Professional Documents
Culture Documents
Point of view
20th May, 2011
A
• Non-‐ • Target
segments
not
clearly
defined
and
• Iden3fica3on
of
key
segments
and
specific
efficient
communica3on
and
benefits
diffused
value
proposi3on
elements
for
each
Pricing
• Price
plans
too
similar
and
do
not
• Price
plan
porBolio
restructuring
value
address
specific
segment
needs
• Drive
price
plans
and
promo3ons
towards
proposi,on
• Price
plans
do
not
incen3vize
usage
(for
increasing
share
of
wallet
and
on-‐net
usage
double
simmers)
• Set-‐up
promo3ons
roadmap
to
drive
• Lack
of
explicit
usage
s3mula3on
reten3on
and
usage
programs
B
• Pricing
wars
• Pricing
wars
translate
into
ARPM
• Iden3fica3on
of
elas3city
gaps
to
op3mize
deteriora-‐ pressure
across
the
subscriber
base,
pricing
ARPM
re-‐balancing
towards
op3mal
,ng
the
leading
to
a
significant
loss
in
segment
pricing
points
per
segment
and
CLTV
profitability
market
• Conduct
innova3ve
pricing
exercises
to
• Tariff
decline
leads
to
reduced
heavily
s3mulate
usage
leveraging
excess
investment
in
telecommunica3ons
capacity
in
network
infrastructure
and
severe
quality
• Define
“out-‐of-‐the-‐box”
pricing
approaches
to
deteriora3on
(due
to
high
network
combat
value
destruc3on
(e.g.
dynamic
conges3on)
tariffs,
3ered-‐pricing,
op3cal
pricing,
etc.)
• The
current
compe33ve
dynamics
in
the
• How
do
elas3city
curves
in
the
telecoms
market
Tanzanian
telecom
market
are
complex,
drive
churn,
new
customer
acquisi3on,
usage
aggressive
promo3ons,
drivers
of
churn
differ
by
profiles,
increase
in
revenues,
margin
and
EBITDA?
segment,
downward
spiral
in
pricing,
etc.
Defining
the
correct
response
requires
a
clear
• How
are
elas3city
curves
affected
by
the
interpreta3on
of
the
drivers
and
in
par3cular
incumbent’s
and
compe3tor
pricing
strategies?
demand
elas3city
• If
the
operator
raises
prices
closer
to
those
of
the
• mmC
has
developed
a
specific
methodology
and
incumbent,
will
churn
increase?
In
which
tools
to
allow
telecom
operators
to
understand
segments?
the
complex
demand
elas3city
variables
in
their
• How
will
price
elas3city
impact
operator’s
churn
markets
and
to
define
appropriate
pricing
rates
if
it
adopts
a
“price
killer”
posi3oning?
strategies
• mmC’s
methodology
is
based
on
the
rela3on
• How
can
an
operator
improve
EBITDA
by
between
price,
traffic
paSerns,
churn,
service
decreasing
prices?
In
which
segments?
adop3on
and
customer
profitability
• How
much
can
an
operator
raise
prices
in
which
• mmC
has
develop
a
tool
based
on
pricing
segments
without
losing
in
EBITDA
terms?
paSerns,
pricing
bundles
and
services,
allowing
to
• Are
other
operators
affected
by
the
same
price
handle
expected
increment
of
revenues,
churn
elas3city
curves?
and
EBITDA.
ARPU
Elas,city
=1
The
op,mal
price
level
for
a
MOU
is
found
where
the
marginal
cost
is
equal
to
the
marginal
revenues
–
the
price
point
where
Op,mum
price
level
an
addi,onal
minute
does
not
generate
any
addi,onal
marginal
profit
and
does
not
improve
any
cri,cal
KPI
$/min
Marginal
cost
Cri,cal
KPIS
varia,on
∆
increase
Risk:
too
aggressive
Risk:
too
high
B3%
• Consumer
behavior
in
• For
consumers
the
• Sejng
prices
• Elas,city
may
be
in
1
2
3
4
mobile
telephony
is
overall
bill
is
more
according
to
elas,city
conflict
with
other
complicated
important
than
can
increase
revenues
objec,ves
individual
prices
without
an
overall
increase
in
prices
• Customers
understand
• Customer
may
see
• Increase
prices
for
the
• The
most
inelas3c
the
value
of
calls
(A
value
on
a
individual
most
inelas3c
customers
customers
tend
to
be
the
repeat
purchase)
decision
basis:
“Is
this
and
services
most
valuable
(e.g.
call
worth
more
to
me
business
users)
• However
customers
• LiSle
impact
on
volume
than
its
cost?”
