Executive Insight: Price wars

The thriving market for mobile services is intensely and relentlessly competitive, where mobile phones today outnumber inhabitants in 105 countries, according to the International Telecommunications Union, the United Nations body that works to coordinate telecommunications policy globally. Operators are constantly seeking new promotions, enticements and other marketing “hooks” to attract new customers, and capture share from their competitors. In this noisy and highly-pressured landscape, one such hook — the price war — reaches the top of marketing department agendas with alarming regularity in markets of all maturity levels and across all service categories, voice and data. Yet, while this always sounds like a good idea, our research shows that in practice, this hook should be rejected quickly and firmly. Put simply, nobody wins. Price wars damage entire mobile markets every time they are rolled out. Which factors make price wars look attractive? New market entrants, changes in market structure, regulation-enforced