report details:

Lead Analyst: Dr Jean-Pierre Aubertin
Publication Date: 09/02/06
Pages: 193  

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Description  

The benefits of market segmentation will only materialise as part of a greater service package

As the number of mobile subscribers increases throughout much of the world and penetration rates reach saturation levels, service providers and handset manufacturers must invent new ways to differentiate themselves and attract new customers and higher revenues. A well-developed segmentation strategy offers these possibilities, as well as providing a means of increasing customer loyalty and reducing churn.

The traditional approach to segmentation based on features, demographics and payment methods is no longer adequate and requires a complete re-evaluation in the face of the changing needs of mobile phone end-users. Service providers need to develop a better understanding of their customers so as to develop specific products that match customers’ needs. The creation of mobile communities, branding, device/service customisation, relevant content, portal strategies and retail distribution are among the added elements that have to be in place.

The need to intelligently segment their market is particularly pressing for mobile operators given that they face competition not only from other mobile network operators, but also from competing service access points such as WLAN, WiMAX, Cable, MSOs and VoIP providers.

This 190+ page report analyses current segmentation strategies employed by operators and handset makers, critically assessing their approach and suggests ways that existing and untapped segments can be targeted more effectively. In the process, the report examines the role of the MVNO, the entrance of third-party brands into the market and the implications to established industry players. We are already seeing strong third-party brands enter the handset space to cater to a specific segment, a development that opens up opportunities as well as threats.

Questions answered by this report include:

Why have some segmentation exercises failed while others have succeeded?
What lessons can be learned from case studies in this space?
How do operators and device manufacturers segment the market?
What options are available to these companies and how can they segment better?
What are the benefits associated with a good segmentation strategy?
What are the drawbacks of a segmented approach?
Should operators partner with MVNOs or target segments through their own sub-brands?
What are the relative costs and merits of each approach?
What are the implications of third-party brands entering the mobile space and which ones offer the best business case for launching own-brand handsets?
How do mobile communities fit into the equation?
Why you should buy this report

Mobile operators:

Gain an understanding of the directions that the market is evolving and how it relates to the needs of subscribers.
Learn about the segmentation strategies employed by your competitors and how you can segment your customers better.
Read about case studies of successful and failed market segmentations and the reasons behind them. In addition, gain insight into currently untapped segments and building targeted propositions.
Evaluate the pros and cons of partnering with MVNOs compared to launching distinct sub-brands.
Mobile operators:

Learn how you can develop handsets customized for particular consumer segments.
Gain insight into the requirements of mobile operators as to the type of terminals they would want to deploy in the future, and how many models operators will on average offer compared to today. 
Learn how older models can be re-designed, thus expanding their life cycle.
Find out how you can partner with third-party brands to target specific segments better, what you can expect from these new market entrants and what can be learned from existing strategies of entertainment and lifestyle brands outside of telecoms.
Application service and content providers:

Discover how you can partner with operators and handset manufacturers better to target segments with more appealing services.
Discover what content will prove most popular with emerging segments.
Also learn about content strategies for creating successful mobile communities.
Investment companies:

Find out about start-ups operating in the segmentation and community space and determine which ones have the most promising business case.
Fixed-line operators:

Learn what mobile operators are planning in order to gain market shares at the expense of your services.
 
Table of Contents 
 
Chapter 1 Executive Summary

 1.1  Evolution of the mobile industry requires a new approach to segmentation
 1.2  New segmentation opportunities
 1.3  Technologies associated with market segmentation
 1.4  MVNOs vs sub-brands
 1.5  Vendors and the impact of third-party brands
 1.6  Handset and service customisation
 1.7  Creating mobile communities
 1.8  Portal strategies aimed at specific segments
 1.9  Major market trends
 1.9.1  Changing face of Segmentation
 1.9.2  Outlook for service providers
 1.9.3  Significant growth in mobile subscribers
 1.9.4  Declining terminal costs
 1.97.5  Increased functionality of devices
 1.9.6  Outlook for handset manufacturers
 1.9.7  Strategic and tactical alliances
 1.10  Conclusions

