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Marketing Analysis NTT DoCoMo

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  1. 1. NTT DoCoMo
  2. 2. Background information – 5C Company  Established in 1992 when spun off by NTT  Introduced i-mode in 1999.  "Always on" wireless technology  Pursued other markets  unavailability of 3G  low response from market to Internet access via mobile phone vs. via PCs  First carrier in the world to launch 3G services Customers  In Japan, trendy and young customers  Business users were still considered a target, because of reduced price sensitivity and typical use of premium information and transaction services
  3. 3. Background information – 5C Collaborators  FeliCa - Contactless IC technology  Third party content providers  Handset manufacturers. Carriers commissioned the designs and bore the inventory costs. Competition  KDDI - introduced a lesser-speed product, but much more compact with GPS and less cost.  Vodaphone Context  A constantly changing technological environment. DoCoMo wanted to be first to market with FeliCa applications, but security concerns leave room for less confidence. Opportunity to change image and reputation (because they alienated their 2 G customers).
  4. 4. SWOT Strengths Weaknesses - Expansion overseas (due to consumer preferences on how to- i-mode in Japan access Internet (via PC vs phone) and- First to market 3G technology the investment required for 3G- State-of-the-art technology licenses - Must build new network facilities for FOMA (vs. KDDI who could use current network.) Opportunities Threats - Market maturation of Japanese- 3G technology markets.- "Lifestyle Infrastructure" - - Regulatory challenegsMarketing opportunity to leverage - Flat-rate pricing led by KDDI - Security issues/fraud on FeliCa.
  5. 5. Main Objectives Improve mobile phone churn and subscription acquisition rates Increase profit from FeliCa Networks Increase Revenue by providing mobile FeliCa services
  6. 6. Major issues Issue 1 – Provide Financing Services and Phone Credit Card Options to consider: 1. Nonexclusive partnership - Collect fees. Points program 2. Exclusive partnership - DoCoMo strong brand could make a difference 3. Phone-based credit without partner - Lack of experience is a risk
  7. 7. Recommendations Issue 1:How to introduce credit card functionality?Option 3: Phone-based is the best choice- Acquire credit company to get the know how and mitigate the risks- Use the DoCoMo brand name- Don’t have to share revenues with credit card company- Position in the market as a provider of complete solutions
  8. 8. RecommendationsCredit Card Phone - STP AnalysisS – Segment · The current cluster of credit card users who also rely on their smart phones to conduct many activities besides the traditional voice, image and data transactionsT - Target · Businesses - Access to buildings (readers would identify the employee, and would be able to download messages, news, scheduled activities to the employee’s phone when he/she access the company’s facility · Trendy Young people (urban, technology oriented, “gadgets” fans)
  9. 9. Recommendations · College Students • (parents charge the student’s phone) • phone’s screen shows current balance, class schedules, latest sports and gossip news) · Commuters in big cities who use massive public transportation (passes)P – Position · Music TV channels · Business Magazines ( adds offering the services to retailers, office buildings, restaurants, etc.) · Top ten web sites visited for the target cluster
  10. 10. RecommendationsFour P’s AnalysisProduct – Offer • Payments in stores, restaurant and businesses in general • Access to high security buildings • Scan of codes in advertising published in magazines – this would allow the purchaser to download general information, review the product, submit the order or request more information. The credit is provided by the DoCoMo Financial Services organization and the validation of credit limits, and authentication is conducted by the same DoCoMo.
