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Even with this broad industry we have are branding themselves as an exclusive e-payment company. The core product for Dixie is convenience for their consumer’s. The actual products are the Dixie tags and Dixie terminals. The two products support one another because without one the other product will not function. The augmented product would be the potential retail stores that would use the terminals. The augmented product extends the core product in terms of convenience because of accessibility of the tags. Objectives Dixie Inc. Ants to focus on their company image of being a quick and simple e- moment system for both consumers and merchants. That being said, Dixie Inc. Main objective is to market their product and actual become a dominant electronic payment company. For us to achieve this objective we would need to view their marketing mix and make decision that would obtain the highest yield. There were attempts of other companies to test out the small purchase tag system. Both of these attempts failed and stopped the program. Furthermore Dixie Inc. Wishes to obtain a six per cent of the market within the low-cash value payment industry.
From here Dixie wishes to expand the market and want to grow their share to 50 per cent in 4 ears. Dixie is expecting that the low value transactions in Canada would grow six per cent on an annual basis. Problem Statement Like mentioned earlier, the main problem for Dixie Inc and their products are to market them to both the consumer’s and merchant segments. This problem can be broken into different part which includes: Price, Promotion, Market, Product, and Place (Distribution). Price With the price section for the problem, we have to decide what we should charge to their consumer and merchant, if there is any.
If we opt into charging our consumers and/merchants we would need to decide on how to charge them. The options for us are to charge their consumers a monthly fee, charge the consumers for a set number of transactions, charge their consumers on a per transaction basis, or Dixie can charge a combination of the choice above. For the merchant segment, Dixie can charge a monthly fee or charge merchants per transaction basis. Promotion & Market Dixie has to create essentially a target market for both their consumer market and merchant segments.
For their consumer market, Dixie has to decide on whether they should segment on a geographic, attitude, work and life styles, income levels or a combination of them. On top of this Dixie has to decide to use either a pull or push strategy for their promotion for our products. We also must consider different stream to promote our product. The streams we considered were: sales promotion, direct marketing and traditional advertising. Under the advertising stream the option we have would be: radio, newspaper, magazines, televisions, billboard, backbit poster boards and portable kiosks.
For their merchant segment, we would have to make the choice on which retailers to target. Product Arena and our team are confident with the decision to use RIFF technology for the Dixie platform. Arena was wondering if the key chain tag and the terminal was the best system. Arena is concerned if we should implement a card system would be more accepted. Place/Distribution On top of the other issues, we have to also decide on the location in where they will launch our product. This decision can be broken down to either a nationally level or Just be subjected to Ontario.
If we go with the option of launching this product in Ontario we would have to look at popular areas, I. E. Toronto. To add on we have to decide how to get the tag we manufacture to our consumers. From here we find that Dixie really need to work out a marketing mix that would let us reach our objectives. Internal Analysis When assessing the internal aspects of our company we have to compare the strengths that Dixie possess and the weaknesses. To start off, our product’s offers a simple and quick service for people “on the go’. So long as there is money on their Dixie account consumer’s can enjoy this feature.
Even with the speed of the Dixie tags it is still secure because the tag and terminals will be communicating with the Dixie Servers. Furthermore from the initial stages of the product development to now he company was able to attract two major banks as well as TELLS Mobility. This means we have a strong relationship in terms of distribution of our product. Weaknesses for Dixie would be that they have not created a marketing mix and do not have a target audience we want to market to. This is a huge downfall because we have a product that could be used but do not know where to go from there.
External Analysis When assessing the external environment we have to compare the opportunities we have and also the threat that might happen to us. Opportunities for us are that we could potential tap into a growing and more accepting market of direct payments. Because the intent of the tag is for low value purchases it help when we see that the national average value of debit transaction going down. This implies that people are making more purchases but the values of those purchases are low-value. The threats section of this analysis would be hard to analyze because the product has not been released yet.
