When we were children, most of us were really aware of the real use of a credit card. In our idealized and naïve world, it was just a plastic card you swipe or insert in a machine, type a 4-digit code, put it in your wallet and leave the store you were in with your bags. As simple as typing a 4-digit code. Life is cool.
Then we’ve grown up and time has come to own our own cards. And live that awkward moment when your banker asks you “Amex ? Visa ? Mastercard ?”. At this moment, you realize that this banking card is more than just plastic with a “puce”.
You realize that the banking card industry is a huge market shared by few companies – an oligolopoly, then – with a well-defined segmentation. Interesting to explore… This oligopoly is “handled” by 3 main companies:
Depending on the area, some of those brands are more successful or more adapted than others. It is way easier to use an “Amex” in the United States than in Indonesia, whereas Mastercard is accepted almost everywhere in Indonesia.This market state is a result of long years of offensive promotional campaigns and a relevant branding strategy.
On this blog, our objective is to understand how these brands managed to build a strong and attractive brand image despite the lack of attractiveness of their industry.
In order to understand this, we will go through the branding differentiators of these brands and see how they have achieved their marketing goals and positioning using different incentives and initiatives over the years.
VISA is a brand of credit card from Visa International Service Association. VISA is also known as the common firm compounded of 21000 financial societies (banks, credit instituions). The major competitors of VISA are American Express and MasterCard.
VISA was created in 1958, when Bank of America launched the BankAmericard. The most of local and regional banks joined either BankAmericard, either Master Charge.
The card took the name of VISA in 1977 in order to make easier the spread of this card in the whole world. In fact, this name doesn’t imply national identity, can be pronounced in every languages and doesn’t make reference to a bank.
In 1987, Visa made an agreement of 5 million of dollars for a part of 33% in the system of automatic cash-flows and became the second bigger ATM network in the United-States.
In 1992, the Gold Card became the credit card the most used in the world. 1993 was a record year for Visa with a global revenue of more than 500 billion of dollars
In France in 2013, with 39 million of cards in circulation, more than 1€ on 5, that is to say 22% of spends, are realized by Visa card.
Visa can be used in 160 countries and more than 26 million of points of sale.
Currently, Visa facing the issues of e-marketing and more in particular, real-time marketing.Visa has a strong brand positioning, a strong brand strategy. All its e-marketing strategy has to be coherent with its brand positioning and its other marketing actions, partnerships. How does Visa make a difference with its competitors? What are the main issues faced by Visa?
Visa offers a very large range of cards in order to cover demands as more as possible. They have in general their counterparts in American Express and Mastercard.
Visa Infinite
The Visa Infinite, in black colour, is the payment card the most top-end model offered by Visa.
It targets customers whose annual incomes are upper to 100 000€.
Competitors:
- Centurion American Express
- World Elite MasterCard
Visa Platinum
Launched in 2011, this high-end card is positioned between the Visa Premier and Visa Infinite.
Competitors:
- Platinium Mastercard - Air France - KLM American Express Platinum
Visa Premier
Well known thanks to its gold colour, the Visa Premier is also a high-end card. It targets customers whose the purchasing power is quite high and travellers.
Competitors:
- Air France - KLM American Express Gold - Gold Mastercard
Visa Classic
The Visa Classic is a middle-class payment card.
It's one of the most popular card in France with the Mastercard Classic.Some banks rename it and give a different commercial name, for instance Cléo for LCL. Competitors: - Air France - KLM American Express Silver - Mastercard Classic
Visa Electron
The Visa Electron is a low-end card, very specific as it triggers an authorization demand for each use, regardless of the transaction amount.Like its competitor Mastercard, Visa offers prepaid cards, either type of Visa, debit Visa or Visa Electron.
It is cheaper than the Visa Classic, although its use is more expensive for banks and stores (because of the systematic demand of authorization).
Some banks rename it, for instance Realys in La Banque Postale or Sensea in Caisse d’Epargne.
The V-PAY card is a new low-end model payment card delivered by Visa. It presents the particularity to be only usable in Europe, in SEPA zone. The E-Blue Card is a card that is only aimed at paying online.It is an option associated with Visa and Mastercard.
Prepaid Visa - European Maestro of MasterCard - No rival for American Express
In 2014, Visa is the 69th most known brand in the world. Consumers' trust of the brand, and wide business endorsement place Visa in a strong position.Combine that with big data at its heart and it is clear that Visa has the potential to be a big player in the Age of You.
