I do wonder why they went into administration with high quality training and company direction like this...
Top Gear Tigers and Bingo Boilers: Farewell then, Phones4U
"Their marketing seemed to be aimed at the more erm ... chav infested end of the market", wrote one Reg reader on the demise of Phones4U, which went into administration on Sunday. But the drinking classes needs phones too, and why shouldn't they have them? Phones4U catered to this need very astutely, and with more care than …
COMMENTS
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Thursday 18th September 2014 07:23 GMT returnmyjedi
Sadly based on their profitability (£100m profit on £1bn sales) this brands of training was clearly serving them well, assuming it continued beyond the mid 2000s. If it wasn't for the networks wanting to cream off as much margin as possible the bingo boilers and top gear tigers would still have somewhere to buy their gear (although the advent of the iPhone kinda blurred these class segmentations).
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Thursday 18th September 2014 11:25 GMT Anonymous Coward
"I do wonder why they went into administration with high quality training and company direction like this..."
Why? Ratners were doing a treat until Gerald made his fatal faux pas, and Phones 4U's problem was simply that the MNOs decided they would cut out the middlemen.
The relationship between buyer and seller has been fraught since commerce first began, and the fake bonhommie of salesmen is equally old. And what's wrong with that? People on these forums routinely moan about sales drones, or sales droids, and similarly insulting terms, and you think that the sellers should hold YOU in high regard?
I regard car salesmen as lazy, greasy, foul-smelling mobile dandruff dispensers. I doubt they hold me in any higher regard. But so long as we're tolerably polite, and I get a car at the price I want, does it matter what they call me behind my back, or what insulting headline they use for me in their segmentation model?
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Thursday 18th September 2014 13:57 GMT Jim 59
I regard car salesmen as lazy, greasy, foul-smelling mobile dandruff dispensers.
Really ? I have found them to be friendly, efficient, usually well dressed and presented.
When 'tards complain of "sales droids" they are really complaining about the company saving money by employing people as young as possible, paying them as little as possible and offering no training.
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Thursday 18th September 2014 18:29 GMT Anonymous Coward
"Really ? I have found them to be friendly, efficient, usually well dressed and presented."
We obviously move in different markets. Presumably you're spending more than I am, and you're happy to see your money spent on plusher showrooms and salesmen with social skills and hygiene. In my world I also have to put up with the pantomime of "not sure I can do it for X, I'll have to go and speak to my boss", tasteless coffee and the like.
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Thursday 18th September 2014 18:46 GMT Michael Strorm
Killed by operators, yes, but was private equity to blame too?
Well, as others have commented, that quite plainly *wasn't* the reason they went bankrupt.
It's quite clear that the company was in serious trouble as soon as the operators decided to stop supplying it with phones, and obvious that this was a deliberate (and successful) attempt to kill a no-longer-wanted middleman and reduce competition in the market. Yet, while this was what obviously triggered their collapse, it wasn't the whole story.
It's notable that Phones 4U was bought about eight years ago by BC Partners, a private equity company. Private equity firms are- as many readers may know- notorious for asset stripping, squeezing companies for all they're worth and in particular, for leaching money out of the company by creating financial obligations to companies they just happen to control.
This piling on of debt of course eventually leads to financial trouble or bankruptcy, but what does that matter when they get to keep the money? OpCapita- the private equity owners of Comet- for example, came out of that deal with a profit despite the company going bankrupt just a year after they bought it:-
http://www.telegraph.co.uk/finance/comment/9649664/Comet-another-OpCapita-kiss-of-death.html
(OpCapita also made a profit on their purchase of MFI despite it having gone bankrupt under their ownership).
Similarly, Phones 4U, despite apparently selling phones quite well until the operetors pulled the plug, had been loaded with debt by its private equity owner. From two Financial Times articles:-
http://www.ft.com/cms/s/0/f53a3ea6-3cd2-11e4-871d-00144feabdc0.html#axzz3Dh0JNsOX
"The collapse came a year after BC Partners, Phones 4U’s owner, took out a £200m dividend by adding more debt to the company."
http://www.ft.com/cms/s/0/dff9383c-3cb7-11e4-9733-00144feabdc0.html#axzz3Dh4q1OGr
"Phones4U may also have been hampered in its negotiations with operators [..] by its leverage. [..] This may have limited its ability to hand back margin to operators compared with rival Dixons Carphone."
