Capital One Financial Corporation: Product Design

5 Pages Posted: 30 May 2017

See all articles by Phillip E. Pfeifer

Phillip E. Pfeifer

University of Virginia - Darden School of Business


The case describes the beginnings of the "product design" process at Capital One Financial Corporation. The question at hand is which of 12 product should be offered through direct mail to which customers. A Web-based exercise accompanies this note. Student teams can plan and implement two rounds of mailings of up to 12 different product solicitations of up to 750,000 prospects.





Signet Banking Corporation, a regional bank based in Richmond, Virginia, offered its first bank card in the 1950s, making it the oldest continuously operating bank-card issuer in the United States. In 1988, the credit card division had over a million cardholders and $ 1.25 billion in outstanding loans. Shortly thereafter, the division hired Nigel W. Morris and Richard D. Fairbank, two principals of a consulting group that had devised a new strategy for marketing credit cards. Under their guidance, the division experienced explosive growth. In February of 1995, Signet spun off their card business as Capital One Financial Corporation (hereafter referred to as Capital One) with Fairbank as CEO and Morris as president. In June of 1995, Capital One was the 10th-largest credit card company in the United States with six million cardholders and $ 9 billion in outstanding loan balances. By 1996, Capital One was widely recognized as one of three “category killers” in the credit card business.

One element of Capital One's strategy was the careful attention given to the design of product offerings. The attributes of a credit card could be changed easily and rapidly. In few other industries could the direct marketer move as quickly and effortlessly to match products to the changing marketplace. Taking advantage of this flexibility was one aspect of Capital One's information-based strategy.

Bank-Card Attributes

. . .

Keywords: Product-line profitability product design sampling test marketing

Suggested Citation

Pfeifer, Phillip E., Capital One Financial Corporation: Product Design. Darden Case No. UVA-M-0506, Available at SSRN:

Phillip E. Pfeifer (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4803 (Phone)


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