Thursday, October 15, 2009

VAS, Concept, Context , Benefits





JIGYASA LAROIYA DHIR

Have you tried Vodafone health tips? Or may be the Airtel visa bill pay? Do you remember, just 5 years back your mom used to make a list of the household grocery for you to leave it to the kirana store and the merchant will deliver the goods at your doorstep.

All these are examples of the now so popular value added services. Why not? Value added services are ruling the marketing scene through customer satisfaction and revenue for the providers.

Value addition is an age old concept. It exists right from the traditional marketing days. During the advent of marketing, value addition was offered at a nascent level, more for relationship building & for goodwill. The concept was there, but is been rejuvenated by our present day marketers.

When we say rejuvenation, i mean a total revival of the very concept of vas. Now vas is a single marketing tool with lot many purposes like, service benefit, revenue generation, relationship & trust building and even to generate conversation around the brand, product or service.

Value-added services (vas) are unlike core services. They have unique characteristics and they relate to other services in a completely different way. They also provide benefits that core services cannot. We need to understand that vas shares some characteristics and these are typical in almost all categories.

  1. Vas in not a basic service, it rather adds value to the total service offered.
  2. Vas stimulates incremental demand for core service(s) to add up the profits.
  3. Can sometimes stand alone operationally & even for profitability.
  4. Does not cannibalize basic service unless clearly favorable.
  5. Can be an add-on to basic service, and as such, may be sold at a premium price. Example: birthing suites in healthcare industry
  6. May provide operational and/or administrative synergy between or among other services – not merely for diversification

Every VAS will demonstrate one or more of the above characteristics. Furthermore, a value-added service will never stand in stark contrast to any of the above characteristics.

VAS also has a certain time dimension associated with them. Subjectively speaking, a value-added service today becomes a basic service when it becomes sufficiently common place and widely deployed to no longer provide substantive differentiation on a relative basis. Like in telecom, we are as used to of sms as for calling & receiving.

The Relationship of VAS to other Services broadly is divided into two types of VAS. The first service type is those value-added services that stand alone from an operational perspective. These types of services need not be coupled with other services, but they can be. In Telecom, many non-voice services fall into this category. They are often provided as an optional service along with voice services, but they could be offered and used by themselves without the voice service. For example, SMS could be offered and used as a service without voice calling.

The second, and arguably more numerous and important type of VAS, are those services that do not stand-alone. Instead, this category adds value to existing services. While it seems implicit in the definition of value-added, this is an important principle that makes value-added services stand apart from other services.

RE-DEFINING VAS

With the constant change and development in economic conditions, customer insights, product categories, FDI and increasing competition, Business needs to innovate to sustain the product/brand and to survive in the mad rush of options for the customers. And the marketer is the person who is at the helm of this task.

The increasing competition among brands to create a space in the consumer’s mind have had been the biggest challenge since ages. The inception of advertising resulted in warfare between brands. The era of innovation marketing ruled the roost and the war of brand survival became more intense. And the definition of marketing went on to constant changes. Broadly, the change in media & promotions looks like this-

Barter-Print-Radio-Television-Outdoor-Internet-Mobile-Sms-Digital media-OOH

It’s been evident that the business has been on a constant change after the t-word i.e., Technology. The above set of media tools depicts the need of modulations in the marketing due to technological advancements. Not only that the trend of innovations in technology is been rapid and is still growing fast, constantly challenging the marketer to provide innovative solutions and execute perfection. All this has resulted in a dire need to differentiate and add value and that’s how we have VAS.

Media has been ever emerging, by all means trying to allure the consumers. But with the concept of ‘Consumer Awareness’, there was an immediate need for the marketer to get into consumer insight which comes from understanding Consumer Behaviour.

Relevance + Truth = Consumer Insight

This has led to the new phase of Consumer marketing, namely ‘Customised Marketing.

THE TURNING POINT IN VAS STORY

Wikipedia (still) Defines VAS as - A value-added service (VAS) is popular as a telecommunications industry term for non-core services or, in short, all services beyond standard voice calls and fax transmissions but, it can be used in ANY service industry (eg. Web 2.0) for the services providers provide for no cost to promote their main service business.

Undoubtedly, the evolution of VAS was through the SMS services, and that was probably the first value add after the mobile calling services which the consumers even experienced. Since then SMS have been equally popular. Yes, because of the competition getting fierce the service providers have made them interesting & playful as well.

The very concept of VAS got popular with the telecom industry trying to get the first among each other by more value addition and less costs. However, due to the technology there has been considerable time taken in offering better & interesting deals. But, by that time various industry segments & categories started picking up VAS as a part of their product/service strategy. So we can say that the success of sms service as VAS is essentially the say that the success of sms service as VAS is essentially the turning point for the marketers in service industry.

VAS as such is a popular term, has emerged as a separate category in the service industry. Almost all the segments of service industry are picking up the concept of VAS and those who have already are looking for constant innovation, because competition is fierce and customer is informed. Let us look at the VAS in the current marketing scene briefly in the Telecom, Media & Entertainment & Healthcare sectors.

