Evaluate the effectiveness of this sponsorship as a Strategic Marketing decision, given: MasterCard's distinctive Business Model and Organization MasterCard's new strategy.
MasterCard International is an American financial corporation listed on the New York Stock Exchange. The company provides one of the world’s biggest payment gateways using debit cards and credit cards. The company partners with various international banks like Bank of America and government all round the world. The payment gateways of MasterCard are protected by passwords and help the payers secure their financial details against frauds and data thefts.
MasterCard’s distinctive business model consisted of three components. They were a global family of payment gateways, a global system of accepting payments and communication of all the payments customers made using their debit cards and credit cards. MasterCard was the manufacturer and marketer of three of the most accepted international payment gateways namely, MasterCard, Cirrus, Maestro and Mondex. These cards found acceptance from millions of customers globally in more than a hundred countries. They all had the logo of MasterCard showing interlocking circles, which enforced the brand power of the company internationally. MasterCard allowed processing of secured payments all over the world, which helped banks and people to conduct electronic transactions. The communication system notifying the customer about the payments made through debit cards and credit cards enabled the customers to gain information about their available bank balances and take prompt actions in case of discrepancies. This facility created tremendous customer satisfaction for both the member banks and MasterCard. This customer centric business model enabled MasterCard to earn huge revenue, which gave it the financial strength to form a new strategy of promoting its brand equity by sponsoring sports events like World Cup and Olympics. The able organisation structure was under the leadership of able CEOs and while its board of directors consisted of top bank officials. The dynamic business decision-making capability of these able leaders enabled MasterCard to make strategies to promote sports events.
The new strategy of MasterCard was to sponsor international sports events like the World Cup matches, which helped it to position itself in the market as an international sponsor. The new strategy helped the company to differentiate its products like MasterCard and Maestro from its competitors mainly Visa and Diner’s Club, its toughest competitors International events like the World Cup enabled MasterCard to promote itself among a global consumer base and promoted itself as a secure payment gateway. This new strategy of using the platform sports events as a medium for marketing enabled the company and its partner banks to generate huge revenue.
The sponsorship worth of MasterCard increased manifold due to its participation in several international sports events like the World Cup, the Olympics and the ISL. These events allowed MasterCard to gain access to customer bases all round the world, which gave it an opportunity to display the usage and benefits of its products. The sporsorship worth of MasterCard became so high that it led to fall in the market capturing of the competitor products like Visa. The huge sponsorship worth of MasterCard encouraged the customers, especially the spectators and the guests at the matches to use the card to make payments. This generated heavy promotion of the company products, which resulted in huge revenue and market penetration globally.
The new business model and the international sports sponsorships enabled MasterCard to gain economies of scale in all its markets around the world. The company had to spend billions of dollars to operate in the international market, which had presence of strong competitors like Visa. Association with international sports events acted as a differentiation strategy, which helped MasterCard to differentiate itself from its rivals and attract more users. This led to generation of huge revenue, which the company could allocate towards chip technology cards, which required heavy investments. Thus the sports sponsorship enabled MasterCard to gain economies scale.
MasterCard standardised its products and adopted the advertising strategy around the sponsorship of sports events. This advertising strategy helped MasterCard to connect emotionally to the customers. The customers as a result retained the advertisements of the company for longer span of time and preferred to use it over other payment gateways. This marketing strategy helped the company and its partner banks earn huge revenue worldwide.
The renewal of sponsorship of the 1999-2002 package of sponsoring the World Cup match should not renewed by MasterCard. This is because the international sponsorship bodies like ISL were charging high amount of entry fees and had altered the event content, which may not be profitable for MasterCard.
It can be evaluated from the above discussion that the strategy of MasterCard to sponsor international sports events was effective as a strategic marketing tool. The company must adopt the same strategy in future to gain competitive advantage in the market and strengthen its position.
“Master Brand,” Delaney Report February 22, 1999
“Master Card to allow banks to move its Logo,” Business Times(Singapore), June 28, 1999, p.24
IEG Sponsorship Report, cited in MasterCard documents
Jason Fargo, “Behind Citi’s feud with Visa,”, Credit Card Management, April 1999, p.30
Lance Egelson, quoted in Kathleen V. Schimdt, “Vendor-partner Deals Winning Proposition for All,” Marketing News August 16, 1999.
McCormack was the founder of IMG, one of the most powerful agencies in the marketing of sporting event right with a 1993 turnover estimated at US$800 million.