learnings from an advanced market - korean experiments - marketing insight by jin kook kim jenny i...
TRANSCRIPT
Learnings from an Advanced Market
- Korean Experiments -
Marketing Insight
by Jin Kook Kim Jenny I Jin Jang
ContentsI. Overview of the Korean Market
II. Research Design
III. Key Findings
IV. Conclusions and Implications
3/32
Introduction Overview of Korean Telecommunication Market
Why is Korea the Test Bed of Mobile Convergence?
Mobile Convergence Initiatives in the Korean Market
4/32
Overview of Korean Telecommunication Market
• The first country to adopt CDMA • Three domestic service providers (SK Telecom, KTF, LG Telecom)• Three major handset manufacturers (Samsung, LG, Pantech) • Handset purchase price: average 292 euros * • Mobile service charge: average 28.5 euros a month * • Communication expenses higher than: ‘education’, ‘medical care’
*Source: The 4th Syndicated Telecom Research by Marketing Insight (Sep. 2006)
• Low-end products/ Non camera phones• Prepaid billing system• Charge for receiving calls• Imported phones
Korea has almost No Market for:
Overview ofthe Korean market
5/32
19992000200120022003200420052006
MusicPhoneCamera
phone(Built-in)
Telematics(Phone)Mobile-
BankingS-DMB(phone)
T-DMB
HSDPA
Wibro
World’s first launch
Mobile Convergence Initiatives in the Korean Market
Overview ofthe Korean market
3.5 Generation
6/32
How Do Korean Consumers UseMobile Convergence Service?
1 Music CameraTelematic
s
Banking DMB HSDPA
Game2 3 4
5 6 7
Overview ofthe Korean market
7/32
MobileConvergence
- Government - Business- Media- Consumers
Necessity of new revenue streams for carriers
Obsessive atmosphere
What Makes Korea a Test Bed?
Overview ofthe Korean market
Solid IT infrastructure
Focus on premium handsets
8/32
Difference S-DMB T-DMBLaunched in May 2005 Dec. 2005
Governed by
Ministry of Information &
Communications
Ministry of Culture & Tourism
Law Telecommunicatio
nsBroadcasting
Operated byMobile service
providerBroadcasting
Corp.
Focus onSatellite
broadcastingTerrestrial
broadcastingProfit source
Subscription feeBased on
advertising
Price €11 Free
Further development of mobile convergence involves issues of diplomacy among various parties rather than technology.
Key Issue for theConvergence Market
Overview ofthe Korean market
10/32
Study Content
Ongoing convergences in the Korean market11
Consumer responses to convergence22
Prospects for mobile convergence33
44 Prospects for Fixed-Mobile Convergence (FMC)
Research Design
11/32
UniverseUniverse
StudyFrequency
StudyFrequency
More than 100,000 mobile phone usersSample SizeSample Size
SamplingFrame
SamplingFrame
MajorContents
MajorContents
Overview of Syndicated Telecom Research (by Marketing Insight)
Mobile phone users aged 14-64
Conducted bi-annually since March 2005 (March and September)
Panel of Marketing Insight (0.6 million panelists) Members of major Internet portal sites
U&A Mobile Convergence CPQ (Consumer Perceived Quality)
Research Methodology
E-mail surveyData
CollectionData
Collection
Research Design
12/32
Buyer within6 months
RespondentsData
CollectionTime of purchase
4th
Wave4th
WaveAug 30 - Sep 15
2006100,901 21,015
Mar-Aug2006
3rd
Wave3rd
WaveMar 7 - 25
2006100,000 17,477*
Sep.2005-Feb.2006
2nd
Wave2nd
WaveSep 6 - 20
2005110,455 24,704
Mar-Aug 2005
1st
Wave1st
WaveMar 10 - Apr 4
2005100,779 24,212
Sep 2004 - Feb 2005
*Demand was temporarily low due to a mobile handset subsidy policy
Primary target is those who bought a handset within past 6 months.
Research MethodologyResearch Design
14/32
Owner-ship
Use rate(Owners
)
Satisfaction rate among
users
Feature
Camera 98 94 (95) 42 Music playback 89 62 (70) 50 Telematics 28 6 (23) 36 Banking 27 5 (19) 63 S-DMB 8 6 (75) 21 T-DMB 9 8 (80) 28 HSDPA 0.4 0.2 (57) - Wibro - - -
Service
Game download service
- 30 35
Music portal service - 14 25
(Base: Buyer within past 6 months, Unit: %)
Penetration, Use Rate andSatisfaction Rate
Key Findings
15/32
Telematics
Banking
T-DMB
S-DMB Music Portal Service
Game Downloads
(Use Rate)
(Satisfactionrate)
(Unit: %)
The fourth
0
20
40
60
0 10 20 30
Use Rate andSatisfaction Rate
Key Findings
16/32
Telematics
Banking
T-DMBS-DMB
Music Portal Service
Game Downloads
(Use Rate)
(Satisfactionrate)
(Unit: %)
The fourth The third
0
20
40
60
0 10 20 30
Changes in Consumers’Responses to Convergence
Key Findings
17/32
Reasons for Dissatisfaction withConvergence Service
S-DMBS-DMB
%Dis-satisfied Price*
Major reasons for dissatisfaction
*Monthly fee (as of Sep. 2006)
Price Content Quality Convenience
51%€11
T-DMBT-DMB Free 48%
MusicMusic €4 37%
GameGame 19%**
TelematicsTelematics€8-15 15%
BankingBanking €0.7 8%
** Charged per download: data + call charge
Key Findings
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Use (intention) rate
Use rate (a)Intention rate (b)
Gap (b-a)
Banking 5 37 32
T-DMB 8 34 26
Telematics 6 24 18
S-DMB 6 11 5
Music portal 14 14 0.4
Wibro - 32 -
HSDPA - 26 -
Market potential based on a comparison of current use andfuture use intention (Unit: %)
Prospects for theConvergence Market
Key Findings
19/32
0
20
40
60
0 10 20 30 40
Telematics
Banking
T-DMB
S-DMBMusic portal
(Use/Intention Rate)
(Satisfactionrate)
(Unit: %)
Prospects for theConvergence Market
The fourthThe third Intention
HSDPA Wibro
Key Findings
20/32
Current price(monthly fee)
as of Sep. 2006
Price willing to pay
Current users
Intenders
Telematics 8 - 15 2.0 2.3 Banking 0.7 0.7 1.5 S-DMB 11 3.9 4.7 T-DMB Free 2.1 2.4 Music portal 4 2.0 2.1 HSDPA 10 - 42 - 5.7 Wibro 13 - 25 - 4.8
(Unit: Euro)
<<<<<
Intenders are willing to pay slightly more than current users.
