Bundling for Business

FRAMINGHAM, MA — NOVEMBER 7, 2000 — Small business interest in bundled telecommunications is on the rise. According to IDC's 2000 Telecom Business Brands Survey, despite recent issues raised about bundled services, 58% of small business respondents would like all of their services bundled. About one-third of the respondents are especially interested in seeing long distance and local services combined on one bill.


"Telcos are interested in figuring out how to efficiently capture small business share," said Thomas Kiersted, research manager for IDC's Telecommunications Business Brands program. "But there are real challenges. The small business market is not particularly sophisticated as telecom purchasers, the kind of one-to-one marketing effort telcos expend on large accounts is unfeasible, and pure price-based plays (the easiest pitches to make) are unpalatable to providers. Done right, bundling is another avenue to attract and retain small business telecom dollars."

A key element to a successful bundling effort aimed at small businesses is to ensure that the bundle offers enhanced convenience and ease, not just a confusing welter of prices and services that happen to come from one provider. Of the small businesses that report buying bundled services, two-thirds say local and more than half say long distance are services provided in their integrated package. Additionally, more than one-quarter of all respondents are interested in a bundle that includes cellular/PCS or Internet service.

The use of bundling services across regions varies. Respondents in the Bell Atlantic North region report the greatest use (28%), followed by U S WEST (22%) and Bell Atlantic South (20%).

"To succeed, smaller telcos will need to build successful bundles that induce small businesses to purchase a greater number of services," Kiersted said. "In addition, they will need to flank against encroaching price snipers and create compelling products that differentiate themselves from the competition."

IDC recently published two reports that discuss the role of telecommunications in the small business market. Bundling for Business: What Small Businesses Really Want, 2000 (IDC #B23033) examines small business consumer interest in purchasing bundled telecommunications products. Data is broken out by region, company size and annual revenue, years in business, industry, and product usage.

The study answers the following questions: Why do businesses want bundles and what can a provider do to tap into the small business market?

Business Telecommunications Brand Image Assessment, 2000: Awareness, Confidence, and the BI2 (IDC #B23006) analyzes the brand image of a large selection of telecommunications brands relevant to the U.S. small business market. The report presents data on awareness of these brands and confidence in these brands as primary providers of telecom services. IDC's unique Brand Image Index (BI2) was used to provide a means of direct comparison in terms of the relative strengths of the brands across multiple business demographics, telecom service usage profiles, and regional Bell operating companies (RBOC) regions. The report also looks at the link between service satisfaction and brand image and other brand-related issues.

To purchase either report, contact Bruce Atlas at 1-800-343-4952, extension 4053, or at batlas@idc.com.

About IDC

IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and ebusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in-depth analysis, and client interaction, IDC forecasts worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC's customers comprise the world's leading IT suppliers, IT organizations, ebusiness companies and the financial community. Additional information can be found at www.idc.com.

IDC is a division of IDG, the world's leading IT media, research and exposition company.

# # #

All product and company names may be trademarks or registered trademarks of their respective holders.