*Capital One, Kmart to Launch Co-Branded Credit Card

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Hoping to tap into a large pool of prospective new members, Capital One Financial Corp. this week agreed to launch a new co-branded MasterCard with national retailer Kmart.

Capital One launched a direct mail campaign targeted to both its card members and most of the people within Kmart's database.

While Capital One sponsors several co-branded credit cards, this is the first time it has worked with a traditional retailer, said Dana Ciluffo, media product manager at Capital One, Falls Church, VA. Ciluffo cited two primary reasons for choosing Kmart, Troy, MI.

"The Kmart shopper is in there all of the time and there is also a very high volume of purchases made in those stores," she said. "We can build on that strong brand recognition they have as well as the strong relationships they have with their customers."

While discussing recent reports regarding the declining success rates of private-label credit cards, Ciluffo said Kmart will have a branded card that does not have to stand on its own. She said Kmart customers can receive the benefits traditionally tied to private-label retail cards along with the "extended buying power" of a major credit card.

Ciluffo would not disclose the number of pieces to be mailed, except to say that it included "several million pieces." The drop began last week and will continue throughout this week.

The pieces are customized beyond just having the recipient's name at the top of a personalized letter. The letter is also customized based on a person's credit history.

The letter outlines the card's benefits as well as the incentive offer of no interest for six months on purchases made at Kmart. Recipients will be asked to sign up for the card by going to BlueLight.com, a Kmart subsidiary, calling a toll-free number or mailing the application form.

Other marketing components include take-ones located at checkouts, in-store signage and in-store announcements at more than 2,000 Kmart locations nationwide. Fliers and signs will highlight the no-interest incentive and contain text similar to the direct mail pieces but will not be as extensive.

The campaign was developed inhouse by Capital One.

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