Decision to Go With Youth

¶ … decision to go with youth as the initial target market was simple. The team viewed the i-mode as an end, not a means. The end was communication. By taking this broad, benefits-based view of their product, the team realized that the youth market was the most in need of alternate means of communication and decided to target this underserved market.

The decision to utilize third party content was born of the desire to specialize in the communication, rather than vertically integrate into content. The decision to carefully control third party content was made in order to ensure that the content added value. The team understood that if they were going to market the devise on the basis of its content, that content had to be of high quality, particularly during the launch phase.

The decision about technology standards was made in large part to enhance the convenience value of the i-mode. WAP's inconsistent standards were a factor, but also NTT wanted to make life easier for its content suppliers to deliver quality content. The necessity of having two sites -- one for WAP and one for HTML -- doomed WAP in this case.

The hardware standards were dictated by a view of the customers' needs. The team knew that NTT had considerable power over its suppliers, enough that it was already dictating hardware standards to them. With four major firms competing for the business, they would give NTT the standards it desired, or risk losing the business to the other three firms.

The advertising policy was designed around the core service that was being delivered -- content. NTT was able to do this because the i-mode had first mover advantage. It was the default product for this form of content dissemination. The content is the main benefit provided to the consumer, so the decision was made to highlight that.

The decision on pricing reflected the desire to make the purchase an impulse one. NTT realized that bandwidth usage was going to be as important a revenue driver as the subscription fee. Thus, it set prices for both at points that would allow the product to be ubiquitous. The was facilitated by the decision to build the system around the existing technology, keeping fixed costs low.

2. With each of these decisions came certain risks. The decision on the initial target market was a major risk because Japanese youth had shown little inclination to the Internet. Marketing to youth, if unsuccessful, would also turn off other potential markets. The project risked miserable failure on account of targeting an unproven market.

The decision on third party content was made in part to simplify the business model. However, NTT was then reliant on having willing third party suppliers that were able to deliver the content that would attract their audience. It was unknown at the time whether they could -- the result could have been failure.

There is always a risk in using inferior technology standards. The target market could turn its back on inferior technology. Worse, a competitor could find a way to achieve the same performance as NTT, but with superior technology. Content providers could have been less hesitant that anticipated with regard to implementing WAP, opening the door for a competitor to crush NTT.

There were two major risks with respect to the hardware. The first is that that manufacturers refused to meet NTT's specs. The result would have been products that NTT did not envision. Alternately, manufacturers may not have been able to deliver on NTT's specs. This could have delayed the project or forced NTT to accept inferior products. Remember that that size and pricing of the i-mode were built into those specs, and a change in either could have reduced the product's overall attractiveness.

The decision with respect to advertising could have backfired. De-emphasizing the i-mode brand could have opened the door for competitors to deliver the same service offering, but build a higher degree of brand recognition and loyalty. NTT took a major risk in focusing its advertising efforts around the content -- it only had some control over content quality and consumers could easily have become disappointed.