The Decline of Dial-Up Internet Service - Term Paper Example

? The Decline of Dial-Up Internet Service BY YOU YOUR SCHOOL INFO HERE HERE The Decline of Dial-Up Internet Service Dial-Up and Target Demographics Advancements in Internet technologies, including mobile devices designed to sustain faster and more efficient mobile Internet services, have pushed dial-up Internet well into the decline stage. There are still companies that provide dial-up services, such as NetZero and America Online, generally catering to either lower-income demographics or to those living in rural regions without adequate access to this quickly modernizing Internet technology substitutes. Why, though, is dial-up Internet service in the decline stage along the product life cycle? According to the U.S. Census conducted in 2010, metropolitan areas experienced much faster growth than rural regions, by a rate of 4.9 percent (census.gov, 2011). This means that consumers are seeking opportunities to migrate to metropolitan or suburban areas at a much faster pace than those looking for rural living opportunities. It is in the urban regions of the United States where major, contemporary Internet providers have developed the appropriate technologies and support tools to sustain broadband Internet access as well as service providers along service networks that provide multitudes of options, today, for abandoning dial-up services. In essence, these migrating shifts away from rural locations gave consumers much more opportunities to explore faster and more efficient non-dial-up Internet service providers. Rationale for Explaining Dial-Up Decline According to Michael Porter (2011), a respected business theorist, threats to sustaining a product and ensuring longevity, thus avoiding decline, include threats of substitutes on the market. During the late 1990s and early 2000s, it was commonplace while Internet services were in the introductory and growth stages to maintain dial-up services due to limited providers and appropriate network developments across the country designed to support faster Internet services. Political de-regulation of Internet services, along with both private and public corporation investment into developing new Internet technologies, provided a foundation for the emergence of many service providers (such as Verizon and Comcast) to put substitutes into the market. With growth in competition, the economic-related benefits to consumers requiring Internet services began to witness various price competitions occurring, thereby providing more value to consumers to abandon dial-up Internet service providers. Up until just the last five years, it was common for dial-up Internet to range between $15 and $25 monthly. It was only upon development of appropriate Internet networks and mobile Internet technologies that dial-up service providers were forced to dramatically lower dial-up services in order to maintain competitiveness against major Internet providers now emerging all across the country. Shifts in social lifestyle also changed the dynamics that no longer made dial-up services viable to sustain busy lifestyle and professionalism. With the ability to now access the Internet using mobile devices (i.e. smartphones), consumers could access the Internet out of their bricks-and-mortar businesses and homes, making dial-up service both impractical and not nearly as reliable. Buyers, due to concentrated and saturated competitive markets, now maintained considerable buying power as switching costs from moving from one provider to another competitor were no longer high as they were in the day of growth of dial-up services. Changes in social lifestyle, as aforementioned, added a new type of pricing transparency for the many broadband and mobile Internet providers now on the market, giving consumers an advantage in choice and purchase selection opportunities. Recommendations for Potential Action The first recommendation would be for dial-up service providers to reposition dial-up services to maintain unique innovations not found with other broadband or mobile providers currently offering Internet services. Muniz and O’Guinn (2001) iterate that when a brand is able to provide consumers with perceptions of self-expansion, they are more likely to be loyal. Major dial-up providers still holding onto the dial-up business model should be looking for opportunities to expand services, such as including free or reduced home line telephone services as a means of incentivizing purchase. By expanding into home phone service, dial-up marketers can regain some ground on lost revenues that occurred as a product of competition and changing social and professional lifestyles. Secondly, dial-up marketers could utilize social media as a means of creating a new type of buzz over dial-up services. Sites such as Facebook have considerable following from many diverse demographics in the United States. Dial-up providers can develop websites offering statistical data about the efficiency of dial-up services compared to previous dial-up models from a decade ago, illustrating how speed has been improved. By using social media as a promotional outlet, consumers not willing to pay the higher price tag for faster Internet service could, theoretically, be lured to explore dial-up opportunities. Lastly, dial-up providers could utilize guerilla marketing teams in urban areas with promotional merchandise and information about the integrity and reliability of dial-up services, with short-term discounting certificates being provided in