
irrespective of price. (Reserve 1x, Prestige 2x) Uber, Toll, Parking, Train and Tram etc.
(Dormant)
 Redemption policy to ensure seamless transition from
 Increase number of travel and hotel partner and rewards points to dollar value
transferability of points earned at 1:1
 Personalize offer like reward points and offer on
birthdays, anniversary and festivals.
 Travel credit of Rs. 350 (Real Cost $150) could
reduced to compensate for increase in expenses
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Recommendations
 Sapphire Reserve and Preferred cards target segment can be

 Prosperous & content: (23%, twice likely to have premium card)

 Deal chasers: (18%, does not mind annual fee)
 Financially stressed: (9%, Value transparency)
 Analyzing the usage frequency by most appealing feature: Airline miles rewards is the highest
used (10 times+) followed by reward points for purchase (3-6 times)
 Sapphire Cards should be maintained and targeted towards dormant segment (28%) because
loyalty is more than 10 years with no Annual fee
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Thank you