Vodafone Youth Market Segmentation

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Vodafone Youth Market Segmentation

  1. 1. The Youth Segment Barcelona, 21 October 2004 Raffaella Leproux Vodafone Italy
  2. 2. Agenda <ul><li>1 - The importance of Customer Base management and segmentation in the Italian market </li></ul><ul><li>2 - The Youth segment: profiling, needs and subsegmentation </li></ul><ul><li>3 - The Vodafone Italy Youth proposition </li></ul>
  3. 3. The Mobile Italian Market/1 <ul><li>VF Italy Mkt share: 36% </li></ul><ul><li>VF Italy EOP Customers: 21.4M (at 30.06.04) </li></ul><ul><li>VF Italy Avg ARPU: 30.1 euro/month (at 30.06.04) </li></ul>39% 56% 77% 90% 94% Penetration As % of Pop. BLU WIND TIM 3 101% VO 103% - 10.000 20.000 30.000 40.000 50.000 60.000 70.000 1998 1999 2000 2001 2002 2003 2004 EOP (.000) BLU WIND TIM 3 VO
  4. 4. The Mobile Italian Market/2 New services revenues New customers revenues <ul><li>The Italian Market Penetration is >100% </li></ul><ul><li>Very compelling market with Mobile Number Portability and the launch of the first UMTS operator, “3”, in 2002. </li></ul>Lost customers revenues 1999 2000 2001 2002 2003 2004 REVENUES Importance of Customer Base Management
  5. 5. UPSELLING CARING Maintain the customer base and defend it from competitors attacks Increase the value of the customer base through the usage stimulation Offer to the customers the best service and reward SEGMENTATION Vodafone Italy Customer Base Management UPSELLING CARING RETENTION
  6. 6. What’s Segmentation To divide the Customer base in cluster groups with different needs and behaviours in order to create different and appropriate marketing proposition
  7. 7. Segmentation changes with market evolution Voice centric segmentation CRM-based segmentation 360 degrees segmentation 1996 / 1997 1998 / 2000 2001 / 2004 Mature Market Start Up Growth <ul><li>Segmentation based on value of customers : </li></ul><ul><ul><li>Top Value Customers </li></ul></ul><ul><ul><li>High Value Customers </li></ul></ul><ul><ul><li>Low Value Customers </li></ul></ul><ul><li>Segmentation based on : </li></ul><ul><ul><li>lifestyle / attitudes </li></ul></ul><ul><ul><li>value </li></ul></ul><ul><li>Segmentation based on volume and kind of calls: </li></ul><ul><ul><li>Emergency only </li></ul></ul><ul><ul><li>Personal use (off peak) </li></ul></ul><ul><ul><li>Professional use (peak/off p) </li></ul></ul>
  8. 8. The Segmentation Methodology YOUTH Seg 1 Seg 2 Seg N Seg4 Seg 3 application of the rule to the entire CB (including new adds) Customer Data Base Seg 1 Seg 2 Seg 3 Seg N Seg 4 Classification rule on sample Segments estimate Seg 1 Seg 2 Seg 3 Seg N Seg 4 variables time Customers Market research* Customer Data Base Segmentation Data Mart Customer Insight Development Modelling
  9. 9. The Youth segment – Key characteristics <ul><li>Age between 12-24 </li></ul><ul><li>Still at home </li></ul><ul><li>Budget constraint </li></ul><ul><li>Need to belong </li></ul><ul><li>Emotional need driven </li></ul><ul><li>Highly social – very image conscious </li></ul><ul><li>Interest: </li></ul><ul><ul><li>Movies </li></ul></ul><ul><ul><li>Music </li></ul></ul><ul><ul><li>Sport </li></ul></ul>
  10. 10. The Youth segment - KPI YOUTH ADULT Voice SMS MMS HS Vodafone Live! Voice Mail Ring Tones Directory services + 30% +100% + 10% + 5% + 60% + 40% + 90%
  11. 11. What is Youth? /1 Early Teens 12 – 15 years Late Teen s 16 – 19 years Young Adult 20 -24 years Young Professionals 25 -30 years Child 0 – 11 years
  12. 12. What is Youth? /2 16 – 19 years Peers Late Teen s Peer group renforcement 12 – 15 years Emancipation from Parents Family /Peers Early Teens 20 – 24 years Peers/Society Peer group Renforcement/ Status Displays Young Adult GROUP AGE SPHERE OF INFLUENCE SYMBOL BEHAVIOUR <ul><ul><li>Chance for product diversification </li></ul></ul><ul><ul><li>Challenge for universal proposition </li></ul></ul>
  13. 13. Needs overview Share of Time** Stimulation Self expression Communication Fun & Entertainment Information Organisation Share of Mind* YOUTH Self expression Stimulation Communication Fun & Entertainment Information Organisation Share of Mind* Share of Time** ADULTS *Share of Mind is the rank order of need when it occurs ** Share of Time is the frequency of mentions of need across all occasions, with occasions weighted by importance (% penetration of occasion & average duration of occasion) The self expression need is the difference
