Marketing Plan for Vodafone UK - Report Example

Marketing Plan for Vodafone UK Contents Terms of Reference 3 Marketing audit 3 Strength 3 Weakness 4 Opportunities 4 Threats 4 Marketing objectives and core strategy 5 Marketing mix decisions 9 Reflective account 10 Reference List 11 Terms of Reference Vodafone Plc is one of the largest global telecommunication companies with its headquarters at London and registered office in Newbury. It is the second largest company in terms of subscribers and revenue and as of June 2013, it had more than 453 million subscribers (Vodafone Group Plc, 2013). The organization provides not only telecommunication services, but also IT services to corporate clients in multiple countries. The company has come a long way since its initial days of local operations and has established itself as one of the most successful global businesses in the world. Presently, the company operates in more than 30 countries and has partner networks in more than 50 countries (Vodafone Group Plc, 2012). The purpose of this paper is to develop a marketing strategy for Vodafone in U.K. Currently, business of the company can be segregated into two geographic areas, namely Europe and EMAPA (an acronym for Eastern Europe, the Middle East, Africa, Asia and Pacific) (Vodafone Group, 2014). Marketing literature states that market segmentation strategies can be done on the basis of either concentration strategy or multi-segment strategy. An efficient marketing segmentation is crucial to reach the desired target market chosen by an organization. Targeting of customers can be done of the basis of geographic, demographic or behavioural characteristics (Bartlett and Ghosal, 2000). This paper attempts to find out the appropriate target market and marketing mix decisions for Vodafone in U.K. based on marketing audit of the company. The final section of the paper provides a critical reflection on experience of conducting this project. Marketing audit SWOT analysis is one of the most powerful management tools and not only a mere instrument of marketing (Cuplan, 2002). Strength and weakness of Vodafone are within voluntary control of the company as they are internal factors, which can be controlled. Opportunities and threats, on the other hand, are factors that cannot be directly regulated by the company as they are external elements (Bolden, et al., 2003). Strength Research has revealed that one of the major strengths of the company is its brand name and presence across diverse geographies. The large scale of operation of the company has allowed reducing its operating expenses by strategically outsourcing less prioritized functions (Anwar, 2003). The organization has started providing broadband services to a number of countries and its vast financial resources and market knowledge add competitive advantage to enter new markets (Vodafone Group, 2008). Weakness As Vodafone is one of the biggest and most successful companies of U.K., its major marketing strategy is to retain market share in the country. In order to achieve this objective, Vodafone tries to focus on revenue earned per customer, improve quality of networks and satisfaction of customers. The mobile market in U.K. has almost reached a stage of maturity and level of market penetration of the services is very high (Masterson and Pickton, 2010). So this makes it difficult for Vodafone to retain market shares as well as to acquire new customers. One of the formidable problems of the company at present is the DSL wholesale market, particularly in U.K. and Italy (Ofcom, 2013). The weaker economical conditions in Europe have particularly pressurized profits of the company. Opportunities The improvements in telecommunication technologies and rise in 3G and 4G services provide the company with opportunities to expand business. It has been found in case of Europe that more than one-third of the voice process is carried over mobile phone networks and customer base can be improved by setting lower tariffs on call charges. Vodafone has grasped this opportunity by reducing its tariffs so as to increase customer base and expects to offset the fall in profit with rise of usage (classic application of Bowman’s strategic clock). One of the ways of exploring 4G technology is to build strategic partnerships with the laptop companies in order to provide Vodafone connection for internet. Threats It has been found out that telecommunication market in U.K. has reached its mature stage and the market competition is extremely high. Vodafone has not been able to come up with services like, triple-play and quad-play, which has become popular in the mature markets. The regulations about the tariffs and licences in the telecommunication industry also create pressure on revenue of the business. The operations across multiple geographies aggravate the regulatory issue. The following chart summarizes key points of strengths, weaknesses, opportunities and threats that are faced by Vodafone. Figure 1: SWOT Analysis (Source: Author’s Creation) Marketing objectives and core strategy