Vodafone and the Use of Internet - Case Study Example

?Vodafone and the use of internet Executive summary Vodafone Group Plc, the UK based multinational telecommunications company, is currently the world's largest mobile telecommunications firm on the basis of revenues. It was formed in 1982 as a subsidiary of Racal Electronics Plc and it became the largest mobile network in the world in 1987. It became an independent company in September 1991, at which point it changed its name to Vodafone Group Plc. From those beginnings, Vodafone now owns and operates mobile phone networks in more than 30 countries, and also operate through partner networks in more than 40 countries. As it operates in the telecommunication sector, it has optimal internet applications and those applications heighten its power, even while nullifying the threats. It uses internet not only for its operations but also as part of marketing tool, with its website being its main marketing tool. Vodafone UK’s Website is aptly designed providing detailed information about its products and services, but still more interactive can be incorporated. Its B2B model is working aptly benefiting both them and their partners. From ethical angle, Vodafone has included restrictions on adult content for children, so they do not become morally corrupt. Thus, Vodafone’s e-business initiatives through internet are working effectively, with need for only few optimization strategies. E-Business background Vodafone is the world’s largest firm in terms revenues earning more than 45 billion pounds and is the second-largest in terms of subscribers having close to 450 million subscribers as on December 2011. (Vitorovich 2012). In all those operations, internet technologies played and are playing optimal role in Vodafone. Vodafone’s major e-Business achievements include launching the first prepaid analogue package in the UK in 1996, acquiring the largest 3G license available in the UK by 2000 and launching their 3G service in 2004. (Further examples in Appendix A). In terms of services, Vodafone offers Mobile Broadband, Pay As You Go, etc. (Appendix B). As far as products are concerned, Vodafone do not build the phones paired with their service contracts, instead they collaborate with certain manufacturers to create Vodafone-branded phones. According to the Porter’s 5 Forces analysis (Complete analysis in Appendix C), the suppliers of Vodafone have less bargaining power due to the availability of similar handsets from many different manufacturers. On the other hand, the buyers have more bargaining power in relation to Vodafone because with strong alternatives, they can switch to new networks without major financial burden. In addition, with internet offering the buyers the option to compare the various service providers or competitors and their services, buyers have sizable power. (Campbell 2007). There is a fairly low threat of new entrants thanks to the high costs and infrastructure including IT related ones required to compete with the big providers like Vodafone. (Thiele, Blakeway and Hosch 2010). There is a threat of substitutes in the form of mobile internet and the related services like Skype for phone calls, and other social networking options like Facebook, mails, etc., for other communications, but still there will be adequate space for Vodafone to operate. Vodafone faces high competitive rivalry from O2, 3, Orange, T Mobile, Virgin Mobile, Asda Mobile, etc. as they offer internet enabled services and products with good features and at competitive prices. E-Marketing analysis As part of e-marketing, Vodafone carry out optimal marketing strategies through various mediums particularly the internet. With internet as the ‘foundation’, Vodafone does e-marketing through its official websites, other Third Party websites in the form advertisements, press releases, etc., and also through social networking websites. Personalization: The Vodafone’s official website features all its products and services, as well as the benefits of using them, thereby providing the customers to personally choose what they need. It has clear details about the subscription charges as well as the rental charges. This could be associated with the Subscription Model, since they offer monthly and yearly mobile contracts. Participation: The participation of the customers is actualized through online as well as retail stores. Links between Rappa’s Utility Model are visible as Vodafone offer pay and go services through metered usage enabling measurement for billing fees, (Vodafone 2012). These details about their various services are featured in the website and in their retail stores. Due to this two-pronged service, they can be classified as a ‘Click and Mortar’. Their ‘Click and Mortar’ status means they fall under the ‘Merchant Model’. Peer-to-Peer Communities: Vodafone also utilize social networking sites to market their product, as well as provide support directly to their users. Vodafone’s marketing as well as operational tactic of providing clarifications and support through Twitter, is an effective marketing strategy. (Prather 2011; Jackson and Lillekar 2011). Through Twitter, Vodafone is providing “helpful hints on how to make the most of its range of handsets or direct responses to individual customer service queries” (Wray