Marketing to the Masses

Carriers have jumped into the consumer-product rat race with both feet and now must add their siren songs to the multitude of other voices out there in media land. Carriers must form strategic marketing plans and creative advertising campaigns. And although many of you may say that nothing is wrong with your marketing plan, is it as effective as it could be? Some industry players indicated there is room for improvement.

VALUED FOCUS Although many carriers bandy about the word "value," some industry consultants are not convinced that carriers are backing up those words with actions. Carriers should create marketing programs that change people's usage habits, said Glenn Gottlieb, Strategic Initiatives president. He cited AT&T's 1-Rate Plan and the GSM carriers' first incoming minute free as good examples of a move in that direction. But, he said, he doesn't think they've all quite gotten it.

"My frustration with the industry as a whole ... is that they give lip service to the idea (of value) and understand that it will help reduce churn, improve usage numbers and thus revenue, but they fail to execute the concepts," he said.

The problem with being stuck in price wars, according to Stu Lipoff, Arthur D Little vice president of communications and information technology, is that pricing and revenue are in conflict.

Competition is increasing, which is driving down prices. Plus, he said, 20% of carriers' customers are generating 80% of their profits, and those 20% are the ones who are going to shop the most carefully and look at the best deals. Not only are carriers getting squeezed in terms of competing for market share, but also they're getting squeezed in terms of trying to retain the small number of customers who are generating the greatest profits, Lipoff said. The process is a vicious circle. Carriers' profits are being squeezed, but in order for them to gain customers, they have to ramp up their marketing and customer-service efforts, both of which cost money. He said most carriers have turned to customer-care solutions, such as over-the-air activation, to help balance the scales.

AirTouch recognizes the need to offer more than a "special-of-the-day" approach to advertising, said Rob Pickell, director of business development. The company is moving away from a promotional approach to offering consumers a value-based message, which allows AirTouch to offer more consistent communications.

AirTouch forms alliances with partners such as the Triple A automobile club and grocery-store chains, which have large bases of desired customers. Many grocery stores have shopping clubs, which allows the carrier to get detailed customer information. Through alliances, AirTouch can take advantage of that same information.

"It's very difficult to get your message across in 30 seconds on TV... but we can do a direct mail piece to them and spend a whole lot more time communicating the message," Pickell said.

PRICE BREAK Still, breaking away from long-time practices is not an easy task. Although some customers are starting to become savvy, many still look, first and foremost, at price when they shop. The idea of getting something for nothing still holds appeal for the general public. Cellular South has found that anything that involves free airtime, even if it is just a temporary offer, is usually successful.

"We do need to be looking at the value our service provides because that leads to reduction in churn," said Carroll Blackledge, Cellular South director of marketing. "But we cannot afford to ignore the fact that the customer still wants a deal." He said the deal is what brings the customers in the door; then you emphasize the value of your service.

Blackledge said Cellular South's current message focuses on positioning the company as "the carrier more people go with; the carrier more people stay with." That message includes a call-to-action on price point. The company also is running a third-quarter testimonial campaign about the company's Telepak bundled services package, which combines cellular, residential service and long distance on one bill.

"We're looking for ways to bring believable added value to the mass market," Blackledge said. "We also do targeted marketing with direct mail."

ORDINARY, AVERAGE CUSTOMER Part of the difficulty in marketing to the masses is that "the masses" are not easily defined.

The average consumer represents so many different types of people: the 21-year-old college graduate, the 55-year-old businessman, the 75-year-old retired couple, the 40-year-old housewife with three kids. They all have different reasons for needing phones and different theories behind how much they want to spend, so you're trying to hit the target, but the target is scattered in many different directions, Blackledge said.

The increased advertising intensity shows carriers' determination to bring wireless to the mainstream. Lipoff said that carriers need to work on brand through advertising as they never have before to increase market share. However, they need to exercise caution because intensity is creating confusion about services, subscriber equipment and features.

