Mastercard Case Study

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MasterCard- Case Study
Background Summary
In May 1998, Meltem Tekeli, MasterCard’s Vice President for Global Promotions and Sponsorships, had already begun discussions with senior MasterCard staff on the renewal of MasterCard’s 1999-2002 World Cup and World Championship Soccer (WCS) sponsorship. When the results of the 1995-1998 WCS Sponsorship came in, it was clear that they had far exceeded those achieved in the previous rounds of their sponsorship of soccer. As one of twelve worldwide sponsors, MasterCard executives knew that their global payments franchise sponsorship of this event was a resounding success. With a cumulative audience of approximately 37 billion in 200 countries and territories watching the matches of the World Cup ’98, MasterCard officials knew their advertising campaign had reached an unprecedented amount of people. With soccer being the number one sport in 10 of MasterCard’s top 17 markets, the World Cup commanded the largest audience of any event in the world.

At the time, MasterCard acceptance locations had grown to 16.2 million in over 220 countries and territories. They organized their operations into six regions: Asia/Pacific, Canada, Europe, Latin America, Middle East/Africa, and the United States. Each region aimed for self-funding, with the United States region being the largest and contributing funds to the other regions to ensure global acceptance. As they expanded their product range and global experience, MasterCard’s worldwide image became ever important. From a marketing perspective, it was necessary to choose their global sponsorships wisely and reach as many consumers as possible. The WCS sponsorship had the dual benefit of promoting MasterCard’s global importance while also providing a means through which to connect interest in the event to the specific promotional efforts of local MasterCard members. A number of issues had come up which threatened the renewal of their contract. First, MasterCard officials were informed that they would have to pay twice as much as it had for the 1995-1998 sponsorship. They also had removed some events from the package that had previously been included. In the United States, which was the largest market for MasterCard, executives were already questioning the value of continuing this sponsorship, since soccer was not the most popular sport in this region and they had just recently launched the successful “Priceless” advertising campaign in this and other markets. On top of that, MasterCard executives were informed that if they did not accept renewal of the contract, its largest competitor, Visa, was ready to step in and take over the sponsorship. MasterCard now needed to decide if renewal of this sponsorship was in their best interest. Problem Identification

While striving to make a timely decision about whether or not to be the sponsor for the World Cup, MasterCard had to do several things, including analyzing the situation and weighing all of the pros and cons of spending the largely inflated amount of money that the World Cup was asking for their sponsorship. There are several key areas that they had to consider before making their final decision. First, there was a significant price increase for the sponsorship rights, and they would not have any negotiating power. MasterCard’s largest competitor, Visa, was waiting on the sidelines ready to accept the sponsorship if MasterCard declines the World Cup offer. Secondly, MasterCard was in the process of restructuring its business in a number of areas, which largely included their marketing budget. Another concern is that MasterCard had just spent a large amount of budget dollars on their new global marketing campaign, “Priceless”. Both the “Priceless” advertising campaign and the sponsorship of the World Cup are global campaigns. The final concern is that MasterCard derived more than half of its revenue from the U. S. Region. This region is the one major market in the world where...
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