(VALUE
so
that
the
price
• Inelas3c
customers
may
awareness
of
the
price
-‐
SERVICE
ELASTICITY)
increase
flows
through
be
less
valuable
(e.g.
low
of
calls
is
limited
• …or
on
an
aggregate
to
revenues
spending
residen3al
• Tariff
plans
hide
the
basis:
“Is
my
current
users)
price
of
an
individual
• Reduce
prices
for
the
usage
worth
more
to
most
elas3c
customers
• There
may
be
a
desire
to
call
Feedback
on
the
me
than
my
monthly
and
services
raise
prices
to
increase
cost
is
delayed
bill?”
(BUDGET
–
profitability
• For
innova3ve
services
AGGREGATED
• The
effect
of
price
both
the
pricing
and
ELASTICITY)
reduc3ons
is
offset
by
• Price
reduc3ons
can
spark
the
value
of
the
increases
in
volume
a
price
war
Price
service
may
be
increases
can
lead
to
• “Ramsey
pricing”
states
unclear.
increased
churn
if
not
what
the
theore3cally
matched
by
compe3tors
op3mal
pricing
is
Pricing
plans
evalua3on
tool
Pricing
plans
elas3city,
compe33veness
mapping
and
gap/opportuni3es
analysis
Offering
design
development
alterna3ves
Pricing
strategy
and
Alterna3ves
offering
design
iden3fica3on
&
selec3on
Compe3tor s
pricing
strategy
Mobile
clients
percep3on
defini3on
for
2011
evalua3on
evalua3on
&
needs
analysis
• Elas3city
model
design
• Traffic
paSern
analysis
per
• Develop
a
gap/opportuni3es
• Pricing
offering
elements
defini3on
• Pricing
plans
simula3on
tool
segment
/
tariff
pan
analysis
iden3fying
the
main
(pricing
structures,
tariffs,
modules…)
for
programming/modeling/design
for:
• Compe33ve
pricing
plans
poten3al
pricing
strategy
and
voice
and
data
services
Main
ac3vi3es
-‐ operator’s
pricing
plans
in
the
analysis
and
mapping
for
offering
alterna3ves
(for
current
• Launch
plan
defini3on
different
regions
different
usage
paSerns
and
new
customers,
and
for
voice
• Hand
over
of
tools
designed
for
poten3al
-‐ Compe3tor s
pricing
plans
• Revenues/margins
sources
and
data
services)
implementa3on
at
an
OSS
level
• Compe3tor´s
expected
pricing
analysis
for
the
different
clients/ • High-‐level
recommenda3ons
for
strategy
analysis
usage
profiles
• Economic
&
commercial
impact
streamlining
pricing
related
processes
• Support
to
operator’s
pricing
team
• Clients
pricing
percep3on/ evalua3on
of
alterna3ves
and
in
training,
coaching
on
analysis
and
needs
(for
operator
and
final
recommenda3on
pricing
tools
compe3tors)
market
research
analysis
1
2
3
4
• Pricing
elas3city
modeling,
• Op3mal
pricing
analysis
• Pricing
strategy
and
offering
development
defini3on
including:
• Implementa3on
/
including:
(either
internal
and
vs.
-‐ Pricing
opportuni3es
&
gaps
for
operator
in
voice
and
data
ac3on
plan
-‐ Elas3city
opportuni3es
compe3tors)
-‐ Pricing
strategy
and
offering
alterna3ves
iden3fica3on
and
-‐ Roadmap
of
Deliverables
-‐ Elas3city
Risks
-‐ Current
price
plans
evalua3on
product
launch
-‐ KPIs
evalua3on
-‐ Planned
prepaid
• Detailed
pricing
offering
elements
(in
voice
and
data
services)
-‐ Migra3on
plan
• Pricing
plans
simula3on
tool
offer
to
be
launched
to
develop
in
2011
for
both,
current
and
new
clients,
including:
including:
• Gaps
and
opportuni3es
-‐ Economic
and
commercial
impact
analysis
and
-‐ operator s
pricing
plans
in
the
short-‐term
quan3fica3on
simula3on
-‐ Tac3cal
structures
-‐ Offering
structure
-‐
first
level
defini3on
-‐ Compe3tors
plans
simula3on
-‐ Price
levels
-‐ Tariffs
range
levels
analysis
-‐ Compe33ve
mapping
simula3on
Client’s
discount
segment,
tariff
plan
and
product
>
50%
35%
to
50%
Discount from 50% to 80%
• 2
entrant
is
cheaper
structurally,
nd
cheapest
Discount from 50% to 80%
20%
to
35%
Discount from 20% to 50%
with
significant
discounts
across
most
vs.
