Transcript Slide 1

PRODATA PARTNERS LTD
Market Modelling in Telecoms & ICT Markets
www.prodata-partners.com
Market Forecasting & Modelling
Desk
research
Prodata undertake
extensive market
modelling and
forecasting work
for blue chip
customers in the
international
telecoms & ICT
marketplace
Macroeconomic
factors
Primary
research
Dynamic
market models
Client
data
Results orientated advice: Identify areas of opportunity & threat
 Forecast revenues and cost
 Understand the impact of industry trends
 Target business development, sales & marketing activity
 Test pricing strategies
 Benchmark operations against industry standards
 Inform investment decisions
Prodata Market Modelling – Methodologies (1)
• Since the late 1980s, Prodata has advised several
telecommunications & ICT companies/consortia on likely demand
for new & existing products & services.
• Our clients rely on credible and reliable demand forecasts, to
ensure that their applications and business plans are transparent
and robust.
• Clients need to know the expected stream of revenue from
projected demand, in order to judge the value of their investment
and customer base.
• In addition to demand modelling, Prodata offers a modelling
service that ranges from support in preparation of business plans
or bid documents, to the turnkey preparation of models and
business/marketing plan, including technical and financial input.
Prodata Market Modelling – Methodologies (2)
• Prodata modelling support has been highly successful in
securing licences & business plan investment for many clients,
varying in value from thousands to several hundred millions of
dollars.
• Prodata models make extensive use of a variety of sources,
including: Our own or the client's primary research data;
 Secondary market/demographic data sources;
 Client in-house data, e.g. from billing/reporting systems.
• Our methodology also embraces techniques such as price
elasticity of demand, demand adoption curves, and market
segmentation.
Prodata Market Modelling – Typical Coverage
• Prodata market modelling & forecasting has covered a number
of business-critical areas for our ICT clients, e.g.:• Potential demand
• Penetration forecast, e.g. product/customer life cycle modelling
• Churn, market share of gross additions, market share of
installed base
• Mobile/fixed subscriber base
• Price elasticity of demand & monthly bill forecasts, e.g. using
price elasticity of demand
• Take-up of new services, e.g. broadband
• Tariff forecasts
• Traffic forecasts
• Incremental revenue from new services
• Cost/ROI modelling
• Customer segmentation
Prodata Market Modelling – Typical Methodology
 Prodata has produced a wide range of market models across several countries
worldwide, modelling up to e.g. 10 years ahead for by market, competitor base,
region or country.
 Our models have frequently formed an integral part of operator licence
applications.
 Such models cover all aspects of marketing planning for operators already active
in a specific market, or a new operator/market entrant.
 Forecasts can be developed for the market as a whole, and in more detail for a
specific venture under consideration.
 Modelling methodology often consists of 4 key stages: Determine the maximum potential demand expressed as the percentage of the total population
who will eventually be subscribers, divided into e.g. business and consumer market segments;
 Fit product life cycle curves for each market segment to forecast the market by segment, and
calculate the total market;
 Develop assumptions as to coverage, churn, and market shares, to forecast the market share for
each competitor in the market;
 Forecast the marketing parameters required for the business plan of the venture under
consideration, such as tariff packages, minutes of use per customer, traffic by destination & origin,
roaming, interconnect, distribution, etc.
Example Outputs Required – Telco Models
• Basic Data Requirements
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–
–
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Penetration & total subscribers
Price elasticity of demand
Average monthly bill and total revenue
Minutes of use
• Other
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–
–
–
–
–
–
–
Coverage
Churn & gross additions
Market share of gross connections and installed base
Customers by segment/tariff plan
Take-up of services
Traffic destinations, origins & roaming
Interconnect
Distribution channels
Example Forecast Model Outline
Maximum Potential
Demand
Market Research, Benchmarks &
Reasonableness Checks
Product Life Cycle
Stage Determination
Historic Data, Shape of Growth Curve
Marketing Indicators
Demand / Penetration
Forecast
Marginal Bill
Forecast
Forecast of Average
Monthly Bill
Minutes of Use
Forecast
Market Value
Forecast
Curve Fit Consistent With Product Life Cycle
Stage and Price Elasticity of Demand
Market Research, Penetration Forecast,
Reasonableness Checks
Current Average Monthly Bill Plus Sum of
Marginal Bill, Price Elasticity of Demand
Tariffs Against Average Monthly Bill,
Benchmarks for Mobile Terminated Traffic
Average Monthly Bills & Total Subscribers
Demand & Price Elasticity Models – Typical
Decision Chain
Reject because of
