Segmentation, Simply
By Steve Wallage, Mon Jun 06 08:15:00 GMT 2005

Much has been written about how the Vodafone Simply range reflects the "dumbing down" of mobile handsets and technology, but it's more accurately a reflection of operators getting smarter.

Much of the press coverage on Vodafone Simply has talked about its release as a total surprise. Surely it goes against 15 years of ever-more sophisticated devices, the lessons from the ever-faster PCs that are released and the promise and push behind 3G? The timing may have been a surprise, as Vodafone didn't warn journalists it was coming, but the strategy certainly should not have been.

It's clear, from radio phone-ins to letters to newspapers, that many people do not like the relentless evolution of the mobile phone. It's not just the increasing sophistication, but also the smaller buttons, the additional features such as cameras and, by definition, the increasing complexity of usage. Vodafone's own survey found that a third of people find devices difficult to use because they can't understand the instructions.

There is also the sense, often a correct one, that many mobile phones are devised and designed for the 12- to 25-year-old group. It may be an interesting segment, but is still a minority of the mobile market.?
The bottom line is money talks. Vodafone has seen the success of its Japanese unit in offering a simpler handset and packages: back in the J-PHONE days, it offered a Simple Phone series of handsets, and now, PDC handsets come equipped with a "simple mode", allowing customers to change the interface for fewer functions and better ease-of-use. Vodafone was also aware that other operators and software vendors were looking at this market, and how to meet the needs of this neglected segment.?

Not Just Older People

And who is this neglected segment? Much of the media coverage has talked about just the over-55 market, but Vodafone says the biggest market is likely to be the 35- to 54-year-olds.

In reality, any age-related segmentation is far too simplistic. Michael Hulme at researchers Teleconomy argues, "age can be a poor guide, and there is certainly little relationship between age and the dispositions that Teleconomy has identified. Operators need to understand their customers' lifestyles and then overlay their dispositions and characteristics." As one example of this, Teleconomy research shows that parents of young kids tend to be much more savvy mobile users.

There has also been widespread belief that Vodafone Simply is a one-off product to meet a specific demand. But within Vodafone, Simply is viewed as similar to Vodafone Live!, and over time, the company will develop different segments and further branding and sub-brand, such as different levels of functionality within Vodafone Simply or various usage offers. These could also vary by country, while the standard Vodafone Simply package is the same across the world.

Not Just Reduced Services

A common question to Vodafone has bee what sort of ARPU hit it expects from Simply users, the assumption being they are minimal voice and text users, and clearly weren't going to use the advanced features in other phones.

The more accurate point is that while they may be heavy users, they are not so interested in the traditional value-added and enhanced services offered on mobiles. These customers are potentially very interested in services more clearly aimed at them. Vodafone is not revealing what its plans are in this area, but it clearly expects to develop specific services for Vodafone Simply users. This could include areas around traffic information, safety and security for children and older people,and services such as text to voice and customized mobile commerce.

Another area of potentially improving ARPUs is in fixed substitution. Vodafone's recent results emphasized this was a priority, as the company faces increased competition and slowing growth. Simply is linked to a price plan called Stop The Clock, where a customer will be able to talk for up to an hour at evenings and weekends while only paying for the first three minutes. The Vodafone Simply handset is also meant to look like a home answering machine, with a messages button on the phones lighting up to notify the customer when a call or text has been received. A further complaint, that people mislay and lose mobile handsets, is answered by the fact that Vodafone Simply offers a cradle for the device. It may be optimistic, but Vodafone Simply is targeted to replace fixed phones.?

Operators Still Driven by Technology

It's taken a long time for operators to throw off their technology focus, but Vodafone insiders talk about this as the first totally marketing led product. Customers were asked how they wanted their ideal phone to look, what services it should offer, how these services should be accessed and how the phone menus should be structured.

Perhaps this strategy is reminiscent of an episode of The Simpsons where Homer designs his ideal car for his long lost brother, and subsequently bankrupts his company, however, Vodafone has been rightly driven by customers for Vodafone Simply, and has said that customer feedback will drive future development.

Vodafone still tries to segment its entire customers base into just seven types, but finally seems to be learning some important marketing and customer-facing lessons.