A Strategic Marketing Assignment on Etisalat - Essay Example

Achieving the Strategy with a Marketing Orientation A STRATEGIC MARKETING ASSIGNMENT ON ETISALAT 2009 Table of Contents Table of Contents 1 Acknowledgements 3 Executive Summary 4 Research Methodology 5 Organizational Background 6 Industry Background: 6 Company Information: 6 The Company: 6 Products and Services: 7 The Market: 7 Vision: 7 Marketing Strategy 9 Strategic Objectives: 9 Etisalat’s Strategic Objective: 9 Strategy: 9 Etisalat’s Strategies: 10 Marketing Strategy: 10 Etisalat’s Current Marketing Strategy: 10 Tactics and Marketing Mix: 11 Etisalat’s Marketing Mix and Tactics: 11 Summary: 11 Competitor’s Analysis 12 An Analysis of the External Factors 12 Porter’s Five Forces Analysis: 12 Summary: 13 Prospective Competitors: 14 Competitor’s Review: 14 SWOT 15 15 Summary: 15 Types of Markets and Market Relations: 17 a)Perfect Competition: 17 b)Monopolistic Competition: 17 c)Oligopoly: 17 d)Monopoly: 18 Market Segmentation: 18 Product Life Cycle: 18 Stages of Product Life Cycle: 19 Boston Consultancy Group Matrix: 20 Etisalat: 21 Competitive Advantage: 22 Porter’s Generic Competitive Advantage: 22 Etisalat’s Current Position: 23 Strategic Objectives and Intended Marketing Strategy 25 Strategic Objective: 25 Intended Marketing Strategy: 25 Evaluation of Marketing Strategy: 25 Marketing Options Analysis 27 Areas for Improvement: 27 Ansoff’s Matrix: 27 Summary: 29 Evaluating the Options: 29 Summary: 29 Strategic Marketing Plan 30 Strategic Objectives: 30 Marketing Objectives: 30 Marketing Strategy: 30 Marketing Tactics: 31 Responsibilities: 31 Investments: 31 Time Period: 32 Monitoring and Control: 32 Proposal to the management 33 Conclusions: 34 Bibliography 35 Appendix 38 Acknowledgements I would like to express my sincere gratitude to people in the LEAD program whose generous support and encouragement have made this project a success. First, my special thanks are owed to my supervisor, for his precious guidance, assistance and friendliness that led to the completion of this assignment. Second, I would like to thank all my friends for their exceptional support during the seminars and research phase of this assignment. Last but not the least I would like to express my thanks and gratitude to my family for the invaluable support at every step in life. Thank you! Executive Summary Etisalat is the biggest and oldest telecommunication company in the UAE. This report aims at understanding and highlighting the current situation of the company both internally as well as external basis. A deep analysis of the company has been made within this report. Also based on the study of the company and its competitors, recommendations have been set out for the management. The plan that has been set down which includes the benefits that Etisalat can gain from the recommendation of starting an e – Commerce website. Research Methodology This study has been based on a secondary research. The information collected is mainly from the secondary sources, which include various sources, studies, customer surveys, newspapers and websites. Secondary data refers to information published by others and which is already available1. It is also data collected by other people rather than the researcher who is carrying out the study2. There has been a through research conducted to gain all the information of this Etisalat. Great care has been taken while choosing the sources from the Internet and it has been ensured that the works chosen from the Internet are from published writers. As Berry refers to the Internet in his books, “an open door to nonsense to appear, and one way of checking on this is knowing about the author”3. Organizational Background Industry Background: The telecom industry of the Middle Eastern countries has seen a continuous growth. A forecast by Informa Telecoms and Media shows that the year 2009 will continue to see a constant growth, with almost 28.68 million net inclusions into the mobile market this year. The market is very wide and has as many as almost 250 million mobile subscribers and is expected to reach as high as 250.79 million by the end of 20094. Company Information: The Company: Etisalat is one of the oldest telecom providers in UAE. It is headed by Mohammad Al Qamzi, the CEO. The company was incorporated in 1976 and has become a part of the Financial Times Top 500 Corporation. In terms of the capitalization and revenues, this company stands on the 6th position in the Middle East. This is the only other largest contributor other than the oil sector, in the development programs of the UAE federal Government. It has also been awarded for being a socially responsible corporation. Etisalat has also been honored for the nationalization programme5. Products and Services: Etisalat offers a number of different products and services. They have a wide variety of products in their portfolio, which totals to almost a hundred and fifty. These include items like the fixed lines, mobiles, and value added services for businesses and consumers. This does not include the additional products and services that are provided by the company to people with special needs6. The Market: Etisalat’s main region of functioning is in UAE and Iran. The company has also had plans to enter into the markets of the Kurdish region7. The company is successfully operating in 16 markets across the world, of which Saudi, UAE and Egypt are the top three markets. Vision: “A world where people’s reach is not limited by matter or distance. People will effortlessly move around the world, staying in touch with family, making new friends as they go, as well as developing new interests. Businesses of all sizes, no longer limited by distance, will be able to reach new markets. Innovative