Prepaid pricing plans and the financially savvy BoP buyer: A discussion

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Rural grocery shop, South Africa January 2008

While putting together my post on demanding BoP customers today, I came across this snippet from an article titled "Getting to know the sophisticated prepaid user" from The Philippines (one of the field locations for the user research documented on this site). Its a quote attributed to the CEO of Globe Telecom,

With the wealth of bucket-priced offerings at their reach, he said these users have learned to shop for the cheapest call and text promos, posing a challenge to profit-seeking telecommunications firms.
[…]
"It's important to know how our prepaid customers think. If you're a telco, how do you convince a farmer to spend his money on prepaid load over food? And how can you make him choose you over the other telco? How do you keep him spending? That's where the challenge is," Cu said.

It is worth debating whether the buying habits of your average prepaid customer have been learned or previously there, choosing to sidestep, at this point, the red flag raised by the question of whether snatching food from the mouths of farmer's families is the right choice for profit seeking corporations to make or whether there may be other value creating alternatives.

Can it be said that the prepaid pricing plans so prevalent now across the developing world have been influential in increasing the financial savvy of their BoP customers or whether this trait was already there, simply overlooked just as the BoP were as a demanding market in their own right?

Certainly, the skills required to rapidly evaluate the best value for the peso, rupee or kwacha have been honed by the almost daily need to top up and the over exposure such plans through saturated advertising and communications.

And that the influence of affordable mobile phone services has certainly been felt and measured. The phone has enhanced the user's span of control over their decisions regarding timing and amount of income and expenses, extended their reach and increased the speed of information flow, thus response time.

But as the interviewees themselves tended to demonstrate, this
"financially savvy" ability – while not as frequently exercised as over airtime perhaps -  was a pre-existing trait as evidenced by their ability
to compare interest rates due on loans and hire purchase or the price
of fish, rice or wheat. This, in turn, is one of the qualities, coupled with their irregular income streams, that make them one of the most challenging customer segments to serve.

This entry was posted in Africa, Airtime, ASEAN, Base of the Pyramid, Business Models, Consumer Behaviour, Expenses, Income, India, Mobile platform, Philipines, Research, rural, Strategy, Sub Saharan Africa, urban, User research. Bookmark the permalink. Post a comment or leave a trackback: Trackback URL.

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