Success in rural markets: New customers for telecommunication businesses
Shanghai, December 16, 2011: Mobile phones used to be a status symbol for the rich and powerful. Today mobile communication is so commonplace that the markets of the industrialized world are thought to have reached saturation point. Things look totally different in emerging and developing countries, where mobile phones are less widespread. But this is changing fast. The demand for mobile communication in these countries is high, as the growth rates in several key emerging markets show (Egypt, Brazil, China, India, Indonesia, Nigeria, Pakistan and Thailand).
Here, 570 million new mobile phone subscribers were added between 2007 and 2010. However, these new customers are not all city dwellers, as you might think. There is considerable demand for mobile communication among the rural population too. Most of the 570 million new customers, 303 million to be exact, live in rural areas. And the growth continues: Well over 90% of those currently without a mobile phone want one. These are the findings of the new think: act Content "Success in rural markets: New customers for telecommunication businesses" by Roland Berger Strategy Consultants.
"Metropolitan" business models do not work in the countryside
Unfortunately, this demand does not automatically translate into big profits. Product design, sales and marketing models established in the cities cannot simply be transferred to the countryside. Among companies who have entered the rural market, the successful ones are those who see their rural customers as a separate customer group that has to be addressed with specially tailored concepts. Companies who simply transfer the concepts they have established in big cities to the countryside, are destined to fail.
Affordability is key, but value-adds are still possible
In general, the average income of rural customer target groups is much lower than in big cities. Differences of a few cents can mean a lot to them – affordability is essential. Other industries can provide ideas for new approaches. Successful companies often reduce entry barriers for their main target group by tailoring the product to the pocket of the customer. This helps the product to penetrate the market and built a customer habit, which could lead to lasting loyalty over time.
Besides the very price-sensitive target group, the rural population also consists of segments who aren't convinced by cheapest offers alone. Here, another strategy could be promising: To link the core product – in our case, country dwellers' desire for mobile communication – with other services relevant to the target group. Another promising value-added area for mobile operators is mobile banking.
Success factors for rural business
For mobile operators, it's about more than only growth beyond the metropolitan areas. The enlargement of customer base also strengthens the company as a whole. Roland Berger has identified three key factors based on its experience from various customer projects:
- Product design
- Sales and distribution
- Brand and marketing
Here, 570 million new mobile phone subscribers were added between 2007 and 2010. However, these new customers are not all city dwellers, as you might think. There is considerable demand for mobile communication among the rural population too. Most of the 570 million new customers, 303 million to be exact, live in rural areas. And the growth continues: Well over 90% of those currently without a mobile phone want one. These are the findings of the new think: act Content "Success in rural markets: New customers for telecommunication businesses" by Roland Berger Strategy Consultants.
"Metropolitan" business models do not work in the countryside
Unfortunately, this demand does not automatically translate into big profits. Product design, sales and marketing models established in the cities cannot simply be transferred to the countryside. Among companies who have entered the rural market, the successful ones are those who see their rural customers as a separate customer group that has to be addressed with specially tailored concepts. Companies who simply transfer the concepts they have established in big cities to the countryside, are destined to fail.
Affordability is key, but value-adds are still possible
In general, the average income of rural customer target groups is much lower than in big cities. Differences of a few cents can mean a lot to them – affordability is essential. Other industries can provide ideas for new approaches. Successful companies often reduce entry barriers for their main target group by tailoring the product to the pocket of the customer. This helps the product to penetrate the market and built a customer habit, which could lead to lasting loyalty over time.
Besides the very price-sensitive target group, the rural population also consists of segments who aren't convinced by cheapest offers alone. Here, another strategy could be promising: To link the core product – in our case, country dwellers' desire for mobile communication – with other services relevant to the target group. Another promising value-added area for mobile operators is mobile banking.
Success factors for rural business
For mobile operators, it's about more than only growth beyond the metropolitan areas. The enlargement of customer base also strengthens the company as a whole. Roland Berger has identified three key factors based on its experience from various customer projects:
- Product design
- Sales and distribution
- Brand and marketing
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