In April 2011, Howard Grosfield, president of American Express Canada (Amex Canada), a fully owned subsidiary of American Express Company (AmEx), was weighing his options related to sustaining Amex Canada’s position in the premium end of the Canadian payment card market.
Credit card issuers such as Visa and MasterCard, operating in the popular end of a market characterized by high volume but low value transactions, were now moving upmarket. As part of this move, they were launching new products and incorporating new rewards and new incentives into their credit cards. These new products were mainly targeted at the luxury market, a notable customer segment that had been a sweet spot for Amex Canada, which held a significant portion of the overall market share in the premium space.
1) How can AMEX Canada sustain its position in the premium end of the Canadian payment market?
2) How can AMEX Canada create barriers to entry to its prospect competitors such as Visa and MasterCard?