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?
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
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
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.
Notas do Editor
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)
