Beyond Demographics

A nationwide 1-rate plan. No roaming charges and no long-distance charges. Sixty minutes for $39.99. Six hundred minutes for $69.99. Which wireless carrier's marketing campaign does that information belong to?

Having trouble figuring it out? That's because they all sound the same.

Uniqueness doesn't last long in marketing wireless services once competitors realize a program is successful. And it's easy for carriers to mimic pricing plans because such plans don't take long to implement and can be explained to potential subscribers easily.

However, one way to get beyond price and capture potential subscribers' attention is through psychographics. Psychographics are an extension of demographics and are used to determine lifestyle characteristics and traits that can be correlated into targeted marketing programs.

Rebecca Diercks, director of Cahners In-Stat Group's wireless and telecommunications research, said that using psychographics allows carriers to market based on demographics as well as people's actions.

PERSONALITY TRAITS Demographics are used to divide users into different age and income ranges, but the reason a person buys a particular service goes beyond how old he is and what his paycheck reads. The decision involves the individual's personality. Psychographic groupings that incorporate factors such as what consumers consider important when they make a purchase are an effective tool.

For example, in a study done by Cahners In-Stat group last year, five potential wireless customer groups were determined after interviewing a cross-section of the U.S. population. The statistical information was compiled through a cluster analysis, which means specific segments were not created before the data was collected but were determined after the information was gathered. Within the five groups, some demographic characteristics are similar, but they do not define the person's exclusion or inclusion in the group. People of the same age and marital status are distributed throughout the categories.

The five categories determined through the cluster analysis were: married with children; young suburban professionals; affluent empty-nesters; mature, moneyed middle-agers; and living off Social Security. Each grouping was determined to have different characteristics regarding how likely members are to have wireless service already, their propensity to sign up for wireless service if they don't have it and what they consider most important when making the decision of which service to buy.

Although most consumers consider price when making a buying decision, not all decisions are based solely on price. Other factors often are more important, such as comfort, security, convenience and customer care. Although, logically, you might think the living off Social Security group is concerned only about price, that is not the case, said Diercks, author of the report.

"Price is one issue, but they need a great deal of customer service," Diercks said. This group is less familiar with technology, so a plan that includes a thorough customer-service angle would make them more likely to buy wireless service.

Appealing to the emotions through safety and convenience issues continues to be effective. Because both parents often work, keeping track of their children is more difficult. GTE Wireless has capitalized on this situation through its FamilyNet program, which makes wireless convenient and affordable for families. As many as four individuals within the same local calling area can have their cellular service grouped on one bill.

LOOK TO THE EXPERIENCED Industries that have been dealing in the consumer world for a long time can be a guide for product segmentation. Take cereal manufacturers, for example, Diercks said. Every type of cereal is targeted to specific customers, and the cereal companies must hit the mark with box design as well as advertising content and placement.

Diercks said that Cheerios knows that most of its consumers are young children, often toddlers, but those children do not buy the cereal and have little direct influence over their parents who do buy it. Therefore, Cheerios is marketed mostly to the mothers. Thus, neither the box nor the commercials sport flashy cartoon characters. Older children tend to exert more influence on the buying decision, so cereal manufacturers market accordingly with flashier "cool" concepts.

ETHNIC FOCUS Although price-based advertising is prevalent, Donald Phipps, Applied Marketing Research CEO, said wireless carriers, especially the larger ones that have the resources, are taking lifestyle characteristics into play with some of their marketing programs. He said some carriers are looking at how to sell to different ethnic groups such as Hispanic or African American.

"We do some bilingual research, and (carriers) are very interested in that," Phipps said.

AirTouch has targeted a Los Angeles campaign at the Hispanic market since July 1997. The carrier's research showed people in this ethnic group, whose first language probably is Spanish, prefer to see and hear advertising in Spanish and like to deal with companies that have shown a deep commitment to their community. Therefore, AirTouch has developed a separate marketing campaign in Spanish targeted at these potential users and has Spanish-speaking customer-service personnel to provide these subscribers a comfortable experience when they call. In addition, the carrier increased its sponsorship of activities in the Latino community.

ATTITUDE ADJUSTMENT As wireless continues to penetrate the consumer market, targeted marketing efforts will be even more important.

"There's a lot of emphasis right now to move the user from thinking of (wireless service) as a utility used once in a while to being something that we use all of the time," Phipps said. "They're pushing that with pricing, but (attitudinal) segmentation of users will play a role in creating demand for the service."

Carriers are trying to understand what it will take for people to use wireless as their only phone, and lifestyle research is essential in meeting that goal, Phipps said.

If a carrier rolls out a new feature or marketing strategy that generates new acquisitions or decreases churn, it's only a matter of time before competitors copy it, but that doesn't mean carriers shouldn't go for it, to be a leader and try something new.

Companies have developed marketing tools to help carriers segment potential users and then target them effectively with specific offers or promotions. In April, Experian released a tool it believes carriers can use to create a database of potential customers that can best be attracted with specific offers. HomeScores uses residential utility usage information to extract lifestyle characteristics of those within the database as well as a questionnaire that helps to determine each person's propensity to switch providers of such services as wireless phone, cable and electricity.

A national survey asks such questions as the size of the person's long-distance, wireless and local phone bills as well as electric and cable bills. Other questions ask how loyal users are to current providers and their interest in receiving products or services from alternate providers. From the compilation of this data, a wireless carrier can overlay these characteristics on its own database or Experian's household database. Carriers can use specific characteristics to filter out a prospect list depending on which groups it is after or what type of promotion is in the works.