Does this explain why the company went so suddenly into bankruptcy as soon as the carriers pulled the plug- that the PE owners had leveraged the company as far as its profits would allow, and as soon as those profits quite clearly wouldn't be sustained they were unable to handle their obligations and legally obliged to declare bankruptcy?
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Thursday 18th September 2014 19:57 GMT jonathanb
Re: Killed by operators, yes, but was private equity to blame too?
Any company would go bankrupt if they didn't have a product to sell. Phones 4U did still have a load of money in the bank, but without a product to sell, the directors were legally obliged to act in the best interests of the creditors and not waste money on overheads with no sales to cover them.
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Thursday 18th September 2014 21:51 GMT Michael Strorm
Re: Killed by operators, yes, but was private equity to blame too?
Yes, it's clear that if there was no prospect of that business model ever being workable again (due to the refusal of the operators to supply them with phones), then the business would eventually go bankrupt- or at least be a pointless drain on that pile of money- regardless of how much was in the bank.
But- correct me if I'm wrong- if they'd had enough to pay off their debts, then wouldn't they have done that, closed the dead-end business down and returned the money to the shareholders? I'm assuming that- even if it was in the owners' benefit (and, as I said, PE firms are generally dodgy and manipulative like that) they wouldn't be allowed to simply declare bankruptcy unless they met certain legal criteria regarding that company's clear inability to meet obligations.
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Friday 19th September 2014 06:57 GMT Anonymous Coward
Re: Killed by operators, yes, but was private equity to blame too?
"But- correct me if I'm wrong- if they'd had enough to pay off their debts, then wouldn't they have done that, closed the dead-end business down and returned the money to the shareholders?"
Why? BC partners probably knew the big middlemen in the phone market were all living on borrowed time. But by issuing a load of bonds they moved the risk onto people so stupid they should be thrown in prison for life for criminal stupidity, and the cash from the bond issue will have been passed back to BC and their mates. Meanwhile financial regulators worry about trivia, and look the other way when people try and report fraudulent corporate finance activity.
Private equity could in theory do a good job of realising value from businesses that the secondary equity markets can't support. In practice they and the big banks are in cahoots as rapacious, unregulated thieves, and we're currently back in 2006, with the PE houses doing monster re-leveraging deals to foist debt onto businesses that can't support that in the long term, the criminals and fools at the banks are lapping up this toxic debt, and (unbelievably) even tiered sub-prime debt is making an appearance, bring back the CDOs that wrought havoc in 2009.
Maybe it will end well this time? We could ask the employees of Phones4U? Or those of Maplin when that goes down trailing heavy smoke.
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Friday 19th September 2014 13:47 GMT Michael Strorm
Re: Killed by operators, yes, but was private equity to blame too?
@Ledswinger; Very good post, but to be clear, my original point *was* that they didn't have enough cash on hand to cover their intentionally-accumulated debt burden.
I was replying to Jonathanb's comment in order to point out that if- as *he* suggested- they'd had sufficient cash then they wouldn't have been allowed to go bankrupt until that cash ran out(?) They could have shut down the company, but that'd be something different.
The fact that they did actually go bankrupt almost straight away suggests that this wasn't the case.
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Thursday 18th September 2014 07:58 GMT billynomates
Re: Slides don't surprise me
Errr. Why would you go into a phone shop if you wanted to avoid a sales rep? Surely it's a natural thing for a salesman to aproach a customer and ask what they want. i've always found a quick 'no thanks just looking' a perfectly satisfactory response..
Anyway they p4u gave me an amazing deal on the boys firstsmartphone. A tenner a month for a Lumia. In and out in ten minutes a duration which the O2 girl had barely managed to access her computer and start trying to flog me an iPhone.
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Thursday 18th September 2014 09:32 GMT DrXym
Re: Slides don't surprise me
"Errr. Why would you go into a phone shop if you wanted to avoid a sales rep? Surely it's a natural thing for a salesman to aproach a customer and ask what they want. i've always found a quick 'no thanks just looking' a perfectly satisfactory response.."
