Question & Answers

Vodafone says it is now getting 70% of contract business from direct channels, and all the networks want to increase their direct sales. What’s the independent channel for?

Williams, Hugh Symons: The independents still have a very valid part to play, especially in the B2B market where there are many SME customers. Hugh Symons still has many independent dealers with thriving retail businesses, adding value through offering choice and exemplary customer service. Not all customers want to buy from large companies, preferring to support smaller, local businesses. The networks recognise this and realise that there would be no gain by removing the independent channel.
It is indeed a fact that networks are placing more focus on direct sales, so the independent dealers need to make sure they diversify their product portfolio to include in-car, accessories and data products while honing their service proposition to ensure customers continue to want to buy from them.

Price, Avenir Telecom: Although the networks have undoubtedly increased their focus on direct channels, our relationships with them have continued to strengthen — which is testament to the value they still place on working with the right independents. Distributors who have a strong foothold in the market, a solid base of high-quality clients and a progressive vision of where the industry is heading, still have a lot of specialist qualities to offer the networks, particularly in helping them to tap into the opportunities that lie within B2B.

This is also evident among our clients, who are increasingly focused on increasing customer value, securing secondary connections and reducing churn in line with network expectations, particularly through driving forward the greater provision of data solutions. Also, we have been working closely with Vodafone to engage more B2B focused resellers through pooling our knowledge and services.
The networks have also demonstrated their commitment to the independent channel through the working with us to develop engaging incentive programmes. Following the success of our Diamond Dinner incentive with Vodafone, we will be rolling out similar programmes with them from the spring, again emphasising the importance that they place on this channel.
The independent market has shrunk but it won’t disappear completely. Inevitably this will mean that there will be a shake out as competition increases but those distributors and clients who can demonstrate value to the networks and work closely in partnership with them will continue to thrive.”
We count more than 160 different phone models currently on the market. Does the need for differentiation warrant so many, or is it just confusing for the consumer?

Nash, Elite Mobile:
What a fantastic choice for the consumer to. But it would be wrong to assume that the handset manufacturers continue to pour more and more models on to an unsuspecting buying public simply to keep rivals’ products off the shelves. In fact, the manufacturers work to highly sophisticated market segmentation models across high, mid and low tier market sectors. Within each there is constantly a superb choice of features and designs.
It is also a mistake to assume that it is the manufacturers alone who drive the market. Consumer demand, with a common desire continually to upgrade to more advanced functions and new styles, play a massive role, along with competitive network price plans.
Particularly in the last few years, the end user has become more knowledgeable and discerning about features and fashion. And it is this, more than anything, which spurs on competition among the manufacturers to innovate and improve – in turn benefiting the consumer.

Alexander, Moco:
The consumer is the reason for such a vast array of phones on the market. The majority of end users are now highly educated and know specifically what they want from their next upgrade, which is more often than not the latest model available with a higher specification that their last. Most end users also have a favourite handset manufacturer, resulting in all manufacturers competing against each other, to ensure they all have equal specifications and a portfolio of handsets to suit everyone’s requirements.
Unfortunately the confusion lies with the manufacturers. With so many handsets available, stock forecasting now requires more skill than ever before.
At the end of the day if you gave consumers the option of reducing their choice and limiting the availability in the market there would be more complaints today than there were yesterday regarding confusion.

Seaton, Airwide:
Rather than continuing to overload consumers with an increasing number of phone models, operators can have a more visible and quicker impact by offering enhanced services and features that aren’t available from other providers — such as email functionality on text messages, parental controls and personalisation services.
Equally as important are mobile security functions such as anti-spam and EIR (Equipment Identity Register) capabilities to disable stolen phones. These build loyalty by reassuring subscribers that the operator is protecting them (and their data).
The focus should be less on trying to get users to switch phones and more on getting users to keep their phones and enhance their services. Users should be encouraged to learn to use more features and download more applications which will in turn get them to adopt more services. Arguably the additional revenue generated from increased use of services will far outweigh the revenue gained from selling a heavily-subsidised new handset.

Taylor, O2:
Handsets manufacturers develop new models in response to customer demand. However, in practice customers do not face a choice of 160 phones at once. O2 selects a limited number of handsets to range at any one time based on quality and our understanding of customers’ needs. A good range of devices is needed to meet customers’ specific needs and our staff are there to help people find the best device for them.

Jones, Portix:
It is confusing for the consumer, although such is the demand by the consumer on the manufacturer to constantly improve their products and increase functionality that it becomes a never-ending circle. Manufacturers of mobile phones will never cease producing newer models for fear of losing market share to competitors

Kearins, Valista:
It’s a consumer electronics business; and since they are largely interchangeable, the manufacturers have to differentiate on style and minor features to compete with each other. There are probably a similar scale of MP3 players, plasma TVs and even printers out there, so it’s not surprising that a large number of different handsets have emerged which appeal to different audiences.
On the other hand, there is evidence to suggest that too many product choices can keep consumers from making a purchasing decision. The rate at which technology is changing seems to also be a factor, and rapidly changing technology often keeps people from buying a new handheld.
When it comes to priorities consumers place on purchasing mobile solutions, it seems compatibility is a big one. Also, it seems price is definitely a consideration, but not yet at the cost of allowing advertising or text messaging as a means of subsiding subscription fees.

Panel members:
Barry Nash, Director, Sales & Marketing, Elite Mobile
David Taylor, Head of Innovation and Planning, O2
Evanna Kearins, Director, Marketing Communications, Valista
Harvey Alexander, Director of Sales and Marketing, Moco Distribution
Jay Seaton, CMO, Airwide Solutions
Steve Jones General Manager, Portix
Tanny Price, Managing Director, Avenir Telecom UK
Theresa Williams, Marketing Manager Hugh Symons Communications 

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