"Dear Banker, I would like a MasterCard, please"
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5 October 2010Zilvinas Bareisis
Many industry commentators who attended MasterCard's Worldwide Media and Analyst Symposium on September 23rd in Purchase, NY noted the confident tone of the company, the energetic and fired-up management team and how the firm views some of the major challenges for the industry (e.g. the Frank-Dodd act) as opportunities. However, I think one of the more subtle shifts in MasterCard's priorities has attracted a lot less attention - the increased company's focus on the end consumer. Of course, the schemes have always spent significant amounts on marketing (~3-5c per transaction) building up the brands and consumer awareness - Visa's sponsorship of the Olympics or MasterCard's "priceless" campaigns are a testimony to that. However, it would be fair to say that it was largely aimed at ensuring the consumers are comfortable at using the card once they have it. In order to ensure that more consumers actually have the cards, the schemes competed for the banks' portfolios. Of course, banks continue to issue the cards, and therefore remain absolutely key for getting the cards into the hands of the consumers. However, it seems that in addition to a "push" from the schemes, MasterCard is trying to bolster the demand for its cards by creating a "pull" from consumers as well. MasterCard's Marketplace (http://marketplace.mastercard.com) is a perfect example of such strategy. More features continue to be added, but it is already an impressive "Web 2.0"-style shopping experience with lots of clever personalisation and "social media" features transferred to the retailing world. The site is "open" - other payment methods are accepted for most purchases. However, some of the best offers, such as Overwhelming Offers (OO), are reserved only for MasterCard cardholders. OO's often feature large discounts on branded merchandise, which is available in strictly limited quantities for a limited period of time. In fact, some of the more attractive offers sell out in a matter of seconds (e.g. 2o Yankees ALDS Post Season Tickets sold out in 4 seconds!). Sometimes customers can even choose themselves between different products to be featured as a next OO - for example, recently the shoppers had the opportunity to vote whether they wanted to get a large discount on a Sony Playstation 3 or Nintendo Wii (the Playstation won and sold out in 7 seconds). This is consumer engagement strategy at its best, creating a powerful rationale for the consumer to actually have a MasterCard in their wallet. American Express also has a similar proposition with its 'daily wish' offering (https://dailywish.amexnetwork.com), but for MasterCard, this certainly represents an interesting strategic development designed to get closer to the end consumers. So, a message to bankers - don't be surprised if the next time your customer has strong views which card brand he or she prefers.