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VoIPFINAL.doc.doc VoIPFINAL.doc.doc Document Transcript

  • Voice Over Internet Protocol (VoIP) – “Crossing the Chasm” MKTG 6525 E-Commerce and High-Technology Marketing: Strategic and Cultural Considerations Prepared for Professor Detlev Zwick Dante Cardenas Jaspal Dhillon Joseph George Aashish Jain
  • Table of Contents EXECUTIVE SUMMARY...........................................................................................................................................3 INTRODUCTION.........................................................................................................................................................4 TECHNOLOGY OVERVIEW....................................................................................................................................5 ADVANTAGES.................................................................................................................................................................5 DISADVANTAGES.............................................................................................................................................................6 CULTURAL AND SOCIAL IMPACT.......................................................................................................................8 REGULATION.............................................................................................................................................................9 MAJOR PLAYERS....................................................................................................................................................10 SKYPE.........................................................................................................................................................................10 VONAGE CANADA ........................................................................................................................................................10 ROGERS.......................................................................................................................................................................11 YAK...........................................................................................................................................................................11 LESSONS FROM OTHER TECHNOLOGIES......................................................................................................11 RESEARCH IN MOTION AND THE BLACKBERRY..................................................................................................................12 Implications.........................................................................................................................................................14 FUEL CELL TECHNOLOGY..............................................................................................................................................14 Implications.........................................................................................................................................................16 ERICSSON AND 3G........................................................................................................................................................17 Implications.........................................................................................................................................................17 CONCLUSION............................................................................................................................................................17 APPENDIX..................................................................................................................................................................21 APPENDIX 1 – CUSTOMER MENTALITY AND REQUIREMENTS ................................................................................................21 APPENDIX 2 – SKYPE PRODUCT PROPOSITION...................................................................................................................22 APPENDIX 3 – VONAGE PRODUCT PROPOSITION................................................................................................................22 APPENDIX 4 – ROGERS PRODUCT PROPOSITION.................................................................................................................23 APPENDIX 5 – YAK PRODUCT PROPOSITION.....................................................................................................................23 BIBLIOGRAPHY.......................................................................................................................................................25 2
