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Competition Beyond Price: The Branding Challenge For TelcosPublished by: Tarifica at PBI Media LLC Published: Apr. 1, 2001 Table of Contents
AbstractExecutive Summary This report combines the findings of qualitative research with buyers of telecommunications services across Europe and an overview of how the industry serves its customers, in order to identify the drivers for purchase decisions. In all sectors of the market from corporate buyers through SMEs to residential, it was found that the most important factors considered by decision-makers could be summarised by the concept of brand. This concept includes all customer perceptions about a company including those gathered from advertising, but also from prior contact with the product or service, or from word of mouth from colleagues and friends. Companies which lack a strong and distinctive brand - and an excessive focus on price mitigates against a strong brand - will be unable to distinguish themselves from competitors and will be condemned to commodity margins.
In order to build a strong brand, it is necessary both to communicate with the market and to ensure that the customer experience at every point of contact matches the brand. In both of these requirements, we found significant shortfalls in telcos' performance.
The challenge for telcos is to find the fit between their customers' needs and their own capabilities, and to tailor their products and communications to suit. This is already achieved in large part for the most capable telcos serving corporate customers, but for those serving other segments, there will be a need to focus on individual groups of customers to a much greater extent. A failure to do so will result, in the long run, in the value in the customer relationship being appropriated by more focused service providers. This challenge will be made more severe by the phenomenon of convergence, which will bring telcos into competition with powerful well-established brands from other industries such as entertainment or even retail. Telcos, whose current value proposition relates to connectivity, will find that many customers will seek a proposition relating to content. The solutions to these challenges are at one and the same time mundane and demanding. Telcos must be rigorous in the application of good marketing practice. They must get to know their customers well enough to identify what those customers value and which competitors cannot easily provide. They must ensure that the quality of their services and support exceed customers' current low expectations. Having done these things, the performance must be repeated continuously so that buyers develop a strong and positive perception of their brands.
The prize for those companies which succeed in re-focusing themselves on the customer will be greatly improved margins and lower churn. Residential and SME customers in particular yearn for a trusted friend who can guide their choices of confusing technology, and ensure that the usage experience is trouble-free. The first companies to stake a rightful claim to this position will make disproportionate gains. |
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