PETER S.P. DIMSEY, president of MasterCard's U.S. region since 1991, brought a consumer marketing background to the association in 1988, when he was natned executive vice president. Before that, the 57-year-old British native spent more than 20 years in senior marketing positions at General Foods, Avis, Kenyon & Eckhardt Advertising, and Seagram.

In this recent conversation with American Banker's Jeffrey Kutler, Mr. Dimsey discussed how he applied his nonbanking background to MasterCard's challenges, including the need to set a consistent advertising strategy and deal with increasingly complex technological changes.

YOU CAME TO MASTERCARD FROM A VERY DIfFeRENT BUSINESS. HOW DID YOU PERCEIVE THE CREDIT CARD INDUSTRY FROM THE OUTSIDE?

As a consumer I think I was very typical. I had an American Express Gold Card, obtained early in my career, and I had a MasterCard from Connecticut National Bank, the bank that gave me my first mortgage.

What gave me my strongest perception about the business in general was that among marketing people at General Foods, where I spent a large portion of my career, financial services was regarded as a very interesting, evolving area. One of our stars, Rick Braddock, went from there to Citibank and did exceptionally well [he is a former president], and a number of others subsequently left for American Express, Citibank, and other financial institutions.

I had always thought this was an interesting business because of the rapidly changing product mix, the new services being provided, and the kind of growth we didn't see in grocery-product shelves.

WHEN YOU BECAME RESPONSIBLE FOR THIS COMPANY AND ITS BRAND, WHAT CHANGED?

I started accumulating lots of my members' cards. Pretty soon after that we came out with the MasterCard Business Card, which made my business life a lot simpler. The fact that I have a fair number of MasterCards allows me to experience the various services and take advantage of some of the nice benefits they offer. It's important in any line of business that you use the products you are selling, because it gives you a better perspective.

I also have learned, and can operate, a home banking system, and I pay bills via Checkflee, our partner in the Master Banking program. It's all part of understanding the business.

I was always aware that my original MasterCard was accepted in many more places than American Express. When I arrived at MasterCard, the idea of additional benefits, starting with the frequent flyer cards, was just getting started. It also became clear that one only needed a single card for most purposes--it wasn't necessary to carry very many.

DID YOU BRING WITH YOU THE PRODUCT-LIFE-CYCLE THEORIES THAT SEEM SO PREVALENT IN CONSUMER GOODS, AND THAT LED SOME OBSERVERS TO CALL THE CREDIT CARD BUSINESS MATURE?

I'm not sure I'm a believer in life-cycle theory. It tends to be a self-fulfilling promise. At General Foods we had Maxwell House, which was around for a very, very long time. If you keep the product current with consumers' needs, you can keep rejuvenating it

I was attracted to MasterCard not only because it was in an interesting, dynamic industry, but as I looked more into it I found it to be a vastly under-leveraged brand. That is something that intrigues marketing folks.

WHAT DO YOU MEAN BY UNDERLEVERAGED?

The brand did not stand for very much in the consumer's mind, the logo was not very attractive, many more products and services could have been added. At the time, Visa was very successful positioning itself against American Express, and MasterCard did not have a very strong positioning.

YOU HIT UPON THE STRATEGY DESCRIBED AS VALUE POSITIONING. HOW LONG DID THAT TAKE?

Less than a year. We put together a group of people within the company, plus some outside resources and Lintas, the ad agency, to address marketing strategy for the card. We looked closely at what American Express, Visa, and Discover were doing.

It quickly became apparent, based on research we were seeing, that the consumer was getting more pragmatic. The values of the 1980s had already peaked by the time I arrived at MasterCard in 1988, and people were viewing cards as something they used in their everyday lives, not as much for the prestige of it. People looked to MasterCard "for the way we really live," as we articulated it in advertising at the time.

THE VALUE-BASED THEME IS STILL GOING STRONG.

I think time has proved it to be right. It is absolutely the right direction for the financial services industry, and credit cards in particular. But you have to keep focused on the aspects of value and how they change, and maybe begin to look at segmented values--different things are important to different groups, and the market is dealing with ever more segmented appeals.

