A study conducted by the company, "Booz & Company" management consultancy that price wars - that arise between telecommunications companies at reduced prices its services to attract new customers and market share larger than its competitors - is a way to get on the gains of urgency, but at the same time bring damage futures.
The study included six advanced and emerging markets have seen price wars in Asia, the Middle East and Europe.
The consulting firm believes that telecommunications companies when they start to cut prices of its services may reduce the need to increase market share and achieve the goals, but in turn have a negative impact on themselves and the markets operating largely financially.
Said David Tusa - a partner in the "Booz & Company": "Check telecommunications companies that begin to cut prices revenues total an unprecedented result of the transformation of clients to it, but after a brief period under a corporate network communications trump the real test with higher utilization rates and low levels of quality."
He added: "have to loss-making telecom companies to double spending on advertising campaigns and provide greater incentives to restore their customers, forcing profitable telecommunications company to do the same to spend more to maintain its market position."
The company advised "Booz & Company" telecommunications companies need to avoid price wars in order to avoid the negative effects, but on the other hand made four approaches to win those wars in case of eruption.
The first approach: deposits of waving force
This approach uses a deterrent before the war broke out, it would defer to the conflict by showing the intention of winning the competitors without entering into battle.
In this approach, the resort operators which have not reduced their prices to waving credible threats to deflect attention from the impending war.
- Messages and tools: This approach includes the perspective of the entire market, and letters shed light on the value and benefits provided by the service offerings in order to divert attention from quotations telecommunications company trades of war
- Capacity: The main ability to understand how the impact of the actions taken against the imminent aggression on customer segments in the market
- Targeted results: see a company that did not reduce their prices, the withdrawal of the company declared the war is the best results can be achieved
- The implications of the market value: adopt established companies in this market approach automatically because it is unlikely to jeopardize its reputation to advantage in prices does not last long
Approach II: Attack directed
This approach is used in addressing the aggression of other companies and seek to reduce the cost and damage choose the battlefield.
- Messages and tools: This approach does not address the broad sector of the public, but his letters targeting realizable value and focus. In fact, telecommunications companies engaged in a price war but control the resulting impacts
- Capacity: The main capacity in the focus on the accuracy and subtraction of effective marketing messages
- Targeted results: This approach contributes to increase the value derived from a particular market segment, which promotes customer loyalty
- The implications of the market value: This method is used in the base in developed countries
Third approach: to enter the war and maintain the momentum
Curriculum includes third company to join the price war with fierce counter-attack, but with the limitation of the scope and intensify its participation.
- Messages and tools: messages are focused and durable and more effective when directed to a slide is not excessive sensitivity to price volatility.
- Capacity: This requires the administrative capacity disciplined approach to overcome obstacles arising along the trail competition
- Targeted results: This method can be applied to all markets
- The implications of the market value: With the adoption of this approach, companies can communications market share of the realizable value of certain segments, although potentially affected by overall market share.
Fourth approach: a new mechanism to fight
This approach differs fundamentally different from previous approaches; This approach aims to develop a new mechanism to fight through a radical change to the cost structure, where the initiative telecommunications companies to acquire structural cost advantage that can be used to develop a privileged position and sustainable prices.
And telecommunications companies can with this approach to develop a new set of capabilities and create a clear competitive advantage based on the three structural elements:
1 - organizational restructuring: include the integration of functions and the limited use of outsourcing to create synergies and cost advantages by outsourcing wider
2 - business process re-design: includes design of internal administrative procedures, and simplify the procedures for dealing with customers, as well as the restructuring of customer segments and simplify product offerings and benefits provided
3 - Reduce operating expenses: includes efforts to reduce operating costs at the level of multiple dimensions.
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