By Paula Serratore
CDMA can be a business tool in one market, a low-cost everyday
service in another and an essential aid to basic communications in a third.
The task for service providers is to find out which approach is going
to sell in which market. But they're not alone; manufacturers can help
them find a marketing solution that works. Here's how. Paula Serratore,
senior director, NSS Global Marketing, Motorola
Last May, Japan's newest digital mobile network operators,
DDI and IDO, jointly presented cdmaOne to the public at Business
Show '98 in Tokyo. First, they gave visitors the opportunity
to try cdmaOne. Then they asked nearly 1,500 potential subscribers
to participate in a survey that let them rate their experience.
Given the technological attributes of CDMA, the results were not surprising.
According to DDI, an overwhelming majority of survey participants
said that CDMA provided call quality that was equal to-or
better than-cell phones. Not only that, 80 percent rated CDMA
voice quality as higher than fixed telephones. In due time,
the results of the survey were released to the public. And,
as planned, the publicity helped raise awareness of cdmaOne
for DDI's and IDO's subsequent introduction of CDMA service.
What survey participants in the Japanese market were less aware of was
that this demonstration of CDMA technology was nothing short of brilliant
marketing. Among wireless-savvy Japanese end users, a very large percentage-90
percent of those who participated in that survey-said they wanted to try
it. Let's be clear about this: those consumers weren't merely interested
in trying a digital phone; they were sold on subscribing to a CDMA system.
This marketing strategy-selling cdmaOne by name-may be surprising
to American service providers. But it is at the very heart
of DDI's and IDO's strategy. In fact, it is both operators'
conviction that by presenting cdmaOne technology by name-by
laying claim to the fact that they have it-they are establishing
themselves as more advanced and forward-looking than their
Toshio Itabashi, director and general manager, Engineering Department
at IDO comments: "By notifying our market that we are using CDMA,
we made it clear that we are serious about providing leading technology.
This is important to our customers. They want to be able to take advantage
of upcoming, cutting-edge applications. Because of our commitment with
the CDMA system, they know we will be able to take them into the future."
Hiroshi Sakai, director and general manager, Mobile Communications
Engineering Division at DDI explains it this way: "When
we began marketing our cdmaOne system, we were confident that
our consumers would be interested and impressed by the system's
technological attributes. That has turned out to be true.
Our target markets are sophisticated and forward-looking,
and they want to transmit and receive multimedia information.
They are also aware that moving into the future will require
a system that supports increased user traffic. cdmaOne answers
those needs and it lets us accurately position ourselves as
providers who are planning for the long term."
This is powerful positioning indeed-especially when you take into account
that DDI and IDO are relatively recent entrants in the intensely competitive
Japanese telecommunications market. In addition, because DDI and IDO will
soon be offering powerful new wireless applications, the CDMA name lets
them appeal to the high-use business and professional market. As their
strategic partner, Motorola Inc.'s Network Solutions Sector (NSS) is presently
working closely with DDI and IDO to help them select, provide, and market
next generation applications to these segments.
Contrast this with the approach chosen by American providers. Despite
phenomenal growth rates that have taken the number of CDMA subscribers
in the US past six million, most American consumers have never even heard
of CDMA. Even among wireless subscribers, it's likely that-when it comes
to the CDMA brand-most don't care what the technology's name is or, for
that matter, what any other technology happens to be called.
Certainly American users have heard of digital wireless systems. And many
have come to believe that digital may give them some attractive benefits.
But choosing a system because it's CDMA? American providers believe that
would be like asking Joe America to select his Friday night movie based
on the set designer.
American providers prefer to market the advantages the technology gives
their customers. They promote clarity and voice quality. Some even promote
the notion of "digital." Rather than trying to educate consumers
about CDMA, they'd rather have those attributes associated with their
own brand. So we see Bell Atlantic advertising its digital service under
its own proprietary name, DigitalChoice. And we see that Sprint PCS has
eliminated the added name and simply markets itself as the largest, 100
percent digital, 100 percent PCS nationwide wireless network in America.