  • Executive Summary Voice Over Internet Protocol (VoIP) is a telephony technology used to transmit ordinary telephone calls over the Internet. VoIP takes analogue audio signals and turns them into digital signals (packets) that are transmitted using Internet Protocol (IP) networks. VoIP’s advantages include low cost, flexibility, and mobility. Conversely, VoIP’s disadvantages include sound quality such as latency (delay), jitter, and packet loss. VoIP has a number of cultural, social, and regulatory impacts that solution providers must consider when marketing their services. The major players in the VoIP market in Canada are Skype, Vonage Canada, Rogers, and Yak. Each player has its own separate marketing mix; however the majority are mainly targeting the technically savvy and small business niche segments. Even though the mass market is the ultimate goal for these players, much of their current business is found within these segments. Therefore, in order for the technology to cross the chasm from the niche to the mass market, the industry would do well to learn from other technologies that were in a similar position. For example, RIM’s Blackberry gives suggestions on how to properly market to your target segment. At the basic level, it is to fulfill user needs and wants. However, it also includes fulfilling needs and wants that are sustainable for the solution provider (i.e. not just a low cost solution). In addition, the Blackberry also teaches VoIP providers the importance of using the purchaser vs. influencer model and the development of key partnerships to increase adoption. Fuel Cell (FC) technology has important lessons for VoIP providers in terms of the marketing message. FC technology shows that in order to reduce the appearance of risk in adopting a new technology, communication, education, and customer involvement are critical. Ericsson and 3G highlight the need for a complementary set of goods for the core technology. Overall, the implementation of these factors is vital for VoIP to “cross the chasm”. 3
  • Introduction VoIP is a revolutionary new technology that could bring dramatic changes to the telecommunication landscape. However in terms of consumer adoption, the technology is at a crossroads and it is unknown whether it will be able to cross it. Author Geoffrey A. Moore has defined this crossroad as a “chasm” which has been successfully adopted by early adopters, but the late adopters are still left to be converted. The chasm can be described as follows: Figure 1 – The chasm The set of individuals involved in each stage have their own set of requirements and mentality towards the technology. To get a greater understanding of these customers mentality and requirements please refer to Appendix 1. The purpose of this paper is to give insights and recommendations into how VoIP providers can go about successfully crossing the chasm. The paper starts with a technical overview of VoIP which includes the advantages and disadvantages of the technology. The second part highlights the cultural and social impacts and the regulatory issues that VoIP providers have to consider when marketing the solution. The 4
  • third section gives a brief introduction into the major players in the Canadian marketplace and their individual marketing mix. The next part discusses other “chasm” technologies and the lessons VoIP can learn. Finally, the conclusion gives final recommendations for VoIP providers to take in order to cross the chasm. Technology Overview VoIP is a new form of communication that takes analogue audio signals and turns them into digital signals, or packets. This is an innovative alternate to the traditional circuit-switched method of telecommunication, where a dedicated circuit between two parties is maintained. In order to set up a traditional phone call between two telephones, the switched and the intervening network establish a dedicated route from one end of the call to the other. Conversely, VoIP uses a packet-switched method where audio signals are converted into digital data at the originating end, which is then transmitted over the Internet and converted back to analog signal at the receiving end. In other words, VoIP digitizes voice, inserts the digitized data into discrete packets, and sends them over the IP network. The packets have a destination address, but no fixed path through the network. The packets arrive at the address, where they are put back together and converted back to analog audio signals. VoIP integrates voice and data communications and turns any Internet connection into a phone call. VoIP is a revolutionary technology that has the potential to drastically change the way people communicate and talk on the phone around the world. Advantages VoIP has a number of advantages. First, the major advantage is related to cost. VoIP has tremendous savings potential for anyone who communicates over long distance. For instance in a corporate environment, the cost for leased lines no longer exist if phone calls are transmitted 5
  • over the Internet. In addition, if an employee moved to a different location within the same office using a regular phone system like the Public Switched Telephone Network (PSTN), fees would be incurred in that move. To make such a move with a VoIP system, however, employees would only need to plug their IP phones into their office’s Ethernet jack, with no extra cost. A digital private branch exchange (PBX)1 system already provides for the integration of traditional telephone services and thereby eliminates the aforementioned costs of moving. Secondly, flexibility and mobility are also utilized with the adoption of VoIP. Individuals can simply plug in their laptops, access the Internet, and talk on the phone, potentially improving organizational communication and customer service. In terms of customer service, VoIP has some advantages. Using VoIP’s capabilities with different enterprise software, when a customer calls they can be routed easily to whom they want to talk, and the service representative will have easy access to pertinent information that will improve customer service. Disadvantages VoIP also has its share of disadvantages when