Chapter 2 Introduction

 2.1  Customer acquisition and retention is becoming increasingly difficult
 2.2  Consolidation ahead
 2.3  The role of MVNOs
 2.4  Defining segmentation
 2.5  Report methodology
 2.5.1  Organisation of this report
 2.5.2 Aims and focus of the report

Chapter 3 Strategic overview

 3.1  Market evolution
 Table 3.1:  Countries with 100%+ mobile penetration, Q4 2005
 3.2  Market direction
 3.3  Market segmentation
 3.3.1  Non-saturated markets
 3.3.2  Concentrated segmentation
 Figure 3.1:  Single marketing mix solution
 3.3.2.1  Merits of this approach
 3.3.2.2  Difficulties of this approach
 3.3.3  Assorted segmentation
 Figure 3.1:  Layered marketing mix solution
 3.3.3.1  Merits of this approach
 3.3.3.2  Difficulties of this approach
 3.4  Segmentation opportunities and issues to consider
 3.4.1 The need for flexible sub-segments
 3.5  Advantages of segmentation
 3.6  Mobile Virtual Network Operators (MVNOs)
 3.7  Market Drivers
 3.7 1  Benefits of market segmentation
 3.7.1.1  Better product positioning
 3.7.1.2  Churn reduction
 3.7.1.2.1  Nokia findings on churn
 3.7.1.2.1.1  Factors influencing churn
 3.7.1.3  Customer acquisition
 3.7.1.4  Customer loyalty
 3.7.1.5  Fixed-mobile substitution
 3.7.1.6  Increasing (data) ARPU
 3.7.1.7  Targeting high value customers

 

Chapter 4 Terminal and market landscape

 4.1 Terminals and end-user evolution
 4.1.1  Mobile phone end-users
 Table 4.1:  Mobile subscribers, 2004-2010
 4.2  Smarthphones forecast
 4.2.1  End-users forecast
 Table 4.2: Smartphone Base end-users, 2004-2010
 4.2.2  Shipments forecast
 Table 4.3:  Smartphone shipments, 2004-2010
 4.3 Technological evolution
 4.3.1  Geographical changes
 4.3.1.1  Europe
 Table 4.4:  Handsets sales in Europe by technology type (units, millions), 2004-2010
 4.3.1.2  North America
 Table 4.5:  Handsets sales in North America by type (millions of units), 2004-2010
 4.4  Technology shift
 4.4.1  EDGE worldwide positioning
 Table 4.6:  World EDGE handset sales, 2004-2010
 4.4.2  W-CDMA worldwide positioning
 Table 4.7:  Global W-CDMA handset sales, 2004-2010
 4.4.3  W-CDMA world end-users base
 Table 4.8:  W-CDMA global end-users (m), 2004-2010
 4.5  PDA end-users base
 Table 4.9:  PDA end-users, 2004-2010
 4.5.1  PDAs forecast
 Table 4.10:  PDA shipments, 2004-2010
 4.6  Telecoms environment
 4.6.1  Mobile phone penetration
 Table 4.11:  Mobile penetration by region
 Table 4.12:  Top 10 economies ranked by mobile penetration
4.7  Competitive market
 4.7.1  Cellular telephony
 Table 4.13:  Cellular mobile services competition (%), 2004
 Table 4.14:  Top 10 mobile operators by proportionate     subscribers, 2004

