Vodafone Youth Market Segmentation

The Youth Segment Barcelona, 21 October 2004 Raffaella Leproux Vodafone Italy

Agenda
1 - The importance of Customer Base management and segmentation in the Italian market
2 - The Youth segment: profiling, needs and subsegmentation
3 - The Vodafone Italy Youth proposition

The Mobile Italian Market/1
VF Italy Mkt share: 36%
VF Italy EOP Customers: 21.4M (at 30.06.04)
VF Italy Avg ARPU: 30.1 euro/month (at 30.06.04)
39% 56% 77% 90% 94% Penetration As % of Pop. BLU WIND TIM 3 101% VO 103% - 10.000 20.000 30.000 40.000 50.000 60.000 70.000 1998 1999 2000 2001 2002 2003 2004 EOP (.000) BLU WIND TIM 3 VO

The Mobile Italian Market/2 New services revenues New customers revenues
The Italian Market Penetration is >100%
Very compelling market with Mobile Number Portability and the launch of the first UMTS operator, “3”, in 2002.
Lost customers revenues 1999 2000 2001 2002 2003 2004 REVENUES Importance of Customer Base Management

UPSELLING CARING Maintain the customer base and defend it from competitors attacks Increase the value of the customer base through the usage stimulation Offer to the customers the best service and reward SEGMENTATION Vodafone Italy Customer Base Management UPSELLING CARING RETENTION

What’s Segmentation To divide the Customer base in cluster groups with different needs and behaviours in order to create different and appropriate marketing proposition

Segmentation changes with market evolution Voice centric segmentation CRM-based segmentation 360 degrees segmentation 1996 / 1997 1998 / 2000 2001 / 2004 Mature Market Start Up Growth
Segmentation based on value of customers :
Top Value Customers
High Value Customers
Low Value Customers
Segmentation based on :
lifestyle / attitudes
value
Segmentation based on volume and kind of calls:
Emergency only
Personal use (off peak)
Professional use (peak/off p)

The Segmentation Methodology YOUTH Seg 1 Seg 2 Seg N Seg4 Seg 3 application of the rule to the entire CB (including new adds) Customer Data Base Seg 1 Seg 2 Seg 3 Seg N Seg 4 Classification rule on sample Segments estimate Seg 1 Seg 2 Seg 3 Seg N Seg 4 variables time Customers Market research* Customer Data Base Segmentation Data Mart Customer Insight Development Modelling

The Youth segment – Key characteristics
Age between 12-24
Still at home
Budget constraint
Need to belong
Emotional need driven
Highly social – very image conscious
Interest:
Movies
Music
Sport

The Youth segment - KPI YOUTH ADULT Voice SMS MMS HS Vodafone Live! Voice Mail Ring Tones Directory services + 30% +100% + 10% + 5% + 60% + 40% + 90%

What is Youth? /1 Early Teens 12 – 15 years Late Teen s 16 – 19 years Young Adult 20 -24 years Young Professionals 25 -30 years Child 0 – 11 years

What is Youth? /2 16 – 19 years Peers Late Teen s Peer group renforcement 12 – 15 years Emancipation from Parents Family /Peers Early Teens 20 – 24 years Peers/Society Peer group Renforcement/ Status Displays Young Adult GROUP AGE SPHERE OF INFLUENCE SYMBOL BEHAVIOUR
Chance for product diversification
Challenge for universal proposition

Needs overview Share of Time** Stimulation Self expression Communication Fun & Entertainment Information Organisation Share of Mind* YOUTH Self expression Stimulation Communication Fun & Entertainment Information Organisation Share of Mind* Share of Time** ADULTS *Share of Mind is the rank order of need when it occurs ** Share of Time is the frequency of mentions of need across all occasions, with occasions weighted by importance (% penetration of occasion & average duration of occasion) The self expression need is the difference

YOUTH - Needs overview
COMMUNICATION
To share
To check-up
To show affection
To chat
MOBILE
COMMUNICATION
Call & Videocall
SMS & MMS
Sending a song

FUN &
ENTERTAINMENT
To have fun
To Escape
To pick up my mood
MOBILE
FUN & ENTERTAINMENT
Playing a game
Listening music track
Taking/Sending pictures
Watching TV

ORGANISATION & INFORMATION
To keep up to date
To organise myself
To learn
MOBILE
ORGANISATION & INFORMATION
Reading news
Finding/Sending information
Receiving alerts

Vodafone Italy YOUTH Proposition
Ringtones
M-play
3 euro Top Up
111 for me
SMS promotions
Early Teens
My Music
Load a Game
Vodafone Infinity
SMS promotions
M-Village
Multiparty
My gallery
Late Teen s
Supertones live!
MMS postcards
MMS contest
Java Games
Vodafone Infinity
Superpromo mms
S. Valentine Card
Freetime MMs
Goal live!
Content SMS
Young Adult COMMUNICATION SELF EXPRESSION FUN & ENTERTAINMEN T ORGANISATION & INFORMATION

Fun & Entertainment: My Music PROPOSITION Replace ring back tones of your mobile with a real song. The activation it’s easy. Call 45555 and choose your song! Until 15 th of November the music track of Vodafone TV summer campaign is free for one month.
OBJECTIVES
I ncrease the range of personalization products.
Be innovative
Use music to reinforce the brand through the youth segment.

Fun & Entertainment: MMS contest PROPOSITION Express yourself catching every week something different and send it with MMS. Every week receive an MMS with the topic of the week.
OBJECTIVES
Stimulating DATA penetration services
Suggest different occasions to send MMS
Create Community.

Communication: Vodafone Infinity PROPOSITION Pay only the first minute of each call, the remaining air time is free. The activation cost is 7 euro.
OBJECTIVES
Be competitive in the new arena.
Stimulating Voice penetration services
Growth VF market share on the segment

PROPOSITION With 3 Euro Top Up you can recharge your mobile also with coins. A small credit that allows you to stay in touch with your friends through calls and SMS.
OBJECTIVES
Top up approachable even for budget restricted customers.
Increase top up margin / frequency.
Communication: 3 Euro Top up

Messaging Promotions – Price/Volume Elasticity SMS Card 2002 SMS+MMS Card 2003 Christmas Card 2003 SMS+MMS Card 2004 Youth Segment shows a strong increase in SMS and MMS per day usage during Summer and Xmas Promotion Summer 03 Xmas 03 Summer 04

Conclusions
Segmentation is fundamental
There is no a “Youth segment ”
The key need is the “self expression”
Proposition should suit each subsegment

Thank you!

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Vodafone Youth Market Segmentation

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