Analysis: Alcatel’s dream team

Analysis: Alcatel’s dream team

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 joint venture.

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 readership’.

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 aggressive deal.

‘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.’

Written by Mobile Today
Mobile Today

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