• Review
of
current
library
of
300
Discount from 20% to 50%
5%
Discount
to
10%
from 5% to 10%
20%
to
35%
Discount from 5% to 10% • 3rd
entrant
is
aggressively
targe3ng
gaps
iden3fica3on
10%
to
20%
200
0%
Discount
to
5%
from 0% to 5%
Discount from 0% to 5% high
value
clients
with
promo3onal
5%
to
10%
plans
35%
to
50%
Client's
premium
Increase of price from 5% to 10%
• We
maintain
a
premium
of
~20-‐30%
in
the
market
5%
Increase
to
10%
of price from 5% to 10%
cheapest
Increase of price from 10% to 20%
vs.
• Compe33ve
landscape
analysis
Increase of price from 20% to 50%
10%
to
20%
20%
to
35%
Increase of price from 20% to 50% almost
0%
for
the
average
client
Increase of price from 50% to 80%
paSerns
0%
Increase
to
5%
of price from 0% to 5% Indicators
Points
of
aSen3on
Es3mated
Traffic
5%
Increase
to
10%
of price from 5% to 10%
• 27%
of
customers
• 4/5
of
overall
increase
• Iden3fica3on
of
main
10%
to
20%
Increase of price from 10% to 20%
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A
consistent
value
proposi3on
COMPATIBLE
WITH
Postpaid offer discussion Current offer Pricing strategy
Proposal study results ( Acquisition market )
discussed
VALUE The new pricing strategy defined for the high prepaid sub-segment The new pricing offer will focus on three main structural blocks on
strategic posi3oning leverages simplicity and add-ons customization which we’ll deploy add-ons to increase customer attractiveness
Type Add-on Oper. (1/2) Oper. (3) Oper. (5) Oper. (6) Oper. (7) Oper. (8) Ope. (9) New
brand-wide
Comments
25,40,55,80,150, 250,
On-net/ 220, 400 -
1000 size and pricing vary
+
300, 600 e 900 220, 400 200, 400 significantly Peak
Minutos
• Ensure
that
market
and
own
CUG or Youth2 • The previously
F&F 5 proposed pricing
Bundle A Monthly bundles (minutes) 1
B
Shared plans have a very
minutes 120, 360, simple structure STRUCTURAL /
600
– Same structures BASIC OFFER Head line tariff Digressive
e 2 3
AVOID
CUG or different entry size
F&F Familia 100, depending on the ADD-ONS (OFFER On-net/to fixed minutes 6
COMPARABILITY
Different add ons
price (off-peak, on-net, On-net (off-peak?)
structures
Bolt-on
SMS, etc)
bundle, just launched, 8
has the same minutes C
20110119_AFRICA_PRICING-STRATEGY-2011+_v5.pptx 18 23
• Capability
to
have
addi3onal
Pricing
module
tariff
detail
Churn
analysis
derived
C
and
market
comparison
from
new
pricing
uptakes
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components
added-‐on
to
FLEXIBILITY
answer
specific
segment
needs
Pricing strategy study results ( Acquisition market ) Under optimal or optimal plan
Over optimal plan
Postpaid offer shortlist elements summary (to be tested) Retention plan
and
compe3tor
moves
Target segment: Mid/High users (from 50 to 300 MoU)
Value proposition: The more minutes you buy, the less you pay.
After assessing the new plan positioning of the client base, the
impact in churn levels will be low.
