5G Marketing, Pricing, and Sales Excellence

March 05, 2019

Unlock the full potential of 5G

As 5G will be the hottest topic by far in 2019 and 2020, it’s time for telco operators to prepare a successful 5G monetization roadmap. What can they learn from best practices and what innovative ideas should they consider? Here are six marketing, pricing, and sales measures to support a successful 5G launch and roadmap.

1. Create distinct 5G value branding as a basis for 5G monetization

The benefits of 5G in B2B and its multiple applications in IoT are obvious. On the consumer side, experts consider 5G as an incremental performance improvement in the launch phase. They emphasize that 4G speed levels are more than sufficient for today’s applications and believe that it will take another three to five years before 5G hero applications come to the mass market. In order to allow for product and price differentiation in the launch phase, a distinct 5G product brand experience needs to be designed to create superior perceived customer value compared to 4G. In the automotive industry, speed and the associated status are key product and price differentiation elements. The Tesla Model S entry model accelerates from 0 to 100 km/h in 4.3 seconds, no one really needs a quicker acceleration. However, many Tesla Model S customers are willing to buy the premium model with "the quickest acceleration on earth – from 0 to 100 km/h in 2.6 seconds" simply for the associated product brand experience and status. Even a pure commodity such as water can be differentiated and premiumized with value branding. Danone, for example, differentiates its water prices with different brands that address different needs, e.g. Evian and Volvic.

Action: Design the 5G value brand experience 

  • Design a distinct 5G product brand experience to create superior perceived customer value as a basis for product and price differentiation
  • Identify distinct 5G value branding elements, e.g. speed and quality status, special numbers, ringtones, smartphone colors and cases

 

2. Position 5G as the new hero product – price-value alignment, migration plan, 4G-ROI

Some telco players struggled to successfully monetize the 4G innovation. In some cases, 4G quickly found its way into the discount segment. Prices and revenues are still not growing according to the investments operators have made and the value delivered. So, how do other players in the telco ecosystem monetize their innovations? When Apple introduced the iPhone X, it created a new hero range, which it sold at significantly higher prices than the previous model. With 5G, operators have the chance to improve their long-term service monetization approach.

Action: Define the 5G/4G monetization roadmap

  • Monetize investments and back the brand experience by delivering superior perceived customer value with 5G at higher prices than 4G (price-value alignment)
  • Integrate 4G into the monetization model as it will continue to be a core revenue driver    
  • Determine how to incentivize the customer base to migrate to 5G; set up segment-specific migration phases

 

3. Design a data price model that monetizes growth drivers and integrates multi-dimensional and digital pricing options

The introduction of 5G offers telco companies the opportunity to implement a future-proof data price model that goes way beyond data volume. The new price model has to monetize growth drivers, integrate multi-dimensional pricing, and include digital pricing options where feasible. With several pricing dimensions to choose from, telcos should carefully assess which options will work best for their specific situation. Our data pricing vision for market leaders sees speed and quality as the core dimensions and includes differentiated speed and quality lanes. Another key element of this model is a special lane for loyal, high-value customers who will receive the best speed and quality levels as well as additional services.

Action: Define a future-proof data price model

  • Define a core price model that monetizes growth drivers in the company context, e.g. data quality, speed, volume, number of connected devices
  • Establish multi-dimensional pricing elements to increase ARPUs, e.g. seamless communication, best connectivity anywhere, VR entertainment, digital/new services
  • Evaluate digital pricing options, e.g. individualized offers in a digital ecosystem

 

4. Create differentiated bundles with the right value-added services – use bundling and behavioral pricing excellence to unlock full potential

Bundling core services with digital/new services is an important task for telcos to differentiate their offer and facilitate up-selling and conversion. For bundles to be effective, they must include "leaders" and "fillers" and leave out any "killers", i.e. services that cause the entire bundle to flop. The New York Times, for example, uses an innovative approach to differentiate their digital subscription bundles. They have the leader service, which is unlimited high-quality digital journalism, and have also developed several new services with high customer appeal as fillers and tariff differentiators, e.g. the NYT Crossword, NYT Cooking, and Times Experiences. Designing successful bundles also means integrating innovative behavioral pricing approaches that can unlock considerable potential.

Action: Design bundles that increase conversion and facilitate up-selling

  • Apply bundling excellence for core and digital/new services by using proven methodology to identify leaders and fillers and avoid killers 
  • Identify and develop asset-based service innovations as new fillers/tariff differentiators
  • Use behavioral pricing approaches to help customers make the right decisions along each step of the customer lifecycle 

 

5. Benefit from innovative device pricing – address customer needs, save on costs

Many operators are planning to launch 5G consumer offers in 2019, but one challenge will be that not all key device manufacturers will have released their 5G phones by then. Moreover, the prices of 5G devices are expected to be high at launch. Consumer behavior is also evolving, with customers expecting longer lifetimes for their devices and participating in the new meta-trend "sharing is the new owning."

Action: Establish new device pricing approaches

  • Address customer needs and differentiate from competitors with innovative device pricing models, such as device-as-a-service programs or third-party financed devices
  • Optimize subsidies with professionalized device pricing management; opportunities range from dynamic device lifecycle pricing to optimized device pricing organization

 

6. Design a future-proof multi-sales channel strategy

Purchasing behavior is changing rapidly in other mass market sectors, such as consumer electronics. MediaMarkt is using an innovative multi-sales channel concept to adapt to these developments. MediaMarkt has opened their first interactive digital store in central Barcelona that is revolutionizing the shopping experience. The digital store offers digital product experiences and customers can immediately buy products from the virtual catalog or pick up products in store which they bought online. The digital store combines the benefits of the physical point of sale, such as immediate product availability, expert support, personalized customer training, and exclusive services with the benefits of the digital world (e.g. convenience, speed, product information). To sell 5G and 4G services, multi-sales channel approaches will be the future, as the customer sales journey is not linear. Online will serve as an important channel for obtaining information and as a purchase channel for some segments. Stores will be an important channel for the experience, education, and fulfillment.

Action: Define a 5G ready sales concept

  • Determine the right multi-sales channel mix for the identified target segments and create an integrated customer sales journey
  • Set up sales steering, e.g. create the right sales incentives, move away from the general online discount for all segments, shift from indirect to direct sales
  • Identify the required retail store formats, e.g. flagship, top, basic, fulfillment
  • Define innovative store concepts to create a distinct 5G brand experience, e.g. testing of 5G devices and services, integrated digital/online experience, highly trained staff

graphic_5g_article.jpg

Simon-Kucher & Partners designs winning offer portfolios, pricing strategies, and go-to-market approaches:

  • We have gained substantial marketing, pricing, and sales knowledge from consulting 60+ telcos globally 
  • We provide benchmarks from both telco and other industries
  • We have achieved double-digit growth with our offer portfolio, price model, and go-to-market innovations
  • We have proven tools and methodologies to make recommendations stick and help you achieve sustainable growth

Get in touch if you would like to hear more about our six measures for unlocking the full potential of 5G.

Contact our experts: