prepaid mobile 2004: developing cost-effective campaigns for implementing prepaid vas sumera khan...
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Prepaid Mobile 2004: Developing Cost-Effective
Campaigns For Implementing Prepaid VAS
Sumera Khan
Manager VAS – Mobilink Pakistan
Pakistan Mobile Communications (Pvt.) Limited 2
Presentation Outline
Developing Cost-Effective Campaigns For Implementing Prepaid VAS
Country Background Mobile industry in Pakistan Mobilink – The Largest Cellular Company in Pakistan Leveraging segmentation Potential of new Value Added Service Mobilink strategies for rolling out VAS Pricing strategy for VAS VAS strategies to control churn Conclusion
Pakistan Mobile Communications (Pvt.) Limited 3
Country Background - Pakistan
Pakistan Mobile Communications (Pvt.) Limited 4
7th populous nation - 150 million
Urban population – 33%
Current fiscal growth to exceed 5.5%.
Forex Reserves US $ 11.5 Billion
Stock Market Capitalization Crossed US $ 20 Billion
GDP Per Capita projected at $ 600 (officially double)
Pakistan – Economic Outlook
Pakistan Mobile Communications (Pvt.) Limited 5
Cost-Effective Campaigns For Implementing Prepaid VAS
Country Background Telecom Industry in Pakistan Mobilink – The Largest Cellular Company in Pakistan Potential of new Value Added Service Leveraging Segmentation Mobilink strategies for Rolling out VAS Pricing strategy for VAS VAS strategies to control churn Conclusion
Pakistan Mobile Communications (Pvt.) Limited 6
Population 150 M
Landlines 4.2 M
Cellular Connections 4.7 M
Tele-density Cellular 2.6%
Tele-density Landlines 2.8%
Mobile Operators Operational 4New Licenses 2
Industry growth (CAGR: 1998-2003)
67%
Pakistan’s Telecom Landscape
Pakistan Mobile Communications (Pvt.) Limited 7
Cumulative Market Shares as of May 2004
Ufone18%
Paktel6%
Instaphone11%
Mobilink64%
•Total Industry Size: 4.73 Million
Company Subs (Millions)
Mobilink 3.1
Ufone 0.85
Paktel 0.27
Instaphone 0.51
Pakistan Mobile Communications (Pvt.) Limited 8
Pakistan’s Telecom Market
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Subs
crib
ers
(000
)
Fixed Line Cellular
Pakistan Mobile Communications (Pvt.) Limited 9
Opportunities: Low tele-density Decreasing taxes & call charges Upgraded infrastructure of telecom/internet permeating
semi-urban & rural regions
Threats: WLL for business/private use, proliferation of all public
call offices
Pakistan’s Cellular Industry - continued
Pakistan Mobile Communications (Pvt.) Limited 10
Cost-Effective Campaigns For Implementing Prepaid VAS
Country Background Mobile industry in Pakistan Mobilink – The Largest Cellular Company in Pakistan Leveraging segmentation Potential of new Value Added Service Mobilink strategies for rolling out VAS Pricing strategy for VAS VAS strategies to control churn Conclusion1
Pakistan Mobile Communications (Pvt.) Limited 11
Mobilink in Pakistan
Started operations in 1994
Subsidiary of Orascom Telecom
64% of the market share today
Every 50th Pakistani uses a Mobilink Connection
GPRS launch planned in 1month
2001
2 M
0.4 M
4 M (projected)
2002
2003
2004
0.9 M
Pakistan Mobile Communications (Pvt.) Limited 12
98% Jazz - Prepaid sales
ARPU – Approx 11USD
Objectives:
Enhance ARPU Reduce Churn
Mobilink in Pakistan - continued
Pakistan Mobile Communications (Pvt.) Limited 13
Cost-Effective Campaigns For Implementing Prepaid VAS
Country Background Mobile industry in Pakistan Mobilink – The Largest Cellular Company in Pakistan Leveraging segmentation Potential of new Value Added Service Mobilink strategies for rolling out VAS Pricing strategy for VAS VAS strategies to control churn Conclusion
Pakistan Mobile Communications (Pvt.) Limited 14
Prepaid Market Dynamics
Why Market segmentation ?
