Card Innovation and Competitive Advantage

Rajiv KapoorExecutive Vice President - MarketingVisa International Asia Pacific

Agenda

� Building brand equity through innovation

– Need for innovation

– Business and brand reasons

� Visa Mini

– A case review

� Beyond design……

– Integrating design with functionality

– Understanding consumer choice

– The Visa approach

The Cause for Innovation

“Business has only two functions

Marketing, and Innovation”Peter .F. Drucker

Design

Packaging

The Ely Lilly – Insulin Pen

Packaging and Design

From To To

The Scale of Innovation

High tech

Low tech

Low perceivedadded value

Technologyas the enabler

Consumer value-added perception

High perceived added value

Aggressivevisionary

Categoryshift

Marketleader

Status Quo& reactive Defensive

The Building Blocks…

ProductProduct

Marketing Marketing

Consumer InsightsConsumer Insights

BrandBrand

Business and Brand Reasons for Innovation

Competitive Differentiation

Consumer Loyalty

Building the railroads for….

…Market Advantage

Innovation – The IDEO Process

Card Design – Development Backdrop

Translucent

Inks

Foils

Holograms

Textures

Colors

Card Design Innovation - Shapes

Making Life Easier

� Dilution of the ‘Honor all Cards’ rule

� Greater flexibility

� Simplifying the rules

Quicker to market with new ideas

First True Size Innovation – Visa Mini

� Developed in response to consumer demand for

increased convenience and mobility in everyday life

� Nearly half the size of a normal card

4 0 0 0 1 2 3 4 5 8 7 8 9 0 1 0

K. A. RANDALL

2001 04/02CUSTOMERSINCE

GOODTHRU

40004 0 0 0 1 2 3 4 5 8 7 8 9 0 1 0

3 5/16”

2 1/8”

2 9/16”

1 9/16”

K. A. RANDALL

04/02GOODTHRU

4 0 0 0 1 2 3 4 5 8 7 8 9 0 1 0

The Mini Revolution

� First non-standard card to be

issued by Visa globally

– 43% smaller than standard sized card

� Issued either as companion card to

standard sized card, or as stand

alone card

� First launched in USA in October

2002, and introduced in Asia

Pacific in August 2003

Consumer Research: Key Findings

� Very positive response to Visa Mini - especially from younger segment– Powerful innovation, in line with

miniaturization trend

– Contemporary and convenient

� Drivers of interest – Practical benefits: convenience of

carrying / use

– Emotional benefits: cute / cool,

desire to own the latest

� Seen as trendy, stylish, novel

� Perceived significantly better than

any competitive offering

� Very strong acquisition interest

� Appeal of Visa Mini was in

packaging – card, accessories,

positioning, features / benefits

Consumer Research: Key Findings

Visa Mini – An Integrated Approach

� Manufacturing and personalization capability

� Develop consumer positioning and proposition– Support member banks

� Visa Mini advertising and PR – Build awareness – Demonstrate Visa leadership and

innovation

� Merchant education materials� Card designs for youth market

Visa Mini – Setting the Stage

Image Building

Business Impact

� 22 issuers of Visa Mini in 11 AP markets

� Targeted primarily at young consumers (25

– 35 years old): technology savvy, fashion

conscious, sporty

� Seen as convenient, attractive and

innovative product

Card Design

� Business Realities

– Credit market saturation and multiple card ownership

– Cards increasingly commoditized

– Difficult and expensive to develop new features / benefits

� Role of Card Design

– Most visible manifestation of product offering

– Integral part of segmentation and card marketing

– Creates strong brand impact

Going Forward…

� Card shape has fundamentally stayed unchanged� Any change in shape will impact:

– Acceptance – Brand – Consumer education– Technology / risk – Production – Costs

� Barriers have been pushed recently– Dilution of ‘Honor All Cards’ rule

• Unembossed Visa Flag cards• ‘Free Form’ cards

Festive Occasions

Gift Occasions

Pets

Home

Sport

More than just Payment…

� World first - exclusive to Visa

� Small and flexible power unit on card

� Add pre-recorded sound or message

� Activated when switch pressed or when card swiped

� Small battery-powered LCD screen linked to chip

Light LCDSound

Cardholder Designed Cards

� Global ‘first’ for Visa cardholders� Visa exclusive partnership with

technology provider – Serverside Graphics

� Simple online interface that allows cardholders to design own card online

In Conclusion

� Brand Equity through innovation

– If you don’t innovate…you die

� Visa Mini …..set the stage

– Integrated approach to big new idea

� Beyond design……closer to the consumer

– Key is to integrate product, design and functionality

– Consumer choice will drive brand preference

– Visa brand must tune in to consumer aspirations and lifestyles

Major Metrics