Carphone Warehouse is celebrating yet another commercial
success after a record-breaking promotion in The Sun newspaper in partnership
with Alcatel and O2.
Between 12 and 14 May, Sun readers were able to buy an
Alcatel handset from Carphone Warehouse for just £9.50 with £10 O2 credit. The
deal resulted in 64,000 handsets being sold over four days, entering the
retailer’s history books. The Alcatel OT-206 now stands as the fastest selling
prepaid handset in the history of Carphone Warehouse.
But despite the success of the promotion, some critics
remain sceptical about the sustainability of these types of deals and whether
they can achieve anything more than a ‘land-grab’.
However, within the mobile industry, the consensus is that
the promotion was a marketing triumph, with all the parties benefiting from the
Who got what?
The Sun may be an outsider to the mobile industry, but a
popular newspaper is driven by numbers and the promotion would have attracted
more readers to the title.
In England, customers could pick up an Alcatel handset with
the St George’s cross emblazoned across it, while punters in Wales, Scotland
and Northern Ireland were offered a plain black design.
Stephen Shurrock, O2’s consumer sales director, says that
the deal was a success because of ‘careful targeting and a simple mechanism’
and that ‘the whole deal was put together to precisely appeal to The Sun’s
But for O2, which is thought to have subsidized the
handsets, there had to be some type of long-term benefit from the promotion.
Shurrock says that the deal positions O2 as a
‘great value network’, increases Pay & Go connections and communicates key
O2 Pay & Go messages to a mass audience.
The Sim card in the handset was an O2 Favourite Place Sim,
giving customers £10 of airtime credit plus 500 minutes to O2 mobiles and
standard UK landlines from a chosen postcode.
And the deal may have helped O2 to gain customers. The
operator’s position as a network with a well respected name would make punters
more likely to stick with O2 than the handset.
Free gifts = free customers?
Carphone Warehouse may appear to miss out on direct money
from the deal, but it has gained footfall and customer details.
Carphone’s huge retail estate makes it an attractive
distribution partner for these types of promotions.
According to one retailer, only Carphone Warehouse has the
power to make this kind of promotion work. Not only does the retailer stretch
across the UK, but it also has buying power and the ability to negotiate.
One source says: ‘Carphone Warehouse will be getting money
out of the handsets, and it’s all about the numbers – but it has to be a really
‘The way that they [Carphone] look at it is that it means
business for them. Even if that means giving something away, it is still a
customer because you can capture their details. Carphone are not going to be
losing money by doing this.’
Alcatel’s big break?
The Sun promotion was the second offer of its kind in the
last 12 months. Alcatel teamed up with the paper, the retailer and Orange in
October 2009 for another hugely successful joint venture. During that
promotion, 47,000 handsets were sold over three days, with 14,000 of those sold
in the first two hours.
CCS Insight analyst Ben Wood says: ‘These kinds of tactical
deals have proved themselves to be extremely successful – you need a lot of
business acumen to pull these deals together, it takes a lot of planning.’
Wood predicts that other manufacturers will follow Alcatel’s
lead in the near future.
However, some critics within the industry believe Alcatel is
treading a ‘fine line’. Other manufacturers such as Sagem have been involved in
similar promotions and all but disappeared from the industry.
One source says: ‘It is not a sustainable business model and
you have to spend lots of money through the brand or some area of
specialisation of the product to attract long term customers.’