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

1. Tangerine Concepts
Corporation:
MasterCard MyCard
Eric Finley Chris Conery
Dora Du Jack Hodapp
Mehmet Orgut Turgut Engin Ozoguz
Deniz Can Hekimoglu

2. Agenda
Problem
Strategic Analysis
Quantitative Analysis
SWOT Analysis
Decision

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. Situational
analysis

6. Situational Analysis
Market Segments
Segments Factual Information
No Credit History 235 824 immigrants in 2004
Students (Post/Secondary)
Poor Credit $39 billion credit card debt
11% increase/yr.
2 million people
Money Transfer Competitive market
Misc. 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 Analysis
Strategies/Distribution Method

9. Situational Analysis
Uncontrollable Variables
Competition- Visa Products
Product Features
Pre-Paid Gift Range: $25 - $500
2 outlets: Citizens Bank, Vicinity Bank
$2 loading fee, $0.50 - 0.75 inquiry fee
Travel 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 Analysis
Uncontrollable Variables
Competition- Retailor Gift Cards
 53% of Canada’s 80 largest – 2003
 Increased usage in gift cards, 68% - 2004
 Reload, no expiration

11. Situational Analysis
Uncontrollable Variables
Competition- Other
Interac Transfers- Email, Canadian Bank
PayPal- Secure online payments, debit or credit
Unsecured Credit- covers Fraud over $50
Secured Credit Cards

12. Quantitative
Analysis

14. 1st Distribution Method
Load fee: $2.95
• $0.95 deduction to retailer
• 2% deduction to MasterCard
• $2.95-$0.95
• =$2 without calculating
deduction to MasterCard

15. 1st Distribution Method
Initial 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

16. 1st Distribution Method
Monthly Fee:$5.95
• 6 months: $35.7
Fixed cost: $ 880,000 (Advertisement for 6
months)
Contribution Margin: $35.7-$16.045 = $19.655
• With a rough calculation: $880000/$19.655
= 44773 consumers

17. 1stofDistribution Method
Number People in Targeted
Segment: 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/ 384,000
MARKET SHARE= 11.6% for
Break Even

18. Swot Analysis
Strengths:
1-Convenient Weaknesses:
2-Secure 1-Price
3-Online 2-Niche market
transactions 3-Unqualified salesman
4-Money Transfers
Opportunities: Threats:
1-Immigrants 1-High rivalry
2-Students (above 16) 2-Emerging technology
3-Growing debt levels 3-Not really competitive
advantage

19. Decision
Considering…
 Market Share
 Competition
 Pricing Strategy
Not to launch MyCard

20. Questions

21. Appendix

22.  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.