Globe Telecom taps mass market segment

From being a high-end product which catered mainly to professionals and the AB crowd, cellular phones have become a mass market commodity.

Recent industry developments have allowed mobile phone service to be enjoyed by a larger portion of the local population – from the country’s leaders down to ordinary citizens.

Such drastic changes in market configurations have opened up a significant potential for mass distribution of mobile phones. In fact, the cellular market has practically gone prepaid. For 2003, alone, Globe Telecom registered a total of 8.2 million prepaid subscribers as against the company’s total subscriber base for the year of over 8.9 million.

Propelling the growing number of prepaid users are the dropping prices of SIM (subscriber identification module) cards and handsets – not to mention the flourishing second-hand market – as well as the introduction of low denomination reloads, making the service more affordable to a larger base of consumers.

The low SIM prices and reload options have, likewise, driven retail trade penetration up to the sari-sari stores, thus, ensuring widespread distribution and reach.

As a result, the lower income segments have increasingly become a viable target customer group given changes in subscriber dynamics, and with improving efficiency, lowering of capital expenditure costs and enhanced economies of scale. This segment fuelled much of the growth experienced by Globe and the whole cellular phone industry as a whole in the past year.

Total wireless penetration reached 27 percent in 2003, even surpassing the 25-percent level analysts predicted to be reached only by 2005. Wireless penetration rate was only 19 percent in 2002.

To capitalize on the new opportunities, Globe has embarked on a four-pronged strategy to position itself more competitively in the mass market arena.

First, the company continues to build its network for a much more extensive coverage nationwide which will allow it to penetrate deeper into mass markets. Globe is currently undertaking the single largest network cellular expansion program in its history, with a significant number of cellsites being put up in Visayas and Mindanao.

Another step being taken by Globe to build a bigger critical mass of subscribers is intensifying its marketing efforts and expanding aggressively in areas outside of Metro Manila. Such efforts are matched by a corresponding build-up in sales and distribution capability, to such a point that Globe’s presence becomes very pervasive in the said markets.

Globe is also driving down its costs for greater flexibility in addressing different market segments as well as developing and introducing more innovative product and service offerings that will be attractive to mass consumers, especially utilizing opportunities that arise from advances in technology.

Such strategic shift will allow Globe to look for opportunities in the lower income segment while keeping its hold of the upscale market.

In the past, Globe’s strategy has been focused primarily on the mid to upscale consumers, in which segment the company continues to enjoy a dominant position.