The Internet Encyclopedia (Volume 3)

P1: B-13

Kwok WL040/Bidgoli-Vol III-Ch-68 August 14, 2003 18:9 Char Count= 0

MARKETINGMIX FORWIRELESS 857

willing to pay for different service rates and a smart billing

systems is developed to solve some basic technical prob-

lems of Internet surfing (e.g. net congestion).

Prepaid Versus Postpaid

A prepaid concept is defined as customers who do not

have subscriptions with a mobile operator but buy air-

time for their SIM (Subscriber Identity Module) cards in

advance and then use the phone as long as there is credit

in their accounts. When their airtime runs out, they pur-

chase more (Korhornen, 2001). SIM card is a small chip

card kept inside a mobile phone. It serves as a network ac-

cess card and it is similar to a tiny computer. It provides

storing capacity for phone numbers, text messages, and

value-added services. The advantages of prepaid service

for the provider are as follows:

There is no need to carry out a credit check on new

customers.


Customers with imperfect credit information can adopt

mobile phone service under the prepaid scheme.


There is no need to bill prepaid customers.


Customers may never uses the services they pay for.

The advantages of prepaid service for users are as follows:

Users remain anonymous in prepaid (hardware and soft-

ware operators).


Users have more freedom to decide where to buy a hand-

set and SIM.


There is no contract arrangement, and customers have

more freedom to switch network operators.


There is no monthly subscription charge, so light users

can be attracted (e.g., keeping a mobile device for emer-

gency purpose only).


It is an efficient way for customers to control costs

(automatically limits their phone service usage).

Disadvantages of prepaid service for the provider are the

following:

From the operators’ perspective, there are security prob-

lems, because it is difficult to identify fraudulent users.


The anonymous nature of prepaid service does not allow

marketers to employ data mining or database marketing

techniques (cannot identify their needs and characteris-

tics).

The disadvantages of prepaid service for the customer are

the following:

Prepaid calls are more expensive than postpaid SIMs.


Prepaid service may have an expiration date (unused

airtime cannot be carried forwarded).

In Finland, the network usage is relatively inexpen-

sive, and thus the prepaid with no monthly fee would not

offer any particular benefit. Consequently, the demand

for the prepaid is limited in that country. In Italy and

Portugal, however, some operators have more than 80

prepaid scheme customers.

Distribution or Sale Channels

As discussed earlier, the wireless Internet is not going to

replace fixed-line Internet in the immediate future, so the

wireless distribution channel is regarded as a supplemen-

tary to existing sales channels (e.g., it could be applied

to internal direct sales force, dealers, retailers, and direct

marketing, etc.). Direct marketing is covered in more de-

tail in the Promotion section.

Internal Sales Force—Telemarketing

The internal sales team of service providers can pursue

telemarketing to individual potential customers. Suffi-

cient training and retraining programs must be provided

to all sales people to carry out effective telemarketing ac-

tivities, however. In addition, motivation programs (e.g.,

incentives, commission, or bonus schemes) for rewarding

outstanding salespeople and employees should be consid-

ered and integrated into the company’s policies.

Middleman (e.g., Dealer, Retailers)

Service providers use middleman to attain a wider cover-

age of the marketplace. The middlemen play an important

role in facilitating business transactions for both business

and consumer markets.

Good channel relationship management is a key is-

sue for pursuing success in channel management. To

eliminate channel conflicts, however, the m-channel (mo-

bile channel) should only be considered a supplementary

mode to the traditional channel of distribution. Generally

speaking, the channel of distribution can be divided into

intensive, exclusive, and selective distribution. Because

mobile phone service is perceived as a commodity, inten-

sive distribution (i.e., as many outlets as possible; Kotler

& Armstrong, 2001) should be considered.

Promotion

There are several promotional mix tools used in marketing

strategy. With respect to m-commerce, advertising, public

relations, and direct marketing are recommended.

SMS Advertising

SMS refers to the short message services provided by

mobile network providers. SMS allows m-marketers to

send electronic coupons and customized promotional

messages to individual customers. Advisor.com (2002,

Document No. 09546) reported a recent global study by

HPI Research Group (marketing specialists) on the be-

half of Nokia showing that a majority (88%) of customers

like this mobile advertising method (i.e., sending advertis-

ing messages or e-coupons via SMS). The study covered

11 countries including Brazil, Denmark, Germany, Italy,

Japan, Korea, Singapore, Spain, Sweden, the United

Kingdom, and the United States.

Public Relations

Service providers can use public relations to build brand

or corporate image. Public relations is defined as “build-

ing good relations with the company’s various publics