compared to the functionality of PSTN. A major disadvantage of VoIP is that it is a new technology. As a result, the long-term benefits and risks are not yet known. These risks include unknown service life of hardware and infrastructure, and details surrounding reliability and quality. The factors that affect the sound quality during transmission include latency (or delay), jitter, and packet loss.2 In terms of latency, human ears can withstand a delay of 150-250 ms and not be able to notice the delay. The PSTN meets this standard with a nominal delay of 150; however, VoIP cannot meet this standard of delay for a consistent period of time. 3 Jitter is defined as the variability in packet 1 PBX – is a private telephone switch that provides switching (including a full set of switching features) for an office or campus. PBXs often use proprietary digital-line protocols, although some are analog-based. 2 Hui Min Chong and H. Scott Matthews. “Comparative Analysis of Traditional Telephone and Voice-over- Internet Protocol (VoIP) Systems”, IEEE 3 Hardman, Dennis. “Noise and Voice Quality in VoIP Envrionments.” Agilent Technologies 6
  • arrival at the destination.4 Voice packets are transmitted over the same IP network as normal data packets and therefore voice packets have to compete for bandwidth with data packets. When a situation arises whereby there is a burst of network traffic (mostly in the form of data packets) voice packets arrive at sporadic times to the destination. The consequence of sporadic arrival time of the packets is sound distortion at the receiver’s end - jitter. Lastly, the issue of packet loss occurs when voice packets that are transmitted over the network do not arrive at the destination. Along the same lines as the causes of jitter, the IP network is to blame for this drawback because it does not guarantee delivery of any packets (data or voice). The consequence of packet loss is distortion at the receivers end as sounds and words may actually never reach the receiver. With regards to availability, VoIP must meet the “five nines” availability demanded of phone services (i.e. VoIP must be available at least 99.999% of the time). A common misconception is that VoIP will have lower dependability and availability than standard PSTN systems because of power failures, internet service provider ‘down-time’, security issues, etc. Nevertheless, it is has been demonstrated that it is possible to build VoIP systems that are more reliable than circuit based PSTN platforms. Adaptive routing ensures that packets reach their designation using multiple network lines. Overall, the disadvantages of VoIP are not significant enough to hamper its ability to compete with traditional PSTN. In addition, advances are being made for the technology to get over some of these stumbling blocks. For example, the problem of jitter has been shown to decrease by using specialized gateways that determine whether large network data bursts are currently affecting throughput and the gateway adjusts to decrease jitter. The technology has 4 Ibid. 7
  • matured to a state where major players are now offering VoIP solutions as alternatives to traditional telecommunication solutions. Cultural and Social Impact The cultural and social impacts are important in order to understand the customer base and must be taken into account in order to increase market penetration. VoIP brings in a change of social behaviour patterns similar to that of text messaging on mobile phones. Individuals can take their VoIP connection along with them as long they have a broadband connection available at their location. In addition, the long distance VoIP charges are cheap enough to open up new market segments such as small businesses, students, teenagers, and even children. For example, youth TV channels could adopt VoIP and video streaming to deliver interactive shows to youth. The availability of new products and services which leverage the use of VoIP will be a major driving force in increasing adoption of VoIP by the general public. Security offered by VoIP systems vs. traditional phone systems is still an issue. This will affect the confidence of the users in adopting a VoIP system, especially in a business environment where confidential matters may be discussed. Also, other risks and fears of adoption include complicated installation, and the threat of viruses and hackers. These fears and risks must be addressed in order to improve the likelihood of adoption. As work groups continue to become distributed across several time zones, they increasingly need to interact and conduct business in a virtual environment. Studies have revealed that alternative method of communication such as email is not very effective for bringing people together. The combination of instant messaging with VoIP has been found to be very effective in such situations. The addition of “presence awareness” enables employees to show whether they are online or offline. These visual clues enhance productivity by letting 8