The stark contrast between the ways in which Japanese and American providers
promote their CDMA systems offers a strong reflection of the varying dynamics
in the world market. Clearly this is a case where one marketing solution
does not fit all markets.
Of course, there is another important tier in the marketing of CDMA, and
that is the manner in which a manufacturer presents its technology to
a service provider. Motorola NSS has developed its own strategies-strategies
which include supporting customers with a value proposition that includes
reliability, quality and capacity.
From a tactical point of view, our most successful marketing has involved
designing and helping our customers set up a test system and then simply
letting them see for themselves.
This was the case with Hong Kong. Set in a mountainous, hilly terrain
that requires transmitting signals through ultra-modern urban canyons
as well as across a body of water, Hong Kong is tailor-made for the efficiencies
of CDMA. In addition, Hong Kong's mobile phone users are sophisticated
consumers who demand exceptional voice quality and leading-edge services-both
of these attributes of CDMA.
Recognizing the benefits CDMA would bring to Hong Kong, Hutchison asked
Motorola to help it design, plan and deploy its 800 MHz CDMA network.
The test system results were good enough to encourage Hutchison to select
CDMA as its digital system.
Helping a provider set up tests has been an important key to Motorola
NSS's marketing success. In Peru, Japan, Brazil, Korea, Beijing and elsewhere,
those tests have compellingly demonstrated the CDMA benefits that are
critical to a service provider: cost-effective quality, lowered real estate
and equipment costs, reduced interference, and a lowered need for frequency
Of course, marketing CDMA's technical benefits to service providers is
only the starting point. Motorola NSS believes that is the responsibility
of manufacturers to take an active role in helping its service providers
market CDMA to their consumers. We feel very strongly that because they
are in a strategic alliance, manufacturers must help their customers attract-and
maintain-as many subscribers in their system as possible. After all, competition
in the industry is continuing to grow.
All this has been going on for several years and shows no sign of letting
up. In Europe, average monthly revenue per subscriber fell by 15 percent
in l996 to $71, according to CIT Research, a London research group. The
same research indicates that by 2001, the European average will decline
to $42 per subscriber. In the American market, a report by Sanford Berstein,
a New York analyst company, calculated that average monthly revenue per
subscriber will fall from $58 in l996 to $49 in 2001.
With operator margins shrinking, manufacturers must see themselves as
teammates with a vested interest in helping their service providers succeed.
To support our customers worldwide, Motorola NSS has done a great deal
of research on the needs of consumers in different markets. Our intention
is to help our customers understand and anticipate the consumer needs
that drive purchasing and loyalty. Since geographic regions clearly no
longer provide meaningful categorizations, our research included relevant
marketing variables that go beyond geography.
For example, we have learned that in the emerging entrepreneurial Chinese
culture, business needs are most likely to dominate telephone use. It
is the value of time-the ability to address business problems immediately-that
is key to Chinese customers. This is one of several issues that must be
understood and addressed by a provider to differentiate its CDMA offering
from its competitors.
In Brazil, on the other hand, the primary motivator for wireless growth
is the need for telephone communication. Our private research revealed
that business needs also drive mobile communication usage, and that social
status has a strong impact. Some Brazilians see that having the latest
technology in their mobile phones helps them establish themselves as members
of the upwardly mobile.
Of course, there are numerous factors that need to be taken into account
when attempting the successful introduction of a new technology. For instance,
the market's business and technological environment affects all new-product
introductions. Carl Clouse, a senior manager in Motorola's NSS Global
Marketing Group, lived and worked in Brazil between l995 and l998. This
was a period during which the telephone environment changed almost completely,
from a government-regulated analog market to a competitive, privatized
market with an entirely new B-Band dimension that didn't exist before.
"During this time," Clouse recalls, "we recognized that
future operators and investors had an urgent need for information. We
felt it was very important to help them, not just to understand the technology-but
to understand it through their consumer's eyes. We decided to keep them
focused on their end-users by providing technological information in terms
of the benefits it brought to their customers. We knew that, later on,
this focus would help them sign up subscribers."