The current data reveals that market share of the company in U.K. is about 25% and its operating profit margin for 2013 has been 12.4 billion pounds (Vodafone Group Plc, 2014b). The following graph presents market shares of different operators in U.K. Figure 2: Market Share of Vodafone (Source: Economics Online, 2012) The EBITDA margin for 2013 has been 29.9%. The problem is that though market share of the company has been maintained, yet share of its operating profit and EBITDA margin has shown negative growth rates. In order to improve the level of profits, key marketing objective of the company is to raise its operating profit margin by reducing cost of operation. Ansoff Matrix can provide a good guidance for understanding the marketing objective to be adopted by a company. Figure 3: Ansoff Matrix Market penetration refers to introduction of existing products in existing markets in order to increase revenue and sales. Product Development is launching of new products in existing markets for improving the market share. Market development is introduction of existing products in new markets and finally, diversification refers to the launch of new products in new markets (McDonald and Wilson, 2011). The strategic option that can be adopted by Vodafone is market penetration as the company wishes to generate more sales in the existing market of U.K. through higher marketing and promotional activity. Analysis of the UK market has shown that the company has still not provided triple-play and quad-play services. Bundling of the services offered will surely raise sales of the company. In order to achieve better penetration, marketing and promotional activities should be improved, thereby achieving better sales. Strategic partnerships with computer and smart phone manufacturers can be a key way to raise sales of its existing products. Additionally, reducing the tariff for existing products can ensure more customers for the company. The profits may be reduced temporarily, but a rise in sales is expected to compensate for the fall in profit. The target market for the new product is corporate customers as well as general public. Presently, Vodafone captures 40% of the corporate market in U.K (Information Gatekeepers, 2010); with slight differentiation of existing products, like, bundling services, Vodafone’s market share can be further improved. Demographic profiling can be used for the purpose of segmentation of the market. The following table shows age groups of the population in U. K. The ideal age groups for the company is 15-24 years, 25-64 years and 55-64 years as this represents a financially significant segment who can purchase services of the company. Revamping the tariff rates can help to increase sales in the existing markets and development of bundled services can further raise operating profits of the company. Figure 4: Demographics of UK 0-14 years 15-24 years 25-54 years 55-64 years 65 years and over 17.3% (male 5,625,040/female 5,346,815) 12.8% (male 4,158,813/female 3,986,831) 41.1% (male 13,250,434/female 12,807,328) 11.5% (male 3,589,345/female 3,680,392) 17.3% (male 4,877,079/female 6,073,497) (Source: UK National Statistics, 2014) The main competitive advantage of the company is ability to adjust itself with changes in the technology. This is a very important requirement for firms in the telecommunication sector as this is the key to introduce innovative products. Vodafone has successfully established a commendable reputation for itself in the U.K. market. Vodafone was the first company, which had used portable mobile computing through its partnership with Dell. The company, therefore, has a comparative advantage to build more of such partnerships in future. The use of superior technology has provided the company with cost efficiency, which in turn has added to its competitive advantage. The chief competitive advantages are: First mover in technology like, buying 3G licences. Accurate forecasts about the telecom sector owing to high degree of knowledge Growth through internet based products Marketing mix decisions Products: The company provides wide range of products from SIM cards to dongles along with other internet based applications, which help people to chat, play games and exchange pictures and videos with one another. Vodafone Live performs most of these functions, thereby enabling individuals to stay connected with one another. The SIM cards produced by the company are used to control the voice traffic. Products not only refer to the physical product, but also the kind of services offered by the company, after the products are sold (The Times 100, 2014). Place: Vodafone has one of the largest networks of shops in U.K., which allows it to sell products through them. The company also sells its products through independent retailers like, Carphone Warehouse. This is done to ensure maximum visibility of the products for customers, when they are purchasing. The sales assistant at the stores helps with demonstration of the products to customers; this helps customers to experience better