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