Everyone has heard about this slogan at least once in his life. If not, then you should ask yorself real questions. What is really MasterCard ?
ID
MASTERCARD
History
Created in 1979, brand from the MasterCard Incorporated company
Sector
Banking and Financial services
Competitors
Visa
SWOT analysis
Different types of credit cards
MasterCard offers different types of credit cards, to suit anyone depending to their needs.
There are some of them, the most known.
Marketing differenciation
MasterCard has used 2 main things to differenciate themselves from the competition :
A real advertisement campain named « pricelesss » : launched by McCann-Erickson and launched in October 1997. She is currently presented in more than 100 countries, in more than 50 languages
Their logo : Two imbricated circles representing a promise of quality, and integrated in each brand of MasterCard, to illustrate their complementarity.
This is a summary of what you should know about MasterCard to begin. We will know more about it trough our articles.
History- Founded in 1850 in New York by Henry Wells, William G. Fargo, and John Butterfield, the American Express company (Amex) was much like FedEx, providing delivery services of money and goods between the east and west coasts. Most of its business clients were banks, which might be what inspired the company to start providing financial services.In 1882 American Express started offering money orders, and offered in 1891 the world’s first traveler’s cheque. Then, the company started establishing relationships in Europe and its international banking operations officially began in 1903. In 1906 American Express was given an exclusive contract to provide currency exchange to immigrants coming through Ellis Island. Finally, the first American Express credit card was issued in 1958.
Nowadays, this international group is present in travelling and in 4 domains in financial services: - Business travelling & Exchange - Corporate cards (issuing payment cards for Corporate companies) - Payments cards for individuals and small business - Monitoring the merchant network accepting Amex cards Moreover, the company employs more than 60 000 persons around the world (130 countries). The Brand - Not only is Amex an important company, but it is also a powerful brand. As a matter of fact, the group is the 24th international brand, according to the Interbrand ranking. To achieve this result, Amex has defined a vision and several values.
The vision: "We work hard every day to make American Express the world's most respected service brand"
The values also called the "Blue Box Values"
1.Customer Commitment
2.Quality
3.Integrity
4.Teamwork
5.Respect for People
6.Good Citizenship
7.A Will to Win
8.Personal Accountability This vision and values are guidelines for all Amex employees but there are especially strong elements of the American Express brand.
Concurrence & added-value- Contrary to its concurrents Visa and MasterCard, Amex is viewed as a high quality credit card service provider and its brand is associated to luxury. Indeed, Amex cards are not aimed at everyone because apart from the high annual fees, the main eligibility criterion is the annual revenue. As a consequence, to understand the brand positioning, we need to get familiar with its products. Let’s take the example of individual credit cards in the French Market.
The products
PRY - American Express only
Cobrand - Air France KLM/ Amex
Blue
Green
Gold
Platinum
Centurion
Silver
Gold
Platinum
Eligibility criteria: annual revenues
20 000 €
35 000 €
50 000 €
80 000 €
More than 100 000 €
20 000 €
30 000 €
65 000 €
The American Express cards are more than credit card because they provide many services and advantages. Here is a short list of them:
Exclusive access to concerts, restaurants, private sales, private lounges (Airport lounges, Disney World lounges)
Access to special offers
Access to a dedicated travel agency
A Concierge Service that can help managing clients projects such as a trip organization or a wedding planning
Gaining Miles® with the co-branded Air France KLM cards
To conclude, all these elements highlight American Express brand strategy. Sources : http://about.americanexpress.com/oc/whoweare/
We have seen that 3 major brands are competing in the credit cards market and we have highlighted their main value proposition, branding strategies and tactics to gain visibility.
This article will focus on co-branded cards, that have appeared to be issued frequently in the last decade.
Co-branding? What are we talking about ?
We define co-branding in this sector as a card branded by a network (Amex, Mastercard, Visa) that is issued with a commercial firm (airlines, department stores, supermarkets). It has turned out to be a great way to increase brand awareness for both credit cards issuers as well as companies willing to enhance loyalty.
Co-brands have appeared in virtually every industry. There are thousands of co-brand and affinity programs in the market (well over eight thousand in the US).The value-added features as well as financial benefits linked to these cards have become very attractive over time – it is recognized as an effective accelerator for helping merchant partners gain exposure and strengthen loyalty.