Other companies have created a similar system in which individual can use a prepaid account to make low value purchases. The problem/ threat here is that those competitors have failed or canceled the program. PESTER Under this style of analysis we can look at the external factors that would affect our product. To begin with there would be no political regulations to limit our product. This would be a current analysis, and when our product does become successful there would be implementation on our people could load money onto their account.
Current economic trends indicate that consumers are making purchasing more with their debit cards as means for direct payment. The interesting fact is that the average value of each purchase on a national level is decreasing as the years progress. For the social aspect we have different mean to market our product and have access to many multimedia platforms. The technology that we use for our products has been used before in the past by other companies. This technology offers the most secure way for individuals who want to pay for their purchases quickly.
The external environment would be related towards the economic trends of direct payment of debit cards. Because the numbers of transactions are increasing on a yearly basis and the amount of the average transaction is decreasing, it indicates that consumers would enjoy this product. Alternatives To mention again, Dixie main objective is to penetrate the market and be able to hit that sic per cent market share by 2003. In order to do we have look at all the options and look at the entire positive and negative aspects of each option.
The best way to demonstrate the positive and negative aspects of each option is the break them into each portion for the marketing mix. Market We have to decide on the consumer basis how we should segment this market. The options we have to segment on the basis of: geographic, attitudes, work and lifestyle, and income levels. In order to reach the objective of six percent of the racket share we would want to have a good start. Under a geographic approach we can see which province would yield the best results.
From the debit direct payment table we can see that from the ten provinces we see that Ontario has the highest payment of 6,551,298 in 2001. From 1999 Ontario increased their direct debit payment by approximately 13 per cent over the two years. Even with the highest number of debit direct payment the province that has the highest overall increase in payment is Newfoundland with and overall change of approximately 17 per cent. We have two choices and currently with Ontario have the shiest number of debit payment and Newfoundland having the highest overall change within the years of 1999 to 2001 . F we go with the geographic area of Ontario on the basis of having a higher number of debit payment we can penetrate the market and gain a high market influence. That being said we have to also consider that these debit payment can be for large purchases. Deist’s products are intended for the low-value purchases and are supposed to be used for quick and simple purchases. If majority of the transaction are higher value then the product will not do so well and will receive negative reviews. For Newfoundland we can see that debit direct payments are increase.
This means that the community is adjusting to the new technology and it is gaining awareness. This is a positive aspect because if we implement our product earlier on while the market is growing we can gain awareness and it is more likely to hit our objective. The problem is the number of transactions and our first objective. With number of transaction for debit direct payment is 250,010 it would be hard for use to gain a six per cent market share. As the market is growing it is likely we would obtain the 50 per cent market share by 2007.
On a national level we can see that Canada as a whole is accepting the debit direct payment. The overall change is approximately 12. 5 per cent from 1999 to 2001. On top of this the total number of debit direct payment has reached 17,635,731. If we go for the national level for our product we have better exposure for our product. The same problem occurs when compared to the other geographic location; we don’t know how big these purchases are. If majority are large value purchases, the consumers would want to take their time when paying for it.
It basically contradicts what the product intended use is. Under the attitudes demographic it would hard to single it out and get enough information about this segment. We would have to tie this with the market segment and look at what the trends are on both a national and provincial level. On the national level we see that the market is more willing/accepting with the debit direct payments. Overall each province is increasing the number of direct debit payment. So even on a provincial level we know that the province is accepting. Again we have to reflect on how big these purchases are.
If most of the payments are high value payment then Deist’s product isn’t going to do well. The work and lifestyle segment is more appealing to Dixie as a market segment because it is geared toward the features of the product. If the lifestyle of our consumers is always on the run then our product is perfect. With the quick and easy use of Just tapping the tag on the terminal the consumer can leave in seconds. And as the economy is growing the working industry is getting bigger. With limited time for breaks, consumers want to make their purchases and move on with their day.
The negative side of this is that consumers have to have time to add funds to their Dixie account. Deist’s product should not be affected with the income levels of the consumer’s heavily. This is because the consumer’s have the power to add as much as they need onto their Dixie prepaid account. The only aspect that would affect this segment is the fee that we could charge. If we go for a charge for the account then it would turn down some consumer’s. Promotion The current options for the promotion is to use wither a pull or push strategy. This would be in regards how we would promote our product.
