Dynamic Pricing in Telecom: A Case Study on Zong

Abstract

This study explores the feasibility and effects of implementing dynamic pricing in Pakistan’s telecom sector, specifically focusing on Zong CMPak Ltd. Telecom market of Pakistan is getting more and more saturated with over 196 million mobile subscribers. Increasing economic pressures, telecom operators are faced with the dual challenge of maintaining profitability while enhancing customer retention. Traditional static pricing models, that provide uniform rates across all segments and regions, have proven ineffective in addressing changing consumer demands, managing network congestion, and optimizing revenue. The research aims to tackle these challenges by exploring a pilot implementation of dynamic pricing across three geographically distinct regions, Region A, Region B, and Region C. The methodology involved segmenting the market based on the market share and customer experience and then making region-specific pricing adjustments for a selected voice offer. The evaluation examined trends in offer activation and revenue changes both before and after the implementation. Recent findings indicate that although there was a negligible decline of only 1% in total offer activations, dynamic pricing contributed to a 5.1% increase in the overall revenue from the voice offer portfolio. Insights specific to each region revealed that regions A & C, where Zong has a dominant market presence, responded positively to premium pricing. In contrast, region B benefited from a modest pricing adjustment. Furthermore, customer behavior showed a drift toward alternative bundles within the portfolio, which helped minimize revenue loss. The study concludes that dynamic pricing is both practical and beneficial in the context of Pakistani telecom industry. It allows a more precise alignment between pricing and network capacity. Key recommendations include expanding dynamic pricing to additional offers, investing in real-time data analytics infrastructure, and ensuring compliance with the Pakistan Telecommunication Authority’s transparency and data privacy regulations. These steps are essential for sustaining growth, enhancing customer satisfaction, and strengthening competitive advantage in a saturated market.