omotional effort is directed at the residential customer with aggressive marketing tactics. Some of AT&T's promotions have attacked their competition's pricing schemes and concentrated on its own strengths in the long-distance market. This resulted in an increased market share as the company successfully lured customers away from MCI and Sprint.
The company also implemented the "True Rewards" program which gives customers who spend at least $25 per month points which can be redeemed for free AT&T minutes, cash, or frequent flier miles on Delta, United and USAir. The points are issued at one point per dollar, which works out to approximately one point per 20 seconds. As an extra incentive, new customers receive triple points their first month. AT&T is not alone in offering this type of promotion, however. MCI and Sprint also have frequent flier programs with major airlines (American and Northwest; TWA, respectively), and Sprint also rewards its members with ten points for each dollar spent. Five thousand points can be redeemed for movie tickets or a tape at a record store; 100,000 points can be redeemed for a three-night cruise to the Bahamas (Hannon, 1994, p. 72).
AT&T's success in gaining market share is not due only to successful advertising, but also to innovative pricing structures. Long distance companies have created tiered pricing structures designed to attract customers, many of which are complicated and difficult for consumers to fully comprehend. However, since AT&T introduced its "Friends and Family II" program in mid-1994, it realized an increase in market share of approximately one percent. The program itself was supported by an advertising campaign that cost more than $369 million during the first half of the year (Lefton, 1994a, p. 40).
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