The streams we can go for include: radio, newspaper, magazines, television, billboard, backbit posters, and ratable kiosks. Looking at the overall strategy we have to compare where the company is and which strategy would be in the best interest for us. Using a push strategy we would be forcing the consumers to get interested into our product. This would be in terms of guerilla marketing and basically surrounding the consumer with our product. With the pull strategy we would be showing the key features of our products that would appeal toward the consumers.
Rather than forcing our product we would be creating an interest within the market. With the radio aspect we can appeal to a lot of consumer that would fall into the epistyle segment. The radio advertisement would run for 30 seconds and be during the rush hour time slot. The costs of the radio advertisement are subjected by city. For Toronto it would cost $250, Montreal is for $175 and finally Vancouver is for $175 as well. With the cost being low and market exposure at the greatest this is the best for our product. During rush hour we can appeal to the work and lifestyle segment.
Consumers who are busy most of the time will be hard to advertise to; with the radio ad we would be able to get our information of our product out. The concern here is hat the radio ad would be appealing towards individual who listen to the radio (I. E. Within a car or have a radio). On top of this rush hour can cause stress for individual and might not pay attention to the radio advertisement. The next alternative for the promotional aspect are newspaper. This advertisement would be half a page long. The cost for this would be $15 000, $7 500, and $1 5 000 for Toronto, Montreal, and Vancouver respectively.
These costs are very high but again we would be applying toward very popular newspapers. The positive aspects of this option would be that Dixie would be gaining a lot of market exposure cause the newspapers’ we are applying for are very well known. Because of this is has a negative aspect as well because of the cost associated to the prestige of the newspaper. The same positive and negative aspect would also apply to magazines as well. The only additional negative aspect is that the magazine would be geared towards only certain people who subscribe with that magazine.
The next option would be to air an ad under a local television channel. The television ad would run for 30 seconds and would air around a prime time spot. With this we would be able to appeal to the mass majority of people who would view the coal channel. The bonus is that the ad would also run on prime time so we know that many individual would be watching. The negative aspect for this ad is the cost. Dixie is low on cash and needs to put this money in the best way possible to market the product. Because of this the cost associated with this option is rather expensive.
Current cost would be $15 000, $10 000, $12 000 for Toronto, Montreal and Vancouver respectively. The next option is to use poster around various locations. We have two options in where one option would give us 60 sites/locations while the other would give 8 actions where we can post the posters. Both options would be for the duration of 1 week. For the subway poster the cost would be $5,300 for all three locations. The subway poster would give us the best market exposure because of the multiple sites and the duration of the ad. For street posters we might not get the numerous location but we compensate it for the high volume.
The cost for the subway options would be $4,000 for the duration of a week as well. Finally the last option is to promote using kiosks in which we have the option for either an indoor kiosk or an outdoor kiosk. The main difference between the two options is the rent in which the indoor option would cost us $5,000 while $10,000 for the outdoor option. The cost for employing 2 staff would be the same of $2,000. The positive side of these options is that the staff would be trained in how to sell the product. For the indoor option it is assumed that we would be in malls which would have high traffic.
Outdoor exposure would be a little harder because most of the traffic would be hard to grab their attention. Place/Distribution Under this aspect we have to see where to launch the product, whether it is on a national, provincial, or municipal level. Going back to the demographics on how the attitudes on using a direct debit payment we can see the same trends apply here as well. We can use the same numbers and get the same analysis from our market section. We see that people are using this method of direct payment. Ontario has the highest number of payment while Newfoundland has the highest change in percentage.
Again we have to look at what kind of spending for these payments are dominant. Price Under the price category we need to view on how we (if we) charge our consumers and retailers. The options laid out for consumers are that we charge them for a reset number of transactions, charge them a monthly rate, charge the consumers for each transaction, make a combination of the above or do not charge them. For the merchants the same options except for the preset number of transactions. Under the consumers section of this category any charge would be view negatively.