product performance (Richter, 2012). Price: Pricing strategies are the most flexible ones compared to other three marketing strategies (Lamb, Hair and McDaniel, 2011). Organizations can increase or decrease the price depending on their strategic objectives. Pricing can either be value based pricing, premium based pricing, cost plus pricing or penetration pricing (Buckley and Casson, 1998). As Vodafone caters to a wide group of customers ranging from young students to professionals, different pricing structures are used to meet needs of diverse customer segments. Owing to high competition in the telecommunication sector of the U.K. market, the company has used competitive pricing to keep pace with competitors. If the company increases price for its products higher than the competitors, then its ability to retain customers will fall. On the other hand, if the price is too low, then customers will perceive the product as of inferior quality. Flexible pricing options like, monthly plan and pay per use approaches, are adopted by Vodafone. Promotion: Vodafone uses both traditional and social media to promote its products. Television, radio, newspapers along with social networking sites like, Twitter, Facebook and Youtube, are employed by the company to promote products that it produces. Over the years, Vodafone has hired celebrities like, David Beckham and created logos that have become an identity for the company. In order to improve company’s promotional activities, higher number of billboards and posters must be set in tube rails and other means of public transport, thereby enhancing visibility (Fennis and Stroebe, 2010). Reflective account Conducting this marketing strategy has been an extremely enriching experience for me. This is because I have been able to relate theories that I have learnt in my course with real life strategies that has been adopted by Vodafone. In order to do this work, I had to read thoroughly in relevance to the topic from various academic articles and journals, which have helped me to obtain a greater insight about the topic. I have been able to understand the reasons for which a particular theory was taken by the company. One of the most challenging tasks in conducting this project was to gather accurate data and draw inferences from of them. This experience has been particularly enriching for me because this has improved my analytical skills. I have also been able to gather a large amount of information on the company that I have chosen, which I think will be particularly useful if I undertake any further project on the same company. One of the negative aspects regarding the research is that this is based entirely on secondary research and I could not get to interact with employees of the company. My experience could have been better if interaction with management of the company was possible. If I have the opportunity of conducting a future project on a similar topic, I could definitely employ my current experience to address the issue. Reference List Anwar, S. T., 2003. Vodafone and the Wireless Industry. Journal of Business and International Marketing, 18(3). pp. 270-278. Bartlett, C. A. and Ghosal, S., 2000. Going Global: Lessions from late movers. Harvard Business Review, 79(2). pp. 132-135. Bolden, R., Gosling, J., Marturano, A. and Dennison, P., 2003. A review of leadership theory and competency frameworks. [pdf] Centre For Leadership Studies. Available at: < http://www2.fcsh.unl.pt/docentes/luisrodrigues/textos/Lideran%C3%A7a.pdf> [Accessed 25 January 2014]. 5 Buckley, P. J. and Casson, M. C., 1998. Analyzing the Foreign Market Entry Strategies: Extending the Internationalization Approach. Journal of International Business Studies, 29(3). pp. 539-545. Cuplan, R., 2002. Global Business Alliances: Theory and practice. New York: Greenwood Publishing Group. 4 Economics Online, 2012. Telecoms. [online] Available at: < http://www.economicsonline.co.uk/Business_economics/Telecoms.html> [Accessed 3 April 2014]. Fennis, B. M. and Stroebe, W., 2010. The psychology of advertising. Florida: Taylor & Francis. Information Gatekeepers, 2010. Telecommunications mergers and acquisitions. Information Gatekeepers: Washington D.C. Lamb, C., Hair, J. And McDaniel, C., 2011. Essentials of marketing. London: Cengage Learning. Masterson, R. and Pickton, D., 2010. Marketing: An introduction. London: Sage. McDonald, M. and Wilson, H., 2011. Marketing Plans: How to prepare them, how to use them. New Jersey: John Wiley & Sons. Ofcom, 2013. Communications Market Report 2013. [pdf] Ofcom. Available at: < http://stakeholders.ofcom.org.uk/binaries/research/cmr/cmr13/2013_UK_CMR.pdf > [Accessed 3 April 2014]. Richter, T., 2012. International marketing mix management: theoretical framework, contingency factors and empirical findings from world-markets. Berlin: Logos Verlag Berlin Gmbh. The Times 100, 2014. Sponsorship and the marketing mix A Vodafone case study. [online] Available at: [Accessed 3 April 2014]. UK National Statistics, 2014. Population. 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