Capital one

The Problem Step 1 of 8

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You have just been appointed the manager of the Cross Sells team at Capital One®. You and your team are responsible for evaluating opportunities to market non-credit card products to our credit card customers. This usually involves products from outside vendors that we can sell to our customers at a premium.

One potential cross-sell opportunity that is sitting on your desk right now is the Prepaid Phone Card—a piece of plastic you can use to pay for long distance telephone calls. Users of the card would call an 800 number, enter the card's PIN, and then enter the destination telephone number. The outside vendor tracks card usage and minutes remaining. Your responsibility is to determine if the product will be profitable for Capital One and how to maximize this profit.

Take a few moments to determine what are the most important factors that will help you decide to accept or reject the Phone Card cross-sell. When you've come up with some ideas, click Continue.

Questions to Consider Step 2 of 8

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Following is a list of some of the most important questions to consider. Please take a moment to compare your list with the one below. Ideally you'll find similarities with your list, as well as some you may not have thought of.

• How much does each Phone Card cost Capital One®?

• Are there any other costs involved, such as a set-up fee?

• Are there any constraints on how many minutes each Phone Card has?

• Are there any constraints on how much we can sell the cards for?

• How much do competitors charge for the Phone Cards?

• How much do our cross-sell products usually sell for?

• How many customers usually buy our cross-sell products?

• What distribution channels are available for marketing the Phone Cards to our customers?

• How much would this marketing cost?

Here are some other questions you might have thought of, but for simplicity's sake, we will not consider their implications during the remainder of the case.

• How does the Phone Card opportunity compare with other cross sells we are considering? Maybe the product is profitable, but there's another, even more profitable product we could offer instead.

• How do our customers feel about receiving cross sell offers? Are there any who have told us that they do not want to receive these offers? If so, our market size may be somewhat