±±¾©Èü³µpk10

At stake is a £300m mature market with lucrative operating margins. The forced withdrawal of BT's 192 service in August ensures there is no dominant player.

Low barriers to entry have attracted more than 80 different companies to consider market entry and the laws of marketing dictate that only one, perhaps two, of these entrants will actually attain long-term profitability.

In May last year, Oftel ran a lottery and each market entrant was allocated a random 118 number.

The war had begun. The Number (118 118) instantly stole the high ground.

Its launch strategy provides all marketers with a best-practice example of how to go to market. Allocated 118 811 in the initial draw, it instantly invested £2m to buy the superior 118 118 from another company. The Number then launched a campaign at the start of 2003 featuring the now infamous moustached runners.

By June it had spent £5m on ads, attained considerable levels of brand awareness and, because most competitors were waiting for deregulation to actually occur before they launched their service, a significant six-month first-mover advantage.

Most notable among the market laggards was BT. Now operating the 118 500 number, its launch team elected to wait until 192 had been withdrawn before it began to promote its service. A BT spokesperson even boasted: "As the incumbent, we've chosen not to spend money on advertising months and months in advance."

Of course, the only ones who perceived BT as the incumbent was BT itself.

In customers' eyes 118 500 was just another number and vital ground had been lost to The Number, which was now emerging, with 82% brand awareness, as the true market leader.

The Number then excelled with a series of brilliant communication strategies using different communication tools to ensure familiarity with the 118 118 number. A wonderful parody of the Honda 'Cog' ad featuring the ubiquitous runners was created and rapidly became a viral sensation via e-mail. Even athlete David Bedford's lawsuit alleging that the 118 runners were based on his image has been cultivated by PR to generate thousands of pounds in advertising equivalency. The Number realised the secret to customer acquisition was awareness and it has played the game brilliantly.

But there are two kinds of customers: new ones you must acquire and existing ones you must keep. Despite the fact that almost all media and managerial attention remains focused on the former, it is the latter that makes or breaks a company's profitability.

Having won the battle for acquisition, the challenge for The Number is to win the battle for retention. Recent research from ICM highlighting shoddy practices in The Number's call centres and a much poorer quality of service compared with the experienced operators at BT suggests The Number may struggle with the demands of retention. The war continues.