Title: Smart Communication Inc (A) case analysis
Philippines as one of Asia’s 2nd tier emerging economies in the world, possesses great opportunities for Smart Communications to tap into the lower income markets. The low disposable income and cash management issue of the lower income group and weak distribution channels for the lower income group could be successfully overcome as seen by precedent cases of Proctor & Gamble and Unilever. Smart Communications should not be limited in market share by just focusing on existing customers. There is great potential to expand and secure the market in the lower income group to bring about massive profits to the company. Smart Communications should pursue a market penetration strategy for lower income customers in the D & E segments.
The existing challenges of expanding to the lower income group were the low disposable income, cash management issue and the lack of established distribution channels. To break into the lower income groups, it would be vital for Smart Communications to make owning mobile handsets affordable. Smart Communications could easily strategize a move to bring in 2nd hand handsets from affluent customers who change phones regularly to sell to the lower income group in Philippines. With more people owning handsets in the lower income group, they would be able to achieve growth in the smart money services and pre-paid credits.
One key issue plaguing the growth of pre-paid credits for the lower income group is the cash flow management issue. P100, which is the lowest price for a prepaid card in 2002 is equivalent to 80% of the daily income for more than 50% of the population in Philippines. Smart Communications could easily tweak the credit packages by introducing cheaper pre-paid cards in lower credits. In addition, they could also consider credit policy extension. Credit terms and policies could be introduced to the lower income group to increase pre-paid card sales effectively. With the...
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