Winning through better value propositions

Winning through better value propositions

Agus W. Soehadi
Contributor
Jakarta

In the past decade the number of cell phone users in Indonesia
has increased sharply. Compared with 33,000 in 1992, last year's
figure was above 11 million.

If each subscriber's bill reaches an average of Rp 130,000 a
month, the monthly revenue reaped by service providers could
total a staggering Rp 1.4 trillion (about US$165 million).

Next to consumers' increasing need for mobile communications,
this huge growth has been triggered by heavy promotions and
various efforts by major cell phone manufacturers and service
providers to educate the target market. Another reason is the
affordable prices of the handsets and the SIM cards. All these
factors, and the potential offered by the country's large
population, will lead to a larger market and eventually fiercer
competition.

To come out as the winner, some strategies have to be
implemented as an integral part of the overall corporate
marketing strategy.

Perhaps the phenomenal success of NTT Japan, in conjunction
with DoCoMo i-mode, in the mobile phone and Internet market can
provide some lessons. Since the launch of new services in
February 1999, they have acquired more than 30 million new
subscribers and the number of subscribers has been growing at the
rate of 50,000 per day. Their net profit has reached US$2.3
billion.

What is interesting is that not only has NTT become a business
winner, but its services have become part of the Japanese
people's lifestyle.

The main element of this success story is the company's
superior values incorporated in the services offered to
customers, meaning quality and benefits that are much more
superior than competitors while being competitively priced. The
value proposition here is not merely to satisfy customers but to
exceed their expectations, and the delivery should be more
effective than that of competitors. Of course, through creative
communications and PR the value proposition has to be conveyed
much in advance to create the desired image in consumers' minds.

No less important after the initial success is maintaining
customer loyalty by nurturing and constantly enhancing the value
propositions, so that consumers think more than twice before
shifting to competitors' products or services.

In the case of DoCoMo i-mode, the value proposition offered
was an entirely different mobile experience. The main target was
consumers who were not too familiar with computer technology,
including the Internet. Different from what competitors were
offering, consumers did not have to dial up the Internet
provider. Their cell phones were automatically and constantly
connected with the Internet provider.

In this way, for customer convenience, time is not wasted and
costs are much reduced in accessing the Internet provider. This
is more effective than the Wavelength Routing Protocol (WaRP)
mobile Internet system made available by competitors.

The rate applied is not based on duration of communication or
air time, but based on the quantity of data transferred. For many
customers this means they spend less than $13 a month. Another
superior value proposition is the wide range of features and the
convenient mode of payment through one integrated billing system.

Here in Indonesia, the recently launched service by the state-
owned company PT Telkom -- Telkom Flexi -- is another success
story that is equally educational. Apart from being the talk of
the town, the demand for Telkom Flexi has been instant, with the
estimated number of subscribers exceeding 100,000 by the end of
2003.

With various superior features, like data transmitting speed
of 144 kilobytes per second, voice quality similar to fixed-line
telephone, Short Message Service (SMS), voice mail, calling line
identification (CLI) and many other facilities, Telkom Flexi is
quickly making significant inroads in the telecommunications
market, especially because the rates applied are the same as
those for fixed-line telephones.

These two examples prove that value propositions for products
and services that not only match consumer demand but, in fact,
exceed consumer expectations, at affordable prices, are one
effective strategy for winning the telecommunications battle. --
The writer heads the School of Marketing at the Prasetiya Mulya
Business School