Cash Connection

Executive Summary:

After operating many years in the short-term cash lending business, Cash Connection needed to distinguish itself from competitors due to large number of rival companies. The president of Cash Connection’s objective is to differentiate its company from competitors so that it can gain the largest market share from the industry. Cash Connection is influenced by the regulations and restrictions that are imposed by federal government. However, the payday lending industry was very attractive to the wide variety of customers since it is very quick and convenient compared to other alternatives. By implementing a successful differentiation strategy, Cash Connection can be able to increase its market share.

Problem Statement:

Allen Franks, Cash Connection’s president, needed to find a way for Cash Connection to differentiate itself from its competitors in the short term lending business because of the increasing number of payday loan companies. The industry was getting hard with additional governmental restrictions, which influenced heavily Cash Connection along with its competitors. Also, Cash Connection has to develop new marketing strategies to attract new and existing customers to take out more loans so that they can sustain high market shares.

Summary of Facts:

Cash Connection is in the business of short term cash lending. It also offers check cashing, bill payment services, prepaid phone cards, money orders, and serves as Western Union agents to allow customers to transfer funds. Payday loans grew recently because of high customer demands and changing conditions in the financial services marketplace. The rising cost of balanced checks and overdraft protection fees, late bill payment penalties, and other forms of credits directed customers to the payday loans. Another reason for the high number of payday lending firms is that substantial profits through fees and interest charges. Furthermore, the start up cost for opening an individual...