Segmentation is a process of dividing large, heterogeneous populations into smaller, homogenous groups and creating, based on research, customized and more desirable products, services, and messages
Understand market potential Understand market need Develop the market = Translate need into product
Helps to
Divide
&
Conquer
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Objective:
To determine the relative importance of upfront cost, tariff, VAS and brand name for existing
and potential customers
Research
Potential of new Value Added Service
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Potential of new Value Added Service
Prepaid market trend :
Prepaid users spend on average one third less than postpaid users
Average annual prepaid churn rate is much higher than postpaid
Prepaid customer knowledge is mandatory to reduce customer churn
Pakistan Mobile Communications (Pvt.) Limited 17
Major Segments
High usage• Business - SMEs• Fun seekers
Teenagers & College Students Medium usage
• Business – Micro• Housewives
Low usage• Blue Collar• Students / Low-budget personal users• Retired people
Jazz Market Segmentation
Pakistan Mobile Communications (Pvt.) Limited 18
Jazz Market Segmentation
Segment Description Value
Business
MediumStudents/housewives/retired adults. Mobile helps keep in
touch with community
Credit Challenged
Fun Seekers. Mainly use mobile for socializing & are at leading
edge of life
Self employed individuals who use their mobiles for professional
purposes
Youth High
High
LowMix of youth & Adults – low
personal usage. Low literacy, Urdu only
Functional
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What attributes are important ? Identify untapped markets? External Research Internal
• Usage Records• Customer Service Feedback
Leveraging Segmentation
Pakistan Mobile Communications (Pvt.) Limited 20
Cost-Effective Campaigns For Implementing Prepaid VAS
Country Background Mobile industry in Pakistan Mobilink – The Largest Cellular Company in Pakistan Leveraging segmentation model Potential of new Value Added Service Mobilink strategies for rolling out VAS Pricing strategy for VAS VAS strategies to control churn Conclusion
Pakistan Mobile Communications (Pvt.) Limited 21
Breakup of Data revenue – Aug’04
SMS (Person to Person) 82%
PowerTools (Content Based Services) 11%
Premium IVR Services 2%
Subscription Based Services 4.5%
SMS – TV/Radio Services 0.5%
Overall Revenue contribution 9%
Pakistan Mobile Communications (Pvt.) Limited 22
Research Findings
Key Buying Factors:• Free or low charged SMS• Affordable Value Added Serviced• Customer Service• Coverage• Reduced connection/Calling charges• Low Denomination Cards• Roaming Facility
Technology Has Had a High Impact on Lifestyles Top of Mind Recall: Mobiles, computers, and
media Technology = Staying in touch Timely Information is a priority for professionals
& businessmen
Potential of new Value Added Service
Pakistan Mobile Communications (Pvt.) Limited 23
Cost-Effective Campaigns For Implementing Prepaid VAS
Country Background Mobile industry in Pakistan Mobilink – The Largest Cellular Company in Pakistan Leveraging segmentation model Potential of new Value Added Service Mobilink strategies for rolling out VAS Pricing strategy for VAS VAS strategies to control churn Conclusion
Pakistan Mobile Communications (Pvt.) Limited 24
VAS Strategy
Retain & Grow customer base
Maximize penetration by income level Retain customers through bundling and further segmentation Discover the high value Prepaid customers Anticipate & minimize churn from high-value, high risk
customers Target with specific offerings
Stimulate usage & ARPU:
Offer multiple recharge methods to drive usage Traffic bundling and flat rates, increasing weight of fixed
charges Introduce new VAS
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Segment - Product Line Enhancement
Educate – Communication Strategy
Stimulate – Entice trial & Usage
KIS – “Keep it simple !”
Strategy to rollout Prepaid VAS
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Jazz Market Segmentation
Segment Strategy
Business
Products that promote community interaction, friendship & fun
Credit Challenged
Rollout innovative services that are focused on entertainment and customization
Retention of customers through adding value to their business
Youth
Promote frequent usage by facilitating friends & family communication. Proactively educate on
use & benefits of SMS & IVR based servicesFunctional
Pakistan Mobile Communications (Pvt.) Limited 27
Increasing ARPU – The Next Step
High VAS revenue generating segment : Business and Fun Seekers.
General PersonalizedContent/Service Content/Service
Financial News Stock AlertsSMS Chat Community Chat/MSN Dictionary M-BankingRing tones Funky Dial Tones
Pakistan Mobile Communications (Pvt.) Limited 28
Service Target Group How?
Community Portal Funseekers & Business Increases SMS interaction between closed groups
Fax Mail Business / Professionals Subscription based service for SOHO
Missed Call Alert Business & Professionals Subscription based & increases voice/SMS usage
Increasing ARPU – How?
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Increasing ARPU – How?
Service Target Group How?
M-Banking (info)
Business Customized Alert Service. Bank pays for MT SMS, User pays MO.