Pricing offer detail – Mid / high users offer Pricing offer detail – Churn map by MOU and type of pricing plan (Current client base)
VC1 MOU profile Sob
OFFER DESCRIPTION MARKET PRICES (Best Vivo Plan) 15 30 (Jovem) 50 55 100 150 300 600 900 Other Medida Total
B
Bundle 250
New plan 25-125 min
Overage 150
SUSTAIN
REAL
125-250 min
minutes 0,79 0,69 0,59 0,49 3rd entrant plan 50 (Plan 150) 26,4% 24,3% 52,4% 26,2%
100
customers value
(Currency
2nd entrant 50, 70, and plan B
min.)
90. 140 and 200
50 250-450 min
32% 24% 65,6% 29,1%
PREMIUM
BUT
(Plan 300)
• Main competitors: 3rd entrant (Plan 50 and Plan B) 0
and 2nd entrant (Plan A, B, C, D and E)
120
160
200
240
280
320
360
400
0
40
80
450-725 min
• Easy for the customer to understand the (Plan 600) 42,4% 29,3% 64% 37,2%
MoU
value proposition
LOWER
PERCEIVED
Pros Targeted profile
• Can be used as a base tariff for add-ons
>725 min
• Similar to current plans • The average premium of the new plan between 50 (Plan 900) 73,7% 55,7% 26,5% 69,3%
• Easily comparable MoU and 300 MoU is ~20%
Cons
• For higher users the premium is over 25% 28,7%
24 26
PREPAID
POSTPAID
ILLUSTRATIVE
Price
premiums
• Defini3on
of
guidelines
to
manage
• Iden3fica3on
and
defini3on
of
elements
to
SEGMENT
1
management
price
premiums
and
the
offer
elements
develop
the
bundle
offer
taking
in
to
Bundle
offer
(structural
offer
and/or
needed
account
the
sustainability,
economic
impact
sophis3ca3on
promo3ons/
and
poten3al
compe3tors
reac3on
recharges)
Recharge
values/
SEG.
2
• Defini3on
of
guidelines
for
recharge
• Module
and
elements
design
to
allow
promo3ons
and
Value
proposi3on
for
values,
promo3onal
offers
and
validity
develop
specific
value
proposi3on
for
high
validity
high
value
clients
value
clients
(aligned
value
proposi3on)
for
high
value
• Design
of
specific
elements
to
build
defend
high
value
clients
Reten3on
oriented
clients
current
customer
base
(taking
in
to
account
offer
elements
tenure
and
value)
• Defini3on
of
specific
value
proposi3ons
on
Modules
to
target
pricing,
leveraging
innova3ve
price
offer
specific
profiles
• Iden3fica3on
of
specific
elements
to
fine-‐
elements,
to
target
key
market
segments
Current
clients
base
(youth/massive)
…
• March
3,
2011
Mul3-‐SIM
usage
in
telecom
–
Threats
and
challenges
for
mobile
operators
• July
2,
2010
Value
based
segmenta3on,
or
how
to
get
boSom-‐line
results.
• March
2,
2010
Reflec3ons
on
on-‐net
/
off-‐net
differen3al
in
developing
markets
• September
19,
2009
Will
dynamic
discount
tariffs
succeed
in
Africa?
• September
12,
2009
How
can
operators
win
the
interna3onal
roaming
baSle?
• July
1,
2009
Mul3ple
SIM
ownership
in
emerging
and
mature
markets
• June
21,
2009
Cri3cal
success
factors
of
a
money-‐transfer
service
in
telecom
• Consultant
Value
• June
10,
2009
Pricing
op3miza3on
in
Africa:
the
challenge!
Added
is
mmC
Group’s
• May
13,
2009
What
are
operators
doing
with
their
excess
of
capacity?
corporate
blog
• February
2,
2009
ARPU
s3mula3on
in
3mes
of
crisis
• November
14,
2008
Preparing
for
a
slump
in
earnings.
What
are
operators
doing?
• Founded
in
2008,
it’s
• September
5,
2008
Double
simmers
in
your
opera3on?
Welcome
on
board.
currently
a
leading
• August
11,
2008
Key
ques3ons
in
market
share
revamping
blog
in
the
telecom
• July
2,
2008
Seeing
ARPU
decrease
in
your
market?
Stay
calm…
category
in
Emerging
• June
19,
2008
There
is
always
a
right
price.
markets
• June
16,
2008
Convergent
pricing
in
triple-‐play
operators
T +34 91 1298100
F +34 91 7141888
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