Iusacell Case

The Economics of CRM: IUSACELL case

Discussion Questions:

1. Analyze IUSACELL's marketing performance over the past two years.

▶ STP Analysis

Segmentation: Targeting

Regional Region 5, 6, 7, 9

Principal Use (Business or Personal) Business

Socio-Economic level A ~ C (Refer to Exhibit 6)

 Positioning - Full Service communications from a beginning in cellular Business

▶ 4P implementation Strategy

 Product – Basic Service, Value-added Service, Roaming, Accessories

 Price – Three Packages

 Placement– Distribution Channel (Customer Service Centers, Corporate Representatives, Distributor)

 Promotion – ‘Lease program' for hand-held phones (NP1/month)

▶ Performance Analysis

 Financial Performance

1991 1992 1993

Revenues NPs 366,849 NPs 559,682 NPs 710,387

Operating

Income 117,659 151,251 102,882

Net Income 72,116 92,355 (93,231)

Average Monthly Revenue/subscriber 750 753 647

 During the year 1991 and 1992, IUSACELL implemented strategy like value-added service to differentiate themselves, resulting an increment of Revenue and Net Income. In the year 1993, due to high acquisition costs and losing valuable customers, Net income and Average Monthly Revenue/subscriber have been dropped.

 Non Financial Performance – Growth(# of Subscribers), Penetration %, Churn Rate

1991 1992 1993

Subscribers

(end of period) 63,735 112,412 127,599

Nonwireline Penetration 0.11 % 0.19 % 0.21 %

Churn Rate N/A 3.1% 3.6%

 In order to increase No. of subscriber, ISUACELL implemented a lease program on a long-term basis for hand-held phones (NP1/month).

 From year 1991 to 1993, although Growth (# of Subscribers) and % of Penetration have increased, the market share was lost by increasing churn rate.

 In order to retain and develop current Customers and grow in continuous revenue, Customer service initiatives are positively necessary.

3. Evaluate IUSACELL's customer service initiatives and their effects on customer loyalty.