This may come as a shocker but some people like to be able to browse througha shop without being pounced on by a salesrep the second they step in the door. If I have a question to ask or I'm interested in buying something I am capable of asking for assistance.
Perhaps you prefer the American model where you get "help" whether you asked for it or not -- where the person bothers you purely because they're on a commission. I don't. I find it annoying and pushy.
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Thursday 18th September 2014 09:52 GMT Nigel 11
Re: Slides don't surprise me
Why would you go into a phone shop if you wanted to avoid a sales rep?
To look at and handle some phones?
This might be part of their demise. Back when phones had buttons (and features rather than apps) touch and feel (and even sales-guidance) was important. Now they are all touch-slabs running Android(*), you don't need high-street outlets. Especially don't need high-street outlets not working for you (the phone network).
I knew what Android was like from friends who'd got a smartphone before I did. Choosing a phone was mostly down to internet reviews and simple parameters like size, weight, and (reviewer-compared) battery life. Then I bought through Amazon at lowest pricce, and it turned up the next day (with a user manual in Estonian, but what hey, nothing wrong with the phone).
(*) Yes I do know about iPhones and WinPhones. I just don't want one.
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Thursday 18th September 2014 13:31 GMT Anonymous Coward
Re: Slides don't surprise me
I've always found, with all sales reps (not just phones) that they'll only ask if you want help, if you do not want it. The moment you walk into a store and go "I need help doing something" you will never find a salesperson to give you a hand. They'll either have an odd lazy moment and not approach you, while hididng somewhere, be busy with other customers, or quite possibly fall into some alternate dimension.
This is especially true of tech stores however. Went to currys once looking at something, I forget what. Ambling around the laptop area out of boredom (and to laugh at the prices) I was approached by not one, not two, but three different sales reps asking if I needed help with anything. Got bored of laptops and went to whatever it was I was actually looking for. I had a question about it, and in that moment the entire shop floor cleared out. There was one person at the till with a large number of customers waiting to pay, one guy at their 'tech desk' again with several customers waiting. That was it. Every sales person had vanished into thin air.
Gave up, went on google to get my answer. Moment I did the salespeople all rematerialized.
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Saturday 20th September 2014 07:38 GMT Martin an gof
Re: Slides don't surprise me
I've always found, with all sales reps (not just phones) that they'll only ask if you want help, if you do not want it. The moment you walk into a store and go "I need help doing something" you will never find a salesperson to give you a hand.
Exactly the same here. I think it's the fact that if you appear to be wandering aimlessly ("just browsing") they imagine that they can "guide" you in what to buy, and perhaps persuade you to buy something better - for their sales figures - than you might actually need.
If, on the other hand, you look purposeful on entering the shop, go straight to the shelf you need, begin comparing prices online and have specific questions about one or two particular devices they know that they have no chance, because you have already decided - pretty much - what you want and can't be persuaded otherwise. In the case of technology shops, there's also the likelihood that the sales reps know less about the product than you do, and they may realise that they can't fob you off with semi-accurate answers, or even downright lies.
It's not just technology shops, we had the exact same experience a few years ago looking for a new car. Wanted to look at a Polo in a VW dealer, dealer reluctantly came over to show us how to open the boot (wasn't obvious) but wandered away immediately s/he (can't remember) realised that we had a particular model in mind and weren't open to being persuaded further up the model range. We never had a chance to ask questions about servicing, miles per gallon, finance options and suchlike. Other dealers weren't quite so bad, but still not what we were hoping for in 2011 when sales of anything were sluggish at best.
Best experience? Richer Sounds. There, they actually like it if you go in knowing pretty much what you want and have already checked online if it's in stock. There is some mileage in them selling you something more expensive than you really need, but their main aim is to get as many sales through the till in as short a time as possible and I've always found them (Cardiff stores) very helpful.
M.
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Thursday 18th September 2014 23:20 GMT Anonymous Coward
Re: Slides don't surprise me
"Soccer dad."
Why are they called "soccer" dads in this case anyway? Did the guide writers think they were American or something? Or is this just a lazy adaptation of the American term "soccer mom", despite that term reflecting something quite different (an American social referring to mothers with school-age kids and the American status of football.... sorry, "soccer").
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Thursday 18th September 2014 08:56 GMT Fihart
Don't fall into those pre-defined roles.
