VeriFone's Credit Processing Box

VeriFone, Inc. manufactures the credit or debit processing box that reads the magnetic strip on a bank card. The company was founded in 1981. At the time, retailers had to get a telephone authorization on most transactions, and there was little specialized equipment for immediate processing of transactions on the market. VeriFone had reached more than half the market for retail transaction processing terminals by 1990 and had become the industry leader in new products for specialized markets. The company is today believed to have about 65 percent of a market that is continuing to expand into new areas. Revenue projects for 1993 are $270 million. In recent years VeriFone has found new markets internationally and in retail sectors that have not previously used transaction processing. In 1992, international sales were up 58 percent from 1991 and accounted for 21 percent of VeriFone's total consolidated revenues. In the first quarter of 1993, international sales were up 70 percent (Carlsen, 1993, 10A). The following is an analysis of the marketing structure of the company, analyzing the action programs that have been instituted and the ways in which the company is marketing its products in new markets and old.

Market Definition, Background, and Product Description

The market for the VeriFone products is large and growing larger. The company was founded by William Melton in 1981. Melton started an earlier company in Hawaii to write

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m enabling customers to earn points toward free gifts. The Vision terminal includes a touch-sensitive screen that can display full-color, live-action promotions sent to stores through an integrated satellite network. A wide-body printer enables retailers and manufacturers to deliver customized messages, such as direct-marketing letters, to shoppers in the checkout lane, and a separate display for the cashier shows such information as the shopper's name when the Vision Value Card is swiped. The Vision system costs $1,300 per terminal, including satellite hookup, and then a monthly fee of $650, entitling retailers to a series of promotions they can run any way they choose on the network. This makes the Vision system more expensive than that from VeriFone, but market analysts believe that APT can achieve a much wider market penetration in the long haul. The APT terminals are seen as especially valuable for promotions, but stores not interested in a frequent shopper program may also not be interested in the APT system (Fox, 1993, 97-100). Analysts examining the overall marketing environment for these terminals find that the market is growing and will continue to do so for some time to come. More and more retailers, and differen

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