Target Market
The relative popularity of prepaid versus
postpaid is informative. In St. Lucia and most of the Caribbean prepaid mobile
represents around 65-80%. Digicel pushes
its prepaid product as a way to introduce mobile services into progressively lower
ARPU (average revenue per user) customer segments in the market. The prepaid opportunity continues to grow around the world and is
expected to reach an approximate net worth of US$822 billion by 2017. The
popularity of prepaid is driven by its unique and practical ability to solve
almost any payment need. Its “pay as you go” concept an automatic spending control that came from the
blocking of services when credit runs out helps users feel “in control”. Traditionally, Digicel and its competitors alike, marketed the prepaid product to the younger demographics and lower income brackets. However, today Digicel incorporates its prepaid product in the offer to Corporate entities as well Small Business enterprises (SME)
Why has this become necessary to do so? The
absence of ongoing financial commitment without monthly fees or contractual
lock-ins in a challenging Economy has made prepaid price plans more attractive
to Business and persons who may have once fell into the higher income bracket
but now have irregular incomes or having difficulties managing their finances,
as well as to those who were not convinced that they needed to use their mobile
service on a regular basis.
Digicel recognizes that the prepaid mobile
market has moved beyond the credit challenged market and has become mainstream
for many segments including the cost conscious user. For many, prepaid mobile is
a hassle free, simple, less expensive alternative to establishing a post-paid
plan. In addition, prepaid does not have the same sigma it once had as Digicel
and many other prepaid mobile service providers offer smart phones and advanced
feature phones to their customers. Currently 100% of Digicel postpaid smart
phones are also available on the prepaid plans, additionally 85% of services
offered on postpaid plans are available for prepaid users.
Segments
The
customer/market segments are best summarized in the pie charts herewith, 67% postpaid and 31% prepaid
Market Segment
A further look at Digicel’s customer
base, though not totally can be segmented as follows:
21%- Corporate
17%- Teenagers
11%- Young Professionals
11%- SME
9% - 2nd & 3rd Level Students
Buying Behaviour
The simplified registration process and absence of credit history checks
for Prepaid service promotes “impulse buying”, thereby extending the channels
through which both devices and services are sold beyond Digicel retail channels
to include supermarkets, convenience stores and other general retailers.
St. Lucia is a parliamentary democracy modeled on the Westminster system. The head of state is Queen Elizabeth II, represented by a governor general, appointed by the Queen as her representative. The governor general exercises ceremonial functions, but residual powers, under the constitution, can be used at the governor general's discretion. The actual power in St. Lucia lies with the prime minister and the cabinet, usually representing the majority party in parliament.
At
the private sector level there is an active and vocal Chamber of Commerce in
comparison to the civil society sector which lacks organisation and
coordination for impact. The political environment is very stable with no major
political pressure groups.
The
Eastern Caribbean Telecommunications
Authority (ECTEL) is the regulatory body for telecommunications in its
Member States.
The
NTRCs – National Telecommunications Regulatory Commissions – are the
Telecommunications regulators at the national level in each Member State. They
are responsible for the processing of applications and advising the Minister on
the award of licenses. The NTRC’s functions include but are not limited to
advising the Minister on the formulation of national policy on
telecommunications matters; receiving and reviewing applications for licenses
and proposed interconnection agreements between telecommunications providers
and advising the Minister accordingly; ensuring compliance with standards,
regulations and conditions attached to licenses; management of radio frequency
spectrum; and investigating and resolving any dispute relating to interconnections
or sharing of infrastructure between telecommunications providers;
investigating and resolving complaints.
Current Economic Environment
St. Lucia’s economy relies primarily on the revenue
generated from tourism, banana production, with additional input from
small-scale manufacturing.
The level of island households living at or below the poverty level increased from 18.7 to 21.4 percent from 1995 to 2005. (As of 2006) another 16.2 percent of the island's population is vulnerable to economic shocks that could easily push them below the poverty line.
The
Implementation of the Value Added Tax (VAT) in October 2012 brought about its
own challenges. St. Lucians and local business are adversely feeling the effect
of VAT as many small businesses has shut its doors, as they just can’t afford
increases in rental space, duties and other related costs that attract VAT.
Economic
and Political Challenges: As a result of the existing
economic profile and the political and governance structure the main economic
and political issues can be summarized as follows:
· Economic vulnerability caused by an
open economy which is heavily dependent on external trade and one or two
sectors with the absence of strong and sustainable backward and forward
linkages;
· High unemployment among the youth which
has been linked to the rise in crime in the last decade;
·
Growing public sector debt;
·
High vulnerability to hurricanes and other
natural disasters
Social Stratification
Although in
recent years a middle class has developed, the disparities between rich and
poor are extreme. Rural prosperity based on banana cultivation is now seriously
threatened. The growth of suburban areas around Castries is indicative of the
economic primacy of the capital; village areas continue to be marked by poverty
and substandard living conditions.
Race remains an important social marker, but it is probably of less consequence than in former times.
Marketing Research
Race remains an important social marker, but it is probably of less consequence than in former times.
Marketing Research
Marketing
Research conducted by Digicel indicates that the mobile market in the Caribbean
continues to be among the most dynamic in the world, approximately 83% mobile
penetration. In terms of both revenue and service adoption, the region will
continue to be among the fastest growing in the world in the 2009-2016 period,
behind only to Africa & the Middle East and Asia-Pacific. Telecoms remains one of the Caribbean’s major
growth industries, particularly in the mobile telephony and data sectors
with high expected rates of subscriber and revenue growth which can
attract other operators to the Caribbean
At entrance into the market in 2001, Digicel had done extensive ground work and market research in terms of what customers were looking for from a new mobile entrant, i.e. cheaper mobile plans and handsets. There was cry in St. Lucia for competition; customers were eagerly anticipating a day where every St. Lucian could afford a mobile phone. After 10 years of operation Digicel has taken over from the incumbent and is now the market leader with a 67% market share.
Digicel bases all business decisions on proper market research
including the use of focus groups, surveys and comparing the current trend and
offerings to Industry standards.
Current
local research conducted by Digicel indicates that more increasingly, both
consumer and corporate customers are looking for cheaper options in mobile
usage. As aforementioned, it is for this
reason that Digicel is now tailoring prepaid plans for corporate customers to
include closed user group options where both postpaid and prepaid users on a
Business account (Corporate or SME) can call each other from the allotted
bundled minutes on a account. This
customization allows Business houses to opportunity to avail themselves of
prepaid services where it ties into the postpaid corporate account.
Digicel recognizes the need to be flexible in its
offerings, especially at a time when the economy is facing some serious
challenges. From the onset Digicel pinned
the St. Lucia market as being predominantly prepaid based on the economic
environment and spending power of the people.
