Regular readers may recall how Ovum has warned fixed telcos that they need to raise their game on marketing if they are to compete successfully with the premier brands (e.g. Internet companies such as Google; high-street stores like Tesco; electronics brands such as Apple, etc). Late last year we undertook a research study into how fixed telcos are responding to this through their marketing strategies. We plan to repeat the study looking at mobile telcos later this year.
The study titled Telco marketing strategies need to move into top gear, and fast concluded with 15 key messages. Here we look at three key findings from our research.
Ovum telecoms strategy practice leadervum Mike Cansfield comments:
Firstly, marketing has only been necessary in the industry since the start of deregulation in the 1980s, so it has only been around for 20 years in contrast to other management functions. It is immature and has so far been largely about advertising and sales support only, rather than customers and market segmentation. The fact that marketing is not seen as anything more than this at board level could be down to marketing teams failing to fully articulate its role. This in-turn has led to under-representation at board level and the lack of company-wide marketing plans. A telco that does not understand and embrace marketing will struggle to defend its market position.
On the second point, fixed telecoms services are no longer just provided by incumbents and altnet phone companies - Skype/eBay; BSkyB; Carphone warehouse (CPW); Tesco; and Orange are all active in the UK. Telcos must be able to compete with these big premier brands. Brands like Tesco have also shown they can muscle in on clothes, books, music and video, and white goods retail markets too. What CPW and other retailers have shown is that telecoms can be sold in the high-street (this is where mobile users shop). To compete, BT needs to be able to match the highly skilled marketing engine of these premier brands, and ensure that customers choose its brand as their trusted supplier first. This applies to all incumbents and altnets in European markets, and not just the UK.
Thirdly, telcos have traditionally innovated by deploying technology themselves and then offered it out to their customers. This is a 'mother knows best' approach. The start of the mobile industry is an example of this from the 1980s; IPTV is a more current example. But this is a top-down model. The experience of SMS messaging, and the spectacular growth of YouTube and MySpace shows that service innovation can also be bottom-up too. Telcos need to recognise and facilitate this in the market, but also leverage the full value of their investments in next generation networks. This is all about marketing and how telcos talk to and interact with their customers.
In conclusion, there is plenty for telcos to do if they are to step up to the plate on marketing. We plan to track how or whether they do so over the coming year.
Mike Cansfield is a research director leading Ovum's Telecoms Strategy practice
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