  • people “locate and connect” with people when they have to resolve a problem in real time. The availability of a VoIP service tied to the instant messenger really helps distributed teams connect with each other. It also allows users to be available to their coworkers wherever they are. Finally, people also tend to be online during their non-work hours. The availability of VoIP and instant messaging gives them a chance to overlap work hours with their peers in another time zone, and thereby increase the overall productivity of the team. The factors above play an important role in understanding the cultural and social factors (i.e. virtual teams) driving the current wave of early adopters and the factors (i.e. security) that will affect the next wave of adopters. The marketers who are able to capitalize on the trends and mitigate the risks for the end user will be the most successful in the end. Regulation The effect of regulation on how VoIP providers market their solutions is important. On April 7th 2004, the Canadian Radio-television and Telecommunications Commission (CRTC) provided preliminary views on the regulatory issues surrounding VoIP. The commission stated that voice communication services using IP that provide access to PSTN and utilize phone numbers that conform to the North American Numbering Plan have characteristics that are functionally the same as circuit-switched voice telecommunications services.5 As a result, the existing regulatory framework and tariffs should apply to VoIP. Although long distance phone calls are currently free using VoIP, the CRTC might implement charges and taxes which will result in an increase in price. The players offering VoIP solutions have to consider these changes to the regulatory environment when marketing the solutions. The views of the CRTC show that providers cannot market VoIP as a low cost solution forever. The long term sustainable benefits 5 Canadian Radio-television and Telecommunications Commission. Regulatory Framework for voice communication services using Internet Protocol. April 7, 2004. http://www.crtc.gc.ca/archieve/ENG/Notices/2004/pt2004-2.htm. Site accessed October 11, 2004. 9
  • of VoIP have to be conveyed to the end user in order to extract as much producer surplus as possible. Major Players In order to understand the Canadian marketplace for VoIP offerings, we took a representative sample of the major players Rogers, Yak, Vonage Canada, and Skype, and analyzed them in terms of the 4P’s (price, promotion, place, and product). In general, we found similar methods of place (i.e. online) and promotion (i.e. word-of-mouth) strategies to target their key customer segments: technically savvy and corporate customers. For a further comparison, please refer to the overview below and added appendices. Skype The Skype service is used normally to maintain a conversation between 2 and up to 5 people using a computer. It does not require any additional hardware except a computer, broadband internet connection, speakers, and a microphone. Skype is used extensively in Europe and Asia by technically savvy end users. In addition, it is being used by teams of employees that are geographically based in different locations. Vonage Canada Vonage Canada is an early pioneer into the Canadian broadband phone industry. It is setting the standard for pricing, features, call quality, and reliability for the entire VoIP category. Vonage's award winning service is sold online and through national retailers like Office Depot, CompuSmart, Best Buy, and Future Shop, etc… In order to access this service, the user needs a broadband internet connection and an analog phone. Vonage supplies a phone adapter so users can use their analog phones without any additional change. Furthermore, the firm provides both personal (residential) and business service plans, catered towards tech-savvy consumers. 10
  • Partnerships with OfficeDepot, CompuSmart etc reinforce Vonage’s commitment to servicing small business enterprises and entrepreneurs.6 Rogers Rogers is one of only two Canadian providers of TV services, cell phones, cable, internet and now phone services (Bell Canada is the other). It is the biggest mobile phone provider (now owner of Sprint Canada) and brings more credibility to the VoIP residential telephone business than the average cable operator. Rogers marketing efforts are directed to attract massive home telephone users. They are selling their product as an alternative to low cost long distance calls or as an additional phone line in the house. Yak Yak Communications Inc. (Yak) is an Integrated Communications Provider (ICP) offering: a full array of long distance (1+, toll free and dial-around) services, local lines, travel cards, cellular long distance services, data services, and broadband voice (VoIP) to residential and small businesses in North America over high speed internet access. Yak currently serves approximately 860,000 customers for its traditional telecom services. Yak’s marketing efforts are targeted for both home and business telephone users. They differentiate their business service by including a set of functions that work together with the Data Transmission service. They target small and middle size companies looking for savings in their telecommunications costs. Lessons From Other Technologies In analyzing the different players in the VoIP market and the segments that have adopted the technology, we have come to believe VoIP can be classified as a technology on the brink of 6 http://www.vonage.ca/canada/corp_english/press.html?PR=2005_08_31_0 11
