Run-time marketing

Although mobile communications (mocoms) began primarily as a service for business users and rich individuals, for over a decade mocoms have attracted a mass consumer audience.   Perhaps for this reason, it is often the case that mocoms marketing folk have cut their baby teeth in the fmcg sector — those consumer goods that move off the shelves so fast that only a short, unpronounceable acronym with all the vowels deleted to save time would keep up with them.    But there are many differences between telecommunications and other consumer products and services, and, despite having pre-cut teeth, these imports don’t always cut the mustard.
We have long tried to identify these differences, and the key difference seems to be the time at which the product is created.     If you sell chocolate bars, you make them in a factory, deliver them to a store, and sell them to consumer.  The product is created before it leaves the factory door.   If you sell draught beer, the product is partly created before it leaves the factory (that would be the “beer” part of “draught beer”), but also partly created at the time the service is purchased (the “draught” part).   So a publican who waters down the beer he or she sells will alter the quality experienced by the end-user.
But telecoms services are not created beforehand, and they are not even created at the time of purchase; instead, they are created at the time of use.  Provision of a network and its level of quality are created and re-created each and every customer call, and not even just once per call, but repeatedly throughout a call.  As a cellular phone user moves around during a call, for instance, his or her call will be routed through different cells, and these may vary widely in quality of service — for example, due to the presence or absence of other, simultaneous users in each cell.   This is quality of service generated on-the-fly, at runtime, to use some computer-speak.  And, as with all marketing, perceptions matter far more than reality:   if customers expect a network to be congested they may be more accepting of quality of service problems than if they’ve been led to think they will be the only users of it.
Lots of fmcg folks don’t see the difference with their prior world.  Marketing can’t simply order the folks in the factory to ensure good quality product, and then sit back, gin and tonics in hand, to commission a few TV spots.  Instead, Marketing has to ensure that customer expectations are set and re-set realistically to match the quality of service being generated by Engineering as the network operates.  For new networks, add, “and as the network rolls out”.    Marketing have to monitor customer expectations and perception of network quality and compare with actual network quality in real-time, and adjust campaign tactics as they do so.  Marketing, too, has to be generated, on-the-fly.  It’s a lot harder than selling candy.

Porous boundaries

Over at This Blog Sits At, Grant McCracken has an interesting discussion about the new corporation.    One of the features he identified is porousness, the idea that boundaries between an organization and its environment are fuzzy and in flux.  This has long been the case in telecommunications services, whose very business is connecting people.  So it is perhaps not surprising that telcos have been porous places for some time.

For British Telecom (BT), Britain’s largest fixed network operator, Vodafone, Britain’s largest mobile operator, was both a major competitor (when BT owned mobile network Cellnet/ O2) and a major customer (because calls from Vodafone’s customers connected across BT’s network, and for this access Vodafone paid BT).  At the same time, BT’s customers, both fixed and mobile, called Vodafone’s mobile customers, so BT was also a major customer of Vodafone.  At one time, each company was the largest customer of the other.  

This makes something of a mockery of traditional linear supply-chain analysis.  How do you manage a relationship with a company that is simultaneously a major competitor, a major supplier, and a major customer?  With kid gloves and internal Chinese Walls, presumably.    You may even decide to leave one market, as BT did by demerging O2, in order to simplify the relationship.

Because most telecommunications markets were once regulated monopolies, most still have a major incumbent (as BT is in Britain).   This fact often makes governments and telecoms regulators tip the scales in favour of new entrants, in order to redress the inherited monopoly.   A common procedure is to allow new entrants to co-locate their switching equipment right alongside that of the incumbent — even, in some cases, inside the same buildings.   How many companies, other than telcos, could tolerate competitors having dedicated space and equipment inside their own buildings?

And it gets even more complex.  As I commented on Grant’s post,  major users of telecoms services, such as American Express, often want direct access to the switches of their telecommunications services supplier so as to facilitate rapid reconfiguration of their service profiles.  Large telcos, such as Verizon, will often allow such access to their major customers.  But then companies such as AmEx, not being phone companies, often do not have the skilled staff to execute such reconfigs. So, Verizon lends AmEx some personnel, and a Verizon employee is sent on longterm secondment to work for AmEx; he or she may be paid by AmEx and report to a boss at AmEx, while retaining a career and benefits at Verizon, and physically sitting still in a Verizon building. Where do his or her loyalties lie?

Porousness indeed.