How do you partner with a company or a card brand?
Credit card brands partner with segmented companies but companies partner as well with targeted partners regarding their customer profiles.The rule is this one: a card brand has to be aligned with its customer needs, its behavior and its habits. The scheme that has been acknowledged and respected has been for years since the 1980s: -Common credit card issuers as Mastercard & Visa partner with lifestyle and “everyday expenses” companies (Walmart co-branded Visa cards, BP co-branded Mastercard...) -Companies targeting Upper middle class consumers go Amex and partner with airlines and department stores as their consumers tend to spend high amount of money and need comprehensive wealth management solutions.
Co-branded AmEx are interesting as they seem to have an appropriate value proposition to their customers.If we focus on the Air France-KLM co-branded AmEx that gives you 2, 4 or 8 free qualifying flights (depending on your tier) that are helpful to maintain or upgrade your frequent flyer status, therefore being highly-attractive to frequent upper-class flyers.We can assume AF-KLM has partnered AmEx to both be recognized as an “upper-class” service provider and keep the “high-end” image of AF-KLM as it is.
Air France - KLM co-branded American Express
But credit cards are going global and issuers need to adapt their partnership strategies. As AMEX is growing slowly in emerging economies – its high commissioning requirements are making its life uneasy. Mastercard and Visa have therefore jumped in the airline market in emerging economies.
Saudi Airlines co-branded Mastercard
Garuda Indonesia co-branded Visa
Today, most of the emerging countries airlines have gone Visa or Mastercard to allow attraction to potential customers to use cards that are not facing acceptance issues.
We can then claim that co-brand is today a challenging market in the loyalty programs where Visa, Mastercard and AMEX are competing to offer the most interesting ROI (with their membership reward policy) to their customers while earning money. Having a loyalty card drives you loyal to the brand and eager to spend more for specific products/services, therefore making it profitable for the network and the companies.
Preliminary note: This article will only cover Visa and Mastercard, as these two brands are the most widely used worldwide and the more interesting from a advertising and promotion standpoint.
3 billion Visa and Mastercard cards are issued in the world, leveraging these brands are worldwide first card issuers and lagging American Express and Discover at the 3rd and 4th position.
Differentiating each other is not easy though: competition is tough and marketers first included new services to distinguish each other and generate new sources of revenues and loyalty.
In spite of this new marketing effort, new features and services to our banking cards were not sufficient enough. Visa and Mastercard felt the need in the 90s to design an “outside of the box” brand identity that make sense to cardholders and enhance their loyalty to the brand.
In 1997, Mastercard launched its “Priceless” campaign fulfilling the following goals:
- Launching A globalized campaign: one message fits for all - align branding and communications objectives. (Note : Priceless ads run in 110 countries and in 51 languages)
- Creating A one-word message: easier to keep in mind
- Focus on emotions – we all know cards are linked to money, let’s find new avenues to customer's sensitivity
As a response to that, Visa has launched localized campaigns. In France, it has been based on love and then on the sort of risks you can face if you do not use your Visa to pay for a bill. It hasn’t been as successful in terms of branding - due to a lack of alignment and coherence over the years and countries, making the message conveyed by Visa confused.
In spite of Mastercard communcations, Visa is still having the biggest market share … but “Priceless” campaign has been very profitable for Mastercard, as they have captured consumers making them move away from checks and cash to cards, regardless of the amount of money they spend.
We think as well that Mastercard has constantly improved its branding since “Priceless” has been launched. The introduction of “Priceless cities” for example, an exclusive Mastercard service, is a relevant example of “on-brand improvement”, focusing on “once-in-a-lifetime”, priceless experiences.
Mastercard Priceless campaign at Ski Dubai - November 2014
Brands of banking cards compete of creativity in term of differentiation of their credit card. As the first contact we have with the card is visual, it seems obvious that the design of the card is important.
One of the offer of banks is to allow their consumers to personalize their credits cards. No one could have missed the tendency of the do-it-yourself (DIY), the objective being to have a singular product made by us. Therefore, this offer seems very interesting.
Other types of cards, more improbable exist. For example we have:
The transparent card or mirror effect
The perfumed card
The flexible card
Cards that light up.
When luxury is added to the recipe, we can reach the VISA infinite with the diamond incrusted. That makes dream!
And you, what’s the particularity of your credit card?