price or coverage
Total
sample
Explain price will
fall & quality will
improve in future
Interested
in product /
service
No interest at
all
Collect classification
data & terminate
All respondents who continue to
main survey represent the
maximum potential demand
Maximum potential demand as
% of population limited by
willingness to pay a minimum
Determine at what price
respondents are willing to adopt
and use product/service
Price elasticity of demand,
revenue forecast as a function
of penetration
Collect classification
data & terminate
Market segmentation
of product/service demand
Forecast Model Flow Chart Example: Mobile Model
Market Survey or Benchmarks
Maximum
Potential
Demand
100%
90%
60
80%
50
70%
60%
40
50%
30
40%
20
30%
10
0%
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Population
Coverage
Forecast
Forecast of
Gross Adds &
Installed Base
Per
Operator
Churn
Per Operator
Gross Adds &
Installed Base
Market Share
of Gross
Additions
2006
2007
Venture Gross
Adds by Tariff
Plan
20
05
10%
19
99
20
02
0
20%
19
96
Forecast of
Penetration
of Maximum
Potential
Demand
Price Elasticity re Monthly Bill for
Marginal Subscribers as Function
of Penetration of Potential Demand
Average Monthly
Bill Existing
Subscribers
Forecast of
Marginal Monthly
Bill as a
Function
of Penetration
Venture
Tariff
Plans
Forecast of
Market Average
Monthly Bill
Adjust
Venture Installed
Base by
Tariff Plan
Monthly Minutes
of Use by
Tariff Plan
Compare
Venture
Average
Monthly Bill
Forecast
Cost of Adoption vs. Penetration Forecast: Example
Handset Cost vs. Price Elasticity of Demand
3,000
35%
Penetration of Pops
Adoption Price Accepted
30%
Handset Price
Handset Price
2,000
25%
20%
1,500
15%
1,000
10%
500
5%
0
0%
Penetration of Population
2,500
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Western European country - sample 2,000 interviews
Forecast Model Flow Chart Example: Business
Market for Telecoms Services
Annual UK & Global Turnover Data by
Company
100%
60
Av. % of
turnover spent
on ICT
(Industry Ests)
90%
Av. % of ICT
spent on
Comms
50
80%
70%
40
60%
30
50%
40%
20
30%
10
20%
10%
0
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
0%
1996
1997
1998
1999
2000
2001
2002
2003
2004
Av 3-Yr %
turnover
growth
2006
2007
Weighting: Av 3Yr GDP LOB
Growth (Natl
Office for Stats)
£ Spend on ICT
& Comms by
Company
% Intended
Increase in ICT
Spend
(Customer
Research)
2005
Projected
Customer
Turnover,
ICT &
Comms
Spend for
next year
Weighting: LOB
Comms Intensity
Factor (Industry
Ests)
Weighting: NonEconomic LOB
Drivers (Industry
Rpts)
Customer ICT
spend split down
to Voice, Data &
Mobile (Customer
Research %
Spend Ests)
Projected
Weighted
Available
Customer ICT &
Comms Spend
for next year
Weighting:
Tiered
Customer
Category
Customer £
Split by
Product Line
(Customer
Research)
Customer £
potential for
current/next
year
Back check
vs. client
billed £
Prodata Product & Service Skills Areas
Voice Services
Wireless/Mobile
Wide area networking
Inbound services
Managed services
Private circuits
IP Networking/Telephony
Operator Licence Models
Market Pricing
Churn Prevention
Mobile Data/Fixed-Mobile
Data Services
Applications
Frame Relay
ATM
MPLS
Broadband
Internet, Intranets
Local Area Networking
Optical/Storage Area
Networking
CRM
Knowledge management
Supply chain management
Outsourcing/BPO
E-Business/Content
Other
Networking Equipment
Software Applications
Business Continuity/Security Applications
B2E / Enterprise-Based Solutions
Modelling CRM market
segmentation by product
type
• Prodata constructed a bottom-
up model of the international
CRM market for a leading
telecommunications company. .
• Dynamic, macro-driven model
provided vital information on
current addressable market and
future growth of the CRM
market by product type.
• Identifying key growth areas
in the CRM sector, this model
was an integral resource
enabling the client to identify
opportunities for market share
gains, and to maximise returns
from the adoption of CRM as a
key business strategy.
Prodata Market Modelling – Case Studies (1)
UK MNC Market Sizing Modelling (UK Telco)
 Model of UK multinational business market for telecoms services, to give the client
a multi-dimensional understanding of markets and lines of business.
 In-depth analysis of the market sizing opportunities for each product/service area,
broken back by product components for each of the client’s constituent markets.
 Model data was generated from: External primary market research
 Assessment of external factors, e.g. National Office of Statistics data on GDP etc
 Secondary market data, e.g. vertical market sector reports (Mintel etc)
 Client internal database data, e.g. account manager input
 This provided strategic and marketing information for the client on opportunities by
line of business, products and services, customer segment/sector etc.
Reseller Channel Model (UK Telco)
 Database model profiling all resellers, distributors and other partners used by the
client in the telecoms market, together with market potential for client products &
services.
 Model included easy-to-use dropdown menus and browser buttons, for client users
to view market profiles and potential revenues by product/channel at a glance.
