Cingular pursues minority markets

Wireless company recruits dealers with startup incentives

January 20, 2002|By Andrea K. Walker | Andrea K. Walker,SUN STAFF

When Harold Travlee II gutted and renovated a 2,000-square-foot Lanham storefront to house his new cellular phone business, Cingular Wireless paid the bill.

The nation's second-largest wireless company also trained Travlee's five employees and covered the costs for some of the advertising for his business, Etel Wireless.

The deal with Cingular was so good, that Travlee, 33, is planning to open a second 1,100-square-foot store next month at Kings Point Square Shopping Center in Randallstown.

In an initiative it kicked off in the Baltimore-Washington region last summer, Cingular is aggressively recruiting minority dealers like Travlee by using attractive startup packages and promises of healthy revenue sharing.

Atlanta-based Cingular has 21.2 million customers and $12.6 billion in revenue. It hopes to increase sales in the African-American, Asian and Hispanic markets by creating more visibility in neighborhoods that are largely underserved.

"We noticed we didn't have a lot of distributors in these areas and thought it would be a good place to start," said Bruce Myers, Cingular vice president and general manager for the Baltimore-Washington region.

"We want to develop a niche that will help differentiate us from our competitors."

Just about all of the country's cellular phone companies are looking at ways to target new buyers as the customer base shrinks, analysts said. About 40 percent of people carry cell phones today, and that number is expected to reach 70 percent in the next six years.

"As markets become more and more competitive in any industry, the tendency is to segment the marketing area," said Adam Guy, a senior analyst with the Strategis Group in Washington. "In this country we're starting to run out of new customers to attack. It's becoming saturated."

Senior citizens, teen-agers and minorities are among the markets that cellular phone companies are beginning to target with their advertising.

Verizon, for instance, offers special family rate plans, while other companies have bilingual Web sites or phones that give instructions in Spanish.

"You've kind of tapped out your traditional customer base," said Knox Bricken, a wireless communications analyst with the Yankee Group in Boston. "Carriers are trying to look toward alternative target markets."

In the Baltimore-Washington area, Cingular is the only large carrier with a specific plan to go after the minority market. Spokesmen for Sprint PCS and Verizon Wireless said they target all customers.

"Our dealer strategy is to be well-represented in all areas - minority, nonminority, affluent, nonaffluent," said Sprint spokesman Larry McDonnell. "We're very well-represented in all of these areas, but we don't have a program geared toward any specific race or identity."

Cingular hopes that minorities will feel comfortable buying from someone in their neighborhoods who looks like them and understands their culture and experiences.

"There is a level of trust that can be built," said Myers. "Once you build that bond it becomes almost unbreakable."

The company has attracted 20 new minority dealers since the program was established in July, and has increased its number of customers by about 4 percent since December. Cingular executives say they hope to attract 20 dealers to the Baltimore area this year.

Every package is different, but in general, Cingular helps the dealer with building renovations, provides signage and will help secure financing to buy the initial phones and other equipment.

The company will also advertise store locations on its national Web site and provide money for advertising based on the number of customers brought in.

The dealers in turn must hire their own employees, pay the store lease and in most cases sign a three-year contract with Cingular. The dealer gets a commission for every customer brought in and residual fees.

Travlee joined the program in November and sold phones from the field until he opened his store earlier this month. He's sold more than 50 phone packages and hopes to double that by March.

"This program is very strong," Travlee said.

"The program has a strong support mechanism and is set up so people like myself can succeed."

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