Wednesday, October 30, 2013

'Uncarrier' Strategy, a winning strategy?

In the first lecture we learned some definitions of "Strategy", for example, from Competitive Marketing Strategy (Czepiel): "A strategy is the overall concept by which you will achieve the unfair advantage needed to avoid the effect of competition and to triumph over competitors".

In general terms I understand strategy as those elements that come into play in your business that give you some advantage over competitors. Elements can be specific actions like reducing prices, buying cutting edge technology, changing your procedures or improving your processes in some innovative way. The main characteristic of these elements is that they must be difficult to replicate by other in order to guarantee that they give you advantage in the medium and long term. If the elements are hardly replicable, this has as a consequence that people link these elements with your company and consequently it happens what Michael E. Porter mentions in his article "What is Strategy": "your company starts performing different activities from rivals, or performing similar activities in different ways".

One example that came to my mind when I was thinking of a company that is doing similar things in different ways was T-Mobile. When I arrived to the US, I was looking for a mobile carrier for my cell phone service. I would have been happy to get a company which provided me service within the United States, but I was surprised when I discovered some of the plans that T-Mobile had, including some with calls to landlines in other countries for a fixed price. After analyzing other options, I chose T Mobile as my carrier no matter that I had to pay some extra dollars.

This month, I was surprised again when I saw a TV advertisement announcing that T-Mobile decided to expand (at no extra charge) its coverage of Internet service to many countries. I was surprised because I know that mobile companies make a lot of money from international roaming data services. Another important initiative carried out by T-Mobile is the "Uncarrier" strategy which has brought 1.1M new users to T-Mobile. According to T-Mobile CEO John Legere "by fixing the things that drive them (customers) mad, like contracts and upgrades, and freeing them from the two-year sentences imposed on them by our competitors, they are choosing the new T-Mobile in unprecedented numbers".

I see this kind of actions as strategic actions since they give advantage over competitors (T Mobile is gaining more users this year than any other mobile carrier in the US) and I consider that these actions will not be replicated easily by others mobile carriers in the near future.

Below, there are some articles that mention some of the strategies that T-Mobile is currently performing and the benefits (advantages) that these strategies are paying  to T-Mobile

All these initiatives are giving good results to T Mobile. Do you think that the number of new users that T Mobile is gaining is enough to overcome the heavy investments it is doing? How can T Mobile manage the risk that other companies start doing the same and it reduces the market share that T Mobile has?

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