Recharging Mobile Innovation - Strategies to Create New Market Space

European mobile phone makers are very eager to revive a flagging market. But a recent report published by leading global IT consultants Capgemini in collaboration with INSEAD's Professor Ben Bensaou indicates that manufacturers and consumers have major differences in terms of priorities. After interviewing 27 mobile firms in 11 markets across Western Europe and over 1,200 consumers in Britain, Italy, Sweden and France, the authors provide unique insight into the current differences between what manufacturers think the public want, and what the latter actually do.

by Ben Bensaou, Jawad Shaikh,Marc Aafjes
Last Updated: 23 Jul 2013

After enjoying phenomenal growth for over a decade, the European mobile sector is now more than slightly eager to find the Next Big Thing to spur a flagging market. Recent technological innovations such as WAP and multimedia messaging services (MMS) have yet to catch on with the general public and are looking increasingly like very costly failures. Mobile manufacturers are now racking their brains as to how to get the edge in an increasingly competitive market, where any more big mistakes could be their undoing.

Against this backdrop of nervousness and hyper-aggressive positioning, Ben Bensaou, Professor of Technology Management and of Asian Business and Comparative Management, and leading global IT consultants Capgemini recently released a comprehensive report, Recharging Mobile Innovation: Strategies to Create New Market Space.

The authors offer what may be unique insight into the present differences between manufacturers efforts to please the European public, and what the latter say they really want. They held interviews with 27 mobile firms in 11 markets across Western Europe, along with over 1,200 consumers in Britain, Italy, Sweden and France.

The report exposes serious and widespread disparities between the underlying values and concerns of producers as opposed to their actual and potential customers. Perhaps most tellingly, operators overwhelmingly viewed advanced services as the most important catalyst for growth and for building and maintaining a competitive edge. Many consumers, however, tended to rank this as the least important factor, far behind simplicity, cost and more straightforward payment procedures.

The authors point out that there are still many grounds for optimism for firms that have invested so heavily in trying to attain the technological upper hand. But clearly, until customers are far more satisfied with the essential elements of their present services, they will see little personal reward in paying for new ones.

The report's findings include:

Operators

· With growth and profitability concerns still at the forefront, most are still trying to "be all things to all people", i.e., outperforming competitors across all areas of direct competition.

· Grabbing and retaining market share is generally the first and foremost concern.

· Market leaders appear convinced that consumers are most drawn by new technology being used to upgrade existing services, or to create new services.

· Some operators are increasingly beginning to take a different approach by offering more basic services at lower prices. This is much in keeping with what many consumers say they most want.

· "The breakthrough innovation opportunity for operators might well be in identifying and exploiting demands that consumers themselves do not yet recognise." The chief concern in this regard is for established operators to be able to provide greater convenience and simplicity, and quite possibly at greatly reduced prices when and where possible.

· There has been a general failure to address many fundamental needs of consumers risks undermining efforts to persuade them to upgrade to the new services operators are so keen to provide.

· Even though producers generally agree with consumers that pricing is a critical issue, producers are quite reluctant to consider lowering prices for fear of eroding their margins.

Consumers

· What seems to be too often overlooked by operators is the prime concerns consistently being expressed by many consumers, i.e., simplicity, cost and payment convenience.

· There are very significant differences between operator's growth-centred strategies and what customers feel are their own main wants and needs.

· Many consumers seem quite willing to use their mobiles more if operators reduced their prices.

· Consumers seemed keen to meet producers half-way, especially by using fewer advanced services and being offered less billing options, in exchange for discounts and simpler payment methods.

For a copy of the Recharging Mobile Innovation report, contact: katherine.powell@capgemini.com

Capgemini, September 2004

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