Dexit – A Marketing Opportunity Essay Example

play a significant role in Dixie's development in the electronic payment industry, its purpose is not to compete with these forms of payment for high-value transactions. Instead, it aims to replace cash and debit cards for low-value transactions by utilizing RIFF technology to increase efficiency. A Dixie tag allows for purchases without the need for loose change or swiping a payment card.

However, at present Dixie cannot entirely replace debit card systems as it does not encompass all aspects like Interact and online payment systems. It operates as a cash substitute during the purchasing process for small payments requiring funds pre-loaded onto the account.When the pre-paid balance is used up, it becomes necessary to refill the account. For Dixie, determining the segmentation strategy is crucial. Before launching Deist, Dixie must identify the target customers for both consumer (users of the Dixie tag) and merchants (users of the Dixie POS terminals). In terms of the consumer market, Dixie has considered segmenting based on psychological factors. As for the merchant market, geographic segmentation with a focus on retailers is being contemplated. However, there are still uncertainties surrounding the consumer market, such as whether early adopters attracted by innovative technology will become long-term heavy users. On the other hand, in order to provide convenience, efficiency, reliability, and faster cashless transactions to customers, Dixie aims to offer a low-value electronic payment service. According to estimates from 2003 mentioned in the case study, Canada's payment industry had a market size of $536 billion. Cash/cheese accounted for $1 billion while debit and Visa/Mastered had market sizes of $11 billion and $151 billion respectively. The average transaction size for cash/cheese was approximately $4.5

with a total of around 60 billion transactions in 2003. Overall, Dixie's service focuses on quick prepaid transactions with low values.
When segmenting the market, one must consider the value proposition. Dixie's goal is to provide a convenient and quick payment method for nonusers, making their tag an essential part of everyday life. Acquiring consumers is crucial for Dixie's Segmentation Strategy, ensuring that early adopters become regular and habitual users. To overcome initial doubts about trying a new payment method, it is vital to simplify the process as much as possible. Encouraging consumers to try new things and generating interest are also important factors. The tag's speed and reliability make it highly appealing, while partnering with reputable companies instills further confidence in the Dixie tag. Once signed up and equipped with their own tag, consumers will be impressed by its simplicity and speed, leading them to use it at all merchant locations that accept it. This offers a better solution for meeting their needs, saving time, and eliminating concerns about dealing with cash. The target segment should comprise customers who desire a low-value, cashless payment option that is easy and fast - simplifying their lives. Many stores still rely on cash payments which decreases cashier efficiency; convenience stores and fast food restaurants would especially benefit from this service.
Consumers who shop at certain merchant locations desire fast service, but many of these stores primarily handle cash or debit cards, resulting in slow payment processing or renovations. We believe that numerous individuals residing in Canada have encountered lengthy queues at Tim Horton's for a cup of coffee and ultimately left due to insufficient time or patience to wait

any longer. However, transactions completed with Dixie tags require less than 3 seconds, leading to enhanced cashier efficiency and decreased instances of customers leaving without making a purchase. By implementing the Dixie product and service, merchants can benefit from quicker processing times and higher sales per unit, consequently generating more revenue. The most promising potential market for Dixie would include merchants in industries such as fast food (e.g., Tim Horton's, McDonald's, KFC), cafeterias on campuses and large corporations; national chained convenience stores (e.g., Circle K and 7-Eleven); as well as gasoline stations. Given the time constraints and efficiency concerns within these industries, the Dixie RIFF product and service offer a more suitable solution. It is advised that Dixie focuses on retail locations where the average ticket size is below $25 by providing a simplified and expedited electronic payment method as an alternative to cash. Furthermore, Dixie should target customers seeking a convenient and swift way to pay for goods and services.Dixie's plan to charge consumers and merchants for their service raises concerns about the appropriateness and feasibility of this pricing strategy. While Dixie aims to generate revenue through these charges, they are unsure how customers will respond to the extra fees and how to effectively charge merchants. It is crucial for the company to devise the best pricing strategy, considering its indirect influence from strategic positioning. Specifically designed for high-frequency, low-value transactions in retail businesses, Dixie is expected to benefit customers with transaction values that add two percent to four percent, as suggested in initial consulting reports. However, implementing fees for every transaction may not be logical and could make Dixie less appealing to many

customers.

Customers might resist this new product due to unexpected additional fees. Similar systems like Dixie have seen poor customer responses despite offering $15 credit incentives, as demonstrated by Monde's failed test run. Unlike Dixie, many of Deist's competitors (such as credit cards, debit cards, and cash) do not directly charge transaction fees to customers. Therefore, Dixie faces challenges in entering the market and gaining customer acceptance without incentives but with added charges.

Merchants often charge service fees to benefit from Dixie's solutions, which solve problems and boost revenues. Retail businesses aim to offer convenience, shorter wait times, and faster customer service for small purchases, especially during peak hours. Therefore, retailers are constantly seeking new ways to improve customer satisfaction and differentiate themselves based on convenience, price, and service.

Dixie is the perfect solution for retailers as it addresses their needs by reducing wait times, improving service efficiency, enhancing customer satisfaction, and retaining loyal customers while attracting new ones. During the launch period of Dixie, certain promotion strategies should be implemented. Firstly, they can help retailers reduce costs and increase profits by tackling challenges related to managing small transactions such as employee fraud, theft, counterfeit currency issues,and time-consuming manual recording of cash transactions.

