• How important are promotions to our customers?
• Are we treating promotions as tactical tools or strategic make-or-break business weapons?
• Are we mainly reacting to the promotions of competitors and accepting the results, or are we implementing our plans and causing the market to react to us?
• Are we applying enough resources to managing promotions? Do we want to apply more but are limited by budget constraints?
• Do we learn about changes in our competitors’ promotions quickly enough to minimize damage?
• Do we have any means to quantitatively compare the consumer value of our promotions with those of our competitors?
If you are not satisfied with your answers, Tarifica has the tools to help you improve them.
Research on the Value of Promotions
Tarifica recently conducted a global survey of consumers and asked:
1. On a scale 1 to 10, how important is it when buying a PHONE that a special deal or promotion is available?
2. On a scale 1 to 10, how important is it when buying a PHONE & PLAN that a special deal or promotion is available?
(1 = not important, 10 = extremely important)
One third of respondents indicated that for both purchase decisions having a promotion was extremely important (response of 10). About three quarters of the respondents indicated that having a promotion was fairly to extremely important for both purchase decisions (responses from 7 to 10).
This completely mature and saturated market has been trained to purchase new phones and plans on promotion because promotions offer great savings. If consumers do not see what they want offered with promotional pricing, they know they only have to wait a short while because this market changes every single day. Only the inexperienced and/or foolish buy retail.
Promotions are the key to maintaining and gaining market share through competitive win backs. However, they can also cut deeply into operators’ profits in an already margin thin business. The challenge for operators is to remain competitive every single day while not cutting profits more than necessary (if at all). The bottom line is that promotions are driving a significant portion of customers’ buying behaviors and operators need to treat this as a strategic element of their business.
Tarifica has developed a service that operators use for both near real time and long term decision making. In the short term it dynamically assesses the competitive promotional landscape enabling operators to take advantage of new promotional opportunities and quickly adjust to meet new promotional threats. Over the long term it enables operators to see the big picture in terms of how promotions evolve and what drives consumer behavior and value.
Tarifica’s Daily Market Tracking Service for Promotions Tarifica’s Daily Market Tracking Service is designed to help operators achieve this balance between managing market share and profitability. This tool provides operators with a daily report on competitive promotions and device prices, enabling them to immediately see what is changing and where they need to reassess their own promotions. A major MNO that uses this report found it to be much more effective, timely and accurate than their internal efforts. While most of this information is available on competitors’ websites, promotions can be hard to find as they are occasionally moved to a different webpage, and are at times ambiguous and even contradictory. Tarifica’s specialists know how to find this information quickly and contact operators via chat and phone when necessary to clarify or validate information. Outsourcing to Tarifica saves operators the cost of hiring, training and managing the necessary resources.
All operators know that the launch of each new high-profile device and/or plan provides a window of opportunity as well as risk. Having immediate information on competitive offers and watching them change every day enables Tarifica’s clients to make strategic counter moves quickly and maximize the upside of such events while minimizing downside risks without significantly increasing the use of internal resources.
An example of this daily report showcasing the US marketing can be seen here. It demonstrates some of the ways this information can be presented. In this format, promotions are categorized by smartphone BOGO, smartphone other, tablet, data plan/network, trade-in and switching operators. Pricing detail is provided for all devices offered and is categorized by smartphones, tablets, smartphones under $10 and prepaid smartphones. Promotion descriptions provide a summary of key elements. All entries are color coded to indicate if they are new and/or if they appear on the competitor’s home page indicating they are expected to be highly attractive.
Many other variations of this information can be provided such as timelines for promotions, indications if promotions have been modified, different device categories (high-end, low-end, accessories, specific manufacturers, etc.), in store or online-only promotions and detailed terms and conditions of promotions, including limitations and restrictions which can be used by operator sales reps to close sales. Report formats and delivery vehicles (e.g., Word, Excel, PowerPoint) are also completely customizable.
Custom analyses of this information are also available, such as comparisons of promotion strengths and weaknesses, price and discount trends by specific models and age of phones, length of promotion periods, promotion modification or turnover rates, etc. Knowing what is happening today, seeing trends as they develop and being able to anticipate the future are key factors in becoming or maintaining a market leadership position.
Further hard evidence of the power of promotions is apparent in Tarifica’s Tarifica Score™ which rates plans based on consumer value. Plans that include promotions are often the top value plans in the market and remain in those positions until another operator offers a better promotion or the original promotion expires. More information on the Tarifica Score can be found here.
Three quarters of consumers regard promotions as fairly to extremely important in their decisions to purchase phones and mobile plans. Operators need to treat promotions as a strategic element of their business and must focus heavily on managing them in order to remain competitive while minimizing the impact on profitability. The Tarifica Daily Tracking Service can help operators manage both the short-term pressures to optimize the trade-offs between market share and profitability as well as the long-term strategic need to position themselves as champions of consumer value. If you are not satisfied with your answers to the questions posed at the beginning of this paper, contact us and see how Tarifica can be your partner in this battle for consumer spending on mobile services.
Tarifica is the global leader in monitoring and analyzing telecom pricing. Covering hundreds of operators in every region of the globe, Tarifica’s databases of mobile and fixed line data and voice tariffs are among the largest and most in-depth in the world. Tarifica is also a leading publisher of benchmark and other pricing reports, and its analysts are recognized authorities in the telecom industry, relied upon by operators and businesses worldwide for pricing insight and guidance.
To learn more about Tarifica, please visit www.tarifica.com