Kansai Case Study

1460 Words Jul 25th, 2015 6 Pages
Overall Case Summary

Ted Katagi was recently put in charge of turning around the struggling Kansai Digital Phone Company. They are trying to compete in the Kansai market against three main competitors (DoCoMo, Cellular, Tu-Ka) and three PHS startups. Katagi and his team have developed several initiatives to try and turn themselves into a customer-centric organization. These incentives include: * Zutto - Operating without contracts. The customer pays up front and receives some benefit at the end of the commitment period in an attempt to elicit behavior (such as paying for another period) * Welcome Calls – Personal contact with each new customer in an attempt to keep customers from switching carriers. * Brand Strategy – Sign
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(The attached excel spreadsheet shows the calculations). Some of the assumptions include a 12% interest rate per year (1% per month). Other assumptions include that the average customer lifetime is 15.5 months. It is also important to assume that the KDP customers will not be leaving quickly after they join, but will at least stay for the 15.5 months.

2. How should Katagi structure Zutto for maximum value? Please think about how each of your design choices will affect the value of the initiative.
To structure the Zutto plan as effectively and efficiently as possible, a couple different factors need to be taken into consideration. First, we need to consider that the average customer tenure is 15.5 months and additionally, the highest level of voluntary churn occurs in month seven of a customers’ service. Because the competitors are not requiring an up-front fee for services, we feel it will be difficult to convince customers to pay an up-front fee. Instead we would like to offer them a two-part plan during the average lifetime of their service with the company. Taking into consider the highest occurrence of churn at seven months, we would approach them in advance at six months thanking them for their service and incentivizing them with a ‘loyal customer’ offer to remain with the company for an additional time period. Essentially, instead of charging them

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