Profile MMHK Jan/Feb 2009

It is not uncommon for an individual to own two (or even three) mobile phones in Hong Kong. But it is unusual to have seven service providers for a population of seven million people. The field looks just a bit too crowded to Mallia, Londoner who first traveled to Hong Kong 20 years ago as a backpacker.

Mallia describes Hong Kong's mobile market as a "brutally competitive environment." He was surprised by the magnitude of challenge in the small market and the ferocity of price competition between rivals when he moved to Hong Kong in 2006.

"The UK only has eight carriers for 60 million people," Mallia compares Hong Kong's mobile market to the U.K. "I was struck by how intense [the] sales process began even before you get inside the stores," he says.

The Nielsen Company reports that local mobile users pick network operators based on two main features: price and promotion. While a majority of local consumers are price-conscious, Mallia is caught between a desire to sell Vodafone products and services at a lower retail price, and discretion to distinguish the brand from its competitors.

But the looming fights over price in the mobile network industry do not threaten Mallia because he has learned the weakness of its competitors in the marketplace.

"A lot of brands have only known how to compete on price. For some customers it's great. However, they [marketers] have found they don't have money to invest in services and deliver beneficial products," Mallia points out.

Vodafone has taken a different approach to create a comprehensive brand identity related to the local retail landscape and it maintains the best churn rate in the industry in the last three years. Its total mobile subscribers hit 1,118,000 ended 30 June, 2008. According to The Nielsen Company, SmarTone-Vodafone has the second highest proportion of personal users.

"We have to be smart in the money we spend and we have to market wisely. We want to invest in research and development. For that great value we ask our customers to pay that little extra. They will realize their money is well-spent and insured."

With the launch of the multi-storey Experience Store and The Loft where scheduled services workshops are held every day, Mallia expects Vodafone to attract high-end customers, with an emphasis on unique services and interaction between customers and brand.

"We have a relentless focus on customer needs, benefits and value. We go that extra mile in everything and pay attention to the most finite details in our planning and execution to deliver unrivalled customer experiences."

Mallia said the stumbling economy will continues to spread widely through high street and more consumers will hold tight to their wallets in the first half of 2009. But the mobile industry is believed to be a hard-hit sector as most marketers have anticipated the mobile advertising explosion this year. New revenue streams from web mobile along with the growth of multimedia services, such as Music XS, Market Watch and FoneTV, etc over the year have given strength to Vodafone to invest in mobile advertising and innovation in the long run. Mallia says internet on mobile reportedly is the fastest growing service among others that over 10% of its customers is actively accessing internet on their mobile phones.

"This is the year for mobile advertising," Mallia said with confidence.

The next step for SmarTone-Vodafone is building tools for marketers to advertise on mobile. Although many marketers agree that mobile ROI is far more measurable than other medium platforms, Nielsen Mobile reports that 40% of the local mobile users have never seen any ads on their mobiles. This means mobile advertising is still a long way to go in Hong Kong.

On the customer side, Mallia said Vodafone is encouraging them to receive more mobile messages and looking forward to creating more channels for them to play with mobile web. In the first half of 2008, data revenue contributed 23.2% of Vodafone's total mobile service revenue while its 3G base currently represents 47% of postpaid customers.

SmarTone-Vodafone's mobile service revenue was driven mainly by improving average revenue per user (ARPU), therefore knowing customers' profiles is very important in mobile and relationship marketing that it empowers marketers to tailor their campaigns to target audience.

Mallia said the group will look at customers' needs and connect it into sales while building tools for brands to advertise on mobile. But how to create an element in mobile advertising to interact with customer still remains as a trick. Advertising features, such as click-on discount coupons and phone TV, are the seductive prospect of reaching target users in the future. Mallia is hoping to create a compelling track and reporting system for agencies and brand to get great insight of how it works.