Identifying New Customers and Markets

By K. Bream

Introduction

When a leading wireless carrier needed to generate new concepts and ideas for new services during its network transformation, the company turned to Alcatel-Lucent. In the past, this transformation initiative might have been handled solely by the service provider's marketing department or perhaps a management consulting firm. Today, however, a growing number of telecommunication service providers and enterprise customers are working with Alcatel-Lucent to garner timely market insights that are shaping all aspects of their product development and go-to-market programs.

How was Alcatel-Lucent able to rapidly assist this wireless carrier in developing new services that addressed end users' unmet needs while leveraging existing investments in network transformation?

The answer, in a word, is experience. Dating back to the 1940s, with our pioneering "human factors" work at Bell Labs, Alcatel-Lucent has focused on end-user behaviors. And, since 2002, we have made very significant investments to understand:

• End-user behaviors
• Unmet needs
• Willingness to pay for new services
• Overall demand for new services and
• Preferred buying models for adopting new services

Those investments are paying off for our clients because Alcatel-Lucent has developed unique market intelligence techniques and capabilities to capture end-user insights that we believe are required for any service provider to compete in the networking industry now and in the future. In this article, we focus on key drivers and research techniques that provide deeper insight into how the service creation process can be optimized.

Market Drivers

The communications industry has entered a period of disruption that is causing service providers to undertake major transformation initiatives. In order to compete and win, service providers need to identify new sources of revenue. But if executives turn to traditional approaches to market research and analysis, they will find that these techniques alone will not fully identify new revenue opportunities. Traditional approaches must be augmented (Table 1). Service providers have a choice: they can develop new techniques or identify an experienced partner who can help.

Understanding user-defined services in real time

While traditional market intelligence collection has focused on services that providers would like to test, new intelligence collection techniques must enable users to define the services that will meet their needs. To do this, service concept research must start with ideation, focus groups and efforts that test for ethnographic experiences.

This approach provides insights into currently unmet needs and frustrations, while identifying the value of such things as being able to "reach someone in one attempt". Meeting these unmet needs can then be tested by several different service concepts. For example, a service provider can determine the role that presence information can have on making it possible to contact a person via various channels (such as fixed voice, mobile voice, IM, SMS, e-mail or social network). By allowing end users to define their needs and the personalized services that address their needs – as opposed to predefining services to be tested – the provider develops better-targeted services that have higher market demand.

Developing ethnographic and user labs

Traditional market intelligence has typically relied on telephone and web surveys to gather data. In today's environment, these techniques have serious limitations because they only provide insights into what end users believe they will do and does not capture data on what they will actually do. This can be especially troublesome when inquiring about new services or capabilities that are unfamiliar to the respondent. That is why, in 2005, Alcatel-Lucent created the Worldwide Teen Lab (www.alcatel-lucentlab.com).

As the name suggests, the Worldwide Teen Lab is made up of a group of teens from around the world who execute lab "assignments" based on requests from Alcatel-Lucent and our customers. These assignments are carried out in real-world environments in which users interact with devices and networks that are available today. This provides Alcatel-Lucent researchers with access to data on what users really do. It offers an opportunity for users to describe their experiences and provide recommendations for new services and upgrades that address their real-world needs. This type of ethnographic insight is a powerful complement to traditional survey techniques and has been used in numerous cultures and geographies by Alcatel-Lucent on behalf of our clients.

Focusing on both payers and influencers

Today, the purchase decisions of a household are no longer made exclusively by the head of the household. In fact, we believe that research efforts focusing only on the person who pays for a service can yield distorted results.

In a recent 11-country "Home and Roam Entertainment Service" research initiative, Alcatel-Lucent paired parents and children to determine the extent to which kids influence service buying decisions. In the United Kingdom, which represented the average, 58% of parents said the child was extremely or very likely to have influence, while only 9% said the child would not have any influence at all.

Clearly, understanding the influence and the unmet needs of tweens and teens in the household is important. And since the size of that generation – the Millennials – is larger than the Baby Boomers, they wield significant market power. To round out the efforts of the Worldwide Teen Lab, which is focused solely on this demographic, Alcatel-Lucent has conducted a significant number of additional quantitative studies on this group and the dynamics of the home.

Testing for sponsorship-oriented service models

Traditional market intelligence capabilities have typically focused on assessing and analyzing subscription service models in which the end user pays for a service.

However, this approach severely limits a service provider's perspective. For instance, a recent Alcatel-Lucent market research project shows that, while User-defined Multichannel Television Guide and Personal Music Video were interesting services to a broad set of subscribers in some markets, those subscribers would not be willing to pay significantly for the services.

Historically, a service provider might ignore such a service and shift focus to one for which the user is willing to pay more. But this course of action misses the opportunity to monetize services in different ways. The same Alcatel-Lucent market research project tested for different monetization opportunities for the two services. As a result, we found that the users would, in fact, be willing to avail themselves of the service while accepting material from a third-party sponsor or advertiser. Testing for sponsorship-oriented service models is important to fully identify all aspects of value in any new service that a service provider might offer in the market.

Recommendations

As service providers navigate the waters of industry-wide transformation, it becomes more important than ever to rapidly develop an in-depth understanding of the various end-user segments. That is why it will be critical to develop new market intelligence gathering and analyzing techniques to guide the decision-making process.

At Alcatel-Lucent, we believe service providers must identify and analyze new customer opportunities and market demands by:

1. Letting the user define the services in which they have interest in real time and testing those services for demand and willingness to pay
2. Investing in ideation and ethnographic research to gain an improved understanding of unmet needs and behaviors of end users
3. Increasing focus on the needs of the influencers (tween, teens, Millennials) in the home and understanding the dynamic between parent and child
4. Investing in understanding the various service models that an end user and a third party will accept in order to capture new revenue for the service provider

Alcatel-Lucent has supported the transformation challenges of its customers around the world and understands that developing new services and service models is critically important to ensure payback of capital invested by service providers.

We have provided unique end-user insights through capabilities such as the Worldwide Teen Lab, end-user service ideation sessions and large-scale quantitative market research studies. User insights from Alcatel-Lucent research generate timely and actionable guidance on issues of importance to our customers and our industry.

Karl Bream is Director of Strategic Marketing, Chief Marketing Office, Alcatel-Lucent, Murray Hill, NJ, USA.

To contact the author or request additional information, please send e-mail to enrich.editor@alcatel-lucent.com.

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