Prodata Market Modelling – Case Studies (2)
CRM Market Modelling & Forecasting (European Telco)
 In-depth market & revenue modelling, covering: Potential CRM universe by size of business/sector/spend on CRM
 Analysis & projection of take-up by product/service
 Sensitivity Analysis - modelled scenarios
 Projected future value of different customer segments
ICT Propositions Model (International Telco)
• Prodata generated potential market sizing breakdowns for key propositions areas
being developed in CRM, Organisational Effectiveness, Knowledge Management,
SCM & E-business.
• Output consisted of 5 models, showing potential market size for each constituent
product within product lines across each of the propositions areas.
• Each model contained market sizing estimates by sectors and lines of business,
with estimates of potential client market share.
• Further assessment was carried out to identify equivalence against client billing
and account management data.
• Segmentation was carried out by proposition and by market. The model
segmented down to revenue opportunities, by analysing potential market share by
product line within each proposition group.
Prodata Market Modelling – Case Studies (3)
Drivers of Customer Satisfaction Models (International Telco)
• Key driver satisfaction modelling for several client business divisions since 2001.
• Modelled customer satisfaction metrics against service and perception measures via
external customer research, benchmarked against client and customer-defined targets.
• Satisfaction driver models use multiple regression techniques, including ridge
regression to remove the effects of correlation between predictor variables/
multicollinearity.
• Prodata has also analysed, compared and modelled data from the client’s employee
care and reseller surveys.
Voice Services Market Model (UK Telco)
• Market size and share modelling tool for voice & related services.
• Data determined from several external & internal sources, e.g.: Desk research e.g. Oftel and analyst reports
 Monthly research interviews with customers
• Products/services modelled included: Local, National, IDD, Fixed-Mobile, Non-Geographic, Internet Calls
 Analogue/Digital Private Circuits
 PSTN/ISDN Lines
 Centrex Calls & Lines
 Switches (< 100 and > 100 ports)
Prodata Market Modelling – Case Studies (4)
Capacity Resale Market Model (International Telecoms Reseller)
• Forecasting model to assess market for dynamic resale of excess T-1 capacity,
including traffic & pricing scenarios, customer retention/churn analysis, capital outlay,
cost components & risk factors.
• Resulted in successful strategy for marketing excess capacity, in line with annual
increases in T-1 traffic take-up between US and UK.
Microbusiness & Consumer Fixed & Mobile Market Models (UK MVNO)
• Modelled 12 industry sectors & 11 demographic segments of fixed & mobile
universes, analysed by calls, equipment, market value and share.
• Model data was generated from Prodata primary market research and secondary
reports, e.g. Oftel, TGI data.
• Model output was used extensively to support business case and market planning.
Operator Licence Models (International Telcos/Altnets/Mobcos)
• Prodata has been used extensively since the early 1990s to construct operator
business case licence models, by mobile and fixed licence applicants and new market
entrants across Europe and Asia-Pacific, including Philippines, Taiwan, Germany,
Netherlands, and several other markets.
Prodata Market Modelling – Customer Feedback
"The quality of Prodata's work has surpassed our
expectations, and given us a rich resource for continuing to
enhance our understanding of SME business needs."
Rogers AT&T Wireless
"Prodata's customised mobile market forecast proved very
effective in meeting our marketing planning and management
reporting needs."
Bouygues Telecom
Prodata Market Modelling Team
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We work with over 35 consultants based in more than 20 countries worldwide
A virtual team is put together based on the mix of deliverables and individual
expertise required for each project
All our consultants have had extensive hands-on telecoms/ICT experience prior
to working in market modelling, research and consultancy with Prodata
Prodata Modelling Specialists - Selection
Hakan Eriksson – Senior Associate
• Highly experienced telecommunications &
ICT modeller
• Specialist in business forecasting and
planning, utilising & linking data from
disparate sources
• Skilled in database modelling
• In-depth knowledge of statistics, business
services and programming
• Key Prodata market modelling projects
managed by Hank include:• Complex business market sizing &
forecasting model updated bi-annually for a
UK telco, covering all telecoms products &
services & drawing/linking data from external
secondary data sources, market research
surveys, and the client's own billing and
reporting systems
• Industry sector market profiling &
forecasting model for a major telco, including
analysis of demographic & database data
• Hank previously developed a number of
services for Ericsson, e.g. management of
writing code for Symbian operating
system
Louise Crosby – Senior Associate
• Over 18 years’ experience in telecoms &
utilities market modelling
• Key Prodata market modelling projects
managed by Louise include:• Detailed market sizing & forecasting
model, updated quarterly for a UK telco
selling to the top 2500 UK enterprises,
covering all telecoms products & services
• Market forecasting and profiling model
for a major telco, covering several industry
sectors in the medium-large enterprise
market
• Previously senior modeller in
PriceWaterhouseCoopers
telecommunications & utilities
consulting divisions
• Managed complex business planning &
evaluation models, development of
corporate guidelines for spreadsheet
modelling best practice
• Economist to the Government of
Botswana, including managing large
government projects in the
telecommunications sector
Contact us
DIRECTOR:
Sarah Ball
Telephone:
01494 717176
07767 477738 (mobile)
Email :
[email protected]
www.prodata-partners.com