ORLANDO, Fla.-“We here are circumscribed by a group that accepts and celebrates technology, but we are a very rare breed, a tribe that thinks it is uniquely important because our reality depends on it,” said James A. Taylor, chief marketing officer for Iomega Corp., Roy, Utah.
“Our difficulty is that we fall in love with early adopters and forget that it’s everyone else who will drive our business,” Taylor said in a presentation about “Building Market Identity and Awareness in a Consumer-Controlled Market” at the recent PCS ’98 show.
In chasing market share through price wars that are shredding margins, the wireless industry has set itself up for “a really difficult time.”
“The average household sees millions of commercials, and when not shown a clear demonstration of incremental value, will always opt for price,” he said.
Two distinct, broad trends are at work that demand attention. The first is psychoneuroimmunology, a person’s self-defense against lying by his or her disregard of words in a phrase that are disjunctive, or contradictory. The second is homophyly, the tendency of the people around the world to become increasingly similar to each other.
“Everyone everywhere wants this same set of stuff, they want this cellular phone, but they think we’re lying, so what do we do?” Taylor said.
“Consumers choose brands, not because brands create status but because they manage risk. The brand is a promise. The truth is a promise kept. The product is an artifact of the truth of the promise.”
In all of marketing, there are just a handful of basic promises, including serenity, harmony, adventure, inclusiveness and grandeur. Each company can choose only a single basic promise for its product or service, and it must stay with it, Taylor said.
Another issue for wireless companies is the need to focus more attention on the consumer mindset and not just on consumer lifestyles, although these too are important.
“People need to see themselves in your story. Don’t ask what they think. Learn what they read and how it talks about technology. Characterize life in terms of how they think and feel.”
Taylor cited one survey whose results said, “the happiest people believe in God, give disproportionately large amounts of money to charity, do volunteer work and keep in close touch with a close group of friends and family.”
“The social reality is that telecommunications allow people to be witnesses to their own lives in an autocatalytic world, where they can’t anticipate changes but want to tell someone about them as they happen.”
That kind of message would resonate well with two groups of consumers-the young and the old-who possess a tremendous amount of purchasing power. “There is a huge concentration of wealth in older people, who are your lousiest set of customers,” Taylor said.
“The average 9-year-old in the United States today has an annual disposable income of $493, in France, $377, in China, $182. I rely on little kids as opinion leaders to see if something makes sense.”
Just 560 cities account for “80 percent of the distributed wealth” of the entire world. If wireless penetration is to extend beyond this core, Taylor said, then the world’s wealthiest subscribers have to see in their services a value proposition that justifies their indirect telecommunications subsidy of others less affluent. Good technology is only one part of that value equation, he said.
Corporate customers
The same might also be said for business customers of wireless services. In a recent survey of North American companies, 31 percent of which spent $500,000 to $5 million yearly on wireless services, Deloitte & Touche Consulting Group, Atlanta, found these results:
More than 70 percent of respondents said they would purchase future wireless services through a request for proposals process, “a sharp departure from today when the vast majority of business buyers tend to procure services more informally.”
Besides network reliability, which received virtually 100 percent endorsement in the survey, corporations also are looking for the carrier to have: a strong account team, 85 percent of respondents said; to offer volume discounts, 69 percent said; to provide consolidated billing, 66 percent said; and to have national coverage, 56 percent said.
The most significant data revealed in this study is that the true national providers have the most likelihood of providing the … seamless coast-to-coast services that business users are looking for,” said Steve Martin, a partner in Deloitte Consulting’s Telecommunications and Media Practice.
“However, merely providing coverage will not be enough. Sustainable advantages only will be realized through core service competencies such as world-class account teams and specialized call centers.
Smaller players
Limited brand recognition is one of many troublesome issues facing small carriers, which are experiencing competition from many players, even in their markets, said David Sharbutt, president and chief executive officer of Hicks & Ragland, Lubbock, Texas.
Consequently, happy marriages of convenience are occurring that allow smaller players to leverage the brand identity of big carriers, he said.
Today, 10 percent of Sprint Spectrum L.P.’s pops are covered by affiliates, and the goal is 25 percent, Sharbutt said.
The management agreements involve the sole use of the Sprint PCS brand, in exchange for which Sprint Spectrum won’t compete in the territory of its local affiliate in the 1900 MHz band. Sprint PCS receives revenues from its local affiliates for use of its brand, its spectrum, its marketing expertise, customer care and billing and network monitoring. Its affiliates also can take advantage of Sprint PCS’ volume purchasing power discounts.
A national brand name, coupled with cost savings through economies of scale, are key components of a marketing strategy for smaller carriers, Sharbutt said.
“Wireless services are becoming a commodity. Unless you are the low-cost provider, you are at risk,” he said.
Cincinnati Bell Wireless is one of four companies that so far has entered into joint-venture agreements with AT&T Wireless Services Inc. In its case, CBW is the majority owner of the joint venture, and the service is co-branded.
“With all due respect to the Sprint brand name, `local-ness’ counts,” said John F. Cassidy, president of Cincinnati Bell Wireless.
“More than 40 percent of our customer basis is willing to do business with a local vendor.”
Cassidy called the service “way more affordable than cellular,” and said “the company’s latest quarterly report showed that, despite low prices, average revenue per subscriber is increasing.”
“We have the coolest phones on the planet-Ericsson and Nokia-with outstanding features. And we have more than 200 cell sites to cover 4 million pops. Coverage cannot be underestimated.”
PCS franchise arrangements have another important monetary advantage. Venture capitalists like them, said Michael Hannon, general partner of Chase Capital Partners, New York.
“Everyone is looking for geographic exclusivity, and so it has become increasingly difficult to get financing for business plans,” he said.
“But if you’re a C-block carrier with a (national carrier) affiliation, you can market yourself as an A-block carrier.”
The 13 Global System for Mobile communications carriers that are members of the North American GSM Alliance use their own corporate names. Bob Brown, Alliance director, said the North American GSM Alliance brand serves the same function as does the FTD brand for flower delivery.
“You still go to local florists, and they have their own brand and make purchasing decisions,” said Brown, who also is director of business development for Aerial Communications Inc., Chicago.
“Our three major strategies are to develop national marketing and new business opportunities, to develop and deploy superior roam
ing and to exploit the opportunities provided by our common technologies.”
Citing statistics from The Strategis Group, Brown said GSM Alliance members account for 40 percent of the domestic PCS market, Sprint for 36 percent, PrimeCo Personal Communications for 16 percent and AT&T Wireless Services for 7 percent.
