British Telecom

Current SME Segment Seg Description Current revenue CAGR Possible Future revenue Comp Intensity Penetration

AT&T A Convenient 52% 6% 41% High Low

Sprint B Low price, easy connection 24% 15% 29% High Low

Comcast C User friendly phone interface 14% 12% 15% Low Hard

Verizon D Intl Access 10% 20% 15% Low Hard

None E Portibility 0% unknw Low Hard

None F Reliability 0% unknw Low Hard

Untapped G User friendly phone interface & Intl Access up to 30% Low Hard

Untapped H Convenient & Low price up to 70% High Low

• BT should target the most valuable segment, existing or new segment. Of the existing segments Segment A which has the lowest CAGR is still the most valuable segment, in addition if this existing segment was selected, it has low penetration and hence low barriers to entry. The high competition intensity would simply mean that BT would have to develop a value proposition for a segment that is already dominated by the largest telecoms company in the US, which already has a strong brand presence. Given that an value proposition would be very similar to AT&T, this segment would not be idea.

• Although portability and reliability would be both benefits to the customer, it appears from the research conducted that these benefits do not hold significant value to the customer/rank highly as a “must have” benefit. When determining benefits, benefit assertion & value assumption should be avoided.

• Of the two new proposed segment combinations, the Convenience (A) and Low Price (B) segments would be the most valuable segment to target. Both of these segments have low penetration (i.e. low barriers to entry) and could result in revenues of up to 70%. BT would need to create value proposition that were distinctive, measurable and sustainable. BT could position it’s product offering as low cost and easy to use.