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While a fair amount of research has been done on brands and customer
satisfaction, little meaningful research exists on core consumer value.
In the telecom industry, many will argue that brand and customer
satisfaction are critical elements for success in this evolving and
increasingly competitive market. However, without understanding what
value consumers place on what is being offered, its difficult for operators
to effectively build and modify their strategies for the future.
With this in mind, last fall, PwCs telecom practice in India teamed up
with a leading Indian business school to understand consumer value.
What is it that mobile users value most and how much value do they
place on what is being offered to them?
The result was a study of usage patterns and consumer value in the
Indian mobile telephony market, conducted in conjunction with the
Indian Institute of Management, Ahmedabad. Since it was launched, the
study has generated interesting insights about consumer value in general
and value for the mobile user in India in particular. While the study
focused on the Indian market, we think the findings will be of interest
to operators in other markets if for no other reason than to get them
thinking from a different point of view about the consumer and their
service offerings.
www.pwc.com/communicationsreview
The telecom industry is at a crossroads Figure 1: Top benefits from the use of telecom services
today as subscriber growth has tapered
off. Operators are now more focused on Scores: Highly agree = 5 and Highly disagree = 1
reducing churn and increasing average
revenue per user (ARPU), rather than
concentrating on adding subscribers
as in the halcyon period up to 2010, 4.07
4.04
when India added up to 20 million
subscribers in some months.
3.87 3.87
To gauge the value consumers place
3.81
on mobile services, we conducted the
3.76 3.75
PwC-IIMA Survey on Consumer Value.
We interviewed 2,152 consumers across It has It has kept me It enables me It helps It has It has It has
17 locations and six telecom circles in given me a in touch with to coordinate save time allowed me brought me reduced the
India. The interviews were conducted feeling of my family with others to expand closer to frequency of
across different socio-economic classes, security my social my parents meeting my
network friends and
age groups, genders, and professions.1
relatives
We asked mobile telephone users
to rate the economic, social, and
personal benefits they derive from Base: All respondents (2,152)
telecom services. At an aggregate level, Source: PwC-IIMA Survey on Consumer Value
respondents reported deriving more
social and economic value followed Does perceived value change Are operators leaving money on
by personal value. Eighty-four percent with time and place? the table?
of consumers feel that mobile is good
value for money and 80% believe that It only seems to take a year for In a perfect world, brand, price,
mobile is important to them. Mobile users to realise value from adopting and value would be in equilibrium.
consumers see most value in a feeling mobile. Once settled into the benefits However, brand consciousness for
of security, being in touch with their of mobility, users tend to derive as telecom services is significantly lower
family, helping them co-ordinate with much utility whether theyve been than price and value.
others, saving time, and expanding on a network for just a few years or
[Editors note: The socio-economic
their social network (see Figure 1). for many. The difference between
classification (SEC) system in India is
new (less than one year of usage)
used to classify households based on
and existing users (over one year of
education levels and asset ownership,
usage) is significantly high on the
seeFigure 2 for further explanation.]
followingattributes:
Within socio-economic segments, SEC
Feeling of security: Newer users
C has the lowest brand consciousness
value the feeling of security that
but the highest price and value
mobiles give them more than those
consciousness. This segment,
who have used mobiles for a while.
comprising the skilled working class,
More productive: New users appears to be a tough-to-crack market
of mobiles value them more for as consumers are focused not only on
increased productivity. the sacrifice (price) they are making
in owning and using a mobile but also
Stay away from mobile: Until they
on the return they get (value). They
get used to mobility, many new
are not looking for brand intangibles.
1 Extensive insights on the profile of the users feel that if they had a chance
interviewed sample can be found on our website they would stay away from mobiles.
at http://www.pwc.in/publications/finding-value-
for-consumer.jhtml.
Our study also indicates that Source: PwC-IIMA Survey on Consumer Value
willingness to migrate to postpaid is
strongly associated with data usage
andeven more so to particular data
usage patterns: To our surprise, 67% of respondents switched in the past. What is alarming
stated that they have never switched is that the percentage of potential
Overall, data users are two and a networks and only about 33% have switchers is almost twice that of those
half times more likely to shift to switched in the past. (See Figure 3.) who have switched in the past.
postpaid than non-data users.
The respondents were also asked which When we analyse the data to see if
Internet pack users are four times network they would choose if they had perceived value has any relevance in
more likely to migrate to postpaid, to buy another SIM card. The list of containing churn, it appears that the
than non-data users, and twice more options included their present network. consumers who derive higher value
likely than low-cost SMSusers. Interestingly, 69% of respondents from the network will have a higher
selected a network other than their propensity to be loyal.
Is churn pervasive
existing network. We treat the choice
orcontainable? So who should worry?
of another network as a proxy for
Churn has been one of the biggest potential to switch. Operators entered the Indian market
issues faced by the Indian mobile in tranches and can be categorised by
The high incidence of potential
industry over the years. The industry longevity of operation in a circle, i.e.,
switchers reaffirms the fact that
has witnessed a monthly churn rate of operators issued licences before 2001
networks need to focus on avoiding
6%5 over the last year. are termed as early entrants, those
churn even among those who have not
between 2002 to 2007 as mid entrants,
and post 2008 as late entrants.
3 Ibid.
4 Quarterly ReportFirst Quarter Ended June 30,
2013, Idea Cellular Limited.
5 Idea and Airtel quarterly company reports from
Q2FY13 to Q1FY14.
lateentrants.
Not surprisingly, when we map
longevity of mobile usage to potential
to switch, we further see that new As for the demographics on which Will data deliver its promise?
consumers have a higher potential consumers will switch, the survey
Data and value-added services (VAS)
to switch than those consumers who results indicate that those under the
are the new growth engines for
have been using mobiles longer (see age of 30 are more willing to select
Indian operators. Non-voice revenue
Figure4). a next network other than their
contribution for Indian operators is
currentnetwork.
half that of its Asian peers and there
Figure 4: Longevity reduces potential The switching tendency of SEC C is strong potential for growth. While
to switch is higher than the overall average. over the last year, data has been
Value perception of SEC C is lowest growing rapidly, traditional VAS has
<=1 >1<=2 >2<=4 >4<=8 >8 among all SECs and they are highly slowed primarily due to regulatory
years years years years years price-conscious. These are likely interventions and the availability of
determining factors for their switching free content on the Internet.
82% behaviour. We see opportunities for
We asked respondents about
76% marketers to profile users more on
69% their awareness levels, usage, and
68% 67% SEC banding rather than on spend and
willingness to use services across
communications use.
entertainment, information, Internet,
Consumers with potential to switch For respondents across segments, and utility categories, and found that
coverage remains the largest this varied across services, geographies,
Source: PwC-IIMA Survey on Consumer Value
determinant during network selection and professions. We found there is a
(see Figure 5). While brand is more linear relationship between awareness
important than recommendations, and usage. The dominant trend is that
advertising is given the lowest one-third of respondents aware of
importance. Students, while broadly entertainment or infotainment VAS also
showing a similar trend, exhibit a use them.
higher reliance on service, brand,
family, and recommendations while
making a purchase decision.
Communications Review 5
www.pwc.com/communicationsreview
Sivarama Krishnan
Executive Director, PwC India
Tel: +91 9650788787
sivarama.krishnan@in.pwc.com
Mohammad Chowdhury
Telecom Leader, PwC India
Tel: +91 9167665544
mohammad.chowdhury@in.pwc.com
Anuj Jain
Managing Consultant in the telecom
practice, PwC India
Tel: +91 9871081073
anuj.x.jain@in.pwc.com
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