(ghanikunto.me) operator pricing & ott- when storytelling is a matter of survival

7/29/2019 (GhaniKunto.me) Operator Pricing & OTT- When Storytelling is a Matter of Survival

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A!lied Storyteling in Marketing

Operator pricing & OTT:When storytelling is a matter

of survival

obile phones primary usage shifted from voice to data back in

2010. Industry data shows that global voice traffic has been

stagnant since 2010 while data traffic has been increasing exponentially. In

2013 data will surpass voice in revenues as well. The successful operator of

tomorrow is the one built around data.

Per-minute, per-event charging models will be rendered useless and unless

operators adopt a more customer-focused mindset, they leave themselves

open to exploitation by over-the-top (OTT) players. Its a strange business

model at present where telcos invest huge amounts of money to upgrade

data networks and players like YouTube, who gets the revenue, dont pay

anything. Vodafone Indias Managing Director and Chief Executive Officer

Marten Pieters.

"Around 18 months ago we started noticing that people were using moreSkype, people were using Viber and What's App," Vodafone Chief Executive

Vittorio Colao told the Mobile World Congress industry meeting, referring to

three apps that let users route phone calls or messages through data plans.

"And our SMS revenues started going down. So we asked them why and it

was a very simple answer. It was because it was free," he said. "So we

decided to turn the model upside down."

OTT players are eating up the market with messaging and content services

that drive revenues off the operator bill. As players like Google have already

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shown in the fixed line market, incumbents are seriously exposed to game

changing shifts. In response, mobile operators need to evolve their charging

models or end up left on the shelf like the record labels in the 90s.

Sustaining vs DisruptiveOperators have 3 options in mitigating the threat from OTTs:1. Produce their own content or charge for added value (e.g. 4G)

2. Sign more deals with OTTs

3. Charge more

The first of the two options are reactive strategies aimed at sustaining the

current business model. Those are the more comfortable options as they

require the least internal change. Those options also leave the operators

more vulnerable to players like Google disrupting the market.

The third option holds the most promise for operators. To get mobile prices

back up, some operators are planning to charge a premium for faster 4G

networks. EE, the first to launch 4G in Britain, has chosen to charge higher

prices for new service, but has not disclosed how many customers it has

won.

In Norway, Telenor increased ARPU by 2% in 2012 by charging more(compared to a 4% decline in rival Teliasonera). Telenor found that data

usage varied widely by user and there was a significant number of customers

willing to pay extra for more data allowances (Telenors standard offering was

400Mb per month).

Young people are the heaviest users of data. One of the reasons youth ARPU

has been in decline since 2008 is because operators have been preoccupied

with monetizing voice & text while ignoring the potential demand for more

expansive data offerings. Because operators are not providing data tariffs thatfulfill youth mobile behavior, they are both losing the youth market and its

revenues.

Youth market leads the wayYouth are leading the way in defining the operator charging models of the

future.



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What youth are demanding today will be the mainstay of the mass market in

3-5 years. If operators want to stay relevant to the market they will need to

better understand how these change agents are using their mobile phones on

a daily basis.

Prior to launching the Red tariffs, Vodafone research revealed that whatcustomers really wanted was a great network and freedom to

communicate. Rather than cool ad campaigns, more content from the

operator or deals with OTTs, youth want the common things done

uncommonly well without the fear of uncontrolled spending.

Operators should avoid the mistake of offering youth tariffs. The future lies

in providing charging models that cater for a shift in mobile behavior lead by

the youth market today.

35% of youth mobile spending is already going to OTT players through

mobile music, games, video and other forms of data usage (source Mobile

Youth report 2013). The current trend in OTT usage isnt about youth seeking

out ways to get content cheaper or for free, its about youth seeking control.

Current operator data plans are not conducive to allowing youth the freedom

to communicate in CEO Colaos words.

Youth want operators to address their fundamental pain points e.g fear ofgoing over data limits, exceeding personal budgets and lack of transparency

in data tariffs. If operators are able to get the youth market right this year, they

will lay the foundations of the mass market for the next five.

Arent youth price sensitive?Operators have continued to believe the myth that youth only care about

price because the industry has not created anything else for youth to care

about. Very few operators have actually created steps to involve youngpeople in the storytelling process. Operators have partnered with ad agencies

when it should have partnered with youth. This resulted in wasteful spending

on big budget ad campaigns that yield no sustainable results.

Winning and keeping youth isnt about creative campaigns and big media

buys but about generating positive recommendation from existing customers.



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Most operators have negative NPS. New data services and charging models

arent the silver bullets to fix negative NPS scores, they are an opportunity to

do so.

As operators launch new data tariffs, the risk is using cool advertising to sell

them to influencers without fixing the NPS first. In the 21st century, themarketing needs to be baked into the product. A good product is based on

solid fundamentals - reliable networks, billing control and transparency. Youth

wont talk about tariffs, theyll talk about these pain points and these are the

key drivers behind churn and influence.

Changing its external story from price to reliability and user-control changes

the operators price elasticity. However, before a company can change its

external story, it needs to change the story it tells internally. In an industry

that has come to believe the fiction of price-based marketing, operators need

to overcome the fact that it has turned itself into a mere commodity.

***

Discussion points:As products and technology become obsolete at an accelerated pace, your

brand story will out last them all. By focusing on creating better stories

instead of better products, profit leaders like Apple can disrupt markets with

new product lines. Apples CEO Tim Cook said, Our base philosophy is tonever fear cannibalization. If we do, somebody else will just cannibalize it.To be able to take risks by entering new markets, releasing new products/services, or launching new tariff plans a company needs to have a solid basein its brand story.

1. How can you improve your brand story to increase your price elasticity?

2. What stories are customers telling each other about your brand? Is it the

same as the one youre telling each other internally?

3. Which segment of the market should you partner with to improve your

brand story?


(ghanikunto.me) operator pricing & ott- when storytelling is a matter of survival

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