US Carriers Smell Fresh (Young) Meat
By Eric Lin, Mon Apr 26 22:00:00 GMT 2004
Confirmation of rumors that Nextel will expand its Boost brand to seven additional markets beyond California and Nevada have prompted new articles on Boost and marketing wireless service to youth.
In less than a year, Boost has acquired over 250,000 subscribers in California and Nevada alone through aggressive advertising, athlete sponsorship and reasonable pricing. Virgin Mobile has gained just over a million users nationwide in 18 months. Statistically Boost has a higher market penetration, but neither of these youth-focused MVNO is doing poorly. In fact, top carriers like Cingular are seeking to emulate the MVNOs' success in the youth market according to today's Washington Post.
The Post actually spent time with kids as well as marketing experts, doing the homework for any technology company who wants to capture the youth market.
- Youth culture is peer culture. For a product to be successful, it must be successful with the popular kids (the "alpha teens," as the article calls them). Companies must work with these trendsetters to be sure their product meets the needs and style of the young leaders.
- The youth are feature-driven consumers. Brand loyalty is not enough to compensate for the fact that all their friends have a cameraphone or whatever feature is viewed as critical at the moment.
- The young are some of the heaviest data users. They want to download new ringtones and games as well as send messages to their peers (or parents). In this Intelecard article on Boost (courtesy of MoCo News), In-Stat/MDR analyst Ken Hyers points out that Boost subscribers use both text messaging and Push to Talk more than Nextel subscribers. Around the globe, youth often have higher phone bills than any other market segment.
Intelecard recommends that if Boost is to compete with Virgin over the long term, they must go nationwide. The Post's revelation that they will launch in seven new markets this year is a start, but Virgin still has a much larger market. The only barrier we can see preventing Boost from full scale launch is the cost of putting the Boost branded iDen handsets in more stores. They already advertising in nationwide media and sports events. Intelecard is also concerned about Boost's large marketing expenditures. Virgin already has a well known brand and doesn't need sponsorships or brand-building advertising. When Boost gains brand recognition, they'll be able to reduce ad spending. However maintaining sponsorships should be an important tool for keeping a finger on the pulse just as Virgin uses their alpha teen focus groups. Trends change quickly and youth-focused companies need to stay up to date.