This is because they would need to pay for the service of cutting the wait time when they could use a debit/credit card for Just a few more seconds. Because the structure is using a prepaid system there would only be the marginal benefit of the quick access. This would apply for any option of charging the consumer. The merchant on the other hand is the one who should receive the charge because the prepaid system is similar to debit and credit cards. The monthly fee would entail a benefit for the retailers because they will not getting charged on a per transaction use.
For the bigger retailers that have many transactions this would become cost efficient. On the other hand, the smaller retailers would want to go for the number of transactions because it would cost them less. This option would really depend on the number of transactions the retailer does. And can reflect on how many retailers would want our terminals. Product In addition to the tag system that Dixie implemented we would also like to consider a card like system as well. The main concern was the safety/security of the tag system. Because there is no PIN required, anyone can steal the tag and use it with any machines.
On top of this, because the system uses a prepaid structure the consumer is putting their own money into the account. If we go and add the card system along with the tag it affects the image of the company. The whole reason Dixie initiated was because we wanted a quick and easy way to do low level purchases. With a card system being introduced it takes away from the company mage of being quick and easy. On the flip side we want do not want to compensate security for quick purchases and introducing a card system would invite consumer to test us out.
Even looking at each option individually, Dixie still needs to look at marketing mix options. The first option would include targeting consumer on a geographic basis so that we can go after either a) the province with the highest number of transaction or b) the province with the highest percentage change. Depending on which section Dixie choose it would create a different promotional ad. Under section a) Dixie would ant to use a pull strategy so that they create a need for the product. For that reason, the best option would be to use guerilla marketing and go for the local television and subway posters.
This would be able to get the mass majority of people Dixie wishes to target. For section b) the promotion would be changed to kiosks and posters, this is because the idea of direct payment is still earlier and with the kiosk we can create more awareness of our product so it is more accepting later on. For both options we would charge the retailers a monthly rate much like debit and credit card companies. On top of this we could go after a national level or provincial level depending on which section we go with.
We would still stick with the current tag and terminal system. The second option would be focuses on the work and lifestyle of the consumers. Under this option the promotional ads changes to one with radio and local television. This is because for the market we are targeting are individuals who are busy and on the go. As such they will not have time to look at posters or stop by kiosks. We can implement the other promotional ads later on during the product life cycle. We loud go after a push strategy and get retailer to move the products towards the consumers.
Initially we would not charge either the consumers or retailers because we want to create awareness of the product. Later on we can charge the retailers a monthly rate. This option we would want to keep the current product because of the busy schedule of our consumers. With the tag system we can give consumers the quick service they want. We would want to apply this marketing mix toward a highly dense city and in this case it would be Toronto because of all the provinces Ontario has the highest number of transaction of debit direct payments. On top of this the advertisement we chose pertain to the Toronto city.
The third marketing mix would be going after the attitude of consumers towards the security of the tag system. As a result the product we want to release would be the card system. From previous companies releasing the similar system it seems that the industry is not ready for the tag system. With the card system being implemented it gives consumers more security but as a result it takes away from the quick and easy feature that the company is trying to strive for. Recommendation Upon analysis of the alternative the best marketing mix would be to go after the ark and lifestyle marketing mix.
This is because it appeals towards the company image of quick and easy purchases. Because of the busy schedule of our target market we would promote using radio and television ads. This is because the only time these consumers have would be either at home watching television or during rush hour listening to the radio. On top of this we would implement a push strategy and get the retailer to push the product. As a result we would not charge the retailers initially because we want them to promote the product. Once the product pickups we can then start charging a monthly rate.
We would benchmark our price lower then debit and credit cards so more retailers would want our terminals. We would want to go for Ontario as the place of distribution because of the high number direct payments. The reason we went with this option is because the high number transaction would have a greater chance for the first objective of six per cent. As a contingency plan if the market doesn’t respond well with the tag system we would start the card system. This would give the market the idea that Dixie is concerned about security and still want to promote fast service.