Case study: How to Increase Market Share with Innovative Customer Value Proposition?

How to increase my market share and create new revenue streams? This is a question that keeps many CxO awake! And I believe the answer is not simple.

Telco Market– In the very competitive Telecom Market, The operators are facing price erosion and revenue decline in their traditional voice business, due to, the emerging over-the-top players offering free of charge voice service over the Internet on one hand, and the change in consumer behavior adopting  new communications means on the other hand. This challenging market situation has pushed many operators to think about innovative solutions to address and fight this new threat.

I highlight below the successful case of Optimus, a Mobile operator in Portugal. I also include their Business Model in Alex’s Canvas format.

Company- Optimus Portugal is an operator in Portugal’s mobile marketplace. As an innovative challenger, it is compelled to think outside the box in attempting to capture new customers as it competes with incumbent market leader TMN and Vodafone.

Objective- Optimus wanted to increase both its brand attractiveness and its market share within the youth segment. The goal was to address the unique requirements of the market with an innovative offering in terms of pricing, devices and social community.

Customer Value Proposition- The solution, which the company calls TAG, bundles a consumer’s mobile and fixed Internet services on the same mobile number for a single monthly fee. The TAG concept was launched – a holistic value proposition with dedicated pricing and services, targeting the teenagers segment, see Optimus TAG.

The Value Proposition comprises Voice calls among TAG members are free of charge, and TAG users receive truly converged communications. Everything the TAG subscriber can do on the mobile is accessible via the PC: voice calls, SMS, MMS, video calls, instant messenger, voice mail with the same look and feel and the same user experience. At the same time Optimus builds up a new TAG community, in fact a new Social Network, within the offering. This allows Optimus to move in the value chain and compete with the emerging Over-The-Top players (see Figure 1).

Figure 1

Customer Segment- Teen, Youth and early adopters market segment.

Sales Channels- Optimus has been using a “guerilla marketing” campaign to attract this customer segments. The service was sold on the Internet, in Kiosks, in Disco’s, Cafes, and close to schools and university sites.

The Business Model Canvas looks as follows:

Optimus TAG - Business Model Canvas

Result- A year and a half after launch, Optimus was able to completely change the game in the Portuguese market. It developed converged fixed-mobile voice/messaging/social experience targeted directly at the teen market. The innovative combination of services and rate plan made the difference.

The TAG results have exceeded all Optimus’ internal expectations:

• 60 percent of all registered users access the service daily.
• Increased Network Utilization
• Increased number of subscriptions and customers
• Creation of a new community owned by Optimus
• And a new way of communicating on the mobile network: PC-based Communication.

Optimus success in the teen market has led to a decision to roll out similar services for its entire user community, including enterprise customers.

References:

Optimus TAG website

http://www.ericsson.com/