The result was a series of information-based trade advertisements. Targeted
at service providers, they were considered quite a departure from normal
trade advertising because they pictured consumers-teenagers, professional
men and women, as well as people engaged in every day activities-and focused
on the end-user benefits of safety, quality of voice, and privacy. When
GLOBALTELECOM signed with Motorola NSS last year to provide CDMA to the
states of Parana and Santa Catarina, we believe they were better prepared
to promote their service in a meaningful way to their customers.
What other regional and cultural differences affect the way CDMA is marketed?
Personal safety, for one. In South Africa and the United States, concern
about personal safety-the ability to call for help in emergency situations-is
a compelling motivator. In Singapore, it's not even a consideration.
When CDMA was introduced in Singapore, consumers were already
familiar with wireless service and sophisticated about technology.
Because other systems were already in use, Mobile One decided
to target cdmaOne to a broad-based market as "M1 Chat."
Mobile One's web page includes a colorful, happy illustration
festooned with a cartoon of a friendly mascot-a smiling lizard
sporting sunglasses and a wireless telephone. This is shown
along with the campaign theme: CDMA/ clearly yours.
M 1 Chat is priced at only $18 per month (including 100 minutes of free
talk time per month.) As the ads say, it's "so affordable you can
chat to your heart's content!"
In Hong Kong, when Hutchison relaunched its CDMA system, it targeted the
teen and twenty-something market. To enhance its "cool" quotient,
the CDMA system was branded as "Xin Gan Xian," a phrase indicating
that the system is in synch with the exciting momentum of city dynamics.
The relaunch was done with a local pop star, using images of the fast-paced
lifestyle in Hong Kong and Asia and the glamorous young "Jet Set"
generation that always needs to stay in touch.
In addition to factoring in consumer motivators, some operators have created
marketing tactics that will solve problems. To reduce churn and help subscribers
keep their charges under control, some operators have developed "pay
as you go" services. The customer buys a handset and pays in advance
for a certain amount of airtime. In Portugal, as many as half of all mobile
customers use a pre-payment service. In Italy, prepaid cards have also
been a great success: within three months of their launch in l996, 570,000
subscribers were using them, according to CIT Research.
A further boost to subscriber numbers comes from situating sign-up centers
in places where nearly everyone can be reached. In August l997, Britain's
One2One launched a scheme for sale of pre-paid airtime vouchers in post
offices and supermarkets, a strategy that makes purchasing wireless service
as easy as buying a postage stamp or a head of lettuce.
One final word on marketing CDMA: as the technology and business of CDMA
mature, manufacturers must be committed to developing innovative advances
that will let their operators offer more services. These new applications
will not only differentiate them in the marketplace but stimulate wireless
Obviously, data capabilities will be critical as "killer" wireline
applications move to wireless. The Yankee Group forecast is that by 2002,
data subscribers will use seven times more minutes than voice users as
data penetration moves from two percent in l996 to 22 percent in 2002.
Data means handsets through which subscribers can retrieve information
such as inventory and pricing through wireless e-mail. It also means interactive,
two-way information transfer that will include everything from wireless
network surfing to the wireless retrieval and exchange of medical records.
More services not only mean enhanced competitiveness and customer satisfaction;
they also mean more minutes billed.
Marketing, of course, will continue to play a critical role in this growth;
and the key to marketing wireless data will be to develop compelling value
propositions that stimulate subscriber use. Once that happens, it's likely
that one of an operator's major challenges will simply be figuring out
how to charge for it.
Paula Serratore is the senior director of the Motorola's Network Solutions
Sector's Global Marketing organization, based in Arlington
Heights, Illinois. Prior to joining Motorola in May 1998,
she was the Director of Business Management for AT&T Local
Services. Ms. Serratore has a Bachelor of Science in Business
Administration from the University of Maryland and a Master
of Science in Management from National-Louis University.