VAS ENHANCING THE POSSIBILITIES OF VALUE PROPOSITION

Coming to the Value Proposition being created by Value Added Services, first let us see what is Value Proposition? Creating a value proposition is a work of Craft & Creativity. Your message should deliver the value proposed by facilitating the customer with an answer to, Why the customer should buy this product/service and precisely, why now?

In marketing terms, we can also define value proposition as a Positioning Statement of a Brand. In VAS it is a statement of service & promise.

A value added service has the property to add up to the value proposition through various ways like consumer benefit, convenience in offering, minimal or no cost and then the marketer communicates the proposition in a variety of visual & textual ways.

A LIGHT-HEARTED EXAMPLE

It’s tongue-in-cheek, but demonstrates how the template can be used.

For a 20 somebody from a call center who wants to sort a messed up relationship, our Love Guru Service is a live mobile help, which provides a customized relationship consulting & tips anywhere.

Unlike radio shows, Love Guru takes care of the confidentiality & individuality, and gives an option to keep the consulting personal.

This is because of our unique customer based & customer oriented value added services. Love Guru - the so personalized & customized Mobile Consultant.

Tip for Readers: Try your value proposition on your colleagues, friends etc and more importantly on the prospective buyers, if you are a service provider.


Telecom industry today survives, competes and excels on the basis of Value Added Services. VAS has almost got embedded in the service offerings of all the telecom service providers. The emergence & growth of VAS in telecom has been phenomenal and the competition fierce. The technology has played its role and the customer is getting all enslaved to technical convenience. And for that they are ready to pay because it saves time & effort as well.

VAS in Telecom is popular in the following service categories:

  • Entertainment VAS
  • Info VAS
  • mCommerce VAS
  • Mobile Advertising
  • 3G Technology
  • Mobile Music

If we go by the figures, Value Added Services in the telecom sector is expected to be Rs. US $ 4 billion Industry in India by 2015. Currently the industry which is pegged around revenue of US $1.2 billion will see major growth in the music and mobile gaming segments suggests a PricewaterhouseCoopers report.

Media & Entertainment:

Similarly, there has been a great hue & cry for the content, maintenance and control in the media & entertainment industry. The media segmentation and proliferation has led to the formation of special niche segment of audiences with their own choices and preferences. This has put the service providers to innovate their offerings to get the maximum audience. And that’s why VAS is emerging fast in the Media & Entertainment Industry especially through the Reality Shows, Engagement Marketing etc. IPL, Roadies, Little champs being the latest example. However, Star Plus’s KBC is still remembered as the trend setter.

Technically speaking the following are the future trends which all the service providers eye for higher revenue generation,

  1. Online Radio & Music
  2. Digital TV
  3. Adver -gaming & Mobile Gaming etc

Going by a recent research study, as per the FICCI - Federation of Indian Chambers of Commerce and Industry and KPMG, media & entertainment industry in India is likely to touch US$ 20.09 billion by 2013. The projected growth rate is 12.5 percent per annum for the next five years.

The popularity of VAS is tremendous in the marketing circles. Not only the popularity, the opportunities and scope are outstanding as the very concept of VAS survives on constant innovation. The customer is informed & demanding so are the channels. Latest success story in innovation offering is of Viacom’s most recent biggest success, Colors – the channel leader with its entire well thought of shows.

Healthcare:

Though, there are comparatively larger costs involved in the healthcare industry, the following are the popular category of value added service in healthcare,

  • Private Rooms
  • Spiritual Architecture
  • CAMS – Complimentary & Alternative Medicine Systems
  • Dietary Services
  • Commercial VAS
  • Telemedicine etc

Education, Retail & Professional Services is also fast adopted Value Added Services as an integral part of their service umbrellas. The popularity of VAS and the success rate is the driving force for the marketers who are now planning to offer to its customers something extra.

There are both Growth drivers and barriers of VAS in the Indian Markets. The customer response is so far so good and the marketer is happy for it, and is encouraged to offer something more & different but there is certain lacunae in the system which turns the situation into a wary one. To list a few barriers -

  • Limited focus – On Youth & Entertainment
  • Content Piracy
  • Lack of Infrastructure
  • Limited Pocket Share of the customers
  • High costs to end users
  • Absence of Utility Services
  • Lack of transparency in revenue sharing
  • Underdeveloped WAP market

VAS is emerging, evolving & growing very fast. A start-up venture for the telecom sector is now becoming a stepping stone of marketing innovation. Phillip Kotler said, ‘Customer is the king’ and services marketing is living up to the expectations of the king – the customer. The customer seeks variety, choices, offers, schemes, benefits etc to make a decision which is value for money. As a result of this, each industry category is welcoming the cost effective tool for new age marketers – Value Added Services. VAS definitely is the future of marketing.

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