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Landline Phones Marketing, Research Paper Example

Pages: 6

Words: 1568

Research Paper

While the ownership of landline phones by households 29 years and younger declined from 93 percent to 71 percent from 1998 to 2005, the landline ownership rate among the group 65 years or older was still at 98 percent in 2005 (United States Census Bureau, 2009). It can be concluded that while younger generation has been embracing cell phones at the expense of landline phones because cell phones complement their technology-intensive lifestyle, the older generation continues to be loyal to landline phones.

There may be several reasons why older generation has not given up on landline phones and one of them may be that landline phones are a simpler technology than cell phones. We humans are a creature of habit and since many grew up with landline phones, they have become used to it and don’t see any need to replace it with a more complex substitute. Cost may be another reason since landline phone subscription rates are still lower than comparable cell phone subscription options and it is not uncommon for landline subscriptions to come with unlimited minutes. In addition, consumers may save even more by bundling landline phones with other services such as cable TV. Even though the landline phones will be aimed at everyone in the market place, the primary target will be households 65 years or older. The U.S. population is aging, thus, there will be significant growth opportunities in the future also. According to U.S. Department of Health and Human Services, people 65 years and older numbered 39.6 million in 2009 or about 12.9 percent of the total U.S. population. By 2030, people 65 years and older will be about 72.1 million or about 19 percent of the total U.S. population (Administration on Aging, 2011).

As far as marketing research is concerned, the cheapest in terms of cost and reach will be the surveys. Traditionally, phone surveys and mail surveys have been used to reach a large number of individuals in the targeted market segment and have been quite cost-effective (AllBusiness) but now internet provides another channel to carry out surveys and do so cost-effectively. But despite its cost and reach benefits, surveys may not be the most appropriate in this case because our targeted market is not technologically affluent and moreover, its needs are not as well understood as those of the younger population. Thus, a marketing research method that allows for open ended responses such as focus groups and personal interviews will be more appropriate. Even though both of these methods will be expensive in terms of cost and time, they will allow us to better understand the needs and desire of elderly population.

For surveys to be effective, a marketer should have a good understanding of the targeted market in order to compile an effective list of questions. In addition, market research methods such as surveys also suffer from poor response rates and often come as intrusive (AllBusiness). In contrast, personal interviews and focus groups have high response rates and by encouraging respondents to express themselves freely, marketers may get insights they could not have thought of otherwise. In addition, the company may also hire independent research company to look into the emerging trends in the near future as a result of aging population.

The company will adopt several strategies to increase adoption rates. First of all, the company will market its product on traditional advertising media with high viewership rates of people 65 years and older such as TV, radio, and print media. The ads will be carefully created to ensure they are informative and have older actors so that the viewers could identify with them. This is because unlike young viewers who enjoy humor, older people are more rational and desire information. They want marketers to persuade them that the product or service is worth purchase (Arnold, 2004).

The company will also provide free cordless handsets to its customers. The cordless handsets will allow the customers to conveniently make calls anywhere within their homes, providing an experience similar to cell phones. In addition, the company will also provide free home-installation service to its customers as well as 24-hour customer service helpline. Since the company’s landline phone will be internet based, just like VoIP but with better sound and reliability, the company has created a new technology that delivers internet connection directly to the phones through regular fiber optic cables. Thus, the consumers will not have to worry about internet routers or a separate internet service. Internet phone technology has made it possible for the company to provide unlimited subscription plan to customers that not only includes local unlimited calls but also unlimited international calls as well. The company’s operating costs will be lower than traditional landline phone service providers while its customers will get better value.

Other strategies being considered by the company to increase adoption rates include providing incentives to customers to refer the company’s product to friends and relatives. The customers will be given 5 percent discount on a monthly subscription plan for six months for every subscriber they bring in, for a maximum of 25 percent discount in a given period. The company will run this promotion for the first two years during which it should be able to build a huge client base. But the company realizes that gaining customers and converting them to loyal customers are two totally different things which is why the company is committed to exemplary customer service and each customer service rep with go through four weeks training out of which two weeks will be on the job training under a qualified mentor. The company has decided not to outsource customer service so that it has more control over the quality of service being delivered to the customers.

The company realizes that video conferencing will be one of the major communication technologies in the future. This is why it will be offering portable video conferencing equipment as an option that could be attached to the landline sets. The customers may pay upfront for the video conferencing equipment as well as additional $5 monthly fees for added internet bandwidth consumption. But the video equipment fees will be waived if consumers sign up a two-year contract. The company believes that the video conferencing option will significantly increase the appeal of company’s landline service to the older consumers because no other competitor offers it to residential consumers. Even though video conferencing is possible on other digital equipments such as tablet devices and smart phones, the video conferencing feature is not always reliable and suffers from poor video quality. The quality of video call will be significantly better than what is possible on other devices and it will be easy to use, even for the novice technology users. Another service we may offer our customers is wireless internet service since we believe tablet devices may gain popularity among a significant number of customers 65 years and older due to user-friendly interface and portability. Though wireless internet service will contribute a very minor portion of our total revenues, we will offer it as value added service and only to our landline phone subscribers.

Since we are primarily targeting older people many of whom may still shop the old way and rarely use internet, we will not be able to take advantage of the cost efficiencies presented by the internet. Similarly, setting up physical distribution network will be quite expensive due to high capital requirements. This is why we will primarily sell through two distribution channels which are over-the-telephone and partnerships with independent retail establishments including both large scale superstore chains and stand-alone shops. The distribution partners will have the opportunity to earn commission on each sale they make and the size of the commission will depend on their overall sales volume. This strategy will offer us several benefits. First of all, we will be able to quickly initiate operations. We will also avoid huge capital costs. This strategy will also give us operating flexibility since we could easily enter new markets as well as exit those where sales may be lower than expectations. We will also save in labor costs since we won’t have to train or pay sales associates that companies with their own distribution networks have to do. We will also choose superstore chains because a significant percentage of elderly people can be seen at such stores. In addition, we may also look into potential distribution partnership with cable companies who could offer our landline service as part of a bundle.

We will use personal interviews and focus groups since we believe elderly population is still poorly understood and surveys will not only yield little information but will also suffer from extremely low response rate. We will partner with other independent retail establishments to distribute our service because it will not only allow us to go in operations immediately but also help save us significant capital costs. We will also offer video conferencing and wireless internet service as options to our subscribers to provide them better value than competing landline phone companies.

References

Administration on Aging. (2011, September 1). Aging Statistics. Retrieved August 19, 2012, from http://www.aoa.gov/aoaroot/aging_statistics/index.aspx

AllBusiness. (n.d.). The Five Basic Methods of Market Research. Retrieved August 19, 2012, from http://www.allbusiness.com/marketing/market-research/1287-1.html#axzz2446w64zv

Arnold, J. (2004, November 30). Ad nausea hits the grey market. Retrieved August 19, 2012, from BBC News: http://news.bbc.co.uk/2/hi/uk_news/4019965.stm

United States Census Bureau. (2009, November 19). Homes With Cell Phones Nearly Double in First Half of Decade. Retrieved August 19, 2012, from http://www.census.gov/newsroom/releases/archives/income_wealth/cb09-174.html

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