and Arthur 2010). (Fig 1). (Fig 1): Tweets and Facebook posts Predictive Modelling: However, as pointed out in SWOT analysis (Appendix D), Vodafone’s a lack of reach and thereby customers in the rural areas can be attributed not only due to deficient network coverage and performance, but also due to lack of more focused marketing strategies. (Kotler and Armstrong 2004; Jeffries 2007) Webdesign analysis The official website of any organization acts as a key avenue for the prospective as well existing customers to know about the company, its products or services, contact them for queries, etc, etc. Due to its multi-purpose role, the website has to be enticing and the same time informative. A well designed website can only make an effective first impression and provide the customers easy access to all the features and provisions provided in the website. “The website must be superbly functional and must facilitate and enhance the effectiveness of all transactions taking place there.” (Botha, Bothma and Geldenhuys 2008). Vodafone's website is a well-structured one because it categorizes customers on the basis of their background. (Nyland 2007). So, we have separate menus or sections for the customers who use their phones with the Vodafone service. At the very top of the website, customers can click the options of Personal, Business, Corporate and Public Sector, based on their professional background and purpose. (Fig 2) (Fig 2): Screenshot of Vodafone Website (Home Page) Within each section, there are few more menus, which provide details about the products, services and even applications, which are offered by Vodafone. Although, Vodafone is a service provider, its website prominently features the products of mobile phones or handsets, manufactured by other firms but having Vodafone service. Under the menus of mobile phones, prices, mobile internet and apps, there are quite a lot of sub-menu options. The prices menu not only provides monthly and yearly plans, but also guidance on how to manage their plans, details about insurance, freebies, etc. For the other categorizations of Business, corporate and public sector, apart from the discussed common menus, few more menus are added. To further analyze this website, AIDA model can be used. Attention: By featuring good looking mobile phones in the horizontal format on the top, the website grabs the attention of the customers. In addition, currently the website also features the attention grabbing photo of Yoda of Star Wars franchise in relation to the feature of transferring all the contacts from one to another. Apart from these two aspects, all the other menus and options appear ‘regular’. Interest: Interest is being built by listing all the enticing mobile phones and also by providing the link to the various service plans. In the other categories of Business, Corporate and Public sector, interesting photos and relevant details are featured to show the applications of Vodafone’s service in their environments. (Fig 3) (Fig 3) Screenshot of Vodafone Website’s Corporate and Public sector’s webpage Desire: With wide range of information about the products provided in a clear, concise and interesting manner throughout the website and under each menu (including mouse-over menus), the website can optimize the desire of the customers. In addition, by featuring many service plans that can fulfill the customers’ personal wants or expectations, their desire are accentuated. (Parsell 2010). Action: The customers’ should be provided apt and at the same time subtle options in the website, so he/she can take the final step and complete the business. “The trip of a customer to the real action, where he/she is already prepared to commit a business with you, should be elegant, user-friendly again, and effectively placed.” (Pixel Crayons). In that direction, Vodafone’s website is aptly designed because after the user clicks any of the product or services to be bought, the page that opens provides good amount of features and benefits, without putting right on the face of the customer that they ‘need’ to buy it. The ‘Buy’ feature is subtly located, and also free shipping feature is also added to mobile phones purchase, to make the clients make the best possible action for Vodafone. Business-to-Business (B2B) analysis Business-to-business or “B2B” for short, is a term which is commonly used to explain the transactions that takes place between businesses (with minimum role for customers), particularly the electronic commerce transactions. Electronic transactions between businesses are an effective concept and it is being followed in Vodafone as well, through Enabler initiative. Under this initiative, Vodafone has a separate Enabler division with a portfolio of internet based products, which were developed by other Third Party Businesses or Aggregators, and which are made available to its customers on the cost-sharing basis. As part of this B2B mode, Vodafone offers a range of products ranging from SMS based services to various specialized applications. (Fig 4) (Fig 4) Screenshot of Vodafone’s B2B Website The prospective customers are provided contact details (both email and phone numbers) of how to access those products or services. However, when the email link is clicked, the relevant details are not ‘currently’ available as it states “Page Not Found”. This is a major deficiency on the part of Vodafone, as customers have to be provided contact options to inquire about the product and importantly purchase the product. (Fig 5) Screenshot of Vodafone’s B2B Website Vodafone is working in collusion with these Aggregators, who will be part of the supply chain of the electronic commerce, to provide specialized products and services to the customers. As Vodafone and Aggregators share the charges, it will be beneficial business for both of them. Ethical aspects Vodafone has been constantly carrying out many ethical activities and most times takes the lead when all the mobile companies decide to commonly implement any particular ethical CSR based initiative. For example, when all the UK mobile phone companies decided to block adult content to young children and young people by forming Independent Mobile Classification Body (IMCB), it was Vodafone which took the lead. They did that by incorporating internet enabled filters to block the adult content “We have led the UK mobile industry in ensuring that proper restrictions and controls are in place to prevent access to adult content by under 18s.” (Vodafone 2004). Although the above lines were sourced from the official CSR report of Vodafone and could be considered as biased, this particular ethical activity of Vodafone was validated by other independent websites as well. For example, the independent body, Business in the Community in its report, prepared in association with All Party Parliamentary Group on Corporate Responsibility, states “Vodafone’s commitment to meeting the needs of vulnerable customers focussed on two groups: children and people with disabilities: Vodafone mobiles have automatic bars on adult content, which can only be removed after age verification e.g by means of a credit card” (Business in the community 2007). Likewise, independent commercial websites also validated how Vodafone becomes first UK operator to implement baring and filtering mechanism which will prevent under age customers accessing 18-rated content such as gambling, erotic content, chat and dating services. (Miles 2004). Thus from the analysis, it is clear that Vodafone carried out certain ethical activities using internet as part of e-business. Overall conclusions and recommendations In conclusion it’s clear that Vodafone are one of the big players in the UK mobile phone market. While the threat of Skype and other messaging services is clear, Vodafone still own the networks (3G and certain Wi-Fi hotspots) that are required to run these apps so they are not in danger of being left behind. (Bradwell and Reeves 2008). That is, with mobile phones being currently used for multi purposes than just talking, as part of e-business initiative, Vodafone can launch few products or services Vodafone has plans to launch the Mobile Wallet in association with Visa so that their customers while shopping for products can “use their handsets instead of cash or cards at the checkout. (Thornhill 2012). However, with its competitor O2 being the early mover, Vodafone has to incorporate more features to this applications like contactless payment, discount offers from more retailers and also for key events like concerts, etc. The other key recommendation is increasing interactivity in its website by adding moving or scrolling images about the various offers and discounts available on its products and services. Now, the website features just the generally sold products and services in a static manner. If more discount offers are featured, in an aesthetic manner without sounding overtly commercial, it can entice more customers. References Botha, J., Bothma, C and Geldenhuys, P., 2008. Managing E-commerce in Business, Juta and Company Ltd. Bradwell, P and Reeves, R., 2008. Network citizens, Routeldge. Campbell, D., 2007. International Telecommunications Law, Lulu.com, Raleigh, N.C. Business in the community., 2007. Vulnerable Customers Inquiry by All Party Parliamentary Group on Corporate Responsibility, [Online] Available at http://www.bitc.org.uk/document.rm?id=8210. (Accessed on April 30, 2012) Jackson, N and Lillekar, D., 2011. Microblogging, Constituency Service and Impression Management: UK MPs and the Use of Twitter, The Journal of Legislative Studies, vol. 17, no. 1, pp.86-105 Jefferies, N. (2007). Vodafone Group R&D and WWRF – Influencing Future Research, [Online] Available at http://www.ieeevtc.org/plenaries/vtc2007fall/1.pdf (Accessed on April 30, 2012) Kotler, P and Armstrong, G 2004, Principles of marketing, Pearson Education, Upper Saddle River, NJ. Miles, S 2004, Vodafone becomes first UK operator to control mobile content, [Online] Available at http://www.pocket-lint.com/news/387/vodafone-becomes-first-uk-operator(Accessed on April 30, 2012) Nyland, R., 2007. The Gratification Niches of Internet Social Networking, E-mail and Face-to-Face Communication, [Online] Available at http://contentdm.lib.byu.edu/ETD/image/etd2151.pdf. (Accessed on April 30, 2012) Pixel Crayons. Applications of AIDA In Website Designing, [Online] Available at http://slodive.com/web-development/applications-of-aida-in-website-designing/ Parsell, M., 2008. Pernicious virtual communities: Identity, polarisation and the Web 2.0., Ethics and Information