In a previous article I discussed the difficulty of applying market segmentation in developing markets. As hard as this task may be, some aspects of segmentation were done during the first stages of mobile telecom implementation.
When entering a new market, we analyzed the expectations within the capital city of the country we were planning to enter. The geographical approach was necessary to determine the needed investment for coverage (mountains, hills, bushes, buildings, distances, soil tests, etc…)While demographics were the basis to determine the potential of profit (People, Businesses, population density, etc…)
Analysis however was not conducted in order to determine any type of detailed segmentation, as all potential customers were grouped in one single segment: Customers who can afford the service. This was mainly due to the limited competition and the lack of alternatives to our products and services.
As the competition increased and the mobile telecom technology developed the needs and ability to define various market segments grew. Existing operators, if able to adapt to changes, were better placed when it came to market research, study, and analysis. The developing markets often do not have updated information resources. Although some are more advanced than others, you can be stuck in a place where a source of reliable information, the information you need, does not even exist.
To a new operator this is a serious challenge. I remember when we entered to a market based on Internet outdated information and the reports of our local partner. When we went to implement our plan we found out that our competitor was already well established, the market was well covered, and that the area we had decided to use as a set up point was suffering from lack of infrastructure. The population we estimated to be there did not was already displaced due to civil war. It was a disaster for us as a new entrant. Although I believe we should have studied this market more, there was still the fact that there was not enough information to rely on.
However in a different market where we have been operational for a couple of years, the development of the billing systems helped us define multiple segments based on customers’ usage trend. Regardless of the lack of official information, our presence and our systematic data collection gave us an edge over any new comer. We were simply better positioned to identify market segments based on geographic, demographic, and psychographic information.
In my next article I will be discussing the cases when we were the new mobile operator and how we proceeded with market research, analysis, and segmentation. Future articles will also discuss how we formulate and tailor products to target the segments of interest.