NTT DoCoMo : Case Study

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Case Study : NTT DoComo

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NTT DoCoMo : Case Study

  1. 1. Case : Marketing i-mode
  2. 2. Marketing i-Mode • NTT : Nippon Telegraph and Telephone Corporation • What is i-mode? – 2002: A wireless Internet service, by NTT Docomo, Japan – 2005 : 30 mil. subscribers , 60% of Japan market share • Initially : Not appreciated by Expert Pundits • Two challenge : 1. Domestic : Prevent competitors + manage migration of existing customer to 3G wireless service 2. International : Bring i-mode model to US, Europe’s reluctant Market of customer to adopt internet
  3. 3. • Keiichi Enoki , MD, Docomo i-mode Operation – Force behind one of Japan’s fastest moving Org. • 1990 : – Low Penetration of Cellular Phone, Because : • Deregulation • Availability of low-cost handsets • Reduction in subscribers fees – Docomo : so Popular that facing trouble to keeping up with demand. Cont…
  4. 4. • 1997 : Congestion Prob. – Enoki : Placed as Lifetime Employee : • To convince : Subscriber to start use their cell differently • Use existing packet switch network : Less Invest. – Adv. : Wireless circuit open during phone call • Interweave text-based Data packets into voice stream : allows multiple subscriber to share single circuit • Enoki : Recruit two outsider : – To develop mobile internet service : Think out of box Cont…
  5. 5. 1. Mari Matsunaga, Marketing Guru, Editor-in-chief • She Doesn’t have cell phone : To focus on content : Brings Fresh Thinking 2. Takeshi Natsumo, Wharton MBA, Works at Hypernet, Internet advertising company : Full of Innovative Ideas • Good at Wireless business • Finally Charismatic Team : Formed • Trio : Culture of – Blue Jeans – Brainstorming held on Beer Table • Controversial Decision : Belied to Conventional Industry Wisdom Two Outsider Hired by Enoki
  6. 6. • Initially : Business People – Always on Internet • Later :Trendy Young People – Teen and 20’s – 12 % : Home PC Penetration – <10 % : Japanese Consumer had internet in 1997 – Few tended to be businessman • Matsunga Believed: – Young People Strong Need of Comm. + Attract towards innovation : If We get them then WE GOT THE JACKPOT… Target Market Selection
  7. 7. • Another Major Decision: International Market • USA & European market : – Focus : Developing proprietary Content • Create a Portal : – Subscriber  directed to Third Party via browser (iTune) • Operator : Control Value Chain  Content to N/W – DoCoMo : Increase Data Traffic  WIN-WIN , 3rd Party • Billing System of DoCoMo – Handle Large no of Small Phone call + Micropayments – Centralized : One bill = Subscriber + 3rd party fees • 9% Commission from Content Provides (3rd Party) Third Party Content
  8. 8. DoCoMo’s Challenge
  9. 9. Technology Standard-Language Protocol OPTION 1 OPTION 2 • DECISION- Which LANGUAGE PROTOCOL should adopt??? • Version for PC browser • Slower Operation but Quicker Download • Widely used language protocol on web • Version for Mobile Browser  Adopted by Nokia Ericsson Motorola • Sent Data Faster and more Efficiently over Wireless Network • Many Players Pushing WAP to GLOBAL STANDARDS. • Deter 3rd Party Operation Content HDML,WML • Docomo decided to adopt (Compact HTML) • Using cHTML, they could optimized existing webpages for mobile viewing by eliminating some Graphics, Tables & Frames
  10. 10. OPTION 1 OPTION 2 • DECISION- Which EMAIL METHOD should adopt??? • Rely on the central server to collect data • The user could open any time • No limit • Send messages directly so that receiver can read it directly. • No need to retrieve from Server • Minimal storage • Limit upto 250 Characters • Speed of DIRECT METHOD • Sender’s Phone was transmitting and receiver's phone receiving • Short Bursts of Communication • Emotions-A new way to express their feelings. ¥20 ¥1 Technology Standard-Email
  11. 11. “UNDER 100 Grams and 100CC” • Top Analyst suggested Enoki to have handset that are heavier, Bigger and consume mere battery power. • “We are not selling an electronic planner or a PDA. We are Selling a Phone!!!” -Enoki Hardware Manufacturers