You do, but you just don't know it.
Seriously though, these primitive (but needlessly complex) ways of expressing target audience are the domain of marketing graduate product managers whose powerpoint-think is the bane of life for ad agencies.
Granted, the visual mnemonic fingers for phones 4 U memorably summarises both the name and the chav target, but by and large creative pros in agencies ignore all "research" and follow their instincts.
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Thursday 18th September 2014 11:36 GMT Anonymous Coward
Re: Don't fall into those pre-defined roles.@ Fihart
"but by and large creative pros in agencies ignore all "research" and follow their instincts"
"Create pros"! Bwahahahahahahaha! You mean the weirdly dressed kn0b ends who come up with a new corporate slogan or logo, and then expect to be paid several million quid for ten minutes work that doesn't really have any impact on the company's performance?
I used to work for a high end professional services firm, and they spent a seven figure sum having some "creative" t**t change their logo and corporate colour scheme. Meanwhile, the actual winning of work was done by the fee earning partners and juniors, with some assistance from the business development team.
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Thursday 18th September 2014 13:37 GMT Anonymous Coward
Re: Don't fall into those pre-defined roles.@ Fihart
I just love the rationals behind the logos.
"By reducing this section of colour here, and expanding this section here it forms a wave which illicits both feeling of calm, and a lust for adventures. By changing from this shade of blue to this one, we're illiciting a dynamic shift of focus which will grab the customers attention and scream "Buy me"
Or in other words, they took the existing logo, tweaked the boundries between sections and adjusted the colour using curves or something. The professional equivalent of submitting a wikipedia article that you've combed through with a theasaurus, only with less effort involved.
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Thursday 18th September 2014 20:25 GMT TheOtherHobbes
Re: Don't fall into those pre-defined roles.@ Fihart
Most 'design' work actually consists of relentlessly flattering manudjmunt and making the talentless plonkers feel important.
That's what companies really pay for when they hire a design shop - hours of board-level day care, with activities.
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Monday 22nd September 2014 13:19 GMT Anonymous Coward
Re: Don't fall into those pre-defined roles.@ Fihart
I'm somewhat convinced that these people go on a simple process of the three options
There is the correct option, the simple flattering design very similar to the existing logo etc, and two wacky designs that are too screwed up to choose. They then give management these 'three options' convinced that the other designs are so bad, nobody in their right minds would pick them.
I'm sure they attempted this same thing with the london2012 olympic logo. Sadly management made the wrong choice and went for lisa simpson giving London a BJ.
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Thursday 18th September 2014 10:05 GMT Cliff
Demographic targeting
Makes sense all round to sell the right phone and contract to the right person, and based on sweeping generalisations that are actually more specific than look, you get to shortcut the guessing game somewhat.
I'm slightly sorry they've gone, sad for those who lost jobs principally, but am relieved that the crappy as campaign with the smug American twat will never be repeated. Amazing they got any business at all with that campaign.
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Thursday 18th September 2014 18:04 GMT Cliff
Re: Demographic targeting
Yes but...
If it takes time to sell a phone to a person, and trying to sell the most expensive phone to the person who'll never get cleared for network subsidised handsets, you're wasting money. Sell them the most expensive phone they can afford, not the most expensive phone.
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Thursday 18th September 2014 10:55 GMT Rikkeh
I briefly did marketing
I was young and foolish (i.e. a student). I did one internship and never looked back!
The clusters that they've identified will be the results of some fairly large-scale surveying of the customers in their stores and the statements are likely to have been at least based on things that customers actually said (if not actual verbatim quotes).
The slightly snobby but catchy names are fairly standard on the research end of the dark art that is marketing. It's also worth noting that graduates who work in marketing and do the legwork for these presentations are overworked and very poorly paid compared to their university contemporaries (to add insult to injury they're not even doing something worthy or even particularly creative when all's said and done, which would take the edge off a lower pay packet). I suspect giving a degrading nickname to a group of people who work less than they do but who have a lot more money is cathartic for them.
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Thursday 18th September 2014 11:19 GMT Yugguy
Re: I briefly did marketing
This is why market research is bollocks son.
Because people will describe themselves according to what they WISH they were like, not what they actually are.
"Yeah, I'm out every night of the week, mate, lady killer me..."