  • entering the mainstream market. Author Geoffrey A. Moore would define it as a typical “crossing the chasm technology”. Moore identifies the transition between early adopters and early majority pragmatists as a chasm that many high-tech companies never cross. VoIP is a perfect example of a chasm technology because it is currently being adopted by a small segment of the market defined as technically savvy and to a small extent corporate user base. In order for the technology to make the next leap, it needs to determine a set of marketing strategies that will enable it to cross the great divide. Therefore, we looked at other chasm technologies to see what lessons could be learned for VoIP. Research In Motion and the Blackberry In early 1998, Research in Motion (RIM) was at a crossroads in its history. Although achieving success as a manufacturer of two-way pagers, wireless PC cards, and OEM radio products, RIM management was contemplating adding an entirely new line of business by selling end users two-way email solutions that encompassed a hardware and telecommunications service.7 This new line of business, now popularly known as the Blackberry, was based on an innovative “push model” where users would be alerted upon receiving an email through their mail exchange servers. This contrasted the traditional “pull” approach, where users had to periodically check their email inbox themselves to see if any new email arrived. As is currently the case with VoIP, RIM faced several obstacles in “crossing the chasm” and marketing this new service so that it would meet their goals. Moving into the email solutions market was risky as, up until that time, RIM had dealt primarily with wireless hardware products. Consequently, RIM would have to acquire new capabilities in several key areas of their operations and expand their managerial skill set to leverage such capabilities in a strategic manner. Rapid time to market was another issue, as first-mover advantage would be important 7 Ryans, Adrian. Research In Motion Ltd. Richard Ivey School of Business. June 2000. 12
  • to build the type of relationships required from partners, suppliers, and ultimately customers. Lastly, customer targeting was another critical issue as widespread adoption of this new wireless email service could only be attained by marketing it to a large and sophisticated base of consumers. With these issues in mind, RIM made key strategic decisions in regards to its rollout and marketing plans. First, they positioned themselves by moving to a 2.5G network service which gave them access to customers outside the USA. This was an important strategy as it exposed them to a market that was absent of major competitors. Secondly, RIM focused on the consumer and defined who they envisioned as the ultimate end user – mobile workers who spent “big blocks of time away from their desks” (and resultantly their desktop computers) and to whom email communication was critical to satisfying their roles and responsibilities.8 Just as importantly, RIM also distinguished the end-user from the purchaser, using the end-user as an influencer in the purchasing decision. This strategy was supported by a mass purchasing pricing model for corporate consumers. Essentially, RIM understood the power of the influencer and leveraged this effectively. Thirdly, RIM initially targeted select consumers in order to build relationships that it could leverage in a sustainable manner. This was exemplified by RIM’s procurement of Morgan Stanley as a client, which went on to sign as an underwriter for the company. With Morgan Stanley on board, RIM found it much easier to generate interest out of venture capitalists and other investors. The key to crossing the chasm for RIM was twofold: (i) create relationships with key stakeholders (partners, suppliers, and customers) and (ii) sustain them for long term profitability. In the first step in the model, RIM focused on the consumer and developed acceptable pricing strategies while marketing the core benefits to end users – not necessarily the purchasers. The 8 Ibid. 13
  • issue of price fell more so on the IT managers who were making the purchasing decisions, whose concerns were addressed by RIM’s mass-purchasing sales model. The second step of the model was ensured by producing a product and service that had solid features and a strong and robust design. The bottom line was that the service simply worked. This made sure that consumers focused on the unique features of the service and not so much its price, and this ultimately translated into sustainable consumer relationships. Implications The key implications from RIM and the Blackberry revolve around fulfilling user needs and wants that are sustainable for the producer, the usage of purchaser vs. influencer, and the development of key partnerships. First, consumers are very price sensitive however; unique features that provide value are the keys to developing long-term demand. Secondly, the target consumer has to be well understood. In particular, the producer must understand the role of the purchaser vs. influencer and identify who the end-user is. Important questions include “what benefits will our service provide the end-user? What matters to the purchaser? Are these two the same individual?” Lastly, the development of important relationships with key partners early can be a source of sustainable competitive advantages. Therefore, identify who these players are and target them quickly and assertively. This will provide the firm with a safety-net of resources that will be needed to cross the chasm. Fuel Cell Technology FC technology has many parallels with VoIP and a number of lessons can be drawn from the marketing and commercialization of the technology. FC is a replacement technology for powering electrical appliances, homes, businesses, and buildings. VoIP is a replacement technology for analog telephone communication. In addition, the knowledge of FC as a 14