  11. 11. RecommendationsPrice – Cost • Service is charged to the mobile phone-credit card (financing charges plus additional fee) • Fee charged (lower than current fees charged by banks) • Store offers bonus or credit points toward future purchases and the customer can check his/her credit points at any time in his/her phone • It can be charged per transaction or a percentage of the purchase or both. Surveys and Focus Groups should tell what every specific group of the target market is willing to pay for this service
  12. 12. Recommendations Place – Distribution • Upgrade of existing phones (in Japan the provider dictates the features the new phone should have) • New models with more functionalities including the possibility of offering a debit/credit card embedded in the same camera phone
  13. 13. Recommendations Promotion • Integrated marketing communication - High end stores and restaurants - Marketing Campaigns in: • Top radio stations and TV segments • Top magazines most read by the target market • Top web sites most visited by Business Managers and investors • Alliances with stores and business to sell from simple ads in newspapers and magazines (QR codes scanning) • request information • submit order • provide feedback (valuable information for manufacturers and retailers about the impact of their marketing materials in the public) • Massive transportation sytems • Colleges
  14. 14. Major issues Issue 2: Security concerns  Phone lost, what happens?  Barrier to adoption  Reputation may be at stake if money is lost  Competing type “B” technology is more secure
  15. 15. Recommendations Issue 2: Security concerns- Look into a version 2 of FeliCa with Sony using its latest chip- Propose a “protection plan” to NTT customers that would protect phone and money- Use innovative functions such as voice recognition or biometric system to identify the owner of the phone
  16. 16. Major issues Issue 3: eMoney promotion  Options to consider  One provider – One reader. Readers interoperability  Promote Edy  Merge efforts with JR East and/or JCB
  17. 17. Recommendations Issue 3: eMoney promotion- Continue to promote Edy, the network of vendors and businesses- Push for reader interoperability by partnering with readers providers - Integration of Visa and eMoney in one terminal- Get compatible with Suica / JR East system- Promote reader purchase with incentive programs, lease options, fee based usage- Partner with retail stores chain- Bundle phone and services access
  18. 18. Major issues Issue 4: Competitive advantage  NTT competitors like KDDI are perceived as more “aggressive” and NTT needs to react to change its image  Setbacks with 3G introduction  KDDI and Vodafon open new services and 2.5G cheap competing offers
  19. 19. Recommendations Issue 4: Competitive advantage- Launch a targeted advertising campaign - Innovation, dynamism theme - Customer focused company- License technology to other countries which have i-mode already- Strengthen its position as ISP provider- Internationally position DoCoMo phones
  20. 20. Timeline Acquire credit Launch promotion card company campaign Secure phone License technology Launch Protection plan Develop Edy network Partner with Suica and JR East 3m 9m 18m 24m
  21. 21. Case updateNTT DoCoMo to Launch "iD" Credit Card Brand for Mobile Payments TOKYO, JAPAN,November 8, 2005 --- NTT DoCoMo, Inc. announced today its new iD™ credit card brand for card issuers, which will enable DoCoMo customers to make credit card payments with the "Osaifu-Keitai" mobile phone equipped with wallet functions. The brand will be launched on December 1, 2005. iD will enhance existing credit card services by giving credit card owners the option of making payments via a DoCoMo wallet phone linked to the card, in addition to conventional payments with their plastic credit card. The payment procedure will be as simple as waving the phones in front of dedicated reader/writers at stores.No signature will be required for purchases under a certain amount, while purchases exceeding this amount will require the user to simply enter a password via a device linked to the reader/writer. In addition to enjoying secure payments with iD, DoCoMo users will also benefit from security features built into their DoCoMo wallet phones.A user can, for example, call a designated phone number to immediately lock a misplaced or stolen phone. Also, a user can choose to make all payments require a password. Applications for iD will be accepted through credit card issuers. Once the application is accepted, the user will download an i- appli™ application into their handset and choose various settings for using the service. The DoCoMo handsets initially compatible with iD will be all 902i series (coming soon) and 901iS series models, and the F901iC, N901iC, SH901iC, F900iC, SH506iC, SO506iC and P506iC models. Compatibility will differ, however, depending on the card issuer, so users are asked to contact their card issuer for details. DoCoMo will continue to enhance the convenience of its "Osaifu-Keitai" wallet service for cashless payments to further integrate handsets into everyday life.In addition, DoCoMo plans to offer services as a credit card issuer using the iD brand in the first half of fiscal 2006