Wednesday, September 03, 2008

Low Prices Equal Trouble

Telephony has a column about how the Duopoly is teaching consumers to switch for the best deal. Brand loyalty is out the window as they give away triple-play deals at $100 as part of "customer acquisition syndrome". It isn't about the number of new adds - unless you are publicly traded. It is about PROFIT and profitable customers.

All of these may be examples of what one global consultant sees as companies teaching customers to constantly seek cheaper services, rather than courting current customers with newer products that add value.....In the 1990s, price competition got out of control in the long-distance industry — and helped kill that segment entirely as brand loyalty evaporated. The same thing can happen in the wireless and broadband segments, Weber warned.

And to prove that point, Telephony has another column that shows who is seeing growth (here).

The most successful companies have higher ARPU. Remember Nextel before Sprint bought them? ARPU of $80+ while everyone else was at $55. But you have to have a clear message to a targeted market to get there. It isn't for everyone. It's like inviting people to a party. You don't went everyone.

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