  • technology, its advantages and disadvantages are not well known in the general public. Similarly, VoIP’s familiarity is only identified in the corporate segment and the leading edge technology adopting consumers. The difficulty this creates is customers are not able to assess the product application possibilities and the requirements for product and system integration.9 Customers can be resistant to adopt technology due to unfamiliarity. 10 Consequently, VoIP marketers must reduce the perceived risk of adoption by educating customers about the technology and the benefits of adoption.11 In terms of developing and maturing FC technology both from a technology and commercial point of view, a dependence on customer expertise to develop new products for FC is vital.12 In the midst of VoIP being at the same stage, VoIP developers have to combine their R&D activities of improving quality and reliability with the development of VoIP applications.13 VOIP developers have to combine their strength of core R&D activities with the application expertise that customers bring to the product. Furthermore, in a study on commercializing new technologies, the interaction between technology suppliers and the adopters serves to articulate demand and facilitate the learning process of commercialisation.14 The reasoning is that successful innovation is related to the integration of supply and demand driven factors and that interactive development enables this integration. 15 Therefore, VoIP developers need to initially tap into the early adopters to extract new product ideas that will also satisfy the needs of the majority. 9 Hellman, Hanna L. (2005), ‘Front End Activities for Radical Product Innovation The case of fuel cell technology development’, oikos Ph.D. summer academy 2005 – Sustainability Management and Innovation, 9 10 Ibid. 11 Ibid. 12 Ibid, 10. 13 Ibid. 14 Magnusson, T. (2003), ‘Commercializing cleaner new technologies: the case of micro turbine generators’, Technology Analysis and Strategic Management, 15, 3. 15 Ibid. 15
  • Frambach outlines how a supplier can influence the adoption process through marketing strategy.16 In his organizational innovation adoption model he describes three marketing strategy factors: • Targeting: choosing a customer that is receptive / has potential for innovation • Communication: create awareness, educate • Risk of adoption: reducing perceived risk of adoption”17 Targeting has been carried out in the case of VoIP with technology savvy and corporate segment users being targeted. However, the next two steps go hand in hand and are vitally needed for VoIP to go mainstream. In particular, communication has to sell the consumer on the VoIP attributes of quality and reliability as being better than the traditional analog method. To reduce the perceived risk of adoption, marketers have to communicate the message that switching costs are not too expensive. In the case of fuel cell technology (in particular the hybrid car), the need to communicate that the costs for not switching (higher fuel prices) were greater than the costs of adoption (higher priced cars) was vital for greater adoption. Implications Overall, the main lessons to be learned from FC technology to advance the adoption to the mainstream center around communication, education, and customer involvement. The combination of these three fundamentals has important implications for VoIP and can lead to greater adoption. 16 Frambach, R.T. (1993) ‘An integrated model of organizational adoption and diffusion of innovations’,pp.22-41, European Journal of Marketing, 27, 5. 17 Ibid. 16
  • Ericsson and 3G Ericsson was founded as a telegraph repair shop in 1876 and by the end of 2002 it was the largest supplier of mobile telecommunications systems in the world. The first generation of cell phones had been analog and the second generation (2G) was digital. By the end of the 1990s, sales of 2G phones were beginning to decline. Telecom leaders began to set their sights on 3G phones that would utilize broadband channels, enabling videoconferencing and high-speed web surfing. In the late 1990s, Ericsson began focusing on 3G systems, and put less effort on developing and promoting its 2G systems. However, transition to 3G turned out to be more complex than expected, and there were worries that users might not value the new services. For example, research showed picture messaging was only used in the first two months of a new subscription while videoconferencing drained all the battery power. Implications The lessons learned regarding the way Ericsson pushed for this technology shows that the telecom and the handset suppliers where not prepared to adopt 3G. Customers did not understand the direct benefits of this new technology and the first 3G handsets where not efficient enough to make use of these benefits. Telecommunication companies realized this situation and stopped the adoption of the technology. Overall, Ericsson’s efforts to implement 3G did not succeed because the complementary goods were not completely developed and customers did not quite understand the benefits of this technology. Conclusion VoIP is a new and emerging technology that is on the brink of crossing the new technology chasm. In order to effectively market to consumers and cross the chasm, the aspects 17