Dixie's solution involves allowing customers to deposit a minimum of $15 in their account to earn interest on these funds. This eliminates the need for customers to directly pay for their purchases.Additionally,Dixie estimates that most customers would find a $15 deposit reasonable since they may use their accounts for purchases up to $25.

To successfully enter the market, Dixie should employ a penetration pricing strategy by charging lower fees to merchants, at

least lower than credit card fees. This will attract more merchants and help Dixie establish a foothold in the market. Additionally, Dixie could charge merchants a set subscription fee per month and offer them lower prices or a free trial of the product. This will incentivize merchants to adopt Dixie's services and build initial customer loyalty.

During the launch period, it is crucial for Dixie to focus on promoting its cost-saving solutions for retailers, employing penetration pricing, offering subscription plans to merchants, and providing incentives for early adoption. The key to success in the electronic payment system is increasing usage of the Dixie tag. To achieve this goal, attracting a significant number of users and participating merchants is important.

Marketing communications play a critical role in informing prospects about Dixie - how to use the tag and where to get it. It is also necessary to highlight the benefits of using Dixie for both buyers and sellers while creating a positive image and perception of the brand. Various methods can be implemented effectively promote and advertise this product.

To optimize economic advantages, we suggest employing a blend of push and pull tactics to promote Dixie. The push approach centers on engaging merchants by employing a sales force to inform, persuade, and influence potential partners during the initial phase. Given that adopting Dixie transactions requires altering consumer behavior, it is crucial for sales personnel to thoroughly explain all product and service attributes while highlighting benefits for both merchants and customers.

Furthermore, sales personnel play a vital role in convincing customers by distinguishing Dixie from its competitors. They can encourage customers to try out and assess the product and

service with the aim of establishing enduring relationships. Although the cost of selling per contact through personnel is high, it remains indispensable for the launch period. Considering target industries such as food establishments, campus cafeterias, companies, national chained convenience stores, and gasoline stations in Toronto city; we recommend having 5-6 salespeople initially. This number could be increased with an expansion in jointed merchants. In the long run, management would be more manageable as these industries are already familiar with transaction processes.

The pull strategy concentrates on attracting tag users.

The strategies for promoting Dixie's service involve traditional advertising methods such as television, radio, newspapers, subway shelters, and indoor and outdoor kiosks. These advertisements are aimed at directly reaching customers and encouraging them to ask for Dixie's service. This approach also helps in brand development. It is important to note that getting merchants on board is only half the battle; acquiring customers holds equal significance. Since Dixie's user base can range across different age groups, income levels, and industries, it is crucial to have a wide advertisement coverage for maximum effectiveness.

Additionally, collaborating with reputable merchants enhances both the merchant and customer confidence. Television and radio ads will run every weekend in newspapers for three months across 60 sites along highways. Busy malls will have one indoor kiosk set up while there will be eight high-traffic sites with outdoor kiosks.

The total cost of advertising for three months amounts to approximately $1 (See Exhibit 1). The launch strategy for Deist's future development revolves around establishing a large customer base consisting of both merchants and consumers. To achieve this goal, Deist needs to carefully plan its distribution strategy by deciding

where to launch its service.The options being considered for launching Deist's services include a national roll, launching just in Ontario, or focusing on a specific area like Toronto. Dixie needs to understand the advantages and disadvantages of each alternative.

A national roll would be the best way to reach a large customer base and gain a first mover advantage across the country. However, there is also a high risk involved as it requires significant financial losses. Additionally, if the launch fails, negative press coverage could have detrimental effects on the company. Despite its appeal, Dixie cannot afford to conduct a national launch due to its small size.

Launching in Toronto offers a more focused and cost-effective approach compared to a national roll. The Downtown Toronto area has an ideal mix of merchants and potential consumers who regularly purchase goods from participating Dixie merchants. Managing and controlling service quality is also easier in this location. However, it should not be Deist's ultimate focus as Toronto is limited market-wise.

On the other hand, launching in Ontario as a whole provides access to a larger customer base compared to just Toronto alone.This option requires more resources, but the statistics show significant potential with 116,241 Ontario merchants adopting the interact direct payment method and 775 million transactions occurring. However, not all cities in Ontario have a significant influence. After analyzing the alternatives, it is believed that Dixie should roll out the launch gradually to manage it closely and minimize risks. This approach is crucial given that they are partnering with leading financial institutions and mobile operators in Canada's largest city.

The potential for success is high as Deist's can quickly expand to a

large number of stores in a specific area. The system becoming more attractive to residents of the area and their willingness to embrace it is an important factor. If the system is successful in Toronto, it should be quickly expanded on a larger scale.

Based on our analysis, Dixie has great market potential and offers a simplified and fast electronic payment method that is competitive. It provides an easy and efficient alternative to cash payments for both customers and merchants.

Additionally, we suggest that Dixie focus on various aspects in the future. For future development, we recommend Dixie to continue using a cross-industry merchant strategy to access a larger customer base.This means allowing consumers to use their Dixie tag at different types and brands of merchants.Dixie should take inspiration from the success of Octopus Card in Hong Kong and strive to provide a service that is available everywhere in the city. This will encourage consumers to use the tag multiple times a day, strengthening their purchasing behavior and solidifying Dixie as an essential lifestyle device. To demonstrate leadership for other markets, Dixie should make Toronto a successful testing ground. In summary, Deist aims to expand its target industries beyond those mentioned above, such as parking, bus transportation, underground services, railway systems, and video rental and movie theaters. Their objective is to establish their tag as a comprehensive "Toronto Pass" solution for cashless payment that not only enables quick and convenient transactions at point of sale but also simplifies people's lives.