Wireless carriers and handset vendors may be overlooking an important market segment in their rush to increase revenues by targeting high-end and entry-level cellular phone users, according to a report published by Strategy Analytics Inc.’s Mobile Communications Service North America.
“There’s definitely a herd mentality in the industry where everyone is going after the heavy user with one-rate plans, and at the other end using prepaid plans to capture the credit-challenged customer,” said David Kerr, director or wireless communications at Strategy Analytics.
Meanwhile, 30 percent of potential users essentially are being ignored by carriers and handset vendors, said Kerr. Those users fall into the medium-use and combination-user segments identified in the report, “U.S. Cellular/PCS Market Segmentation.”
The report breaks users into six categories-light, medium and power users, and business, personal and combination users. Carriers and vendors have crafted products and plans for the light and power users and business and personal users but not the medium and combination users, said Kerr.
The combination user typically is a person that began using wireless service for business and later developed a dependency on their wireless service for personal use as well. The combination user represents about 15 percent of the market, said Kerr.
“If you look at the pricing plans out there now, if you want to use 100 minutes a month or less, you can find a good value,” said Kerr. “If you want to use 600 minutes a month or more, you can get a good value. But if you fall between 100 and 300 minutes, you’re going to pay a significant premium.”
“The U.S. Cellular/PCS market has passed the critical 25-percent penetration level,” said Kerr. “As an industry, we have already tapped into the low-hanging fruit with standardized one-size-fits-all value propositions. In order to capture, retain and earn a profit on the next 20 percent of the population, operators and device vendors must develop customized product for distinct sub-segments of demand.”
Combination users might look for a handset that could provide home-and-road functionality, short-message service and e-mail, and service packages that include a single-number service, companion programs and large buckets of weekend and evening minutes, said Kerr.
“We’ve broken down the market into six segments, each with different needs and interests in their cellular usage,” said Kelly Quinn, wireless analyst with Strategy Analytics. “For example, medium users are the heaviest users of cordless telephones at home. They’re prime candidates for fixed wireless solutions that utilize their need for cellular away from home and cordless in the home.”
Kerr said the mid-range and combination-user segments represent an opportunity for someone to separate from the crowd.
“It’s purely a question of focus,” said Kerr.”There is so much going on in terms of competition that carriers feel compelled to respond to the industry leaders with things like one-rate plans.
“They need the time and resources to think about how to segment customers by lifestyle,” he continued. “The business vs. consumer model is ceasing to be effective.”