  12. 12. COST $167-$250 APPEARANCE  Sleek  99 grams  9.6 Kbps  Single button switch to i-MODE “UNDER 100 Grams and 100CC” BATTERY  4 Hrs of Talk time  400 hrs of Stand By tine Cost of other Phone with no i-mode : $197-$310 • No i-Mode • >100 grams • No Gprs connectivity • No i-Mode • Upto max. 3 hours • Stand-by time of max. 96 hours
  13. 13. “UNDER 100 Grams and 100CC” 1st Generation 2nd Generation
  14. 14. UTILITY Provided Real benefits to Subscriber and Industry Partners • Financial services • Retail • Hotels • Airlines • News Entertainment partners • Horoscope • Games • Ringtones WHIMSICAL People were having happy hours when using i-mode Marketing the I-mode Service A nytime nywhere nything
  15. 15. Marketing Campaign
  16. 16. The Pricing strategy • Pricing can influence the product positioning I-mode Price Amount of data downloaded Email 1 yen Downloading Cost 7 yen Time spent on web Not desirable Transferring funds Cost 60 yen •Finally team has decided •Basic subscription fee – ¥ 300 per month •Every packet data - ¥ 0.3 •No fees for dial up
  17. 17. Found Comparable with the cost for subscribing ISP ¥ 2000 Cutdowntheprice ¥ 300 per month for subscription With ¥ 0.3 per packet data Zeroprice No cost for dial up and will be available 24x7 Strategy • With a low price the billing method was also convenient for users. • i-Mode customers used to receive monthly bill with all of their mobile charges. Cont…
  18. 18. An Overnight Success Story • I-mode was launched in february,1999.
  19. 19. • Reasons for this success can be the various features provided by I-mode. Transaction Money transfer Balance check Ticket booking Retail sales Information News Updates Sports scores Stock data Business news search Restaurant guide Cooking recipes Data bases Ring tones Games Screen savers Entertainment I-Mode •High switching cost for users •Market was such •Ready to spend more •Ring tones •Games and Wallpapers Cont…
  20. 20. Content Providers • Some rules Could not offer links to sites outside the I- mode portal Limited advertise- ment space Chat rooms were not allowed
  21. 21. Cont… By the end of 2001, company has more than 3000 I-mode menu Contents provider has to meet rigid quality standards and has to go through the hierarchical process In spite of having a rigid standards providers wants to be with them • Not much investment in new technology • Efficient billing service
  22. 22. Domestic Challenges • i-mode’s subscriber growth – falling off • Competitions was getting intense – KDDI – 24% market share – J-Phone – 17% market share (similar to HTML) • More focused on trying to be innovative, target to youngsters • Both can use voluntarily i-mode sites • i-mode committed to shift in its business model • Complaints from content provider – government pressure – gain open access to its network – i-mode portal no longer default starting point – Reduce basic monthly subscription from 300 to 200 yen
  23. 23. • Key challenge – Maintaining i-mode’s momentum – Continuing growth in business • 2001 – first carrier in world to offer a viable 3- G service branded “FOMA” – Plan was to move graft i-mode business to faster 3-G network – Certain technical limitations –battery life – Complaints about poor connection rates – Still struggling with pricing, position, promote FOMA relative to its existing i-mode FOMA Upgrade
  24. 24. • Mobile Internet market – stagnant • Working to bring i-mode model to US and Europe • No any carrier dominated in the market • Difference in consumer behaviour • Europe – 70% penetration in mobile phone segment – Lack of content (content provider reluctant to provide) – SMS had become popular over voice call • US – Less likely to use cell phone – more likely to use internet over PC – Flat monthly rate for unlimited internet access rather than fee based on use • Different marketing strategies – US and Europe – tended to target early adopters – Carriers - not responsible for collecting revenue on behalf of content provider – reluctant to open up network to many providers International Challenges

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