The wireless industry is primed to woo holiday shoppers this season to their stable of products, offering service that is inexpensive and easy to use, with no strings attached.
In the past, a shopper trying to decide between a pager and a blouse, or a digital cellular phone and a compact disk player, would likely veer away from the wireless item. Even when equally priced, the wireless gift required more time and energy than many buyers wanted to spend. The number of product models and rate plans available were overwhelming. Year-long contracts were complicated. When the phone was offered for free, shoppers were challenged to judge the true value of the phone and contract.
Buying a car was easier than this.
This year, prepaid cellular service has taken off, a few operators have eliminated service contracts and rate plans have been simplified. A phone or pager plus service can be purchased in one off-the-shelf package from just about any mass merchandiser or electronics superstore.
Austin, Texas-based IDC/Link Resources recently released a study on distribution channels, finding retail outlets comprise about 50 percent of a carrier’s distribution mix for cellular/broadband personal communications and about 13 percent for paging.
The introduction of no-contract service was a milestone in consumer marketing. American Personal Communications started offering its personal communications services without a contract late last year in Washington, D.C. The option is attractive for new customers who are interested in service but hesitant based on the year-long commitment. For the seasoned cellular user, no-contract service is a good reason to switch. APC’s service is branded Sprint PCS. For the gift giver, no-contract service keeps terms flexible for the receiver to later decide to continue, quit or change the service package.
AT&T Wireless Services Inc. is currently activating Interim Standard 136 Time Division Multiple Access “Digital PCS” in its cellular markets, which requires customers to sign on, but only for billing purposes. Customers can leave anytime without penalty, said spokesman Todd Wolfenbarger.
Earlier this month, Bell Atlantic Nynex Mobile introduced EZ Max in New York and New Jersey. The name says it all. Bell Atlantic Nynex said EZ Max is a “personal communications package” that uses “21st century technology.” The EZ Max phone, by Ericsson Inc., is an analog phone. A $150 phone and $19 per month service fee are marketed in one off-the-shelf package requiring no activation fee and no contract, providing coast-to-coast coverage and voice-activated dialing, free detailed billing and built-in fraud protection, said the company. EZ Max allows users to talk in Bell Atlantic Nynex’ markets from Maine to South Carolina for 69 cents per minute. The first minute of all incoming calls is free in the New York/New Jersey area.
Jane Zweig, senior vice president of marketing and client relations, Herschel Shosteck Associates Ltd., said the marketing approach of EZ Max and the features offered will bridge Bell Atlantic Nynex’s product offerings. She believes the carrier will expand its Code Division Multiple Access digital service before the end of the year.
The phone-in-a-box concept makes wireless service an easy purchase. The buyer is not faced with so many decisions. What you see is what you get. As a gift, prepackaged wireless offers something to unwrap. Most box products offer immediate service activation. AT&T Wireless, AirTouch Cellular and Bell Atlantic Nynex offer such products nationwide. TalkALong offers a Nokia Corp. phone and two zones of airtime prices. Bell Atlantic Nynex spokeswoman Maggie Rohr said EZ Max is designed in a similar way but with more flexibility in call rating. In New York, TalkALong costs about $40 for the phone, plus $15 for service every month and airtime is $39 cents or $49 cents per minute.
Rohr noted that in Washington, D.C., TalkALong is available without a contract.
Grab n’ Go, a prepackaged Sony Corp. pager that uses SkyTel Corp. service, is a prepaid service. For about $100, the user receives the unit and 50 pages. To continue service, pages are purchased in increments of 25 or 100.
Zweig expects prepaid services are positioned well for gift-giving. This type of service started in response to the large number of people turned away from cellular service because of poor or no credit. In this arena, competition is growing quickly. Marketing efforts have been clever. The sales pitch rarely mentions the consumer’s credit status, but instead positions prepaid as a service where the user has control. The message is: prepaid is easy and requires no commitment.
For gift giving, a shopper may buy a phone and 30 minutes of calling. If the recipient already has a phone, a $60 calling card could make a fun stocking stuffer.
Bell South Mobility’s new prepaid service includes laminated prepaid calling cards with various colorful images on one side-like a pink Cadillac or a school of tropical fish-and calling instructions on the other side. The whole campaign seems to say cellular service is fun and easy. The brochure features colorful, animated illustrations and a light-hearted typeface, compared with typical marketing collateral that traditionally convey a straightforward, down-to-business look.
While carriers aim to make shopping easier, so more buying takes place, Zweig said “customers are going to have to be smart” about what they buy and the value of what they buy, noting some prepaid services still are relatively expensive.
Herschel Shosteck said fourth quarter sales are responsible for about 40 percent of a carrier’s annual revenue. He expects actual units sold during the holiday season to rise slightly this year, noting shoppers in 1995 were responsive to free phones.
