If you want a better understanding of the market share dilemma…

…watch the Verizon and AT&T ads.

For years Verizon has been hammering AT&T with its coverage map, almost with impunity.  Finally, AT&T is fighting back.  Why the delay?  AT&T didn’t understand what market it was serving.

Verizon has been touting the reliability of its phone service over that of AT&T. Indeed, from it’s ads it appears that Verizon created its network with the intent to minimize dropped calls and assure connections in the most remote locations, something that AT&T’s network is not designed to do.

It’s Verizon’s success in its mission, not to mention its reputation for superior customer service, that caused me to wonder why Steve Jobs chose AT&T over Verizon when he introduced the iPhone.

AT&T’s recent ads may be answering, at least in part, that question for me. AT&T’s ads indicate that it built its infrastructure in highly populated areas.  That’s how they can claim to reach the vast majority of users, roughly 300 million people with a smaller network.

AT&T has also been touting its faster download speeds.  That could be what Steve Jobs was looking at – reaching the majority of the users with a network that made his apps programs run faster.  Faster speeds encourage greater usage of those apps.

Based on their ads, Verizon and AT&T seem to be pursuing two different strategies. Yet they seem to be viewing market share as if all cellphone/PDA users were equally valuable.  Obviously that’s not the case. What can we learn from this example?

It’s counter-intuitive, but understanding what your customers really value can help you avoid competing for customers who don’t value what you offer.  This knowledge will save you huge investments in marketing dollars, infrastructure costs, heavy discounts to attract customers who don’t value what you offer and investments in ill-conceived future strategic initiatives.

All of these benefits are available by simply avoiding the market share trap – defining market share by number of customers or percentage of industry revenue dollars.  If your organization has fallen into this trap and you’d like to climb back out, but aren’t sure where the ladder is, give me a call at 314-707-3771.

Tags: counter-intuitive pricing, price management, Pricing, pricing for profit, pricing for profitability, pricing management, pricing strategies, pricing strategy

This entry was posted on Tuesday, February 23rd, 2010 at 6:00 am and is filed under Marketing, Pricing, Sales. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.