  • of defining the target market and the associated marketing message must be understood from the perspective of the principles of networked marketing. First, the target market is currently technically savvy users whose requirements and expectations differ greatly from late adopters. Early adopters’ expectations are driven by the potential benefits of exploiting the capabilities of the new technology and by being first adopters. In terms of requirements, they normally demand special modifications and customizations, but do not require the technology to be mature. On the other hand, late adopters want a product that is mature, reliable and that can work right “out of the box”. Late adopters look for a product to be stable. They are not as impressed by the technology, but by the marketing and user experience that accompanies it. The RIM and Blackberry example shows that to reach your target market and cross the chasm, it is vital to fulfill user’s needs and wants in a sustainable manner and recognize the intricacies of the targeted consumer (i.e. purchaser vs. influencer). In the case of VoIP, if the target is “an enterprise, you have to show them a productivity gain. If it’s a consumer, you have to show them entertainment or something worth opening up their wallet for.”18 This highlight’s the importance of understanding the target market. Secondly the winning strategy for any new technology will be based more on the strength of the marketing message than the technology. There are many examples of strong technologies with weak sales and weak demand (Microsoft’s TabletPC for one). Ultimately, it is the marketing of these technologies that has failed them. It is also important to note that the marketing and technology must be synergistic – the marketing message must be an accurate reflection of the capabilities and benefits associated with the technology. The lessons from FC technology have shown that communication, education, and customer involvement are key factors to increase the degree of adoption. 18 Vittore, Vince. Crossing the VoIP Chasm. Primedia Business Magazines & Media Inc. September 2005. 18
  • In order for the marketing message to be effective, the elements of networked marketing have to be understood. This is even greater when attempting to comprehend the differences between early and late adopters, as the latter require a far more enriched product ecosystem than the former. As seen with the importance that key partnerships played in the RIM-Blackberry example, an effective marketing strategy must pay particular attention to the user network within the product ecosystem. VoIP’s connection with Customer Relationship Management (CRM) solutions could set up a partnership with CRM providers in order to deepen the penetration into the corporate world. The example of Ericsson and 3G technology highlights the importance of recognizing the compliments network, as devices often did not have enough battery power to make full use of 3G’s benefits. In the case of VoIP, providers must include the compliments networks in its marketing strategies, as recent surveys have showed that “enterprise users (are) much more interested in applications” as a direct benefit of VoIP than they have been in the past.19 The pricing strategy for VoIP will come through both a low cost solution and high premium services. The low cost solution will enable the major players to penetrate the market to get economies of scale. While on the other hand, the high premium services will help recover the fixed costs of the network, and create an added revenue stream. As the marketplace for VoIP services evolves into the future, many important lessons can be learned from the past. Some of these lessons are based on traditional concepts of marketing, like understating the target market and communicating the benefits and value of the product to the consumer. However, as sophistication levels of consumers increase, so to must the marketing strategies of technologies like VoIP. The principles of networked marketing are one 19 Ibid. 19
  • example of the recent complexities marketers face. VoIP, just like any other technology, must understand and engage these principles to successfully cross the chasm into sustained adoption. 20
  • Appendix Appendix 1 – Customer mentality and requirements Stage in Life Cycle Mentality and Requirements • Need cool and new technology • Want to be the first to try it • Willing to accept the occasional setback when new ideas prove Stage 1: Innovators, unsuccessful Enthusiasts • Risk takers • Look at technology in terms of ‘what it can do’ • The whole product being purchased here is the technology itself and the ability to customize to meet their needs for enjoyment (minimum as well) • Need to see business value before others see it • Want to see how technology can transform customer experiences Stage 2: Early Adopters, • Able to take a managed risk and want to move fast Visionaries • The whole product being purchased here is the technology (at minimum) and the potential uses of it (the future ecosystem) THE CHASM • Desire a degree of stability in the environment • Don’t need to be the first to see the business value, but the business value must exist Stage 3: Early Majority • Want realistic business cases for adopting the technology with impact on Pragmatists bottom line • Need many easy to use services at low cost that fit into their daily lives • The whole product here is the existing (at minimum) and some potential uses of the technology (the current and developing ecosystem) • Absolutely must have stability in the environment • Want minimal risk Stage 4: Late Majority • Need ‘tried and true’ measures of what they can expect from adopting the Conservatives technology • The whole product here is the existing uses of the technology (the mature ecosystem) at minimum as well • Averse to technology in general • Don’t see real value and real results from adoption • Use historical experiences to judge future innovations, questioning not Stage 5: Skeptics only the technology but the innovators themselves • The whole product here is the entire fully-matured indestructible ecosystem (at a minimum as well) 21