consumers’ lifestyle or workplace environments. Guerilla marketing is often effective as it engages consumers at their social level, creating excitement if the campaign is relevant to consumer needs. It does appear, however, that it would be necessary to discount dial-up in order to gain more interest in a variety of potential target markets. A Potential Country for Marketing Dial-Up Services The African nation of Kenya would be an ideal location to market dial-up services, as the country’s GDP increased by over four percent in 2011. Additionally, telecommunications infrastructures are being rapidly developed in this country, giving consumers home phone service for the first time. Even though approximately 45 percent of the total population in Kenya lives in poverty-stricken, rural regions, there are prospects for growth in education and business development that would give consumers opportunities to become more like the rest of the developed world. Approximately 63 percent of Kenya’s entire GDP is based on tourism, which requires support from local citizens that provide housing, food and entertainment. By giving these tourist-supporting citizens opportunities to expand their offerings so that they can more effectively promote their tourism-supporting businesses internationally, Kenya could experience even further international traveler interest in the region. Using effective promotions from the dial-up service provider, various alliances can be developed that make dial-up service return to the growth stage in this country by sparking consumer interest in this product. Without adequate telecommunications networks and fiber optic cables in place to support faster Internet services, and with limited competition, companies such as NetZero could gain considerable market share and revenue growth by expanding into this nation. Furthermore, 73 percent of the total national population is under the age of 30 (CIA World Factbook, 2011). This gives marketers ample opportunity to maintain very long relationships for those that will become brand loyal and trust in the integrity of dial-up service and the proficiency of its provider network. Segmentation and Positioning in Kenya The middle class is Kenya with the tangible resources available by which to adopt dial-up Internet service consists of factory management, research scientists, and computer programmers, which are the dominant industries in this country contributing to GDP growth (McClean, 2009). There is not enough ample research evidence available on the specific psychographic characteristics of Kenyan consumers, however it would not be difficult to segment according to economic demographics and geographics by isolating urban regions with the majority of middle class consumers. Positioning would require conducting a strategic audit of the external market environment, isolating competition, and then benchmarking best practices at the cultural level in order to build on creating perceptions of quality as an appropriate positioning strategy. By informing consumers of the integrity and reliability of this product, positioning would be accomplished relatively simplistically amid an environment with very limited competitive presence. If this positioning strategy fails, then the business could utilize a price-focused positioning strategy, appealing to consumers that want value for their money as an influence in their decision-making processes. Price positioning could extend to consumers that the business understands Kenya is a struggling nation that is just recently beginning to emerge from its difficult history of under-development and poverty. By adding this cultural connotation to the marketing strategy, it could create lifestyle-based connections with the dial-up brand that would serve the business well into the future when competition begins to enter the market after completed development of appropriate technologies to support faster and more efficient Internet services. According to Kalyanaram and Gurumurthy (2008), first movers with a regional innovation often are favored over late movers. Companies such as Net Zero and other dial-up providers could build sustainable brand-related relationships with Kenyan consumers, thus building loyalty long before competition begins to saturate the market in the years or decades to come. By positioning appropriately according to demographics/geographics or related to pricing, it would give the dial-up marketer first mover advantages that are difficult to replicate once loyalties and attachments (built on trust) have been established with desired target markets in the region. References Census.gov. (2011). Population Distribution and Change: 2000 to 2010. Retrieved January 26, 2013 from http://www.census.gov/prod/cen2010/briefs/c2010br-01.pdf CIA World Factbook. (2011). Kenya. Retrieved January 27, 2013 from https://www.cia.gov/library/publications/the-world-factbook/geos/ke.html Kalyanaram, G. and Gurumurthy, R. (2008). Market Entry Strategies: Pioneers versus Late Arrivals, Wright University. Retrieved January 27, 2013 from http://www.wright.edu/~tdung/entry.pdf McLean, Jon. (2009). Profile: The Kenyan Middle Class. Retrieved January 27, 2013 from http://jonmcleanpcv.wordpress.com/2009/11/14/profile-the-kenyan-middle-class/ Muniz, Albert and O’Guinn, Thomas. (2001). Brand Community, Journal of Consumer Research, 27(4), pp.412-432. Porter, Michael. (2011). Porter’s Five Forces: A Model for Industry Analysis. Retrieved January 26, 2013 from http://www.quickmba.com/strategy/porter.shtml Read More