ChallengerStrategies_CaseDNA

8/8/2019 ChallengerStrategies_CaseDNA

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Challenger Strategies:

Case DNA Finland Ltd.Mathias Tallberg

Networking Laboratory, HUT

[email protected]

15.10.2003


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Content

The Market Challenger and Challenger

Strategies

The Mobile Operator Business

Case: DNA Finland Ltd.

Conclusions

Questions?


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The Market Challenger and Challenger

Strategies

The market challenger company challenge and fight othercompanies for a stronger market position

To improve its market standings, a challenger company needs astrategy aimed at building a competitive advantage of its own

Can rarely improve its competitive position just by trying harderor by imitating what a leading company in the industry is doing

If large market share companies have a significant costadvantage, small market share companies have only two viableoptions: move to increase the market share or withdraw from the

business Attack the market leaders strengths rather than its weaknesses

(e.g. if the market leader is not serving the market well enough)

Indirect attack by attacking weaknesses or gaps in the marketcoverage (new geographic markets or poorly served segments)


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The Mobile Operator Business

About big investments and fierce competition

Many issues to consider (regulation, investment,technology, marketing, disrtibution channel,organizational, purchasing etc.)

Most important: pricing?

Pricing offers a rich field of opportunities, but requiredeep understanding of the business as a whole

Falling ARPU nowadays a real problem

Traditional mobile network providers vs. mobileservice providers


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CASE: DNA Finland Ltd.

The Finnish Mobile Operator Market

DNA Finland Ltd.

Suomen 2G

Pricing for VoiceGPRS Pricing

The Acquisition of Telia Mobile Finland

The Distribution Channel


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The Finnish Mobile Operator Market

Deregulation

At the end of 2002 there was 87 mobile

subscriptions per 100 inhabitantsTeliaSonera, Radiolinja, and Suomen 2G holds

licenses for GSM

TeliaSonera, Radiolinja, Suomen 2G, and Suomen3G holds licenses for UMTS

Market leaders: TeliaSonera and Radiolinja

Market challengers: DNA, Saunalahti Group, Cubioetc.


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The third largest mobile operator utilizingGSM/GPRS

Owned by Finnet Ltd.

Turnover in 2002 was 111 million A mobile service provider and its services work

in Suomen 2Gs GSM/GPRS network

Subscriber base reaches over 700 000

DNAs services mainly targeted for corporatecustomers and other innovative customers, whoare not afraid to try something new


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DNA funtions as the mobile service operator, Suomen2G as the mobile network operator

DNA: builds the products which are visible to the end-user

is responsible for customer service, distribution, pricing,marketing, and billing

develops customer relations

etc.

Suomen 2G: builds and operates a nation-wide GSM/GPRS network and

service is responsible for connecting traffic with other networks, roaming

agreements, and co-operation, both nationally and internationally

mobile service provider customers: DNA, Wireless Maingate,Fujitsu Invia, and PG Free


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Voice PricingDNA wants its pricing model to be as simple as

possible

and of course competitively priced.Operators such as Saunalahti Group and Cubio puts

pressure on lowering prices

DNA Maraton, a typical challenger pricing policy:

Fixed monthly price for calls and SMSs between DNA

subscribersDNA the first operator in the world providing such a

service

User friendly and clear pricing


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GPRS PricingBased on a fixed monthly charge (DNA GPRS for

consumer customers an exception)

Differs from the pricing policies of other mobileoperators providing GPRS service in Finland

Most affordable GPRS provider in the Finnish marketTwo types of GPRS service:

DNA GPRS

DNA WAP-GPRS

DNA offered GPRS for a 11 month trial period without

limitations to find out if there is customer demand forsuch a service => there was

Is this the best alternative?not fair

congestion


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Acquisition of Telia Mobile FinlandMay 12, 2003 reached an agreement with TeliaSonera about

about the acquisition of Telia Mobile Finlands operations

Now over 700000 mobile subscriber customers

The acquisition combined the resources of two challenger mobileoperators

Over 100 employees lost their jobs

Suomen 3G sold, Suomen 2G got the UMTS license from TeliaMobile Finland

The Distribution Channel

Both traditional and totally new types of distribution channels(e.g. Filmtown, Helios, and R-Kioski)

Do not want to wait passively in stores, but wnats to finddistributors who customers visit anyway and on a regular basis

The network of DNA shops: > 550 today


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Conclusions

Mobile communications is here to stay

Decisions on strategies critical

DNA has been able to build a strong and

wellknown brand fast

DNAs mobile subscriptions have reached the

planned 15%

The year 2004 will tell if DNA will be able tomake positive cash flows as well


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Questions?

Documents

ChallengerStrategies_CaseDNA