While there are still people interested in prestige, the biggest market segments are very valuedriven, interested in the product's functionality, along with rates, pricing, and benefits such as rebate points.

Ammirati & Puris, which became our ad agency in 1992, added a new dimension in saying that it was smart to look for value, that there were psychological benefits in making the smart choice. Hence the "Smart Money" theme in our advertising. It was a good platform not just for cards, but also for when we defined ourselves as a payment services company.

In our discussions with our cobranding partners and potential parmers, our positioning plays extremely well. Countless times they have told us how well it fits with what they are trying to do.

ISN'T IT INTERESTING THAT YOUR VALUE POSITIONING HAS BEEN IN PLACE FOR SEVERAL YEARS, AND VISA'S "EVERYWHERE YOU WANT TO BE" TAGLINE IS EVEN OLDER7 WHAT DOES THAT TELL US ABOUT THIS MARKETPLACE?

It tells us that you have better marketers at both associations. Most of the big success stories in brand marketing continually return to a theme. My alma mater Avis made itself on "We try harder" and came back to that later under employee ownership. The success of enduring brands is at least in part because they found a positioning, stuck with it, and it became a credo that could be reinforced by the products and services that make up the brand.

Advertising can change relatively quickly. It would be a really big issue with me if someone wanted to change MasterCard away from the value positioning, now that we've found how successful it is. But I am open to emphasizing different aspects of value. More and more members are telling me that response rates on MasterCard offerings are equal to or better than Visa, which was not the case a couple of years ago, and it's very encouraging. Those things take time, and consistency, to accomphsh.

VISA AND OTHER CARD BRANDS ARE OBVIOUSLY STILL YOUR PRINCIPAL COMPETITORS. DOESN'T THE EXPANSION INTO NEW AREAS LIKE REMOTE BANKING WIDEN THE FIELD?

In credit cards, I look at the immediate circle of competition, which is the general-purpose cards, the brands with the most interchangeability. Outside that are the single-purpose cards, the store and gas cards and the like, which historically have generated a large portion of credit card volume. And then beyond that are cash and checks. You have to keep your eye on all three of those rings.

We, as the No. 2 brand among general-purpose cards, have needed to keep our focus on that group, but I think our "Smart Money" positioning takes us beyond just general-purpose cards. We are also taking more steps to become a broader payment services company, something that began in 1988 with the acquisition of Cirrus System and that allowed us to add on to the credit card service with ATE access around the world.

If you are going to be effective in the areas where cash and checks are now, you have to look at products beyond credit. Pete Hart [MasterCard president from 1989 to early 1994], with his excellent perspective on retail banking, looked at the debit market and led us to understand that to be effective in debit we had to be effective in Europe, where debit was most developed. That led to the development and launch of Maestro, which has been an outstanding global success.

The analysis done by [MasterCard International president] Gene Lockhart when he was at First Manhattan Consulting Group for the Bank Administration Institute showed people are becoming increasingly reluctant to go to bank branches and want to do banking remotely via ATMs or phones. We're in the payments business, and payments have to include not only awayfrom-home, plastic-driven transactions, but also what takes place in the home.

It has become dear over the past year that the whole payments environment is going to be changed quite dramatically by the advent of the chip in the card. The good news is that Visa and ourselves appear to be in agreement that the chip will be important in the future from both the security standpoint and added functionality.

WHAT ARE THE BIGGEST CHALLENGES ON YOUR HORIZON?

There will be significant challenges surrounding applications of new technology, be it the chip or interactive technology in the home. Big decisions will have to be made on how to use that technology to improve value. Some people will get it right, some not quite so right.

In the industry, everywhere you look there is concentration and specialization. You see it on the issuing side, the acquiring side, among processors and regional networks. The associations that provide much of the interconnectivity for this system must must be very sensitive to the needs of a changing membership and make sure those needs are served. The members want certain core functionalities, such as in home banking, but beyond that they want to customize and differentiate themselves from competitors.

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