The Youth Segment

Barcelona, 21 October 2004

Raffaella Leproux
Vodafone Italy

Barcelona, 21 October 2004

Agenda
1 The importance of Customer Base
management and segmentation in the
Italian market
2 and
3 -

The Youth segment: profiling, needs

subsegmentation
The Vodafone Italy Youth proposition

Barcelona, 21 October 2004

The Mobile Italian Market/1

70.000

101%

60.000

Penetration
As % of Pop.

EOP (.000)

50.000

77%

40.000

BLU
BLU

33

103%

94%

90%

WIND WIND

56%

TIM

TIM

30.000

39%
20.000

10.000

VO

VO

1998

1999

2000

2001

2002

2003

VF Italy Mkt share: 36%

VF Italy EOP Customers: 21.4M (at 30.06.04)
VF Italy Avg ARPU: 30.1 euro/month (at
30.06.04)

Barcelona, 21 October 2004

2004

REVENUES

The Mobile Italian Market/2

New customers revenues

Lost customers revenues

1999

2000

2001

Importance of
Customer Base
Management
New services revenues

2002

2003

2004

The Italian Market Penetration is >100%

Very compelling market with Mobile Number Portability and the
launch of the first UMTS operator, 3, in 2002.

Barcelona, 21 October 2004

Vodafone Italy Customer Base

Management
RETENTION

Maintain the customer base and defend it

from competitors attacks

UPSELLING
UPSELLING

Increase the value of the customer

base through the usage stimulation

CARING

Offer to the customers the best

service and reward

CARING

SEGMENTATION

Barcelona, 21 October 2004

Whats Segmentation

To divide the Customer base in cluster groups

with different needs and behaviours in order to
create
different and appropriate marketing
proposition

Barcelona, 21 October 2004

Segmentation changes with market

evolution

Growth

Start
Up

1996 / 1997

1998 / 2000
CRM-based
segmentation

Voice centric
segmentation

Segmentation based on
volume and kind of
calls:

Segmentation based
on value of
customers:

Emergency only

Top Value Customers

Personal use (off peak)

High Value Customers

Professional use (peak/off p)

Low Value Customers

Barcelona, 21 October 2004

Mature
Market

2001 /
2004
360 degrees
segmentation

Segmentation based on:

lifestyle / attitudes
value

The Segmentation Methodology

Segmentation Data Mart
Market research*

Customer Data Base

Customers

Seg 1
Seg 2
Seg 3

Modelling

Seg N

variables

ti
m
e

Seg 4

Customer Data Base

Seg 1
Seg 3

YOUT
H

Customer Insight
Development

Seg4

Segments
estimate
Seg 1

Se
g2
Seg N

Barcelona, 21 October 2004

Seg 2
Seg 3
application of the
rule to the entire CB
(including new adds)