technologies will open up fresh opportunities across the globe, allowing the supply of new goods and services to everyone who wants them”8. Mission: “To extend people’s reach. At Etisalat, we are actively developing advanced networks that will enable people to develop, to learn and to grow”9 Role in the Organization: Just mention 2 lines on what your designation is and which department or how you are related to the company which you have selected for this assignment. In case you selected the company due to some contact in that company, then mention this too. Marketing Strategy Strategic Objectives: Strategic objective refers to the objectives that are set down by companies to make the strategies succeed. These objectives normally focus on eight major classifications, like the market standing, innovation, human resources, financial resources, physical resources, productivity, social responsibility and lastly the profit requirements of the company10. Etisalat’s Strategic Objective: Etisalat’s objectives are very simple and are aimed at ensuring that the network is well spread and is reachable to all. The company intends to increase their reach to the maximum extent and ensure there are higher opportunities internationally to use innovative technologies. Strategy: Johnson and Scholes define strategy as follows11: "Strategy is the direction and scope of an organization over the long-term: which achieves advantage for the organization through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations". Etisalat’s Strategies: Etisalat’s core strategy is customer focused. They aim at ensuring that the customer’s are provided with the latest and most highly developed technologies. Etisalat has also taken into consideration the group of people who have physical disabilities and have problems dealing with the new and latest technologies. This shows how customer driven the company is and its business strategies. Marketing Strategy: A marketing Strategy is a written plan, which includes the four elements of the marketing mix and also includes the company’s marketing goals. This includes the time frame within which the company aims at achieving the goals and also determines the target market, segments, positioning, marketing mix and the allocation of the resources12. Etisalat’s Current Marketing Strategy: Etisalat’s current marketing strategy is very customer focused. They have focused all the strategies based on the needs of the customers and also including the needs of special customers. The company has also created a differentiate market and a higher level of market penetration by being the most technologically advanced in the regions of operations13. The marketing strategies are also based a lot on the innovativeness of the company and its products along side with the corporate social responsibility, which is an important element for the business14. Tactics and Marketing Mix: This is one of the most essential concepts of marketing. The marketing mix, also called the marketing tactics, includes the basic elements and main components of marketing. These include the four P’s, i.e. Price, Place, Product and Promotion. The newer version of the marketing mix however includes other elements like the people, packaging, and physical evidence. Etisalat’s Marketing Mix and Tactics: Summary: Based on the above research that has been made of the company, it has been clearly understood that the company is a monopoly. Competitor’s Analysis An Analysis of the External Factors Porter’s Five Forces Analysis: Michael Porter has devised a framework which provides a better understanding of the industry and how companies can be affected by forces within the markets. The five forces that he has described are: a) Threat of new entrants, b) Determinant of buying power, c) Threat of substitutes, d) Determinants of supplier power, and e) Rivalry among the firms15. Competitive rivalry, for Etisalat is minimum or almost nil. This is majorly due to the fact that the company is a monopoly and although there have been attempts of companies to move into the markets, they have not been successful. Threat of New Entrants, is very low as the company has a strong market force where the company has complete monopoly and thus this makes the entrance of the new entrants low. This is seen from the fact that the ‘Du’ an other telecom company that was built almost until two years ago, has been pushed out of the market due to the competitive force of Etisalat. Threat of Substitute Product, again as the company is a monopoly and hence the substitute products are not available. This gives the company a strong advantage and allows for the company to have a complete control over the prices. Bargaining power of the buyers is very low in the case of Etisalat, as the company is a monopoly and this gives them no choice but to buy from Etisalat, irrespective of the prices. Bargaining power of the suppliers is also lowered due to the fact that the company is the one of the only producers hence Etisalat to a great extent has the upper hand and can easily bargain on the prices. Summary: Based on the five forces and the PESTEL analysis (Appendix 1) of the company, it is clear that the company is faced with a number of forces externally which affects its working and operations. However, due to the monopolistic power of the company, it does not have a lot of treat and rivalry in the markets it operates, making it easier for the company to operate and giving the company an upper hand in terms of the bargaining power among the buyers and the suppliers. Prospective Competitors: The company would face a lot of competition from the possible new entrants. With the various companies like Carphonewarehouse in the UK, the telecom industry is now been given a new face. These