=
"Er, I mostly just watch Casualty. And then crack one off."
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Thursday 18th September 2014 12:51 GMT Yugguy
Re: bollocks
I dunno. I have a deep, ingrained resistance to this kind of thing - what demographic group do I belong to. I am not an insect. So I detest targetted marketing as I do not like to be thought of that way.
I'd be one of those purged from the Martian herd. (Quatermass and The Pit)
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Thursday 18th September 2014 18:23 GMT Kubla Cant
Re: I briefly did marketing
@Yugguy Because people will describe themselves according to what they WISH they were like, not what they actually are.
I know the social sciences are extensively, and perhaps justifiably, derided in this forum, but market researchers aren't completely stupid. There's a bit more to survey design than just asking people to describe themselves, and a competent researcher would go to great lengths to eliminate this kind of bias.
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Thursday 18th September 2014 11:49 GMT Anonymous Coward
Re: I briefly did marketing
"they're not even doing something worthy"
Actually, done well, it is very worthy, and I commend you for having done it. In any retail business you can't personally know your customers, segmentation is (done well) an adequate approximation that covers the most profitable groups of customers, and identifies solutions that fit their needs. Now, go back to your marketing theory, and what was it about? Som't like "identifying and meeting the needs of consumers by creating appropriate offers and making customers aware"?
The problem for the marketing grads and careerists, is that they think that poncing around with "brand image", having free lunches in the name of PR, or commissioning high cost self-aggrandising ad campaigns is valuable. It isn't, it is simply what they would like to do, and within the marketing silo stuff like segmentation or writing collateral is certainly seen as unglamorous work to be dumped on the most junior employee to hand.
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Thursday 18th September 2014 13:06 GMT kmac499
Targeted marketing..
Ok hands up anyone who has bought something because it popped up in a targeted sidebar..
Ok let's make it easier, hands up anyone who clicked on an advert in a sidebar.. (Then tried to get back to where they were...grrr)
Hands up anyone who thinks the targeted adverts around the text you are actually reading is just pretty colours and as it is on the edge of your tunnel vision doesn't even form into words..
Yeah thought so; me too....
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Thursday 18th September 2014 13:24 GMT Anonymous Coward
I am that meldrew man
And I dont even have a functional mobile phone right now.
Maybe what happened is that we all grew up, got tired of gadgets we didn't need and couldn't afford.
The end of Ratner's consumer society? It can't come too soon..
If I had all the money I've spent on drink, I'd spend it on drink.
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Thursday 18th September 2014 13:57 GMT Anonymous Coward
Silver PS3 in late 2005?
The document- dated November 2005- seems genuine in most respects, as it has that "subtly dated" vibe that more obviously gives away its better-part-of-a-decade-old age when you look at the details (e.g. focus on SMS and MMS(!), mid-noughties pre-smartphone mentality).
*But*... what's with the picture of a silver PlayStation 3 (on the "Young Guns" page near the start), around a year before the PS3 itself launched? Was that even in existence at the time?
(Yes, I do appreciate that the sprayed silver finish now looks more datedly of that time than the original black, but was it around at launch, let alone a year before?)
And... is it just me, or do all the types of men listed there seem to overlap quite a lot, i.e. all football-watching, one-of-the-lads types with minor differences in age range and income?
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Thursday 18th September 2014 14:33 GMT Anonymous Coward
Nothing wrong with Pay as you go
Had a mobile for 15 years and apart from a couple of months where I tried a SIM only pay monthly deal I've bought my handset SIM free and used PAYG.
I ditched the pay monthly deals as it irked me that I was being charged for minutes I would not use as I don't have my phone clamped to my ear 24/7 nor wander around with no regard to my personal safety or that of others staring at the Facebook or Twitter app desperate to find out what my mate has just eaten or what their opinion is on a reality show.
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Thursday 18th September 2014 15:39 GMT Fogcat
It's not surprising that they had these classifications, the only slightly unusual thing about them is the less than flattering titles. What really counts is the data used to build them. The one I'm familiar with is Mosaic
http://en.wikipedia.org/wiki/Mosaic_%28geodemography%29
Which in a past life I was involved in creating, we did have to tactfully suggest alternative names for some of the classification titles that the MD came up with.