business

The Rage To Page Has Motorola's Mouth Watering

Two teenagers and two working parents add up to one monumental headache when it comes to coordinating schedules--or even just staying in touch. So about a year ago, How-ard and Linda White of Highland Beach, Fla., outfitted the family with pagers. After that, when 43-year-old Howard's job as a corporate pilot took him out of town unexpectedly, he could beep 17-year-old Matt and 15-year-old Jillian to let them know he wouldn't be able to pick them up from school. To make things even easier, the family soon developed shorthand codes, such as 86, which means "cancel plans." Says IBM executive Linda, 41: "It's really a great way to stay in touch."

That's exactly the message Motorola Inc., which built the pagers the Whites and about 2.9 million other Americans clipped to their belts last year, wants to send to other families. With snappy ads and modish designs in colors such as Bimini Blue and Vibra Pink, the electronics giant is out for every parent, teenager, and citizen it can snag. Consumers account for just 15% of the 15.3 million pagers in use in the U.S., but they're the hot segment, growing 25% annually, compared with 20% for the overall $2.8 billion industry, says market researcher Yankee Group.

HEALTHY MARGINS. Motorola, which controls 85% of the pager market, is the big winner. In 1993, total revenues from sales of handheld units and paging equipment for network operators should grow 30%, to $1.6 billion, predicts Anthony Langham, senior vice-president for NatWest Securities Corp. With relatively healthy 12% operating margins, pagers should play an important role in helping the company score a 66% jump in net income, to $954 million, on a sales increase of 23%, to $16.4 billion, he says.

But the pager rage will do more than help the bottom line. The quest for customers such as the Whites has dragged Motorola back into consumer marketing for the first time since it sold off its Quasar TV line in 1974. The experience of making pagers for a mass market could give the company an important foundation from which to tackle other emerging markets, including wireless modems for personal computers and so-called personal digital assistants (PDAs) such as Apple Computer Inc.'s Newton. Says Robert Fraser, electronics buyer for the 25-store ABC Warehouse chain: "Pagers afford Motorola a tremendous avenue to get name-brand awareness."

Motorola jumped back into consumer marketing two years ago when it saw that declining prices made the easy-to-use devices practical for ordinary citizens--not just for doctors or Wall Street traders. The price for a basic pager that displays the number of the person trying to reach you is $89, down 45% from 1988. The average monthly fee for basic service is $15, vs. $25 in 1987, says industry trade group Telocator.

To get that message out to consumers, Motorola recruited marketing pros to its Boynton Beach (Fla.) paging unit, led by Rob Pollack, a former General Electric and Black & Decker marketer. To emphasize pagers as fashion accessories, Pollack's crew not only peddles pagers in bold colors but also sells packages of three sleeves, in teal, fuchsia, and silver, that slip over a pager and can coordinate with the wearer's clothes.

SOOTHING VOICES. To pull people into stores, Motorola rolled out an ad campaign last spring created by McCann-Erickson. The agency, which had worked for Sony Corp., came up with print and TV ads featuring such vignettes as the young parents who leave a pager with a baby-sitter as they head out to dinner and Little Leaguers who beep Mom when the game is rained out. "Motorola certainly has taken the lead in encouraging consumer appeal," says A. Robert Handell, chief operating officer for Mo-bileComm. Handell credits the ads with spurring more consumer sales for his Jackson (Miss.) paging network.

Motorola is now expanding the boundaries of the paging market. A new credit-card-size version due in September can be inserted in Apple's Newton and Tandy's Zoomer to give those PDAs paging capabilities. The company also plans to test a cellular-phone/pager unit and is already testing voice page, a system that allows a pager to store a voice message, just as an answering machine would. Then there are the more sophisticated alphanumeric pagers (starting at about $179), which can display data such as stock prices and news flashes. And finally, there's two-way paging, which sends an acknowledgement that the message has been received. Two-way paging has received approval from the Federal Communications Commission and will probably be available by yearend.

Because these and other forms of wireless communication are expected to have business and consumer uses, Motorola is now attempting to spread the marketing message across the corporation. The paging sales force has already been put through classes in consumer marketing, and other employees will soon follow. At the same time, a global committee headed by Christopher Galvin, a grandson of the company founder and assistant chief operating officer, is crafting the first companywide marketing strategy. Notes Pollack: "The company understands the importance of building brand image."

BACKLASH? Motorola also understands that things aren't as simple as when it sold TVs and radios. Although pagers are sold at Target, Circuit City, Macy's, and hundreds of other stores, they work only if they're hooked up to a network, so Motorola uses Metromedia and other operators to resell the hardware to stores and then sign up customers for the service. The operators tend to emphasize their service brands, not the manufacturer's brand. Then there's the image problem: Pagers have become so popular with teens that schools have started banning them in classrooms. Also, there's the association with drug dealers. To try to counter that, Motorola print ads prominently display the Good Housekeeping seal.

Any possible problems are far outweighed by paging's sheer potential. The international market, which is already as big as the U.S., is growing rapidly. In China alone, Motorola expects to sell 3 million pagers this year, up from 100,000 in 1990. And even as America's technophiles begin using fancy wireless gizmos such as PDAs, the domestic market is expected to remain strong. "Pagers are going to be the low-cost workhorse of wireless communications for today and tomorrow," asserts Charlie Johnson, president of Pactel Paging. Just ask the Whites: When son Matt enlisted in the Air Force Academy this summer, along went a new pager, to keep him in touch.

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