companies provide the customers with a variety of products and offers and facilities which is lacking with Etisalat. Carphonewarehouse can be considered as a huge threat along with other companies like U - pone of Pakistan as well. These have the chances on entering to the market and proving to be strong competition for Etisalat. Competitor’s Review: The competitors that have been mentioned above have a strong market hold already. They have been in the industry for a long period of time and have created their own mark. Each of the two companies is very famous and has proved to be the best in their current markets. These companies also have the availability of new technology and huge sums of investments which they can put into the markets. SWOT This provides for the strengths, weaknesses, opportunities and threats of the company. This is an internal analysis of the company and allows for an understanding of where the company currently stands. Summary: The above provides for the SWOT of the company which allows for a better understanding of the current condition of the company. Types of Markets and Market Relations: There are four major types of markets. These are discussed below and their implications to the demand and supply are also discussed: a) Perfect Competition: This is a market structure with a number of firms. These kinds of markets have a free entry and exit for firms and all firms here produce identical products. This is an extreme form of capitalism, and firms in these kinds of markets are price takers. In these types of markets the demand as well as the supply is high16. b) Monopolistic Competition: This is similar to the perfect competition markets. Here there are a number of different firms that are present. However each of these firms provides differentiated products. These markets have a freedom to entry and exit. Due to the differentiation in products the firms have some control over the prices. The demand curve in these types of markets is generally downward sloping however it is relatively elastic17. c) Oligopoly: In these kinds of markets there are limited numbers of firms. Also the entry and exit into these kinds of markets is restricted. The products of these firms can be differentiated as well as undifferentiated. The demand curves in these kind of markets is generally downward sloping and relatively inelastic. The demand is affected by the reaction of the rivals to a price change.18 d) Monopoly: This is a market structure with only one firm in the industry. Here there is a block for entry of any other firms and the product that is produced is unique. Etisalat is a great example for these kinds of firms. Here the demand curve is normally downward sloping and this is very inelastic when compared to oligopoly. Also these firms have a complete control over the prices in the market19. Market Segmentation: It is a known fact that the different features of a product appeal to different customers. For products with a number of different products and a number of customers for a particular category, here the producers divide the market into segments. A simple and most common example is that of the car industry20. However, customer choices change over time and the features may not meet the tastes of every one. This then becomes a niche market, where the target customers and customer segment is very limited. Product Life Cycle: According to Jobber (2003, p.229), “a product is anything that is capable of satisfying customer needs”. It is essential to understand that the needs of a customer change over time. These changes in the needs of the customers, to a great extent lead to the changes in the products as well. Figure 2: Product Life Cycle21 Stages of Product Life Cycle: Introduction: This is the first stage for any product. Here the companies generally tend to operate in a number of losses, mainly because of the fact that the company has huge sums of monies that have been invested into the development and the promotion of the product. This stage acts as a testing and trial period for a lot of products. In case the product does not show a promising growth, the companies also have a chance of terminating the product at this stage22. Growth: Here in this stage the sales and profits of the product grow at faster rates. There is also the factor of market acceptance that is gained here at this stage. The start of this stage generally finds the products gaining in terms of profits and sales and a rapid acceptance is seen within the markets. This is majorly due to the fact that there are new entrants within the market, which creates the product demand to be reduced. The main cause for the new entrants within the markets is majorly because of the sales growth and the growing demand and high potential for profits23. Maturity: Post the growth period of the product life cycle, the next stage that is entered into is referred to as the maturity stage. Here the sales of the product tend to peak and then flatten out. This is majorly due to saturation. This stage in the life cycle of a product requires a lot of advertising, product improvements, sales promotion offers, dealer discounts, and price cutting. This is essential for companies to keep their stand within the market, against all their competitors. Decline: The sales and profits of products are majorly affected in this stage. Here there is an intense decline in the demand for the product and this is majorly due to the high levels of growth of technology. Also another major determinant that causes the decline of a product is the change in consumer tastes24. Also the products are faced with a complete decline in the profitability. Boston Consultancy Group Matrix: This method is based on the product life cycle theory. This provides a means to correctly give importance to the product portfolio of a business unit. The diagram below explains the BCG Matrix25. Stars, refers to businesses use huge amounts of cash and also generate large amounts of monies as well. Here the company has a high growth as well as high market share. Cash Cows, this is where the investments are low and the growth is also low, however the profits and cash generation should be high. Dogs are companies which are low in growth as well as market share. These companies are in a state of almost liquidity. The last group is the Question Marks, are companies with high growth but low market shares.   