Is The Operator Arms Race Stifling Innovation In The Mobile Telecoms Sector?
Research from Capgemini and INSEAD highlights the disconnect between what consumers demand from mobile services and what operators focus on.
22 September 2004
A report launched today reveals that mobile operators are too focused on winning market share from competitors and are failing to address consumers’ fundamental needs. Published by Capgemini, one of the world’s leading providers of consulting, technology, and outsourcing services, and INSEAD, a leading global business school, the research surveyed 27 operators and 1,216 consumers from across Europe and highlights several opportunities for operators to generate growth.
Operators are missing an opportunity to generate more revenue, and arguably more market share, by not listening to what their customers want. Whilst both operators and consumers agree on the significance of price, operators are failing their customers as 5 7% are unhappy with the price they pay for calls. But lower prices can benefit operators as well as consumers:
- 44% of consumers willing to forego any advanced services.
- 79% would increase mobile usage at the expense of fixed—49% would give up their fixed lines altogether.
Similarly, coverage and the broader aspect of convenience are key but the majority of consumers are dissatisfied, spelling an opportunity for operators:
- 74% of users would increase mobile usage if coverage were improved in buildings, the underground, and trains.
- 79% would increase mobile usage if operators subsidised headsets or car kits.
“The operators’ current approach to strategy leaves them competing on very generic propositions, failing to address those areas that consumers consider most important,” Didier Bonnet, Managing Director, Telecom, Media & Entertainment (TME) Capgemini, explained. “Some of the fundamentals, such as attractive pricing, convenience, and simplicity are either not a competitive focus for operators or are not being addressed well enough. Advanced services will happen, but adoption takes time and requires compelling propositions at attractive prices—something the operators still need to refine.”
Professor Ben M. Bensaou, INSEAD, put the research in context: “By comparing the factors the industry competes on to create value for consumers, with buyers and non-buyers’ actual frustrations and desires, we were able to identify several unexploited opportunities. We were guided by the logic of Value Innovation, which says that successful innovators focus on redefining or creating new market space by exploring opportunities to simultaneously increase buyer value and reduce their own cost structure.”
The research uncovered some significant disconnects between customer demand and operator focus. The complexity of offerings and handsets and the ease of making and controlling payments are significant issues for consumers—over 70% of over 35s prefer simpler handsets, for example. By contrast, very few operators mentioned either as a factor on which to compete. On the other hand, while the majority of operators consider advanced services to be a critical differentiating factor, it seems that relatively few consumers agree.
Jawad Shaikh, Head of Capgemini’s TME Strategy Lab, added: “These responses show that operators need to refocus their innovation efforts on what consumers really value. They should initially concentrate on fulfilling the basic proposition of anytime, anywhere communication. Advanced services will become important but not to the detriment of the basic consumer requirements. If incumbents do not act they will find themselves competing against new entrants that are better equipped to deliver the value that consumers expect.”
For further press information contact:
Inferno Communications:
Suzy Sammons (+44 20 8735 9102/9103)
suzy.sammons@infernopr.com
Capgemini:
Katherine Powell (+44 870 905 3025)
katherine.powell@capgemini.com
About INSEAD
INSEAD (www.insead.edu) is one of the world’s largest top-tier graduate business schools, with two comprehensive and fully connected campuses in Asia (Singapore) and Europe (France). Currently, 147 faculty members from 33 countries teach more than 840 MBA participants, 54 executive MBAs, 6,500 executives and 73 PhD candidates. INSEAD’s unique global perspective and multicultural diversity are reflected in all aspects of its research and teaching. The INSEAD-Wharton Alliance, announced in May 2001, combines INSEAD’s resources with those of Wharton’s campuses in Philadelphia and San Francisco, to deliver business education and research across a Global Learning Network.
Value Innovation is the work of W. Chan Kim and Renée Mauborgne of INSEAD.