  • Appendix 2 – Skype Product Proposition Product (Service) Price Place Promotion Skype (Windows, Mac OS X, Linux, Free Online Viral/word of Pocket PC) – Skype to Skype call. mouth, Website SkypeOut – Skype to landline or Varies upon landline or mobile destination mobile phone. SkypeIn – Landline or mobile call to 3 month subscription - $14.2020 Skype phone. 12 month subscription - $42.6021 Free with SkypeVoicemail SkypeVoicemail – Send voicemail 3 month subscription - $7.1022 messages to Skype users. 12 month subscription - $21.3023 Free with SkypeIn Skype Zones – Access Skype from Two hours - $3.5524 hotspots around the world One Month - $9.2325 Skype Groups – Manages Skype Free accounts on a group basis. Appendix 3 – Vonage Product Proposition 20 €1 Euro = $1.42 CDN, “http://www.bankofcanada.ca/en/rates/exchform.html”, Accessed Online: 8th, October, 2005. 21 Ibid. 22 Ibid. 23 Ibid. 24 Ibid. 25 Ibid. 22
  • Product (Service)* Price Place Promotion Premium Unlimited - unlimited, unrestricted calls $39.99 per month Online Word of mouth, website, anywhere in Canada and the United States radio Province Unlimited - flat rate on all calls within $34.99 per month your home province, plus a generous 500 minutes of long distance calling throughout the rest of North America Basic 500 Plan – 500 'anytime, anywhere' minutes' $19.99 per month for local, long-distance and toll-free calls throughout Canada and the U.S. Small Business Unlimited Plan - unlimited, $69.99 per month unrestricted calls anywhere in Canada and the United States plus dedicated fax line Small Business Basic - 1,500 anytime minutes for $55.99 per month local, long-distance and toll-free calls throughout Canada and the U.S. plus dedicated fax line All Vonage service plans include the following list of features for no additional charge: - Voicemail - Call return ((x)69) - Call hunt - Repeat dialling - Call waiting - Bandwidth saver - Call transfer - Real-time - Caller ID inbound/outbound call - Call return ((x)69) record details - Caller ID block ((x)67) - Web-based account management, - Call forwarding including: - International call block - Online voicemail retrieval - Area code selection and real-time billing - Great international calling rates, such as: - Tel Aviv - 6 cents per minute - London - 4 cents per minute - Sydney - 6 cents per minute - Hong Kong - 4 cents per minute - India - 21 cents per minute About Vonage(R) Canada Appendix 4 – Rogers Product Proposition Product (Service)* Price Place Promotion Standard Plan (one feature) $29.95 Online, Word of mouth, $25.46 when Bundle with other Rogers Rogers website, radio, TV, services. retail stores. written media and Enhance Plan (3 features) $37.95 mail. $32.26 when Bundle with other Rogers services. Ultimate Plan (6 features) $41.95 $35.66 when Bundle with other Rogers services. Appendix 5 – Yak Product Proposition 23
  • Product (Service)* Price Place Promotion Basic Yak $12.95 Online Word of mouth, website (10 hrs. month calls to the US & CND, yak member-to-member worldwide calling, free device for 1 year plan, free shipping of device to US & CND). Ultimate Yak (Basic Yak + unlimited calls, Choice of public $35.99 telephone number, Optional second public telephone number, Caller ID & Caller ID blocking, Call Forwarding, Call Waiting, Call Hold, and Call Transfer, Unified Voice Mail & Messaging, Personal online account manager, Three-Way Calling, VideoPhone Calling (Requires yak Virtual VideoPhone), 911 service. 24
  • Bibliography 1. Breznick, Alan (2005, August 1). Rogers Launches VoIP Service in Canada. Cable Digital News. 2. Crossing the Chasm – Wikipedia, the free encyclopedia. online: http://en.wikipedia.org/wiki/ Crossing_the_Chasm (site accessed: October 7th, 2005) 3. Hayes, B. and Buiron, F. (2005), PMI Global Congress Proceedings, Edinburgh, Scotland 4. Integrated Communications Provider ICP, YAK Communications. online: http://www.yak.ca (site accessed: October 2nd, 2005) 5. Marketing Week. Analysis: Internet providers prepare for VOIP dogfight. September 2005. 6. Rogers.com. online: http://www.rogers.com (site accessed: October 2nd, 2005) 7. Schilling, Melissa A. (2004). Strategic Management of Technological Innovation. New York: McGraw Hill. 8. Ryans, Adrian. Research In Motion Ltd. Richard Ivey School of Business. June 2000. 9. Skype – The whole world can talk for free. online: http://www.skype.com (site accessed: October 4th, 2005) 10. Treloar, Andrew. Just Another Technology? How The Dynamics Of Innovation Can Help Predict The Future Of The Browser. online: http://ausweb.scu.edu.au/aw99/papers/treloar1/paper.html (site accessed: October 7th, 2005) 11. Vittore, Vince. Crossing the VoIP Chasm. Primedia Business Magazines & Media Inc. September 2005. 25
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