Dexit Analysis

Situation Analysis

Marketing Analysis:
•Dexit’s objective was to launch a wireless payment system as the standard payment method for small dollar amount retail transactions in the Canadian Market. •Company has strong investment financing behind it in the form of two large Canadian banking firms. •Fast 3 second transactions via RFID would create simple convenient transactions that could be tracked easily by consumers.

Environment:
•“Big 6” Banks controlled the Canadian industry Current market via issuing Credit and Debit cards and the corresponding retail processing systems. •Canadian shoppers were routine users of electronic payment methods •Customers were satisfied with the credit and debit payment methods and viewed them as convenient to use. •By 2003, Canadian cash purchases projected grow to $270 billion with the average transaction totaling roughly $4.50 each •Although acceptable in the marketplace, Canadians were not traditionally using debit or credit cards for small purchases, which were viewed as sales requiring cash. KEY •Over 70,000 of 350,000 Canadian retailers focused on low value transactions. •30% percent of debit users were in major metropolitan areas - Vancouver, Montreal and Toronto. •Avg. value of electronic retail transactions in Canada was far lower than any other developed country. •RFID had not been widely introduced into the Canadian marketplace at this time.

Organization and Marketing Mix:
Strengths
•Company has strong investment financing behind it in the form of two large Canadian banking firms. •Dexit has a strong highly experienced management team that is highly knowledgeable in the area of ecommerce and electronic payment systems. •Electronic payment is already highly acceptable practice by both Canadian retailers and consumers •Product provides a fast convenient method of payment that rivals cash typically used for small transactions. •Faster than using a debit/credit card

•No direct competition in the marketplace
Weaknesses:
•MONDEX demonstrated that RFID was unsuccessful in Canadian markets. •Costly to retailers to maintain a different system other than the traditional magnetic card readers. •Hardware would have to be supplied to merchants at substantial cost •You have to get customers to sign up on their own

Opportunities
•High speed, high frequency transaction retailers and patrons would welcome the technology as brings added convenience, which is perceived as most valuable in these situations. (Gas stations, book stores, coffee shops convenience stores, etc.) Threats

•Debit/Credit cards were already accepted forms of electronic payment making them competitors in these retailers. •They could lower transaction fees on the retail side to encourage use •Retailers were marketing their own company cards (i.e. Exxon Speedpass, Starbucks cards, etc.)

Problem Definition/Substantiation
Objective:
To launch a RFID payment technology as the standard transaction method for low value transactions in the Canadian market place. Success Measures:
•Increased market share resulting from increasing usage among merchants and patrons. •Increased profitability
•Maintain 40% contribution margin
Constraints:
•Which customers to target
•Which pricing strategy to use
•Which locations to launch the product
•Which geographic areas to launch the product

Alternative Solutions and Evaluation

Customers to Target:
•Retailers accepting Debit and Credit transactions in their establishments •Retailers with cash intensive operations
•All merchants in the three major areas of electronic payment usage –Toronto, Montreal and Vancouver •Convenience stores, Bookstores, Grocery Stores (which were moving to smart checkout), Fast Food Restaurants, Gas Stations, and other stores having high volume, low dollar value transactions. •Wal-Mart - They were implementing the technology anyway. Pricing Strategy:

•Charge a transaction fee to the consumer...