Acceptable price for users is estimated to be €2, much lower than the current price.
Price Acceptance for EachConvergence Service
<
<
<<
=
Key Findings
21/32
0
2
4
6
8
10
12
14
16
0 10 20 30 40
Telematics
BankingT-DMB
S-DMB
Music portal
(Intention Rate, %)
(Price, €)(Base: Intenders)
Willing to pay Current price
Price Acceptance for EachConvergence Service
Intention Rate & Acceptable Price
Key Findings
HSDPA Wibro
22/32
E-mail 71Shopping 61
Messenger 55Blog/mini home page 51
On-line cafe/club 47Video service 45
......
(Unit: % MA)
Communication-centered + shopping
Entertainment-centered + e-mail
(Unit: % MA)
Music portal service 17E-mail 14
Video service 10Broadcasting service 8
Traffic information 8...
...
Experience in fixed lines
Experience of mobile
Experience of Fixed-MobileConvergence Services
Key Findings
23/32
ExperienceFuture
Intention of mobilePC
Mobile
E-mail 71 14 31Traffic information 43 8 30
Financial service 42 6 28GPS service - 5 28
Broadcasting service
26 8 24
Video service 45 10 18Music portal
service42 17 16
......
......
Practical serviceon a real time base
Entertainmentservice
Intention of future use of mobile
(Unit: % MA)
Potential for Fixed-MobileConvergence Services
<
Highest experience but low intention
Key Findings
24/32
0
10
20
30
40
0 20 40 60 80(Experience in Fixed lines)
(Future intention of Mobile)(Unit: %, MA)
Experience Intention
Potential for Fixed-MobileConvergence Services
Shopping
Messenger
Blog
Café/Club
Video
TrafficFinance
FileManagement
Broadcasting
Home networking
Edu./E-book Network game
Music
Experience in fixed lines vs. Future intention of Mobile
Key Findings
26/32
CameraCameraMost common feature in convergence
- But does not generate much revenue
MusicMusic Low growth potential- Low satisfaction & intention rates
- Difficult to make profit by increasing the use rate
GameGame Declining use rate- Need to develop fun games while on the move
Conclusions- Prospects for each
convergence service-
Conclusions andImplications
27/32
Tele-maticsTele-
maticsOn a steady rise with its own product value
- Needs to compete with low-end navigation products
BankingBankingMost promising convergence service
- Failure of initial price strategy: too low to make profits- Issue of chip integration will be a turning point
DMBDMBComplex issues among parties Uncertain market - The solution for above issues involves agreement between interested parties
Conclusions- Prospects for each
convergence service-
Conclusions andImplications
28/32
Pricing
1. Maximum affordable cost (median): €342. Current monthly cost (median): €28.53. New product intenders: approx. 30% - they are willing to pay approx. €5 (equivalent to €34 -
€28.5)4. Acceptable price for existing service: €2
Implications- Marketing Tips for
Mobile Convergence-
Several hypotheses were derived:
Conclusions andImplications
29/32
Product
Promising products:“Practical, NOT heavily content-dependent”
Banking service: High growth potential Telematics: Practical but limited in serviceMusic portal service: Not practical and too content-
dependent
Implications- Marketing Tips for
Mobile Convergence-
Conclusions andImplications
30/32
PromotionEvent-centered convergence services: sport or entertainment events
Eg. WBC event
DistributionDiversity of distribution channels
Eg. Selling of mobile handsets at banks for mobile banking
Implications-Marketing Tips for
Mobile Convergence-
Conclusions andImplications
31/32
The future of mobile convergence is uncertain. The success and failure of mobile convergence is hard to
predict. Numerous unexpected variables that may affect the success
or failure of mobile convergence lead us to uncertainty.
Epilogue
T-DMB: Promising!
S-DMB: Not promising!
What’s
happening?
32/32
From a conversation with a CMO of a mobile service company…
Q. Any success yet?
A. None yet.
Q. Will there be one?
Q. What are you doing?
A. Not sure
A. We’re trying!
Epilogue
MobileConvergence
MobileConvergence