Technology, vol.10, no.41, pp. 56. Prather, DC., 2011. The Utilization of Social Media by Collegiate Aviation Faculty, Collegiate Aviation Review, vol. 29, no. 2, pp. 47-57 Thiele, AR., Blakeway, JR and Hosch, CM., 2010. The Patent Infringement Litigation Handbook: Avoidance and Management, American Bar Association. Thornhill, T., 2012. Vodafone unveils the 'mobile wallet' that will see smartphones swiped at the till to pay for shopping, [Online] Available at http://www.dailymail.co.uk/sciencetech/article-2107157/Vodafone-unveils-mobile- wallet-smartphones-swiped-till-pay-shopping.html(Accessed on April 30, 2012) Vitorovich, L., 2012. Vodafone talks with Largo reportedly over, [Online] Available at http://www.marketwatch.com/story/vodafone-talks-with-largo-reportedly-over-2012- 02-05(Accessed on April 30, 2012) Vodafone 2004, Being a Responsible Business Vodafone UK Corporate Social Responsibility Report, [Online] Available at http://www.corporateregister.com/a10723/vodltd-csr-uk.pdf (Accessed on April 30, 2012) Vodafone. (2012). Company History, The story so far.... , [Online] Available at http://www.vodafone.co.uk/vodafone-uk/about-us/company-history/index.htm. (Accessed on April 30, 2012) Wray, R and Arthur, C., 2010. Vodafone suspends employee after obscene tweet, [Online] Available at http://www.guardian.co.uk/technology/2010/feb/05/vodafone-twitter-obscene- tweet(Accessed on April 30, 2012) Appendix A Vodafone: A brief history and a list of their e-Business achievements. Vodafone was formed in 1982 as a subsidiary of Racal Electronics Plc.In 1987 is Vodafone recognized as the largest mobile network in the world. It was fully demerged from Racal Electronics Plc and became an independent company in September 1991, at which time it changed its name to Vodafone Group Plc. At the same year Vodafone launches its digital (GSM) mobile phone service – the first in the UK. Vodafone was the first network operator in 1996 in the UK to launch a Pre-Pay analogue package. In 1999 it also merged with AirTouch Communications, Inc. (‘AirTouch’), the company changed its name to Vodafone AirTouch Plc, following the approval by the shareholders in General Meeting, reverted to its former name, Vodafone Group Plc. Year 2000 acquires the largest available 3G licence in the UK. In 2001 GPRS launched nationwide providing an “always on” connectivity. The following year Vodafone launches Vodafone live! and Mobile Office. In 2004 Vodafone launches its first 3G service in Europe with Vodafone Mobile Connect 3G/GPRS data card for corporate customers allowing access to office applications at ten times the speed of GPRS. After 2 years they reach 10 million customers with 3G. The first ever touch-screen BlackBerry smartphone – The BlackBerry Storm 9500 is announced in 2008. The device was built exclusively for Vodafone. http://www.vodafone.co.uk/vodafone-uk/about-us/company-history/index.htm Appendix B Mobile broadband Mobile email Trade in your phone Mobile applications Pay as you go Remote access Vodafone sure signal Fixed network services SIM cards and SIM only deals Unified communications Free SIM Contact centre Vodafone VIP Machine-to-machine Coverage checker Support services Billing Information Mobile voice and coverage Prepaid phones World calling cards Vodafone post-paid Vodafone Handyphone Appendix C: Porter’s Five Forces The bargaining power of our suppliers The main suppliers for mobile providers are the manufacturers’ such as Apple, RIM, Nokia and Samsung who provide the handsets for Vodafone. The large number of suppliers means that the providers have a lot of handsets to choose from, which lowers the bargaining power of suppliers. The trend is usually reversed when an extremely popular phone is launched (i.e. iPhone 4S) at which point the supplier has almost all the power. In terms of differentiation, there isn’t that much between handsets nowadays. You get different price points such as the cheap low functionality phone (ZTE Blade, Blackberry Curve 8520), the mid range smart phone (HTC Desire, iPhone 4) and the top end powerful smart phones (i.e Galaxy SII, iPhone 4S); my point being that all the manufacturers offer phones with similar functionality at similar price points so most manufacturers are undifferentiated. In terms of overall supplier power, there isn’t much. Thanks to the internet, we have all the information (on these handsets) necessary to make a purchase so there is very little scope for suppliers being able to ‘sell’ us their respective products. The same goes for Vodafone and other providers, who can predict the popularity of future handsets and, pick one that meets their specifications in order to, start selling them to their customers. The bargaining power of buyers The buyer power of the mobile phone market is underestimated. Anyone who has demanded a better deal with the threat of moving to another provider knows that companies like Vodafone will usually go to good lengths to keep their subscribers. This involves throwing freebies in or just providing better rates. This gives us a glimpse into the level of competition between providers. (Campbell 2007) However the threat of switching provider sometimes isn’t an option. People’s choices of provider are usually based on the signal and reception in the area they live in, rather than the