On 18 July, mobile service provider Orange launched an add-on offer exclusively targeted at the youth market in the U.K. Called U24, it is available only to users (both monthly and prepaid) with new or existing plans who are under the age of 24 and consists of free unlimited in-network calls and texts within the U.K. and 1 GB of free extra data allowance per month. These benefits will be added to the terms of whatever Orange plan the user currently has or to which a new customer subscribes. In order to get U24, pay-as-you-go customers must top up by at least £15.00, and monthly subscribers must be spending at least £15.00 on their plans.

U24 also has an app – available to download for Apple, Android, and BlackBerry devices – that scans the user’s contacts and highlights those whose phones are on the Orange or T-Mobile networks. (Under a cooperative agreement between the two providers in the U.K., Orange subscribers can use the T-Mobile signal where needed and vice versa, effectively expanding the coverage area for both companies.)

Tarifica’s Take

With this offer, Orange clearly intends to capture market share in the highly desirable youth demographic and to turn these users, who have just started or are about to start their careers, into loyal long-term customers. This strategy is by no means unique to Orange – mobile providers worldwide have recently been launching a variety of youth-oriented budget plans and add-ons. In the developing world, where mobile-data-hungry young people represent a relatively large proportion of the population, this approach has proven profitable. We believe that youth niche marketing is and will be a viable strategy for mobile providers in the developed and developing worlds alike.

Beyond that, Orange’s offer exemplifies an even broader trend in the mobile telecom industry: ever-more-tightly-focused niche marketing. As of the end of last year, the number of mobile subscriptions worldwide passed the six billion mark, and three in four people now have mobile phones. In the developed countries, penetration in the mobile phone market is generally at or above 100 percent. As Tarifica’s analysts pointed out in their January 2012 Mobile Pricing Report, “the days of settling virgin territory are over, and carriers know it.” Instead, carriers are trying to increase average revenue per user (ARPU) by creating add-ons to existing plans that attract ever more narrow segments of the market, thereby further enhancing their ability to draw-in new subscribers, as well as up-sell existing ones.

Within the last year, in addition to youth plans, service providers have launched flexible-allocation plans, SIM-only plans, small-business plans, and even plans for users who want to call only at night. From niche to super-niche, slicing and dicing the mobile marketplace appears to be the wave of the present, not to mention the future.