Chapter 5 Operator and vendor market segmentations

 5.1  Device and service customisation overview
 5.1.1  Lesson from Dell
 5.2  Producing fully customised mobile products
 5.3  Portals strategy
 5.4  Operator challenges
 5.5  Operator segmentation
 5.5.1  Operators will drastically reduce the number of terminals they offer
 Table 5.1:  Vodafone UK handset selection (Q1 2006)
 5.5.1.1  Case study - Telia-Sonera’s device  deployment strategy
 5.5.1.2  Advantages of signature handsets
 5.5.1.2.1  Hurdles for smaller operators
 5.5.1.3  Device presentation
 5.5.1.4  Future segmentation opportunities
 5.5.1.5  Implementing new-services market  segmentation
 5.5.2  Cingular
 5.5.2.1  Reaching the youth through new segmentation services
 Table 5.2:  Cingular Sounds pricing
 5.5.3  O2
 5.5.3.1  Fixed-line conversion market
 Table 5.3: O2 Genion tariffs
 5.5.4  Telefónica Móviles
 Table 5.4:  Telefonica’s customer segments and strategy
 5.5.5  T-Mobile
 5.5.5.1  Group segmentation
 5.5.5.2  Problems associated with complex price structures
 Table 5.5:   T-Mobile UK tariffs
 5.5.5.3  T-Mobile’s Flext will appeal to broad customer segments
 5.5.6  Vodafone
 5.5.6.1  Focusing on customers
 5.5.6.2 Adopting a more flexible approach to segmentation
 Chart 5.1:  Vodafone Germany’s ARPU by customer segment (Q1 2005)
 5.5.6.2.1 Vodafone’s strategies differ by region
 5.5.6.2.2  Business service
 5.5.6.3.3 Vodafone’s future global approach
 5.6  Segmentation and ARPU
 Table 5.6:  US operator subscriber and ARPU data, 2005
 5.7  Community segmentation
 5.7.1  Defining mobile communities
 5.7.2  Operator objectives with user communities
 5.7.3  Mobile vs online communities
 5.7.4  Gaming
 5.7.4.1  Motricity
 5.7.5  Blogging
 5.7.5.1  FoneBlo
 5.7.6  Dating
 5.7.6.1  Mobestar's mDate
 5.7.6.2  Mobilook
 5.7.7  Advertising
 5.7.8  LBS-based content
 5.7.9  Other user generated content
 5.7.9.1  Upoc
 5.7.9.2  ShoZu
 5.7.10  Community segmentation case studies
 5.7.10.1  Sprint’s community services
 5.7.10.2  Orange Lounge
 5.8  Other segmentation choices for operators
 5.8.1  Segmenting by technology
 5.8.2  Segmenting by cost/price point
 5.8.3  Lifestyle market segments
 5.8.4  Case study: Technology segmentation in France
 5.9  Terminal vendors
 5.9.1  Nokia
 5.9.1.1  Needs-based segmentation
 Table 5.7:  Nokia handsets aimed at specific segments
 5.10  Vendor segmentation
 5.10 .1 Indian case study
 Table 5.8:  Vendors’ segmentation of end-users in India and    typical handset models
 5.11  Terminal distribution
 5.11.1  Motorola V3
 5.11.1.1  Effect of colour changes on V3’s sales
 5.11.2  Motorola i835
 5.11.3  NEC
 Table 5.9:  NEC 232 features
 5.12  Multi-function vs specialised handsets
 5.12.1  Sony Ericsson: Superior approach to handset segmentation
 5.12.2  Challenges with creating a form-factor that accommodates diverse requirements
 5.13  Handset customisation and commoditisation
 5.13.1  Impact of commoditisation on the mobile industry
 5.13.1.1  Commoditisation and falling ASPs
 Table 5.10:  ASPs and margins by vendor
 5.14  Targeted segmentation
 5.15  What do users look for in a handset?
 5.15.1  Consumer preferences
 Table 5.11:  Survey - What was the primary driver that led to your phone?
 5.15.2  Enterprise sector
 5.16  Operator brands and signature devices
 5.16.1  Strengthening customer loyalty through customisation
 5.16.2  Stimulating data usage through brand and device personalisation
 5.17  Examples of group segmentations
 5.17.1  Pre-teen segment
 5.19.1.1  Teenagers
 5.19.1.2  Advantages of targeting pre-teens
 Chart 5.2:  Spending power of pre-teens, by region
 Chart 5.3:  Services used by pre-teens access (%)
 5.19.1.3  Pre-teens in the US market
 5.19.1.4  Pre-teens in Europe
 5.19.1.5  Pre-teens in Asia
 5.20  Operator segmentation in India
 5.20.1  Airtel: Reaching out to multiple segments through specialised products and services
