Value over price: while price is an obvious factor in driving usage, some operators have achieved volume growth by focusing on value rather than discounts, using segmentation and bundles to tailor their offerings
Telecom Asia, April, 2009 by D. Robert Rutledge, Guillaume Sachet
Indosat, Indonesia’s second largest mobile operator, announced in January 2008 its “Mentari First 1 Minute Free” program in response to Telkomsel promoting Rp. 0.1 per second tariff. In an acquisition driven market like Indonesia, over the last two years operators focused primarily on offering discounts in an aggressive price war. In contrast, more mature markets such as Malaysia and Singapore moved away from giving discounts and focused on value through bundled and/or segmented offers.
To understand how pricing and profit optimization initiatives can help telecom operators in ASEAN become more successful, we analyze three representative markets–Singapore, Malaysia and Indonesia–and explore how to develop a strategy for pricing and profit optimization.
Maturity differs
Our analysis shows three levels of market maturity in ASEAN telecom service providers:
Developed markets are characterized by high ARPU and market penetration, technology-driven business innovation and convergence towards media-communications business. In Singapore, there is a dear trend towards defensive strategies based on retention through re-contracting incentives and bundled offerings. Cost per minute of usage is consistent across the various operators at 11 cents per minute on average for postpaid. Mobile ARPU in Singapore is around $24 and decreasing constantly since 2003.
Mobile states are characterized by fixed-mobile substitution, broadband growth and prepaid dominance. Competition in Malaysia is increasing and with penetration levels soon reaching saturation, retention strategies will soon replace acquisition strategies, and value is becoming a key driver for operators. Similarly to Singapore, we observe a consist price (11 cents per minute for prepaid, 4 cents for post-paid). In Malaysia, mobile ARPU is also reasonably high at $20 and decreasing.
Future giants are characterized by large populations and territory, limited penetration and huge growth potential. Indonesia is currently in acquisition mode with all players trying to grow their customer base by offering simple and inexpensive plans. Loyalty is very low. No operator has ventured into bundles despite a world of possibilities (Indosat with IM2, Telkomsel with TelkomVision). In Indonesia, there is a large variance in price per minute and complexity depending on time of day, operator and area (prepaid price per minute can vary from 4 cents to 26 cents per minute, for GSM plans only). Mobile ARPU is $6 and decreasing more rapidly than in Singapore and Malaysia.
Despite differences, we observe a blurring of lines between the three markets. Indonesia is beginning to move up the maturity scale toward the mobile states, and Malaysia is moving toward developed market status. Pricing strategies are critical as they strive for revenue growth and churn reduction not only in developed markets but also in emerging countries.
As markets mature, pricing and profit optimization becomes more critical to a company’s success. In ASEAN, we observe waves of pricing activities aligned with the three markets.
Wave 1 (developed markets): Segmentation and bundling. Telcos in Singapore are now facing mobile number portability (MNP) and cannot solely compete on price. Instead they have started to use customer service to optimize their value proposition and move from discounting to segmentation and bundling.
StarHub has been offering quadruple-play bundles since its merger with SCV while SingTel launched its Mio mobile TV packages. Although the ARPU of bundles is general lower than the sum of the individual products’ ARPU, the customer’s overall customer lifetime value is higher due to the stickiness created by the bundies, resulting in lower churn. An assessment of the effects of MNP in Singapore revealed that in the first six months, M1, the only operator in Singapore with no bundling leverage, lost 0.8% market share to SingTel, while StarHub maintained its market share.
Operators are also starting to identify low margin and unprofitable customers, i.e. the “abusers” who exploit a telco’s weak points. For example, after StarHub launched free incoming calls in 2000, some customers used StarHub phones for incoming calls and SingTel or M1 for outgoing calls until all operators launched free incoming calls plans. Although operators do no officially publicize any action against abusers, we believe that with MNP in Singapore, operators will focus on retaining their best value customers and discard or find alternative ways to service abusers.
Wave 2 (mobile states): Segmentation and pricing. In Malaysia, we have not seen any bold move toward bundles. Maxis and its sister company, Astro, have explored partnerships for mobile TV, but the market does not seem mature enough for bundles. Also, the market has not reached a level of integration within companies similar to Singapore
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admin
11:14 pm on September 2, 2010
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admin
10:42 pm on September 2, 2010
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Self-fulfilling prophecy.
10. Make sure that you have enough activities and lessons to fill a day. Classroom discipline can start to get a little rocky if you have too much free time that must be filled. Avoid having free time ? this is a time that a class can get disruptive.
11. Treat your students as individuals. Know that what works for one student may not work for another. Just because 9 students understand your rules, it does not mean that the tenth student will. Students learn in different ways. All students are different. Individuals have different needs.
12. Use positive rules of classroom discipline. For instance, instead of having all of your rules say what your students should not do, have rules that state what they should. Instead of, ?Do not speak unless called on,? say, ?raise your hand if you have a question.?
Anne Clarke writes numerous articles for websites on gardening, parenting, fashion, and home decor.
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