Second annual survey into operators` best and worst marketing practices
A recent study by International Data Corporation (IDC) finds that declining prices and different payment methods such as prepaid have increased cellular penetration but as competition intensifies and prices falls, the cellular market grows more fickle and unstable. Increased competition, attractive customer incentives and fewer barriers to changing operators are all working to push up churn levels.
"If churn rates are to fall, the emphasis must shift away from attracting any customer to attracting the right kind," said Giulia Rancati, Senior Analyst for IDC`s European Wireless and Mobile Communication Programme. "Operators are now realising that growth at any price must be controlled - customer acquisition programmes must be more discriminating and market segmentation must be effective in order for all operators to be able to correctly identify and target the most profitable customers." IDC believes that one of the most important survival strategies of the next few years will be to shift the business emphasis from a culture of `customer acquisition at any expense` to one of customer retention.
"Since all digital services in Europe are based on the same GSM standard, analysing successes and failures in this region allows technology choice to be discarded as a critical success factor," said Rancati. "If one carrier performs better than another in the same market, the difference must be due to marketing, strategic and business planning." Outside influences, such as cultural, economic or regulatory factors also play their part but these can be manipulated to a certain extent by the marketing strategy.
IDC identified new marketing practices that other carriers should emulate to improve their market position, such as more focused tariff strategies, reducing subsidies and the implementation of long term marketing strategies in order to fulfil an acceptable return on investment (ROI). To be avoided at all cost were investing heavily on indiscriminate customer acquisition and the lack of significant customer retention programmes.
Changing Marketing Strategies in the European Cellular Industry, 1998 (#HW03E) details the findings of IDC`s project to benchmark the marketing practices of Europe`s major GSM operators. This report, based on a survey of 18 operators in the region, includes market trends, competitive survival strategies, operator marketing practices and the best and worst practices across Europe. The report is available to purchase from your local IDC office.
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