RapihDhoho ~DotNet

Be creative and innovative!!

This year, 2008 will become a year with very hard competition for all companies in Indonesia. Especially… for telecommunication industry, the competition will be so hard. The competition is entering price war. The signs can be seen in operator’s commercials in these recent months. In fact they try to avoid price war. But fail. Three biggest operator (TELKOMSEL, I-SAT and XL) have decreased the price of their product to the lowest stage.

Is it true that they cannot avoid this war? Before we talk further more, it’s better to find out what factors can make price war. Hermawan Kertajaya, world class master of marketing, ever said that at least there are 3 factors. Here they are:

1. There are new comers in telecommunication industry
As we know that there are many new operators in Indonesia. Their (new comer) strategy in setting their product’s price in low level can be understood because they have to attract customers to buy and use their product.

2. New Technology
The development of telecommunication technology is growing rapidly. Operators have to spend much more CAPEX (Capital Expenditure) to upgrade their technology to compete in giving service to customers. Even though the cost is very expensive, mostly operators compete to be the first. Because of the impact in implementations the newest technology is it can raise their chance in winning market by reducing production cost. So the operator can set their product’s price in low level to attract the biggest part of cellular users.

3. Decreasing profit by operators
There are two points that make operators slowly but surely decreasing their profit in order to set their product’s price as low as possible. First, the competition is so hard and the second is mostly of customers is price sensitive (especially the bottom of pyramid). For that kind of customer operators have to know their term that cost is religion.

And how can the operators get out from this condition (price war)?

First thing they have to do is trying to expand market outside of java. Market outside of java is very potential. Because of they have large number of population. So they (operators) can start to build society’s perception about communication as basic needs. Moreover the government has plan to develop PALAPA RINGS (connect east part of Indonesia through national link). With all of the probability above the operators should be more creative and always make innovations through their products and services to win the market.

The second thing is do segmentation through product. Before doing segmentation, we have to calculate accurately which segment will give more profits for them? In my opinion, the bottom of pyramid is the most potential part should be given more attention. Because the large number of people they have. But it’s not a fix deals. They can choose the top of pyramid to be given more attention but one thing should concerned is you have to give them exclusivity in anything. So they will be satisfied and will be deep impressed and finally loyal to your products.

Finally you have to be creative, innovative and segmentation oriented to win the market in 2008.