Personal communications services carriers can be credited with spurring huge demand for wireless service, but they continue to struggle with brand awareness and perceptions customers have about coverage.
“It’s a brand game and a consumer-marketing game,” said Andrew Sukawaty, president of nationwide carrier Sprint PCS, which has led the industry three consecutive quarters in subscriber additions. “People who walk into a store and look on a shelf and see the Sprint brand along with a brand they’ve never heard of, what are they going to get?”
Though industry experts would argue that brand name alone doesn’t win customers, a strong brand name does earn a company consideration as a potential choice. Peter Dresch, director of telecommunications market analysis with J.D. Power and Associates, said long-distance carriers and regional telephone companies continue to garner the highest marks for customer satisfaction in a majority of their wireless markets, due in large part to their brand names.
“Across those markets, it is the local regional RBOC or the AT&T and Sprint that will come out No. 1,” said Dresch. “They are generally up there on corporate capability, reputation and brand.”
The problem for PCS carriers, said Bob Egan, research director with Gartner Group, a firm that caters to Fortune 500 end users, is they continue to compete on price, rather than researching target audiences in a way that will draw in profitable customers.
“It really comes down to the failure of these companies to develop a brand that is something other than saying, hey, I’m a cheaper alternative in the market,” said Egan.
Analysts point to VoiceStream Wireless Corp. as a company that is beginning to achieve brand awareness in targeting the mass consumer. The carrier, which is increasing sales and marketing expenses, outpaced Sprint PCS in penetration of covered pops with 2.8 percent in the second quarter, according the Prudential Securities Inc. in New York.
But PCS carriers often are disheartened by the length of time and amount of money it takes to establish a brand name when they run up against cellular incumbents. This cost often offsets the benefits of branding, making it more justifiable to compete on price. Companies like Sprint PCS, which doesn’t do much brand advertising these days, and AT&T Wireless Services Inc. have the luxury of riding on the coattails of their parent companies’ strong brand names.
When the pricing game settles, however, customers may feel more comfortable running to a name they know rather than dissecting messages from as many as six operators per market.
The good news for many PCS operators is that in an industry where consumers expect competitive offers, brands can be established, believes David Freedman, wireless analyst with Bear Stearns & Co. He cited as examples AirTouch Communications Inc., which spun off from regional Bell operating company Pacific Telesis, and the former Sprint Cellular property, 360
