T-Mobile's distribution and pricing strategies

A little about T-Mobile's distribution and pricing strategies!

T-Mobile's distribution strategy appears to aim simply at getting their services and products to the consumer as quick and as accessible as possible. They give customers the ability to sign up for service via online, customer care, direct corporate retail stores, indirect retail stores (premium retail stores, kiosks), and business dealers (for business accounts). Many choices for the busy consumer. In fact, a T-Mobile customer never has to step into a store if they choose not to. Everything can be done via customer care or online now. This allows T-Mobile to satisfy customer needs and wants faster and more efficiently, while also cutting down on how many locations and staffing needed (able to use more indirect dealers vs corporate direct, also utilize Internet and customer care for all-in-one). It also gives T-Mobile the ability to reach out to many different consumer markets (kiosks at malls reach a range of different age groups and demographics, while corporate stores focus more on family head/business consumers). By creating such a versatile way to reach out to consumers, T-Mobile has managed to attain the J.D.Power award 8 times in the past 9 years for customer service, as well as earning the J.D.Power award for Retail. Their ability to reach out to their colorful makeup of consumers shows in this great achievement in consumer happiness.

The downfall to all of these distribution channels? Confusion and miscommunication. A customer care representative may send a consumer to a retail store to get a product faster and quicker, only to send them to a disappointing "sorry, we cannot override such things in-store. Only customer care can." This wastes the customer's time, while also making T-Mobile appear fragmented and separated into almost competing units. Direct dealers versus indirect dealers, customer care versus retail, business versus retail - it really can prove messy, time-consuming, and worst of all, damaging to the consumer experience.

The concept of giving the customer many different channels to acquire T-Mobile products and services is a great one - however, T-Mobile should work on refining it down. Corporate direct dealers go through routine training, abide by stricter guidelines, follow T-Mobile ethics and culture, and also have a base pay plus commission salary. Indirects primarily depend, if not solely depend, on commissions. They also do not work in a corporate style environment with T-Mobile culture, creating a "I sell T-Mobile," rather than a "I am T-Mobile" attitude. By depending more on corporate direct dealers and less on indirects, T-Mobile can raise customer satisfaction retail-wise, which in turn will also help the customer care vs retail scenario. Both the customer care and retail end will come from T-Mobile corporate culture and life, creating a greater familiarity with policies and procedures between the two. This will lead to less conflict and more harmony overall, which benefits everyone involved - customers, employees, and T-Mobile.


Pricing...it is T-Mobile's trustworthy sword battling against its fellow competitors, even wielding price penetration tactics to capture more customers (thus - more wireless market share). T-Mobile bluntly advertises costing an average of 28 dollars cheaper than their top competitors (Verizon and AT&T). They know they cost much less while providing equally, if not a little more for your buck, to customers. They do this very well. One of the best examples of this is the powerful mixture of the T-Mobile Hotspot, T-Mobile @Home, and the cheaper T-Mobile plans...the T-mobile "Triple Threat," to quote Businessweek columnist Olga Kharif. Not only did T-mobile roll out first with the VoIP service wireless provider-wise, creating a nicely organized cell/home all-in-one bill feeling, but they created a deadly combination of price penetration, cheap base plans, and great new technology to attract and retain new and existing customers. The @home service is 10 dollars a month, undercutting Vonage's 20/month and its fellow competitors. T-mobile managed to step into a new playing field and dominate it price wise - and what is even strategically nicer is the requirement of having T-mobile service wireless before being able to take advantage of the cheap VoIP service. Excellent strategy. Makes the existing customers feel they are getting a great deal, only them, while also attracting new customers from top competitors due to the fact they want to join in on saving a great deal of money on their monthly home phone bill.

Price definitely works for T-Mobile. The one worry right now is the economy. Kharif brings up the fact of a price slashing war causing great issues and complications for the wireless companies, T-Mobile most certainly being one of them. Right now, T-mobile has slashed their prices down from 99.99 usually for an unlimited plan to 50 for selected "tenure" customers to compete with MetroPCS and smaller competitors. No longer must T-mobile simply worry about the top competitors, but also the smaller and regional ones. They are growing and with the economy suffering, pre-paid plans and deals are what attracts and retains customers nowadays. T-Mobile has also rid of their handset upgrade fee, an $18 dollar renewal fee for existing customers. This proved a big move, especially since fellow competitors have not stepped that far yet into the pricing cutting. Although T-Mobile definitely has acquired the ability to attract new customers, while also satisfying existing customers, they must know when to implement the final stage of price penetration - the true money making part, raising the price after "hooking" the customers. They successfully did this with their Internet packages, raising it from their low rate of 19.99 a month for Blackberry and PDA devices to 24.99 recently. Hopefully, they will have equally successful outcomes when attempting to reap the benefits of all the new and returning customers.

T-Mobile offers a multi-range of products, from hotspot capable devices to @Home VoIP services, to wifi for laptops and, obviously great plans for cheap. They need to realize they do not have to go too far with their price slashing - they want to separate themselves from the "second rate" providers, not associate themselves as eye-to-eye competitors. It is smart of them to keep a mindful watch of them, but lowering too far will also lower T-Mobile's positioning in consumer's view, which would prove detrimental overall to T-Mobile's business and image. Top wireless provider for less, consumer-focused and technologically "there" - not a cheap, second-rate service provider.

To read more about Kharif's articles in Businessweek:

T-Mobile's Triple Threat

Prepaid Wireless Takes Off