Etisalat: The case of Etisalat, the company is currently in its growth stage. The company has been established in 1976 and the company has grown to a great extent. The company has been through the introductory stages and is now in a stage where the company is growing and can make a number of improvements. Also since it is a monopoly, the company is now being faced with a number of threats in terms of the new entrants into the markets. In terms of the BCG matrix, the company is currently in the stars matrix. It has a high investment level along with a high market presence. Competitive Advantage: A company which sustains profits which are higher than the average earned within the industry, the company is said to have a competitive advantage. According to Business Dictionary (2009)26, “Superiority gained by a firm when it can provide the same value as its competitors but at a lower price, or can charge higher prices by providing greater value through differentiation. Competitive advantage results from matching core competencies to the opportunities.” Porter’s Generic Competitive Advantage: This is one of the largest contributors to the strategic management literature. The diagram below highlights the theory. This was developed to discuss the three strategies that can be used to create a competitive edge for the companies. The first strategy that was introduced by Porter was Cost leadership. This is a very beneficial factor however at times this leads to companies reducing their costs to such great extents that it costs the company for the losses. The second strategy as discussed in this theory is the differentiation factor. This is when the companies differentiate their products both vertically as well as horizontally to gain a market share. The last option that was developed by Porter was later revised to be called a moderator of the other two generic options27. Focus is a strategy where the companies focus on the areas in a market where there is least amount of competition, like the niche markets or even providing special services to the niche market. This is thus at time referred to as the niche strategy a number of times28. Etisalat’s Current Position: The current situation of the company is where the company falls into the ‘focus’ strategy. Etisalat as discusses is monopoly. The company has used this to their strength and has built a strong empire for itself. They have also used the differentiation to their strength and created a competitive advantage. Strategic Objectives and Intended Marketing Strategy Strategic Objective: The strategic objectives for the company would be as follows: ~ Better marketing ~ Penetration into other markets ~ Innovative technology ~ Improved Customer Service Intended Marketing Strategy: Etisalat has a drawback and lacks a lot on the marketing efforts. The company offers a lot of high tech products, however the company’s website is not as well developed and as effective as can be. Hence the intended marketing strategies are as follows: ~ Improved Website ~ B2C website developed ~ Search engine optimized ~ Create an e – Commerce Website Evaluation of Marketing Strategy: The below table highlights how each of the above mentioned strategies will be useful to the company: Marketing Options Analysis Areas for Improvement: The improvements that are required for Etisalat based on the analysis that has been made are discussed here. Firstly the company is lacking a lot in terms of the website development. Etisalat’s website provides for simple details and is not well developed. Hence this is one of the biggest changes required company. Also the customer service and the advertising are not up to the mark and require a lot of improvements. Ansoff’s Matrix: This was a theory that was developed by Igor Ansoff which helped firms correctly focus on the present market and products that are dealt with and considering newer ways to grow into newer markets and better products. There are four possible combinations which have been described by Ansoff. The diagram below provides a better understanding for the same29. Market Penetration: The company has managed to penetrate into 16 different markets at present. Here Etisalat requires a big improvement in the services provided. There is a lack in terms of the customers’ needs and being in sync with the current market trends. Thus Etisalat required paying great attention to ensure better market penetration by improving their website. Market Development: Also as Etisalat is already recognized to be one of the biggest and best telecom providers in the UAE, the company has had plans of expanding into other countries as well. There is a high chance for the company to move into countries like Pakistan and Egypt. Product Development: Etisalat is already known for the differentiation in terms of the products, however the company can increase the horizontal differentiation to a greater extent to thereby provide the users with a larger choice to choose from and increase customer satisfaction. Diversification: Etisalat also has high chances of diversifying into a number of businesses across newer markets. The company can develop new