Seg 4
Seg N

Classification
rule on
sample

The Youth segment Key

characteristics

Age between 12-24

Emotional need driven

Still at home

Highly social very image

conscious

Budget constraint
Need to belong

Barcelona, 21 October 2004

Interest:
- Movies
- Music
- Sport

The Youth segment - KPI

YOUTH

ADULT
Voice

+ 30%

SMS

+100%
+ 10%
+ 5%

MMS
HS Vodafone
Live!
+ 60%

Voice Mail
+ 40%

Ring Tones

+ 90%

Directory
services
Barcelona, 21 October 2004

What is Youth?/1

Late
Teens
16 19 years

Child
0 11 years

Early
Teen
s
12 15 years

Barcelona, 21 October 2004

Young
Adult
20-24 years

Young
Professional
s
25 -30 years

What is Youth?/2
GROUP

Early
Teens

AGE

12
1215
15years
years

Late
Teens

16
1619
19years
years

Young
Adult

20
2024
24years
years

SPHERE OF
INFLUENCE

SYMBOL
BEHAVIOUR

Family
Family/Peers
/Peers

Emancipation
Emancipation
from
fromParents
Parents

Peers
Peers

Peer
Peergroup
group
renforcement
renforcement

Peers/Society
Peers/Society

Peer
Peergroup
group
Renforcement/
Renforcement/
Status
StatusDisplays
Displays

Chance for product diversification

Challenge for universal proposition
Barcelona, 21 October 2004

Needs overview
ADULTS

YOUTH

Communication

Share of Time**

Organisation

Information Fun &

Entertainment
Stimulation

Share of Time**

Communication

Organisation

Information
Fun &
Entertainment
Stimulation

Self expression
Self expression

Share of Mind*

Share of Mind*

The self expression need is the difference

*Share of Mind is the rank order of need when it occurs
** Share of Time is the frequency of mentions of need across all occasions, with occasions weighted by importance (% penetration of occasion & average duration of occasion)

Barcelona, 21 October 2004

YOUTH - Needs overview

MOBILE
COMMUNICATION

COMMUNICATION

To share

Call & Videocall

To check-up

SMS & MMS

To show affection

Sending a song

To chat

Barcelona, 21 October 2004

YOUTH - Needs overview

FUN &

MOBILE

ENTERTAINMENT

FUN & ENTERTAINMENT

To have fun
To Escape
To pick up my mood

Playing a game
Listening music track
Taking/Sending
pictures
Watching TV

Barcelona, 21 October 2004

YOUTH - Needs overview

ORGANISATION &
INFORMATION

MOBILE
ORGANISATION &
INFORMATION

To keep up to date

Reading news

To organise myself

Finding/Sending
information

To learn

Barcelona, 21 October 2004

Receiving alerts

Vodafone Italy YOUTH Proposition

FUN &
ORGANISATION &
COMMUNICATION ENTERTAINMENT INFORMATION
SELF
SELFEXPRESSION
EXPRESSION

Early
Teens

Late
Teens

Young
Adult

3 euro Top Up

Ringtones

111 for me

M-play

SMS promotions

Vodafone Infinity

My Music

SMS promotions

Load a Game

Vodafone Infinity
Superpromo mms
S. Valentine Card

Barcelona, 21 October 2004

M-Village
Multiparty
My gallery

Supertones live!

Freetime MMs

MMS postcards

Goal live!

MMS contest

Content SMS

Java Games

Fun & Entertainment: My Music

PROPOSITION
Replace ring back tones of
your mobile with a real song.
The activation its easy. Call
45555 and choose your song!
Until 15th of November the
music track of Vodafone TV
summer campaign is free for
one month.

OBJECTIVES

Increase the range of personalization products.

Be innovative

Use music to reinforce the brand through the youth segment.

Barcelona, 21 October 2004

Fun & Entertainment: MMS contest

PROPOSITION
Express
yourself
catching
every
week
something
different and send it with
MMS. Every week receive an
MMS with the topic of the
week.

OBJECTIVES
Stimulating DATA penetration services
Suggest different occasions to send MMS
Create Community.

Barcelona, 21 October 2004

Communication: Vodafone
Infinity
PROPOSITION
Pay only the first minute of
each
call,
the
remaining
airtime is free. The activation
cost is 7 euro.

OBJECTIVES
Be competitive in the new arena.
Stimulating Voice penetration services
Growth VF market share on the segment

Barcelona, 21 October 2004

Communication: 3 Euro Top up

PROPOSITION
With 3 Euro Top Up you can
recharge your mobile also
with coins. A small credit that
allows you to stay in touch
with your friends through
calls and SMS.

OBJECTIVES
Top up approachable even for budget restricted customers.
Increase top up margin/frequency.

Barcelona, 21 October 2004

Messaging Promotions Price/Volume

Elasticity
Christmas Card
2003

SMS+MMS Card
2004

SMS+MMS Card
2003
SMS Card
2002

Summer 03

Xmas 03

Summer 04

Youth Segment shows a strong increase in SMS and MMS per day
usage during Summer and Xmas Promotion
Barcelona, 21 October 2004

Conclusions

Segmentation is fundamental
There is no a Youth segment
The key need is the self expression
Proposition should suit each subsegment

Barcelona, 21 October 2004

Thank you!

Barcelona, 21 October 2004