Bigpond’s market share

Here’s the problem that is brewing for Bigpond.

I have a firm belief that many of BigPond’s customers are:

The uneducated. Those who not know better. Those who have no idea on how to research the competition. They may tend to believe or assume that by going with Telstra they aren’t going to be paying too much more, some even believe they will pay less.

The ignorant. Those who are educated, or who are informed, but do nothing, because they “trust” Telstra, or believe Telstra will be just as competitive as the next company.

The educated. These are typically the Bigpond Cable users. Cable is generally faster than ADSL1 for many users, with some having a 17Mbps / 256k connection, the obvious incentive was the faster download speeds. Still poor value for downloads though.

The folk who are lied to. These are those who have no idea, and are marketed to, by sales people with no idea either. Essentially the sales person will say whatever it takes to get the sale, or in some cases, the offer is plain and clear, but what’s a megabyte?

The business users, who chose BigPond for one of the many reasons above.

So, as you can see from that rough sketch, BigPond have a market share that doesn’t really consist of any one that is familiar in IT, with the exception of the educated Cable users.

With this in mind, let’s look at a different level of market share.

iTunes for example.
It’s primary target are those that listen to music, ie. a large percentage of the entire population.

It’s marketshare would likely consist of:

Those who don’t want to pay a fortume for CDs when they only want one song, and want to do it legally.

Another to look at would be any other emerging business that is a replacement for an expensive equivilent.

The primary targets and users of these are younger people, the educated.

Either way you look at this, the younger people will be looking out for good value, it’s cross marketed to them from other younger people just how poor value BigPond is, and so the decision to sign is heavily influenced.

This leaves them going to look for alternatives that do it cheaper, and of course don’t double dip.

The end result is Bigpond’s market share, in reality, consists of the uninformed, and those sucked in by the great wall of china ad marketing education, of course, the reality is, the same product is available at 248 different businesses (and more) for more value, and a fraction of the cost.

So, as younger people realise this and are signing up to competitors, Bigpond’s market share will eventually decline, because of two reasons:

1. Bigpond’s market share consists of older users, and not younger users. Using the logic that younger users are informed and seek better value plans (ie. evaluate the competition), means that market share cannot be rising for too long. Market share might rise now, but, there is indeed a limit on that rise, and when that limit is hit, they will either be competitive, or they will lose market share.

2. Viral marketing of a bad brand gets around very quickly, if you have a bad experience with something, you tell 10 people, if you have a good experience, you tell just 3.

So, with those in mind, and the number of bad experiences (Big bills, negative media attention, informed users educating the uneducated, etc), Bigpond really have a tough force to fight to keep that market share in the future.

They simply cannot continue the current road and expect growth in the ISP market, because the force of their marketing, however deceiving it is, will result in them having a loss in market share, you only have to put common logic in play here.

Not everyone will want or enjoy a walled internet experience, and those walls, just like the great wall in China, will indeed come down. The current sign users now method means that as the marketing starts failing, they’ll have plenty of warning (2 years from the last huge marketing campaign), because after that 2 years, you can clearly see the market being a high percentage of informed users, and a low percentage of uninformed, resulting in, as I have stated earlier, lower market share.

The trick for them ?

Easy, compete, create competitive plans, the only way they can compete effectively is without regulations? Fine, get rid of them, the only way you can successfully get rid of them, putting the infrastructure in another company that you don’t control. Let regulations be the problem for them.

On a related note though, another Telstra unit will also lose market share in the not too distant future, and that’s Telstra Wholesale.

With OPEL adding infrastructure in regional areas, and Optus committed to ridding itself of Telstra Wholesale by expanding its services to anywhere it can, the result will be that more and more infrastructure will be available for competitors to use.

With this competition, Telstra Wholesale will lose marketshare to OPEL, who will offer a very competitive deal.

Expect profits to fall as a result of loss in revenue is my key point, the revenue resources will go elsewhere, and that’s all Telstra’s fault, for sitting on their hands in the first place.

Enjoy!