Ontela PicDeck - Case Study Example

Ontela PicDeck: Case Analysis Executive Summary Ontela is technology based start-up that was under the process of offering its first product, PicDeck. PicDeck was a technology service that allows subscribers of wireless to effortlessly transfer their photos from their mobile to their computers, email inbox, and other networking devices and services. Media has appreciated the service a lot; an article in the Telephony magazine regarded the service as “helping bridge the gap between phone and PC.” The basic revenue model of the service was to provide a more convenient mobile imaging experience, which would increase the sales of high margin data services of Ontela’s wireless carrier who are the actual direct customers of the company. Ontela was expecting that once customers started using their PicDeck service to transfer photos from their mobile devices to their computers, emails, etc. it would eventually increase the use of the wireless carrier services. Ontela’s direct customers are the wireless service providers who would market the service to its wireless subscribers. Ontela would receive a portion of the subscription fee that the subscribers pay to the wireless carriers. Now, Ontela needs to find a customer segment to position its service offering accordingly so that they can satisfy the value proposition of the Wireless Carriers who in turn can satisfy their end customers. The case identifies three basic customer segments through a qualitative review, the parent, the professional, and the teen. The finding from the qualitative research and an in-depth Cluster analysis reveal that initially choosing the professional segment aged in the mid twenties is the most feasible option both revenue and growth wire. Although, the other two options are also feasible but the company can choose to move on those segments once it has saturated the professional segment. Managerial Problem The most important aspect of product or service introduction is choosing a valid positioning for the product or service. Ontela is also facing this problem. They need to identify the most profitable target segments within the wireless customer base. The company initially needed to identify the correct methodology of research so that they can get maximum information on available customer segments and once the suitable segments have been identified, they need to choose the segment that provides maximum opportunity for the company and the wireless carriers. They also need to balance the needs of the subscribers with those of the wireless carriers who want to decrease chum and increase Average Revenue per User (ARPU). It was really important for the company to find out the answer to these questions as Ontela’s direct customers are wireless carriers who are looking to increase their Average Revenue per User through the use of this service. The PicDeck service can only be successful if Ontela can find out the most profitable target segment and position their service accordingly. Analysis of the Case Ontela needs to find the most profitable target segment for its service PicDeck so that it can make a positioning statement accordingly and its direct customers, wireless carriers can reap profits from the service and in return Ontela can also gain profits. The US mobile phone service industry is one of the largest sectors of the US economy. It comprises of various sub segment and its data service segments, which provides services such as internet data plans, text messaging, picture messaging and other multimedia transfer has developed at a very fast pace. It is expected that the data services segments would continue to increase, consequently, the revenue of voice segment would decline. Hence, as the data services segment evolves, wireless carriers would become increasingly dependent on the unique and high profit data services that can provide them with competitive advantage. As cellular phones became an extremely common device, it started coming out with different features and capabilities to provide the user with more functionality. A phone with built-in camera features is also one variation of mobile phones along with other various features as users moved towards gadgets that have numerous capabilities all converged in a single device. Moreover, as social media became popular, web interaction increased tremendously. PicDeck Service allows the user to transfer their photos seamlessly from their mobile phones to their computers, email inbox, or online albums such as Facebook, and Picasa. Previously, there were other options available but all the options required some hassle and involved complexity. Two regional wireless carriers had recently picked up technology similar to PicDeck and it had turned out to be successful for them. The success of similar technology with two other wireless carriers gave Ontela a lot of optimism regarding the success and growth of its PicDeck service. They were hopeful that once the market picked up the technology, then there would a lot of growth opportunity for the company. The company wanted to identify a possible segment before they went into detailed research. For this purpose, they had carried out a qualitative behavioral research on end users of mobile devices along with the personal insights on the knowledge of the industry. With the help of the knowledge of the wireless carriers of their customers, the company had come up with three possible customer segments: Sarah, the parent, Steve, the young professional, Regina, the teen. Each of these segments had some positives and negative aspects that made them suitable for the service. Following are some of the characteristics of each of these segments: Sarah, the parent – Sarah is a middle aged married woman whose oldest kid is a teenager. She is a homemaker and works part time from home. She is not a technology enthusiast but knows how to check email, and she is skeptical about social networking whereas her kids are very much into it. She has an old set with a pretty low quality camera phone. She uses a separate digital camera to take all photos but hates to transfer them to the PC and she needs to take help from her husband or children for the transfer. She would really like it if she could easily transfer the photos from her device to her computer. Steve, the professional – Steve is in his mid twenties, and is a real estate agent. His job keeps him constantly moving from one place to another. He does not belong to the internet age and uses emails and other technology related services if there is really a need otherwise he prefers to use the conventional way of doing things. He carries an old model cellular phone and does not want to upgrade because he is afraid that he would lose his contacts and other important information. However, camera phones have recently caught his attention as he has seen his colleagues taking pictures of houses and sending them to clients, who appreciate it a lot. He does not want to fall behind, and hence, he would really like it if a phone could include a camera it would be easier for him. Regina, the teen – Regina is teenager of a middle class family. She