 5.20.1.1  Ladies Special Plan
 5.20.1.2  Seniors plan
 5.20.1.3  New customer additions by segment
 5.20.1.4  Future segmentation strategy
 5.20.1 Idea Cellular
 5.20.1.1  Youth market focus and strategies
 5.20.1.2  BPL Cellular
 5.20.1.2.1  Targeting BPOs
 5.20.1.2.2  BPL and women
 5.20.1.3  Bharat Sanchar Nigam (BSNL)
 5.21  SMART
 Table 5.12:  SMART’s sub-brands
 Chart 5.4:  SMART’s ARPU by segment
 5.22  African Market
 5.21.1  MTN in Africa
 Table 5.13:  MTN subscriber growth by market
 Table 5.14:  MTN's ARPU
 5.22  3G service for pre-teens
 5.22.1  Successfully targeting pre-teens with content and features
 5.22.2  Pre-teens regulatory implications
 5.22.2.1  Europe
 5.22.2.2  Asia-Pacific
 5.22.2.3  US
 5.22.3  Social issues
 5.22.3.1  Bullying
 5.22.3.2 Thieving
 5.22.3.3  Health consideration
 5.22.4  Children’s terminals
 5.22.4.1  European market
 5.22.4.1  Teddyfone
 Image 5.1:  Teddyfone
 5.22.4.1  iKids
 5.22.4.2  Scarlet
 5.22.4.2  US market for kid under 12
 5.22.4.2  Verizon’s kid-orientated services
 5.24.2.2  Cingular Wireless
 Image 5.2:  Firefly
 Table 5.14:  Firefly features
 5.22.5  Preteens and teens demographic
 Table 5.15: World population aged 5-14, 2005-2015
 Table 5.16:  World population aged 5-17, 2005-2015
 Table 5.17:  Africa population aged 5-14, 2005-2015
 Table 5.18:  Africa population aged 5-17, 2005-2015
 Table 5.19:  Asia population aged 5-14, 2005-2015
 Table 5.20:  Asia population aged 5-17, 2005-2015
 Table 5.21:  Europe population aged 5-14, 2005-2015
 Table 5.22:  Europe population aged 5-17, 2005-2015
 Table 5.23:  Latin America and Caribbean population aged 5-14, 2005-2015
 Table 5.24: Latin America and Caribbean population aged 5-17, 2005-2015
 Table 5.25:  North America population aged 5-14, 2005-2015
 Table 5.26:  North America population aged 5-17, 2005-2015
 Table 5.27:  Oceania population aged 5-14, 2005-2015
 Table 5.28:  Oceania population aged 5-17, 2005-2015
 5.22.6  Pre-teens revenue potential
 Table 5.29:  Average Annual ARPU in Europe from mobile users aged 5-11, 2004-2010
 Table 5.30:  Global mobile gamers and preteen mobile gamers (million), 2004-2010
 5.23  The seniors market
 5.23.1  Viability of the seniors segment
 5.23.1.1  An untapped, but viable segment
 Table 5.31:  Disposable income of seniors by country and region 2004-2010 ($)
 Table 5.32:  Regional and world population by age segment, 2005-2015
 5.23.2  Seniors revenue forecasts
 5.23.2.1  Scenario 1: Without dedicated effort
 Chart 5.5:  Seniors’ market mobile revenues, 2005-2010
 5.23.2.2  Scenario 2: With targeted measures
 Chart 5.6:  Mobile revenues from seniors market under Target    Market scenario, 2005-2010
 5.23.3  Phones ownership among older consumers
 5.23.4  Route to success in selling to the senior segment
 5.23.4.1  Informing the elderly
 5.23.4.2  Training of sales staff
 5.23.5  Handsets for seniors
 Table 5.33:  Senior-specific handsets
 5.23.1  Design considerations
 5.23.2  Operability
 5.23.3  Functionality
 5.23.4  Ancillaries
 5.23.6  Services for seniors
 5.23.6.1  DoCoMo’s Seniors market strategy
 5.23.7  MVNOs and seniors
 5.24  Ethnic markets
 5.24.1  Ethnic market usage patterns
 5.24.2  US Hispanic market
 5.24.2.1  Market overview
 5.24.2.2  Distribution of the Hispanic population
 Table 5.34:  Hispanic mobile penetration by US city
 5.24.2.3  Hispanic market: Socio & Economics make-up
 5.24.2.4  Hispanics and mobility
 5.25  Female market
 5.25.1  Women are an untapped segment
 5.12.2  Reaching the female market
 5.25.2.1  Operator attempts
 5.25.2.2 Vendor strategies
 Table 5.35:  Handsets aimed at female segment
 5.25.2.3  Options open to vendors
 5.25.2.4  Enter the third-party brand
 5.25.2.4.1  Design and VAS considerations for female market
 5.25.2.5  Device customisation solutions
 5.26  Recipe for success
 Table 5.36:  Star Trek Communicator Phone features and VAS
 5.27  Failed attempts at segmentation