products for the new markets which will thereby increase its market presence and recognition across the markets. Summary: The above options shall be evaluated in the coming section. Evaluating the Options: Summary: Based on the above evaluation the most beneficial will be a combined strategy of differentiation, along with a good market penetration. Strategic Marketing Plan Strategic Objectives: The strategic objectives for the company would be as follows: ~ Better marketing ~ Penetration into other markets ~ Innovative technology ~ Improved Customer Service Marketing Objectives: ~ Improved Website ~ B2C website developed ~ Search engine optimized ~ Create an e – Commerce Website Marketing Strategy: The strategy used here will be a combination of the differentiation and the market penetration. This will form a base for the products and the services. However the biggest strategy for the company is to improve the website and include an e-commerce website for the company. Marketing Tactics: The inclusion of an E – commerce website for a company as large as Etisalat is a simple process. Since the marketing strategy is one of building an e – Commerce website, the marketing tactics are more based on the website and the user friendliness of the website. Also it is essential to understand that making sales via this medium is more beneficial to the comp any as it reduces the cost of transactions. Also as the customer is not present the cost reduces as there is lesser need for human resources to complete a transaction. Also the use of a website to make a sale also increases the use of direct debits which helps reduce the transaction costs and time spent on cheque payments. These form the basic tactics for the company as the strategy is to include an e – Commerce website for the company. Responsibilities: The plan is one which does not require too many people. The e – Commerce website can provide for better sales. These sales however do not require any additional staff. The current staffs of the company who work out of the outlets can also deal with the sales that are got out of the website. The only staff that will be required for the website will be to maintain the website and ensure constant updates and maintenance of the site. Investments: The investment for the website will not cost the company too much. Since the company already has a developed site and with details of all the products, the company only requires to pay for the inclusion of the e- Commerce features on the site. The costing will be marginal and depends on the size of website. Time Period: Since the website is already equipped with all the details of the various offers, it would not take a long period for the inclusion of the e – Commerce features on the website. The maximum period of time that would be required is 4 months to get the website up and live. Monitoring and Control: Monitoring and control of website can either be taken care of by people within the company or it could also be outsourced to other development companies. The development companies can ensure that all the features of the website work well and the payment gateways that are included within the site are hack proof for the safety of the customers. Proposal to the management To the Manager, Etisalat Telecommunication Corporation, Dear Sir, I have conducted a deep study of the company. Based on this study I have come up with a few recommendations which I consider will be beneficial for the company. I would recommend the company to improve its website and include an e – Commerce facility. This would prove to be quite beneficial for the company as it will not only allow for the company to increase the sales, but would also provide the company with a solid form of marketing. The cost for the company will be very minimal as the company already has a well developed site. Hence it would only mean an inclusion of the E – Commerce feature. The benefit for this however will be more than just an increase in the sales. It would prove to provide a good marketing for the company, and the company can also include its banners in other websites which would provide for as a strong advertisement. The benefit of the website is more of the non monetary along with the monetary benefits. There is a greater deal of advertisement and a good will which is created for the company. The return on investment is very fast as this would help the company save up on the monies it would otherwise need to spend for the advertisements and the transaction costs when it comes to the physical stores. This will also meet the growing use of the internet and the growing use of the e – Commerce websites. The only form of resistance that might occur is the extra work that the employees might need to put in to complete the orders and sending the ordered goods to the customers. This however can be overcome by ensuring that the work is spread out between all the employees and this will allow for all the work to be spread out across every employee and this will not cause a burden on any person. Thus I recommend that the company starts an e – Commerce website at the earliest as this would prove to be very beneficial for the company. I hope you find my recommendations valuable. Thanking You, Faris Al Mazrouei Conclusions: This research has been conducted and a clear understanding of the company has been gained by analyzing all the factors that might influence the company’s working. Also based on the study of the company and including the various marketing theories and concepts a recommendation for the company to start an e – Commerce website has been devised. This will prove to be very beneficial for the company both in terms of financial as well as non – financial basis. 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