is good in studies and likes to socialize a lot. She has been a part of the internet age and is continuously involved at social networking sites such as Facebook and Twitter, etc. She wants a service that would allow her to transfer photos instantly from her mobile to her PC so that she can share it with her friends instantly. She would like to manage and edit the photos once they are on PC. As I have mentioned earlier, all the three segments have certain advantages and disadvantages. Although, it seems apparently that the teenage segment has the highest acceptability and usage probability for the product. However, one important thing to realize is the fact that teenagers have very limited funds available to them for their mobile and other luxury uses. The wireless carriers would have to charge a very low fee otherwise they would not be accepted in the segment. The parent segment also seems like a profitable one as well are aware that these people run away the most from technological complexities. One problem with this segment would be making the segment understand regarding the use of the product, moreover, not all housewives have disposable income available to them to use for luxuries. They can have a very limited budget and their acceptance for a new technology is pretty low, hence, targeting this segment could pose a major risk. In this regard, Steve’s segment seems like the most profitable one as Steve needs it to expand his business, therefore, he would be willing to pay extra for it. Moreover, he is a free individual handling only the responsibility of his business. He can experiment with the service and could become a loyal customer and continue to use it in the latter phases of his life. Moreover, once Ontela and its wireless carriers have fully exploited the segment, they can move on towards the Parent’s segment and the teenage segment. The company further researched on the identified segments as they need more insight on the behaviors and preferences of each of these segments. Therefore, they hired a marketing firm to conduct marketing research. The firm conducted a survey with 2000 respondents who were selected from the list of mobile subscribers above the age of 15. The questions in the survey included questions regarding demographics, use of camera, orientation towards use of technology, and sensitivity to price. The firm conducted a cluster analysis and was able to identify six distinct clusters based on their behavior patterns and demographics. Each of the clusters came out with their own set of responses to the survey questions and judging from the responses I need to identify the cluster that boasts off growth and profitability. It is important to mention here that the Male-Female demographic in each of the Clusters came out to be pretty much equal in all of the Clusters, i.e. each of the clusters had more or less 50% men and 50% women. Following is a brief insight into each of the clusters: Cluster 1 – Median of this cluster is 42 and 52% in this cluster are males and most of them are married but few of them have children. Majority of them use a DataPlan and they have the highest DataPlan usage statistics in all of the six clusters. Majority of the members pay their own bill and are regular readers of Tech magazines, websites. They also have the highest percentage of respondents in all of the clusters. They are also more inclined and welcoming towards the services offered by PicDeck and have the highest adaptation towards new technology but they are also quite price sensitive and are willing to pay a quite low monthly fee, which is the third lowest in all the clusters. Cluster 2 – The median age of Cluster 2 is the same as that of Cluster 1, however, here a larger percentage of people are over 40 years old and only 15% of the total respondents have a DataPlan, which is the second lowest in all the clusters. They also do not read tech magazines a lot and 84% of them pay their own bill. They are less price sensitive than the Cluster 1 but they have a low percentage of respondents. Cluster 3 – The median age of the 3rd Cluster is 22 years with 55% of the respondents lying under 25 years of age. 22% of the respondents have the DataPlan whereas 61% have the MessagePack and only 45% of them pay their own bill. They are not very price sensitive value the services offered by PicDeck with a high adaptation to new technology but sensitivity towards price also exists. They do not essentially look for an easy setup of the technology like the other cluster and they have the second highest percentage of respondents. Cluster 4 – Cluster 4’s median age is 30 years and 31% of the respondents fall below 25 years. 42% of the respondents have DataPlan whereas 65% have the MessagePack. They like to read on technology and websites and 93% of the respondents pay their own bills. They value quality of photos more than the transfer and do not adapt to new technology early. Moreover, they are quite price sensitive with the second least acceptance of Monthly Fee. Cluster 5 – The median age of Cluster 5 is 39 with 28% above 40 years of age and 16% in less than 25 years. 27% have taken the DataPlan and 39% have taken the MessagePack and 92% of the respondents pay their own bills. This cluster has the lowest sensitivity to price and the highest acceptance for a monthly fee. Easy setup of the new technology is an important factor for this cluster as well as easy transferability of photos. However, one major negative is the fact that they are slowest to adopt to new technology and do not value sharing photos a lot. Cluster 6 – The median age of the 6th Cluster is 55 with 43% over the age of 40. 95% pay their own bill, however, they have the lower percentages of DataPlan, MessagePack and very few like to follow tech magazines and websites. They are the second slowest to adopt to new technology and highly sensitive to price. This cluster has the lowest monthly fee acceptance and do not value transfer of photos and sharing them as compared to the other clusters. Recommendations As I have mentioned earlier, Ontela is looking for a positioning strategy that offers their wireless carriers the highest Average Revenue per User (ARPU) and growth opportunity. According to the analysis above, it seems like the 3rd Cluster is the most feasible option as it has the second highest ARPU and highest growth opportunity as the median age of the consumers of this cluster is 22 along with the fact that they value transfer of photos, sharing them through email, facebook, desktop, etc. Although, easy setup is not a factor for this Cluster because of their age, but they are early adopters of new technology and also have the second highest percentage of respondents making the research more valid. This cluster not only offers Ontela a high ARPU but a large consumer base for it to grow. Moreover, another interesting factor is earlier I had predicted that Steve, the young professional seems like the most profitable target segment providing with an opportunity to grow. Considering our findings from the Cluster Analysis, I can reinforce on the decision to choose Steve as the target segment. Read More