Chapter 6 MVNOs

 6.1 Overview
 Table 6.1:  Global MVNO deployments by country
 Chart 6.1:  Number of MVNOs by region
 Chart 6.2:  Global MVNO subscribers and as % of total mobile subscribers, 2004-2010
 6.2  MVNO with a different approach
 6.2.1  Targeting business users: BeyondMobile
 6.3  Benefits associated with MVNOs
 6.4  MVNO trends
 6.4.1  MVNOs to segment on content
 6.4.1.1  Total Call Mobile
 6.4.1.2  MVNOs to drive 3G
 6.4.1.3  MNOs are acquiring MVNOs
 6.4.1.4  MNOs are more willing to accommodate MVNOs
 6.4.1.5  Fixed line operators taking the MVNO approach
 6.4.1.6  MVNOs expanding their offering
 6.5  MVNOs payment methods
 6.6  Regulation
 6.7  Examples of MVNOs
 Table 6.2:  Examples of MVNOs by value group, 2005
 6.7.1  Tesco Mobile
 Table 6.3:  Tesco Mobile service pricing
 6.7.2  Wal-Mart to become German MVNO
 6.7.3  Aldi Talk
 6.7.4  Religion goes mobile
 6.7.5  Lifestyle-focused MVNO
 Table 6.4:  ESPN Mobile’s target audience
 6.8  New MVNO to target tween market
 6.9  Operator responses to MVNOs treats and strategic options
 Table 6.5:  Companies by sector that could benefits from    entering the MVNOs market
 6.10  Branding
 Table 6.6:  The world's top brands and their business case for    entering the mobile market

Chapter 7 Case Studies

 7.1  KPN
 7.1.1  Segmentation approach
 Table 7.1:  KPN's European position
 7.1.2  Brand strategy
 Table 7.2:  KPN’s multi-brand approach
 7.1.3  Segments within segments
 7.1.4  Achieving customer loyalty
 Figure 7.1:  Customer intimacy strategy
 7.2  SK Telecom
 7.2.1  Age and lifestyle-based segmentation
 7.2.2  Complex segmentation model
 Figure 7.2:  SK Telecom's segmentation matrix
 7.2.3  Impact of segmentation on SK’s ARPU
 7.3  LogicaCMG
 7.3.1  Overview
 7.3.2  Segmentation solutions
 7.3.2.1  SMART Marketing
 7.3.2.1.1  Service performance
 7.3.2.1.2  Segment monitoring
 7.3.2.1.3  Portal loyalty
 7.3.2.1.4  Churn patterns
 7.3.2.2  Smart Customer Care
 7.3.2.2.1  Customer loyalty and churn
 7.3.2.2.2  Benefits of retaining customers
 7.3.2.2.3  Inhibit data service uptake
 7.3.2.2.4  Added costs with low FCR
 7.3.2.2.5  The solution
 7.3.2.2.6  Benefits on KPIs
 7.3.3  LogicaCMG's customers
 Table 7.3:  Smart Customer Care and SMART Marketing    deployments
 7.3.4  LogicaCMG on the mobile industry
 7.3.4.1  Segmentation
 7.3.4.1.1  Implications of this strategy
 7.3.4.1.2  Device detection and management
 7.3.4.1.3  Intra-departmental co-operation
 7.4  Redknee
 7.4.1  Overview
 7.4.2  Redknee's capabilities
 7.4.3  Redknee's solutions
 7.4.4  Redknee's product portfolio
 Table 7.4:  Redknee's product portfolio
 7.4.4.1  Converged Rating & Charging
 7.4.4.1.1  E-Care
 7.4.4.1.2  IP Charging Gateway
 7.4.4.1.3  Loyalty
 7.4.4.1.4  Loyalty Services
 7.4.4.1.5  DataMart
 7.4.4.1.6  mCommerce
 7.4.4.1.7  Policy Decision Rules Server (PDRS)
 7.4.4.1.8  Subscriber Self-Care
 7.4.4.2  Network applications
 7.4.4.2.1  EasyRoams
 7.4.4.2.2  Enhanced Messaging Gateway
 7.4.4.2.3  Flexible rating and charging
 7.4.4.2.4  Routing facilities
 7.4.4.2.5  SMS and MMS messages
 7.4.4.2.6  Mobile Group Enabler
 7.4.4.2.7  Mobile Office Manager
 7.4.4.2.8  Multi-SIM
 7.4.4.3  Enablers
 7.4.4.3.1  Enhanced Location Services (ELS)
 7.4.4.3.2  Enhanced Presence Server (EPS)
 7.4.4.3.3  OSA/Parlay Gateway
 7.4.5  Redknee's partners
 Table 7.5:  Redknee’s partnerships
 7.4.6  Redknee's customers
 7.4.7  Redknee on segmentation
 7.4.7.1  Emerging segments
 7.4.7.2  Kids phones
 7.4.7.3  Evolution towards features-lead services
 7.4.7.3.1  Group calling
 7.4.7.3.2  Message broadcasting
 7.4.7.3.4  Event service
 7.4.7.3.5  Affinity service
 7.4.7.3.6  Loyalty segment
 7.4.7.3.7  Business subscribers
 7.4.7.3.8  Group call management
 7.4.7.3.9 Mobile PBXs
 7.4.7.3.10  Location service
 7.4.7.3.11  Sophisticated payment systems
 7.5  Sonopia
 7.5.1  Sonopia’s approach to segmentation

