Marketing Economics Engineers
Engineers are really clever but blind. I know, I am an engineer.
We think everything is like engineering. We are wrong.
If telecom is going to be business successful we need to be as good at marketing economics as we are at CAPEX economics. Give people what they want.
History is a good teacher for the future...
People are very different - obviously!
We know people are not all the same. The above segmentation was pioneered by Henrik P?lsson and Ericsson Consumer Lab, an organization that studied different markets and different customer behaviours starting in the 1990's. Originally they served the handset business before moving into the networks business. The market reality when first building the mobile networks was nobody was making handsets. The internal joke in Ericsson was that GSM stood for "God Send Mobiles". Ericsson entered the handset business to grow the network business and overnight Ericsson, who had existed for a 100 years in the background, became a consumer brand.
The segmentation model separated populations on the explorer versus stability dimension and the instant gratification versus lasting benefit dimension.
Explorative people inclined to instant gratification are triggered by emotions and emotional messages. To them, new technology is fun, addictive, it helps them being spontaneous and speed is very important to them as they are impatient. The ability to be always connected is also important to them - this is the group that never turns off their mobile phone in order to always be reachable to their friends.
Explorative people inclined to lasting benefits, but also people in the middle of the model are more likely to be triggered by rational reasons. Efficiency, time saving, convenience, and improved quality of life are important triggers for them.
Less explorative segments that are inclined towards the instant gratification are more triggered by the status brought to them by the new telecom. They don’t have a high usage of telecom products today, but they are still interested in new technology - mainly in order to show off and make a visual statements with e g a new cool phone with cool functions.
Finally, there are the stability oriented segments, like traditionalists, that are hard to trigger since they are the late adopters. They will not start using new technology until it has become an element which is hard to avoid using in everyday life.
To not recognize there are different people is a very utilitarian approach.
Different people named
The first dimension, “Exploration vs Stability”, is the most important as it differentiates best between consumers. It also measures at what pace people need and require changes in their lives.
People near the Exploration end are characterised by:
People near the Stability end are characterised by:
Lasting Benefits vs Instant gratification is the second dimension, and has to do with the relationship between one self and others.
People near Lasting benefits end are characterised by:
People near Instant gratification end are characterised by:
From the data nine distinct populations were identified.
Each country has all the populations but each has a unique distribution of population sizes based on age, education, GDP etc.
No two countries look the same! Obviously.
The Customer Promise
In the earliest days of mobile networks the customer promise of all operators was very simple. Speak anywhere! Even if anywhere was not anywhere, just where I needed to be most of the time. And for most that is outside but in the city.
Mobile networks have never been ubiquitous, they still aren't. But they do work in enough places to be very valuable to their customers.
As the industry matured and more competition appeared, there is a need to differentiate what you do versus what others who do the same do.
It needs to be something your customers care about, not what you care about.
And the different customer groups care about very different things. Obviously.
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Propensity to buy
Any good market analysis understands customer interest versus offering. Any highly profitable business maximizes this product market fit, and minimizes the cost of acquisition, churn and delivery. The better the fit, the better the profits.
Interest levels in different services vary massively across the different groups. Obviously.
The start of doing more than speaking
Imagine owning the mobile rights to a Hollywood movie. What are the different products that can be created uniquely to mobile, where there is low to zero marginal production costs and large potential market value?
Example production
We chose this example at the time since Harry Potter and the Half Blood Prince was being released in the upcoming quarter. The content industry knows exactly how to make returns from merchandising surrounding products.
Populations to play with
Business outcome projections
We now have
We introduce a subtlety to our go to market by using our new markets for two reasons.
The first we deliver to the total target populations where we have the rights, irrespective of existing service provider. We use as an aggressive targeting promotional mechanism that generates revenue but also encourages acquisition.
The second is to continuously sell to them as part of a recurring service, that is discounted versus not being a direct customer, either through cheaper offers or access to exclusive content.
Below is the potential value of each targeted customer segment.
In Closing
This presentation was first delivered on March 14 at CTIA 2005. This was at the start of the mobile content business.
This market has now become not addressable by the industry. We never innovated on new product through licensing and two years later the iPhone first came to market and created what we did not. For many reasons.
Content is a very easy concept to grasp versus different people types, hence this example still having value today.
The segmentation approach is as valid today as it ever was, the world is changing drastically once more due to technology, perhaps the biggest change to date.
What are the new offerings, the new promises, and the new business models that are even more valuable today than this was in 2005?
This is the core business of Rakuten , the approach has just become more sophisticated now, with live individual customer understanding and segmentation across all customer aspects.
The statistical data assets that form the foundation of this platform utilize the Rakuten Ecosystem’s "CustomerDNA" database, which classifies Rakuten user attribute information – which includes demographic data such as age, gender, life stages, lifestyle and more – into over 4,000 attributes using AI. This database provides multifaceted persona information, classified into attributes based on real registration information and purchasing behavior, as well as attributes estimated from user behavior.
This is really why I wanted to join Rakuten - to bring this promise to the mobile industry.
For bonus content, I created a simple telecom economics simulator where population, acquisition cost, and churn can be changed, to create projections for your market.
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Human decision-making is nuanced and individual, often challenging traditional segmentation models that rely on generalized categories. No matter how well-designed, these models are inevitably compromises, where only a portion of consumers fully align with each segment. Today, however, AI enables us to manage individual profiles for tens of millions of customers, capturing not only what they do but, more critically, why they do it. This insight into the "why" is essential for accurately predicting consumers' next moves. By understanding motivations and behaviors on a personal level, we have the opportunity to create value and stay a step ahead, turning these insights into meaningful monetization opportunities.
Head of Ecosystems, Strategic Partnerships, Business Development, Strategy & Marketing| Ambidexterity| Business Models| Digital Transformation| CVC| M&A| Innovation| Marketing| Insights| DEI
3 周I remember seeing this. I also used a part of the consumer lab deck, along with jobs to be done + business model canvas, to bring forth 2 innovations to group function strategy, then handling innovations outside the core. Simultaneously, I Introduced the concept of organizational ambidexterity. We all know that, as usual, classically, operational pressures took over exploration.
Storyteller | Evangelist | Discussion Leader | Presenter | Business Engagement | Futurist! My passion is to make complex things understandable!
3 周This basically sums up my career at Ericsson. Trying to tell not only customers but also other stakeholders the value of the network, not the technology it contains. What Consumer Lab are doing have always been a stable foundation of this, it's just sad that many in the telecom industry still seem to think that the technology is the cool thing, not what you use it for. Taking the words from engineers are ONE part of the story, but unless you can complement with the rest, you have a tough job explaining to the audience outside engineering what you offer.
Thanks for sharing Geoff. Those were the days. ?? Now we can profile the same WHY dimensions on individual customers. When you have this depth of knowledge on individual millions of customers a new world opens up. As Mukesh Ambani says “data is the new oil” for everything. The trick for the future is the revenues the GBs enable not the revenue per GB as such. No Michelin restaurant charge for the salt in the dishes. That’s why our M-Sari gives GBs for “free” and monetize elsewhere. It works beyond expectations.