Marathon Petroleum to Offer Co-branded Credit Card

Case Type: marketing/operations strategy; new product.
Consulting Firm: American Express 2nd round job interview.
Industry Coverage: oil, gas & petroleum industry; financial services; credit cards.

Case Interview Question #00356: Your client Marathon Petroleum Corporation (NYSE: MPC) is a U.S. based oil refining, marketing, and pipeline transport company with its headquarter in Findlay, Ohio. Marathon Petroleum operated as a subsidiary of Houston, Texas-based Marathon Oil Corporation (NYSE: MRO) until July 1, 2011.

Marathon Petroleum has its own credit card that many of its customers use at Marathon gas stations when they fill up their car with gas. Recently, other oil companies have begun entering into partnership agreements with major banks for co-branded credit cards (i.e. Shell and CitiBank, BP and Chase). The client Marathon wants to know if it should do the same. Either way, should Marathon continue to offer its own credit card?

Possible Solution:

Basically, the 3C’s — Customer, Company, Competitors, seems like an appropriate framework to solve this “launching a new product” type of cases.

1. Customer

Candidate: Do current customers value the Marathon credit card – do they use it?

Interviewer: About 20% use it and like it.

Candidate: Would a co-branded credit card draw new customers or increase customer loyalty?

Interviewer: Yes, people indicated they’d be more likely to visit our gas stations if we had the co-branded credit cards. However convenience is the main consideration when selecting a location.

2. Company

Candidate: Is the client company currently performing the credit card processing in-house – is it profitable?

Interviewer: Yes, they’re doing it in-house but are not making much money on it.

Candidate: Would the co-branded credit card processing be out-sourced – does it offer attractive margins?

Interviewer: That’s an option; the margins appear to be better if processing is out-sourced.

3. Competitors

Candidate: How many competitors have co-branded credit cards?

Interviewer: Only two (Shell, BP) so far, but others are looking.

Candidate: If they don’t move now, would their choice of partners be limited?

Interviewer: Probably.

Recommendation:

Offer the co-branded credit card, but out-source it. Given that existing customers use and like the company card, they should continue offering it, but attempt to shift customers to use the co-branded card.

The data processing operations for its credit cards should also be out-sourced. They should research marketing (co-marketing) tactics that could improve the attractiveness of the credit card to the company’s customers – with the intent of increasing the number of customers.

Additional Issues to discuss about:

• Consider the marketing research that had been conducted.
• Explore the focus of the client company (they made no money trying to run credit card processing).