Chapter 8 Strategies for success

 8.1  Overview
 8.2  Strategies based on pricing
 8.2.1  Voice and data service providers
 8.2.1.1  Vodafone Sweden pricing strategy
 8.2.1.2  Vodafone browsing strategy
 8.3  Strategy based on service levels
 8.3.1  Mobile operators
 8.3.1.1  T-Mobile
 8.4  Strategies based on strategic alliances
 8.4.1  Solutions for operators and vendors
 8.5  Strategies based on selected targeting of market segments
 8.5.1  Niche markets
 8.5.2  Adding value to customers’ requirements

Chapter 9 Conclusions and recommendations

 9.1  Marketing department
 9.1.1  Vendor recommendations
 9.1.1.1  Visibility of handsets in the market place
 9.1.1.1.1  LG Electronics' approach
 9.1.2  Operator recommendations
 9.2  Sales department
 9.2.1  Operator recommendations
 9.3  Product development department
 9.3.1  Vendor recommendations
 9.4  Market specific recommendations
 9.4.1  Recommendations for the preteens market
 9.4.1.1  Operators: Addressable challenge
 9.4.1.2  Service branding in the preteen mobile market
 9.4.1.3  Recommendations for operators
 9.4.1.4  Handset Vendors: Issues to consider
 9.4.1.5 Terminals branding in the preteen mobile market
 9.4.1.6  Recommendations for terminal vendors
 9.4.1.7  Recommendation for participants in the value chain of the preteen market
 9.4.1.8  Recommendations for children's brand owners
 9.4.1.9  Preteen mobile market: Recommendations for content providers
 9.4.1.10  Competitive issues in the preteen mobile market
 9.4.2  Recommendation for the ethnic market
 9.4.2.1  Ethnic group as general consumers
 9.4.2.2  General recommendations
 9.4.3  Recommendations for the seniors market segment
 9.4.3.1  The case for seniors market segmentation
 9.4.3.2  Targeting senior consumers
 9.4.3.3  Seniors market: Technology issues
 9.4.3.4  Seniors-relevant services
 9.4.3.5  MVNOs as a means of targeting senior consumers
 9.4.3.6  Handset portfolio
 9.5  Recommendations for handset vendors
 9.6  Time-to-market
 9.7  Strengthened product portfolio
 9.8  Attention to design

Appendix A Lead author’s profile

Appendix B About visiongain

Appendix C Report evaluation form