Case Study : Pricing Plan on Tight Competition

1. DCCT President Director
Pricing Plan
By Djadja Sardjana
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2. 1. Pricing Plan on Tight Competition
Its should be:
a. Align to Company Vision & Mission with trend of:
Technology Change
Change of Market Demand
Deregulation
Globalization
b. Refer to Multi-Dimensional Competition:
Competition base on Price and Service Quality
Diversified Competition Factors
c. As Start-up Company penetrate market first
d. Comply with Government Policy & Regulation
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3. 1. Pricing Plan on Tight Competition
a. Align to Company Vision & Mission with trend of:
Technological Change
• Merging of computer and telecom
• Advanced intelligent network (AIN)
• Cellular and mobile service
Deregulation/Liberalization
• Privatization Globalization
• Competition
Market Demand
• Greater customer sophistication
• Need for specialized services
Source : Syailendra on MM-Biztel Lecture
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4. 1. Pricing Plan on Tight Competition
b. Refer to Multi-Dimensional Competition:
Multi-Dimensional Competition Change of Billing Role
Competition base on
Price and Service Quality
• Network Cost
Integrated Service & Revenue Management
Past Not simply provide an invoice for the network
• Coverage
usage,
• Scale of Economy But play a crucial role as an End-to-end Service &
Revenue Management in providing various types of
service products to customer and grasping quickly
and accurately revenue.
Diversified Competition Factors
• Content Portfolio
• Customer Segment Customer Focused, Event-Driven Architecture
Current &
• Bundling and Service Plan Should not be a network-oriented billing system,
Future But be a customer and service-oriented system to
• Device
support individual event usage regarding the
• Scope of Economy
services provided to customers
• Speed of Economy
• Innovation
Source : Syailendra on MM-Biztel Lecture
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5. 1. Pricing Plan on Tight Competition
c. As Start-up Company penetrate market first
Telco at Indonesia still as Attractive Business
Telecommunication Indonesia Penetration Rate
Market Share - Cellular
80.0% 100%
69.0%
70.0% 90%
60.7%
60.0%
80% Lippo Telecom
52.2%
70% 32% 32% Cyber Access
50.0% 43.5% 60% 32% 31%
29% 27% 25% Mobil-8
40.0% 34.9% 50%
Excelcomindo
25.5% 40%
30.0%
30% Indosat
17.6% 54% 51%
20.0% 47% 45% 45% 45% 45% Telkomsel
20%
10.0% 10%
0.0%
0%
2004 2005 2006 2007 2008 2009 2010 2004 2005 2006 2007 2008 2009 2010
“ Pure & Tight Competition”
Source : M.Sibarani on MM-Biztel Lecture
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6. 1. Pricing Plan on Tight Competition
d. Comply with Government Policy & Regulation
Source : BAPPENAS Infrastructure Roadmap 2006
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7. 2. Reasoning of Pricing Plan
a. Use Optimal Market Positioning
Based on company’s strength
Could be differentiated from competitor (unique)
Perceived positive by consumer (reason to buy)
Sustainable in facing changes in business
environment
b. Use Perceived Value Rather Than Actual Price
c. Good Understanding on Costing-Tariff-Pricing
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8. 2. Reasoning of Pricing Plan
a. Use Optimal Market Positioning :
Source : Sumrahadi on MM-Biztel Lecture
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9. 2. Reasoning of Pricing Plan
b. Use Perceived Value Rather Than Actual Price :
Source : Sumrahadi on MM-Biztel Lecture
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10. 2. Reasoning of Pricing Plan
c. Good Understanding on Costing-Tariff-Pricing :
Source : Sumrahadi on MM-Biztel Lecture
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11. 2. Reasoning of Pricing Plan
Customer Calculation
Proje cte d Custome r 2007-2011
600000
400000
200000
0
1 2 3 4 5
Year 2007 2008 2009 2010 2011
Projected Cus tom er 75.000 165.000 270.000 345.000 410.000
Growth 120% 64% 28% 19%
a. Progressive customer penetration 2nd year (2008) :
Pricing lower than competitor.
Launch interested marketing gimmick
Catch “churn customer” from competitor
b. Steady state but still have 2 digit customer growth on 2010 even on this year have new
entry of fixed wireless and cellular operator
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12. 2. Reasoning of Pricing Plan
Revenue Calculation
Projected Revenue 2007-20011
3E+11
2E+11
1E+11
0
1 2 3 4 5
Year 2007 2008 2009 2010 2011
Projected Revenue 27.000.000.000 86.400.000.000 156.600.000.000 221.400.000.000 271.800.000.000
Growth 220% 81% 41% 23%
a. Impressive revenue growth on 2nd year (2008) caused by:
Customer increase significantly but OPEX is lower than expected.
Revenue stream not only gain by customer increase but also ARPU & AMPU.
b. Company still have 2 digit revenue growth on 2010 even on this year on “slim profit
margin mode”
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13. 3. Marketing Mix Activity
Source : Sumrahadi on MM-Biztel Lecture
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