deals. If it were a process it would go: find provider with the best signal in the area, go on their website and look for deals. So while the consumers have the bargaining power when it comes to finding the best deal, they may not have a choice of which provider they sign with. In terms of concentration, there is a huge level of buyers compared to firms in this market, this gives the firms a balance of power since they can effectively guarantee they net customers based on their location and reception (rather than budget and price). The threat of new entrants The barrier to entry in the phone market is huge. With companies like Vodafone and O2 established and making huge revenues from millions of subscribers, it’s rare to find a start-up provider breaking into the market and gaining a significant market share. The cost of an infrastructure such as Vodafone’s is almost impossible to compete with; this is why start-up providers usually ‘piggy back’ off another network. (Thiele, Blakeway and Hosch 2010). A good recent example is Giff Gaff. While not strictly an independent provider (they’re wholly owned by O2), they have managed to establish a niche for themselves. By allowing their users to participate in some of the companies’ operations (such as customer service via their forum) they can cut the majority of costs while operating with a small number of employees (20+). While the actual entry into the market isn’t too difficult, the goodwill of a company is one of the main reasons why companies like Vodafone and O2 stay near the top of the food chain. They benefit from having their established consumer bases, as well as the brand loyalty involved which ensures that their customers stay with them. This reputation allows them to retain their customers, while start-ups (no matter what they’re offers are, etc) have to prove themselves before they get a recurring user base which is why we only see competition between the big providers. The threat of substitutes The breakthrough of mobile internet has allowed people to communicate on the go (due to the availability of Wi-Fi hotspots and 3G networks). Services like Skype, utilising Voice over IP, offer users free calls to other Skype users worldwide. Furthermore, the breakthrough of Facebook, Twitter and other social networking sites have given users another way to communicate with large groups of people, something a phone can’t do. They allow users to talk to their friends on the go, it carries a similar function to the text message but Facebook allows you to post pictures, status updates and other features in addition to texting. This enables Skype (and similar services) to directly substitute the traditional phone call and put more pressure on Vodafone and other providers. However while services like Skype can substitute phone calls they still rely on the data connections such as the 3G networks and Wi-Fi networks which are controlled by the providers like Vodafone. The intensity of rivalry between the firms As mobile technologies are rapidly changing, creating potential threats towards the way in which Vodafone purchase and sell their products and services. With competition between other networks fighting for the largest license, it’s often easier to identify the main rivals in specific markets. The fixed-line operators that provide increased production capacity and lower consumer costs are the main rivals due to often matching or beating the prices being offered by Vodafone. (http://www.cybozone.com/vcu/Vodafone_Air_Touch_-_The_Acquisition_of_Mannesmann.pdf) Although the market sector is successful and continuously growing, Vodafone are faced with high levels of competition. It is common to have rivalry between organisations that offer similar products and services, as each will be competing to gain a dominant share of the market. Competition can help organisations improve its ability to survive whilst helping to identify areas of improvements, (Harrison, 2010). The main rivals for Vodafone in the UK are network providers such as, O2, 3, Orange, T Mobile, Virgin Mobile, Asda Mobile, Family Mobile, giffgaff, Lebara Mobile and Tesco Mobile. Appendix D SWOT Analysis Strengths: - Diversified geographical portfolio with strong mobile telecommunications operations in Europe, the Middle East, Africa, Asia Pacific and to some extent the US. - Network infrastructure. - Leading presence in emerging markets such as India. - Large customer base along with being the 2nd largest UK mobile telecommunications organisation. Weaknesses: - US business is not as strong other operations in Europe and worldwide. - Lack of signal in rural areas and network failure. - Mergers of other networks such as, O2 and T-mobile. - Negative return on assets (ROA) underperforms key competitors like AT&T, BT Group and Deutsche Telecom. - 80% of its business is generated in Europe. Opportunities: - Improved accessibility to wide range of customers (rural areas). - Focus on cost reductions to improve returns. - Majority stakeholders in Hutchison Essar, in India. - Research and development of new mobile technologies. Threats: - Market opportunity posed by new technologies and business models. - Highly competitive market. - Lags behind major competitors in the US. - Unpredictable political/economical risks and laws in the EU. Read More