Tangerine concepts

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A Case analysis on Mastercard MyCard in conjunction with Tangerine Concepts.

A Case analysis on Mastercard MyCard in conjunction with Tangerine Concepts.

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  • Case 1assumption:people will deposit the average amount of moneyload fee:2.950.95 deduction to retailer0.02y deduction to mastercard=2-0.02yDon’t understand this number .98x-2.95=y? fee when depositted by credit card:0.035y0.95 deduction to retailer0.02y deduction to mastercard=0.015y-0.95initial signup : $39.953.995 deduction to mastercard$12 deduction to retailer and for the rest ,I assume that all people who will purchase this product will buy them from retailer in an uniform way. in other words, 20 perc of total card sales will be made in retailer whose owner has only one to five store 20 perc of that in retailer whose owner has more than 5 store and goes on that way.39.95-3.995-40-12=-16.045monthly fee:5.956 months: 35.7as a starting point  with a rough calculation:880000/(35.7-16.045)=44773 consumersbreakeven analysis: 880000/(35.7-16.045+2-0.02y) (I dont add credit card part since those  who have it are not in our segmentation)

Transcript

  • 1. Tangerine ConceptsCorporation:MasterCard MyCardEric Finley Chris ConeryDora Du Jack HodappMehmet Orgut Turgut Engin OzoguzDeniz Can Hekimoglu
  • 2. AgendaProblemStrategic AnalysisQuantitative AnalysisSWOT AnalysisDecision
  • 3. Problem • Objective • Expand Tangarine’s influence within market • Find consumer segment with greatest consumer need • Build on Tangarine’s growing relationship with it’s current an future merchants • Successfully advertise MyCard to a growing market
  • 4. Problem Statement What distribution strategy can be used for MyCard to penetrate the appropriate market segment without harming Tangerine’s brand recognition?
  • 5. Situationalanalysis
  • 6. Situational Analysis Market SegmentsSegments Factual InformationNo Credit History 235 824 immigrants in 2004 Students (Post/Secondary)Poor Credit $39 billion credit card debt 11% increase/yr. 2 million peopleMoney Transfer Competitive marketMisc. Activities Online shopping
  • 7. Situational Analysis Controllable factors Price of Card Advertising Streams- $880,000 Type of Advertising Exposure Costs Rogers TV Listing 336 30-second spots $350,000 Channel Transit shelter Large panels $530,000
  • 8. Situational AnalysisStrategies/Distribution Method
  • 9. Situational Analysis Uncontrollable Variables Competition- Visa ProductsProduct FeaturesPre-Paid Gift Range: $25 - $500 2 outlets: Citizens Bank, Vicinity Bank $2 loading fee, $0.50 - 0.75 inquiry feeTravel Card Range: $250 - $9000 Only available through CAA, select ATM $7.95 (members), $10.95 (non-members) $3 withdrawal fee, $0.75 inquiry fee
  • 10. Situational AnalysisUncontrollable VariablesCompetition- Retailor Gift Cards 53% of Canada’s 80 largest – 2003 Increased usage in gift cards, 68% - 2004 Reload, no expiration
  • 11. Situational AnalysisUncontrollable VariablesCompetition- OtherInterac Transfers- Email, Canadian BankPayPal- Secure online payments, debit or creditUnsecured Credit- covers Fraud over $50Secured Credit Cards
  • 12. QuantitativeAnalysis
  • 13. 1st Distribution MethodLoad fee: $2.95• $0.95 deduction to retailer• 2% deduction to MasterCard• $2.95-$0.95• =$2 without calculating deduction to MasterCard
  • 14. 1st Distribution MethodInitial Signup : $39.95• $3.995 deduction to MasterCard• $12 deduction to retailer• Assumption: All purchases will be distributed uniformly, this will lead us to $40 deficit.• $39.95-$3.995-$40-$12• =$-16.045
  • 15. 1st Distribution MethodMonthly Fee:$5.95• 6 months: $35.7Fixed cost: $ 880,000 (Advertisement for 6months)Contribution Margin: $35.7-$16.045 = $19.655• With a rough calculation: $880000/$19.655= 44773 consumers
  • 16. 1stofDistribution MethodNumber People in TargetedSegment: 2 Million• 2/31 Million People= 0.064 (Proportion of the segments to whole country)• 6 Million*0.064= 384,000 people fitting the segment, in Golden Horseshoe Area• 44,753/ 384,000MARKET SHARE= 11.6% forBreak Even
  • 17. Swot AnalysisStrengths:1-Convenient Weaknesses:2-Secure 1-Price3-Online 2-Niche markettransactions 3-Unqualified salesman4-Money TransfersOpportunities: Threats:1-Immigrants 1-High rivalry2-Students (above 16) 2-Emerging technology3-Growing debt levels 3-Not really competitive advantage
  • 18. DecisionConsidering… Market Share Competition Pricing Strategy Not to launch MyCard
  • 19. Questions
  • 20. Appendix
  • 21.  The segments will be directed towards those who have no credit and poor credit ratings, as they will be only groups that are willing to pay to have the advantages of a MasterCard MyCard. There are 2 million out of 31 million Canadians in these segments. 2,000,000/31,000,000 = 0.064 6.4% is the population proportion targeted for MyCard. Using this proportion, we will find the segments targeted in the Goldenhorshoe area. We will assume that the population of the Golden Horshoe area is ⅕ of Canada’s total population, making the population of the Goldenhorshoe 6 million. To find segments in this area, 0.064 will be multiplied by 6 million which will give us 384,000 people. Load fee is $2.95, $.95 will be deducted to the retailer and 2% of total deposited on the MyCard will be deducted and allocated to MasterCard. So as a result, if we call y the total amount deposited on the MyCard we obtain this function: Load Fee = $2.95 Deduction to Retailer = .95 Deduction to Mastercard = 0.02y =2-0.02y Initial Signup = $39.95 Deduction to MasterCard = $3.995 Deduction to retailer = $12 We have assumed that all people who will purchase this product will buy them from retailer in an uniform distribution. In other words, we have made the assumption that cards sold will be strongly correlated to the number of stores that retailer have. That has lead us to the extra $40 expenditure towards retailers. 39.95-3.995-40-12 =$-16.045 We conclude here that this will cause a deficit of $16.05 Monthly Fee:5.95 Considering the 6 month Advertising Campaign, we will multiply the monthly maintenance fee by the total number of months. (5.95)(6)=35.7 For the contribution margin, we need to calculate revenue-variable costs. This has been done separately for each part of the case. We will then add them up. 35.7-16.045=18.955 contribution margin = 18.955 Using a rough calculation which include fixed costs divided by contribution margin, exclude revenue that can be generated from load fee. This will provide us with the number of consumers that will help us determine our break-even analysis. 880000/(35.7-16.045) 880000/18.955 =44773 consumers needed for break-even. Now we will need to define the market share. This will be done by dividing 44773 consumer by 384,000. 44773/384000=.116 11.6% is the market share needed to break-even.