"I don't think anybody in the industry wants to be selling a complicated product," Pickell said, "Yet the industry structure kind of creates that environment."

When customers are confused about a product, they revert to something they can understand -- brand. Well-known brands have an obvious advantage over new companies entering the marketplace.

"If I can trust the brand, I believe that if I pull this phone out of the glove compartment, it will work," said Richard Walker, ALLTEL director of strategic marketing.

Walker added that the company that can provide a comfort level in terms of providing excellent service best is going to have the best margins and the best profit. For example, Saturn does not charge less for its cars than others; it charges more, he said.

"Saturn says they will take care of you from the cradle to the grave as far as that car is concerned," Walker said. "They made a promise of superior service, and because they give superior service, they don't have to haggle so much on their price."

TARGET PRACTICE In an effort to manage a nebulous consumer market, some carriers break down the mass market into segments. All segments are not equally profitable, Walker said, so carriers are realigning themselves to gain the segments that they deem the most profitable, given their business plans. He said AT&T puts a lot of emphasis on the customer that travels frequently and incurs roaming and long-distance charges. ALLTEL, on the other hand, emphasizes the local community.

"According to our business design, we emphasize a certain message about being convenient and easy to do business with," Walker said.

AirTouch breaks down existing data into different target segments and then matches its service offerings with the different segments. The company then comes up with five to 10 key message points that it communicates to that type of customer.

AirTouch hopes that the hard work up front will pay off many times over, creating salespeople out of its customers. Pickell said a big part of AirTouch's success is through word-of-mouth.

"A lot of studies have shown that the No. 1 source of new activations is referrals," Pickell said.

If carriers effectively communicate with their customers, then they have real advocates for their service.

"We spend a lot of money trying to communicate interactively with our base," Pickell said.

Part of effective communications is making sure everyone involved truly understands your message.

"A lot of people view cellular as consumer electronics rather than a service, " Pickell said.

Even though the phone may fall under the consumer electronics genre, carriers want to emphasize to customers that what they really are buying is the relationship with the carrier. Many times that part of the message falls through the cracks.

EVOLUTION In the confusing struggle to capture the average user, nothing is certain except that marketing will evolve as the consumer population evolves. The Internet will play a greater role in the future but will not supersede carrier retail outlets, which offer customers human expertise that computers can't match.

According to Pickell, the industry still is in a transition stage from the old duopoly structure and a launch stage for PCS players. He said that even in the markets where PCS has been deployed for a while, carriers still are in the honeymoon period and are spending a lot of money to build a market presence.

"The next stage of this is that you have to get to a more steady state," Pickell said. "Advertising expenditures are going to have to come in line with the value that customers are providing, and I would be surprised that as an industry we would be able to spend the same amount that we are today."

Marketing to mass consumers is no easy task. Not only are they less educated about wireless communications than business users, but also they vary widely. Innovative retail outlets go a long way toward getting consumers hooked.

Retail Planning Associates (RPA) has designed TotalCom, a mall-based store that combines offerings from both Bell Mobility and Bell Canada. The store is divided into departments by lifestyles -- Personal Solutions, Business Solutions, Entertainment and Discovery and Leading Edge. Customers follow a serpentine plexiglass ceiling fixture past the merchandise array and six interactive touch-screens. RPA's studies indicate that extranet-monitored interactive shopping is the most significant trend at the close of the century, on par with the mail-order catalog at the century's beginning. Integrating a virtual environment into the retail setting increases brand potency, and the probability of sales is significantly higher.

InfoPlanet also uses an innovative retail design to help educate consumers. Its three new retail locations in San Diego offer customers an "upscale environment to be educated on all emerging wireless technologies," said President Jay Levitt. The company's product mix includes wireless phones and accessories, pagers, 2-way messaging devices, wireless data products, and global positioning systems. InfoPlanet's service approach includes offering free soft drinks, espresso and toy phones for children.