G-Mail Business Will soon be converted to subscription-based, Email-SMS
Cricket Alerts All Segments Subscription based, taps the local passion for cricket.
Funky Dial Tones
All Segments Subscription based
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Key Components of VAS Strategy
Attractive Pricing
Attractive business models
Distribution
Marketing CRM
Mobile Terminal
Network
Mobile support service
Compelling content
Satisfied customer
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Cost-Effective Campaigns For Implementing Prepaid VAS
Country Background Mobile industry in Pakistan Mobilink – The Largest Cellular Company in Pakistan Potential of new Value Added Service Leveraging segmentation model to maximize VAS
penetration Mobilink strategies for rolling out VAS Pricing strategy for VAS VAS strategies to control churn Conclusion
Pakistan Mobile Communications (Pvt.) Limited 32
VAS Pricing Strategy Begins and ends with
customer in mind
Focus on simplicity and transparency
Evolution from standard to premium priced content
Pricing will continue to be used as a promotional tool
Pricing will compliment our core VAS strategy – increase penetration
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Pricing Proposals and Deals – continued
Present : Simple
• Event based : All services marketed by Mobilink were ‘standard’ priced
• Subscription based: relatively new strategy for services where the number of MTs were largely unknown
Reference point = customer’s perception of value
Future : Price based on :
• Type of content (commodity vs differentiated/high value)• More attractive for high usage / valuable customers• MT based
Pakistan Mobile Communications (Pvt.) Limited 34
Case Study 1: Missed Calls Alerts
Service / Objective Customer receives an SMS of calls missed when out of
coverage/switched off. Initially launched for Postpaid subscriber only.
Methodology Branded as MCA, for corporate customers Activation by sending an SMS to a LA Offered FOC for 2 months trial to all postpaid customers
Results More than 10k active postpaid subscribers after trial
period ended MOU increased for subscribers
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Learning
Free trial period proved to be successful Simple activation process made it easier for the
customer to opt in / out Several features of the application stimulated users to
try it Cultural inhibition of ‘interacting’ with a
machine/computer (IVR) made voice mail a highly segmented service
Launch through ATL was greatly supported by the Free Trial Period
Increased ARPU through subscription & stimulated voice/SMS usage
Utility of the service is high 11
Pakistan Mobile Communications (Pvt.) Limited 36
Cost-Effective Campaigns For Implementing Prepaid VAS
Country Background Mobile industry in Pakistan Mobilink – The Largest Cellular Company in Pakistan Potential of new Value Added Service Leveraging segmentation model to maximize VAS
penetration Mobilink strategies for rolling out VAS Pricing strategy for VAS VAS strategies to control churn Conclusion
Pakistan Mobile Communications (Pvt.) Limited 37
Churn management
Understanding of present market needs and dislikes
Quality not Quantity
Image improvement – branding and positioning
Product prioritization, sticky services!
Investment in loyalty programs
Turning the anonymous to known and loyal
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Churn management
Customer knowledge management to support churn management
Key customer data• Marketing data• Customer care data• Billing data• Polls, focus groups• Informal customer feedback• Data on competition• Social-demographic data• etc
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Churn management
Segmentation & Identification of existingCustomer profile
Identify customers with high churn risk
Maximize customers satisfaction
Identify potential VAS targets
Lower the churn rate Maximize customer value
Propensity to churn
Value Score
Increase customer’s lifetime value
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Churn Management
Loyalty Programs – • Free trials & incentives to
encourage customer to try new services & simultaneously increase satisfaction
• deals Multiple recharge solutions Segmented pricing Innovative services & Sticky
Services - Introduce P2P services & Personalized Content that keep customers from changing carriers
Pakistan Mobile Communications (Pvt.) Limited 41
Cost-Effective Campaigns For Implementing Prepaid VAS
Country Background Mobile industry in Pakistan Mobilink – The Largest Cellular Company in Pakistan Potential of new Value Added Service Leveraging segmentation model to maximize VAS
penetration Mobilink strategies for rolling out VAS Pricing strategy for VAS VAS strategies to control churn Conclusion
Pakistan Mobile Communications (Pvt.) Limited 42
Conclusion
Focus on Youth Provide leading business services through additional channels
to increase data revenues on the back of sms success Offer innovative VAS that leverage new handsets’ rich feature There is money to be made through new customer segments &
leveraging existing customers with new services Personalized content increases customer satisfaction, creates
stickiness, & increases ARPU The most lucrative segment of our prepaid market wishes to
keep it simple, remember this when developing content Don’t leave money on the table!!
Thank youThank You