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Segmentation and Proposition Development

Abstract

Convergence offers the potential to deliver multiple services to customers. Apart from delivering additional revenues and improving returns on the investment made, supplying multiple services to one customer increases stickiness, and provides better understanding of customer needs and interests to the operator.

However, operators have had mixed success in successfully selling converged services. In part this arises from the nature of the services; mobile services tend to be personal, fixed are for households, raising questions about the best way to segment the market. In addition the pricing structures currently employed are derived from a business dominated by voice traffic, and are ill-suited to a business dominated by data traffic.

However, in a situation where operators are using pricing models based on voice traffic while data usage is set to grow exponentially, convergence may be the essential element that allows tariff and traffic rebalancing and avoids MNOs becoming constrained by their own failure to extend their propositions to provide full services to the customer base.

This report considers methods of segmenting the market for converged services, and proposes an approach to suit the market characteristics. It also looks at the criteria for developing propositions for the market segments identified, and how and whether these can also address the need to restructure the pricing model.

Table of Contents

1 Overview

2 Introduction

  • 2.1 Background to the Report
  • 2.2 Report Content
  • 2.3 Currency and Conversions
  • 2.4 Further Questions and Feedback

3 The Convergence Market Defined

  • 3.1 Convergence Definitions
  • 3.2 Type of Services and Technologies Involved
    • 3.2.1 Fixed Broadband Services
      • 3.2.1.1 DSL Broadband
      • 3.2.1.2 Other ' Fixed' Broadband Services
    • 3.2.2 Mobile Broadband
    • 3.2.3 Voice Telephony Services
    • 3.2.4 Pay TV and VoD Services
    • 3.2.5 Other Varied Applications

4 Segmentation of Converged Markets

  • 4.1 Introduction
  • 4.2 Market Structure and Possible Segmentations
    • 4.2.1 Geographic segmentation
    • 4.2.2 Demographic Segmentation
    • 4.2.3 Psychographic Segmentation
    • 4.2.4 Behavioural Segmentation
    • 4.2.5 Social Segmentation
    • 4.2.6 Personal vs. Household
  • 4.3 Segmentation for Convergent Services
    • 4.3.1 Teenagers/Starters (partly in Starting Out)
    • 4.3.2 Young Singles (Starting Out/ Unwired)
    • 4.3.3 Young Couples (Unwired)
    • 4.3.4 Young Family (Committed to Cables)
    • 4.3.5 Older Family (Committed to Cables)
    • 4.3.6 Empty Nest (Comfortable Middle Age)
    • 4.3.7 Older Singles or Couples
    • 4.3.8 Transitions from Segment to Segment
  • 4.4 Operator Approaches to Segmentation
    • 4.4.1 Example: Vodafone
    • 4.4.2 Example: O2
    • 4.4.3 Example: Orange

5 Proposition Development

  • 5.1 Introduction
  • 5.2 Operators' Objectives and Constraints
  • 5.3 Selecting Target Segments
    • 5.3.1 Combining Personal and Household Propositions
    • 5.3.2 Matching Sector Requirements
  • 5.4 Propositions
    • 5.4.1 Mobile Convergence Propositions
    • 5.4.2 Fixed Convergence Propositions
    • 5.4.3 Fixed-Mobile Convergence Propositions
    • 5.4.4 Promotion
    • 5.4.5 Pricing Approach

6 Conclusions & Recommendations

  • 6.1 Convergence
  • 6.2 Segmentation
  • 6.3 Propositions
  • 6.4 Organisational Issues
  • 6.5 Recommendations

Appendix - Feedback Questions

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