  14. 14. YOUTH - Needs overview <ul><li>COMMUNICATION </li></ul><ul><li>To share </li></ul><ul><li>To check-up </li></ul><ul><li>To show affection </li></ul><ul><li>To chat </li></ul><ul><li>MOBILE </li></ul><ul><li>COMMUNICATION </li></ul><ul><li>Call & Videocall </li></ul><ul><li>SMS & MMS </li></ul><ul><li>Sending a song </li></ul>
  15. 15. <ul><li>FUN & </li></ul><ul><li>ENTERTAINMENT </li></ul><ul><li>To have fun </li></ul><ul><li>To Escape </li></ul><ul><li>To pick up my mood </li></ul>YOUTH - Needs overview <ul><li>MOBILE </li></ul><ul><li>FUN & ENTERTAINMENT </li></ul><ul><li>Playing a game </li></ul><ul><li>Listening music track </li></ul><ul><li>Taking/Sending pictures </li></ul><ul><li>Watching TV </li></ul>
  16. 16. YOUTH - Needs overview <ul><li>ORGANISATION & INFORMATION </li></ul><ul><li>To keep up to date </li></ul><ul><li>To organise myself </li></ul><ul><li>To learn </li></ul><ul><li>MOBILE </li></ul><ul><li>ORGANISATION & INFORMATION </li></ul><ul><li>Reading news </li></ul><ul><li>Finding/Sending information </li></ul><ul><li>Receiving alerts </li></ul>
  17. 17. Vodafone Italy YOUTH Proposition <ul><li>Ringtones </li></ul><ul><li>M-play </li></ul><ul><li>3 euro Top Up </li></ul><ul><li>111 for me </li></ul><ul><li>SMS promotions </li></ul>Early Teens <ul><li>My Music </li></ul><ul><li>Load a Game </li></ul><ul><li>Vodafone Infinity </li></ul><ul><li>SMS promotions </li></ul><ul><li>M-Village </li></ul><ul><li>Multiparty </li></ul><ul><li>My gallery </li></ul>Late Teen s <ul><li>Supertones live! </li></ul><ul><li>MMS postcards </li></ul><ul><li>MMS contest </li></ul><ul><li>Java Games </li></ul><ul><li>Vodafone Infinity </li></ul><ul><li>Superpromo mms </li></ul><ul><li>S. Valentine Card </li></ul><ul><li>Freetime MMs </li></ul><ul><li>Goal live! </li></ul><ul><li>Content SMS </li></ul>Young Adult COMMUNICATION SELF EXPRESSION FUN & ENTERTAINMEN T ORGANISATION & INFORMATION
  18. 18. Fun & Entertainment: My Music PROPOSITION Replace ring back tones of your mobile with a real song. The activation it’s easy. Call 45555 and choose your song! Until 15 th of November the music track of Vodafone TV summer campaign is free for one month. <ul><li>OBJECTIVES </li></ul><ul><li>I ncrease the range of personalization products. </li></ul><ul><li>Be innovative </li></ul><ul><li>Use music to reinforce the brand through the youth segment. </li></ul>
  19. 19. Fun & Entertainment: MMS contest PROPOSITION Express yourself catching every week something different and send it with MMS. Every week receive an MMS with the topic of the week. <ul><li>OBJECTIVES </li></ul><ul><li>Stimulating DATA penetration services </li></ul><ul><li>Suggest different occasions to send MMS </li></ul><ul><li>Create Community. </li></ul>
  20. 20. Communication: Vodafone Infinity PROPOSITION Pay only the first minute of each call, the remaining air time is free. The activation cost is 7 euro. <ul><li>OBJECTIVES </li></ul><ul><li>Be competitive in the new arena. </li></ul><ul><li>Stimulating Voice penetration services </li></ul><ul><li>Growth VF market share on the segment </li></ul>
  21. 21. PROPOSITION With 3 Euro Top Up you can recharge your mobile also with coins. A small credit that allows you to stay in touch with your friends through calls and SMS. <ul><li>OBJECTIVES </li></ul><ul><li>Top up approachable even for budget restricted customers. </li></ul><ul><li>Increase top up margin / frequency. </li></ul>Communication: 3 Euro Top up
  22. 22. Messaging Promotions – Price/Volume Elasticity SMS Card 2002 SMS+MMS Card 2003 Christmas Card 2003 SMS+MMS Card 2004 Youth Segment shows a strong increase in SMS and MMS per day usage during Summer and Xmas Promotion Summer 03 Xmas 03 Summer 04
  23. 23. Conclusions <ul><li>Segmentation is fundamental </li></ul><ul><li>There is no a “Youth segment ” </li></ul><ul><li>The key need is the “self expression” </li></ul><ul><li>Proposition should suit each subsegment </li></ul>
  24. 24. <ul><li>Thank you! </li></ul>