By Alok Saboo on February 28th, 2010
Contrary to our initial expectations, Vonage World Plan has really taken off and provided a new life line to Vonage. Before Vonage launched the Vonage world plan, there was a big question mark on the company’s strategies and its ability to compete with the new breed of VoIP service providers. Vonage stock was trading around 25 cents. However, it seems like Vonage has figured out the recipe – Vonage World Plan – to compete and beat its competition. A quick look at the Vonage stock chart reveals a clear performance boost after the launch of Vonage World Plan, indicating that investors seem to value this strategy.
What went right for Vonage:
- Brand Equity: Vonage was one of the first movers in the residential VoIP business – offering a great alternative to residential consumers. The company quickly established a great brand equity and recall among the residential VoIP customers.
- Customer Segmentation: Instead of focusing on the entire VoIP market, Vonage chose to focus on the residential VoIP market. The consumers in this segment value reliability, quality, and are relatively more brand conscious as compared to the broader market. Thus, Vonage could easily leverage its brand equity in this consumer segment and convince its target customers that it could provide all these features.
- Market Knowledge: Vonage was already in the VoIP business and had good understanding of the VoIP market, relations with suppliers, and supporting functions and processes to support the customers. Thus, the investment to provide and support the World Plan was minimal. In contrast, companies such as Comcast would have to develop these competencies to compete with Vonage.
- Size of the Market: Given the amount of migration across borders, there is an increasing need for such a product at an affordable price. The need is acute for certain segment of population that have a higher migration rate, e.g., India, Brazil, Australia, and Israel. By including these countries in the world plan, Vonage was able to attract this huge customer segment.
- Pricing: Finally and most importantly, Vonage was able to price the product correctly. The $25.99 price range was just about right (although we all would have loved a slightly lower price range) to attract hordes of users who are not comfortable or who do not want to play around with ATAs. Comcast, the other player worth talking, offers a much inferior service (in terms of features) – Comcast Digital Voice – for between $40 and $45. Further, it offers unlimited calls only within US and Canada. Thus, for people looking for a off the box service, Vonage World Plan in a no brainer. Not surprisingly, many of my friends or acquaintances have switched from Comcast to Vonage.
As you can see, all these points taken together resulted in the superior performance of Vonage World plan. I would again like to summarize that if you are looking for a simple, no-nonsense, ready to use unlimited calling plan without the worries of configuring your VoIP hardware (ATA), then Vonage World Plan is a serious option.
If you are convinced that Vonage is the right option, then Vonage has a great promotion going on wherein you pay only $14.99 for the first six months – a total saving of $66. You also get the equipment (VoIP adapter) for FREE.