Case Study : Pricing Plan on Tight Competition

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Case Study : Pricing Plan on Tight Competition

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Case Study : Pricing Plan on Tight Competition

  1. 1. DCCT President Director Pricing Plan By Djadja Sardjana 10/19/2009 Djadja Achmad Sardjana - MM-Biztel 1 of 13
  2. 2. 1. Pricing Plan on Tight Competition Its should be: a. Align to Company Vision & Mission with trend of: Technology Change Change of Market Demand Deregulation Globalization b. Refer to Multi-Dimensional Competition: Competition base on Price and Service Quality Diversified Competition Factors c. As Start-up Company penetrate market first d. Comply with Government Policy & Regulation 10/19/2009 Djadja Achmad Sardjana - MM-Biztel 2 of 13
  3. 3. 1. Pricing Plan on Tight Competition a. Align to Company Vision & Mission with trend of: Technological Change • Merging of computer and telecom • Advanced intelligent network (AIN) • Cellular and mobile service Deregulation/Liberalization • Privatization Globalization • Competition Market Demand • Greater customer sophistication • Need for specialized services Source : Syailendra on MM-Biztel Lecture 10/19/2009 Djadja Achmad Sardjana - MM-Biztel 3 of 13
  4. 4. 1. Pricing Plan on Tight Competition b. Refer to Multi-Dimensional Competition: Multi-Dimensional Competition Change of Billing Role Competition base on Price and Service Quality • Network Cost Integrated Service & Revenue Management Past Not simply provide an invoice for the network • Coverage usage, • Scale of Economy But play a crucial role as an End-to-end Service & Revenue Management in providing various types of service products to customer and grasping quickly and accurately revenue. Diversified Competition Factors • Content Portfolio • Customer Segment Customer Focused, Event-Driven Architecture Current & • Bundling and Service Plan Should not be a network-oriented billing system, Future But be a customer and service-oriented system to • Device support individual event usage regarding the • Scope of Economy services provided to customers • Speed of Economy • Innovation Source : Syailendra on MM-Biztel Lecture 10/19/2009 Djadja Achmad Sardjana - MM-Biztel 4 of 13
  5. 5. 1. Pricing Plan on Tight Competition c. As Start-up Company penetrate market first Telco at Indonesia still as Attractive Business Telecommunication Indonesia Penetration Rate Market Share - Cellular 80.0% 100% 69.0% 70.0% 90% 60.7% 60.0% 80% Lippo Telecom 52.2% 70% 32% 32% Cyber Access 50.0% 43.5% 60% 32% 31% 29% 27% 25% Mobil-8 40.0% 34.9% 50% Excelcomindo 25.5% 40% 30.0% 30% Indosat 17.6% 54% 51% 20.0% 47% 45% 45% 45% 45% Telkomsel 20% 10.0% 10% 0.0% 0% 2004 2005 2006 2007 2008 2009 2010 2004 2005 2006 2007 2008 2009 2010 “ Pure & Tight Competition” Source : M.Sibarani on MM-Biztel Lecture 10/19/2009 Djadja Achmad Sardjana - MM-Biztel 5 of 13
  6. 6. 1. Pricing Plan on Tight Competition d. Comply with Government Policy & Regulation Source : BAPPENAS Infrastructure Roadmap 2006 10/19/2009 Djadja Achmad Sardjana - MM-Biztel 6 of 13
  7. 7. 2. Reasoning of Pricing Plan a. Use Optimal Market Positioning Based on company’s strength Could be differentiated from competitor (unique) Perceived positive by consumer (reason to buy) Sustainable in facing changes in business environment b. Use Perceived Value Rather Than Actual Price c. Good Understanding on Costing-Tariff-Pricing 10/19/2009 Djadja Achmad Sardjana - MM-Biztel 7 of 13
  8. 8. 2. Reasoning of Pricing Plan a. Use Optimal Market Positioning : Source : Sumrahadi on MM-Biztel Lecture 10/19/2009 Djadja Achmad Sardjana - MM-Biztel 8 of 13
  9. 9. 2. Reasoning of Pricing Plan b. Use Perceived Value Rather Than Actual Price : Source : Sumrahadi on MM-Biztel Lecture 10/19/2009 Djadja Achmad Sardjana - MM-Biztel 9 of 13
  10. 10. 2. Reasoning of Pricing Plan c. Good Understanding on Costing-Tariff-Pricing : Source : Sumrahadi on MM-Biztel Lecture 10/19/2009 Djadja Achmad Sardjana - MM-Biztel 10 of 13
  11. 11. 2. Reasoning of Pricing Plan Customer Calculation Proje cte d Custome r 2007-2011 600000 400000 200000 0 1 2 3 4 5 Year 2007 2008 2009 2010 2011 Projected Cus tom er 75.000 165.000 270.000 345.000 410.000 Growth 120% 64% 28% 19% a. Progressive customer penetration 2nd year (2008) : Pricing lower than competitor. Launch interested marketing gimmick Catch “churn customer” from competitor b. Steady state but still have 2 digit customer growth on 2010 even on this year have new entry of fixed wireless and cellular operator 10/19/2009 Djadja Achmad Sardjana - MM-Biztel 11 of 13
  12. 12. 2. Reasoning of Pricing Plan Revenue Calculation Projected Revenue 2007-20011 3E+11 2E+11 1E+11 0 1 2 3 4 5 Year 2007 2008 2009 2010 2011 Projected Revenue 27.000.000.000 86.400.000.000 156.600.000.000 221.400.000.000 271.800.000.000 Growth 220% 81% 41% 23% a. Impressive revenue growth on 2nd year (2008) caused by: Customer increase significantly but OPEX is lower than expected. Revenue stream not only gain by customer increase but also ARPU & AMPU. b. Company still have 2 digit revenue growth on 2010 even on this year on “slim profit margin mode” 10/19/2009 Djadja Achmad Sardjana - MM-Biztel 12 of 13
  13. 13. 3. Marketing Mix Activity Source : Sumrahadi on MM-Biztel Lecture 10/19/2009 Djadja Achmad Sardjana - MM-Biztel 13 of 13

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