Strategy

Driving Capital One's success and efficiency has been its innovative "Information-Based Strategy" (IBS). With a wealth of data from its 50 million consumer and business accounts, Capital One analyses its profitability down to the individual customer level and tracks the behaviour of its customers in order to statistically analyse micro-segments of the consumer market.

Capital One has used IBS to great effect in the credit card division both in creating revenues and in cutting costs. Capital One has been able to innovate intelligently and rapidly by testing new marketing strategies on small groups before engaging in full-scale marketing. This approach allows the company to predict results of rolling out new products and rapidly scale up successful new promotion schemes before competitors have a chance to copy. This implies the strategy follows a bit of the planning and positioning school of strategy mentioned in Strategy Safari. IBS has also provided a high level of product customization. Capital One redefined the credit card industry in the 1990s with its personal pricing and credit line sizing, achieving low risk and default rates through personalized pricing. Setting price and line size for individual customers, Capital One took the most profitable business from competitors using aggregate pricing schemes and has consistently had the highest credit card profit margins among competitors.

 (mill) |  £ | 31/12/2012 |  £ | 31/12/2011 |  £ | 31/12/2010 | £  | 31/12/2009 | £  | 31/12/2008 | £  | 31/12/2007 |

Turnover | 507,859 | 494,550 | 624,260 |   |   |   |

Profit (Loss) before Taxation | 127,678 | 65,214 | 219,046 | -19,940 | -76,488 | -55,913 |

Net Tangible Assets (Liab.) | 1,920,775 | 1,786,077 | 2,071,989 | 1,504,389 | 373,488 | 456,825 |

Shareholders Funds | 723,184 | 620,449 | 572,996 | 399,538 | 364,165 | 443,473 |

Profit Margin | 25.14 | 13.19 | 35.09 |   |   |   |

Return on Shareholders Funds | 17.65 | 10.51 | 38.23 | -4.99 |...