A new report from Diamond Management & Technology Consultants finds that wireless carriers in mature markets typically
are not marketing targeted pricing plans to specific customer segments
as effectively as they should. Diamond’s
paper, entitled “Targeted Pricing,”
explains that targeting can be performed on the basis of wireless
subscribers’ usage patterns or demographics,
but notes that pricing is just one element of a targeted value
proposition.
“Carriers looking to add new customers at
their competitors’ expense have little choice
but to develop differentiated offers—which
are often based on price,” said Hamilton
Sekino, a Partner in Diamond’s Telecom
practice and author of the paper. “The rise
of family plans has locked a larger portion of subscribers into group
contracts, which increases the barriers for many subscribers to change
carriers.”
Discounts on new phones for existing subscribers and other incentives
have added to carriers’ difficulty in
converting competitors’ subscribers, known as “customer
churn.” According to Diamond’s
report, these factors have largely contributed to a drop in monthly
churn rates from 2.5 percent in 2000 to 1.7 percent today—and
only 1.3 percent for postpaid plan subscribers.
“Companies run the risk of losing money if
they do not undertake adequate preparation when launching new pricing
plans,” said Sekino. “Wireless
carriers cannot afford to approach pricing plans blindly, and must
validate their targeted plans.”
For instance, carriers need to weigh the value of mass-market
advertising campaigns against the value of marketing specific pricing
plans through media outlets that cater to particular demographic
segments. While some companies have developed innovative pricing
structures, most wireless carriers adopt the mass-market approach for
pricing plan introductions—often not the most
cost-effective approach.
