Marketing Mix Strategy - Vodafone - Case Study Example

Name: Course: Date: Professor: Table of Contents Executive summary………………………………………………………………………………..3 Introduction………………………………………………………………………………………..4 Vodafone’s Presence………………………………………………………………………………5 Market Review…………………………………………………………………………………….5 Competition in Indian Market……………………………………………………………………..6 Consumers’ Consumption Behavior………………………………………………………………7 Market Adaptation………………………………………………………………………………...7 Vodafone Product Pricing…………………………………………………………………………8 Vodafone Payment System………………………………………………………………………..9 T-Mobile…………………………………………………………………………………………..9 Critical Analysis………………………………………………………………………………….10 Conclusion……………………………………………………………………………………….13 Recommendation………………………………………………………………………………...14 References………………………………………………………………………………………..15 Executive summary In this paper, discussion will take place on the integratedmarketing communications mix strategy for Vodafone versus T-Mobile.The strategies used will assist the company to take the actions necessary to make the service provider to increase the market competitiveness by utilizing strategic marketing and branding tools. This paper touches on the shortcomings the T-Mobile is experiencing which make it not as successful as Vodafone, a well-known service provider worldwide. As a manager, some strategies are to be put in place in order to make the company succeed. Vodafone has its mission statement in which it governs the company in implementing the communication strategy mix which in turn makes it successful. Vodafone is touched majorly in India from this report. In this report we’ll look at Vodafone in India and how it ventured there. Vodafone entered India with a joint venture having some percentage of stakes with the Essar group as a partner for the Hong Kong telecommunication. There was a bid which was tough between reliance communication and Hinduja group who wanted to purchase a service provider in India by the name Hutch which was by then the second largest GSM brand in the country. Out of what I have researched on Vodafone service provider, as a manager, there are a lot of things which are to be put in place. As the company’s communication mix, there should be good relation between the company and the customers, workers and the customers and so on. Good pricing should be done in order to cater also for the end users who don’t earn much money. Promotion should also be done in order to capture the interest of the customers who are in the country the company is interested to. I have chosenT-Mobilesince I have researched upon the same and drawn from the company the shortcomings which we can get the help of the same from the communication mix of another company which is the VodafoneCompany. Vodafone Company is a successful company which for instance in India, passed through a lot of hardship but at the end they managed. Since they are successful, it forms a good basis to seek help from their communication mix strategies in order to help market and improve the T-Mobile which is not so poor but also not so good in communication mix strategies. Introduction Vodafone is a British multinomial mobile network operator which is the third largest Britain Company. In terms of revenue, it is the world’s largest mobile network operator. Its revenue is approximately 45 billion pounds and a market value of about 78 billion pounds. This report is as of August 2010. The company was leading the world market with 8% market share. This company started in the year 1984 whereby they gave it the name Vodafone which is just an acronym for “voice data fone.” Vodafone has its operations in all the continents and as at 2010 June, it had a customer base of more than 340 million subscribers globally. They had the vision to be the world’s mobile operator leader. Something called corporate responsibility helps the company achieve what they want by minimizing business risk and supporting our reputation with the customers. This is about making profit in a way that reduces or rather minimizes negative impacts and maximizes the positive impacts. It also introduced its logo, as a quotation mark in circle. Vodafone’s Presence Vodafone in June 1999 completed its merger with Airtouch communication which is a united states based server provider which is wireless. It also had the world’s largest take over when it took over the Germangiant Mannesmann which had 42 million customers. Since 2000 up to date, Vodafone has gone to every continent of the world with their own subsidiaries and partnering with the other countries service providers. Vodafone Essar in India was formed in the year 2007 when VodafonePLC made its way to the country. The company has currently 109 million users or subscribers in India which when put in percentage form are 23.89% of the total 457 million subscribers in India in June 2010. Market Review We will look at Vodafone in India and how it ventured there. Vodafone entered India with a joint venture having some percentage of stakes with the Essargroup as a partner for the Hong Kong telecommunication. There was a bid which was tough between reliance communication and Hinduja group who wanted to purchase a service provider in India by the name Hutch which was by then the second largest GSM brand in the country. The deal was sealed and Hutch went for $18.8 billion and Vodafone paid $11.7 billion which was a stake of 67% in the company. This was considered as a hard deal which is the largest foreign acquisition ever in the Indian country (Wilson & Woodside, 1994). Vodafone Company received a notice which was legal from the Indian tax authority for the potential tax liability in the year 2009. This company was accused for not deducting the withholding tax considering the payment to Hutch service provider, Hong Kong in respect to capital gain on disposal of its shares in Essar. In tax news Swine said, “That the Indian tax authorities have contended that the shares in the islands of Cayman Company were just the mode or the vehicle to transfer chattels situated in India and that the transaction between HTL and VIH was just a transfer of interest which were tangible and intangible in the Indian company.” She claimed that, “It was just an acquisition of shares of a shell foreign company. This made the VIH to file the writs which was in favor of the Indian tax authority. Vodafone appealed and filed its petition which was against the decision of tax authority in the high court. Vodafone were defending themselves that there is no liability whatsoever in withholding tax and the case still exist in court waiting for an ultimate decision. The company says that it is exempt from the charge as the stake sale took place between the two off-shore entities. Competition in Indian Market Vodafone secured its place successfully in India, due to the takeover of business and Hutch subscribers, as the second largest operator in the country’s market. It became difficult for India to change premium rates since there was a stiff competition in the country. Service providers such as airtel, aircel, IDEA and others are big rivals of Vodafone ( Wilson& Woodside, 1994). There was a statistical comparison between December 2009 and June 2010 which tells that the top 5 GSM telecom industry, Vodafone is second in the subscribers and the market share despite its coming late to the country with 23.8% market share. Airtel is in the lead in the country with 29% market share while IDEA Cellular is third place with a 15% market share. Airtel and IDEA are the major competitors of Vodafone in the country. Consumers’ Consumption Behavior This plays a major role in an organization for decision making such as positioning, promotion, pricing, segmentations and distribution. Vodafone bought a second largest cellular operator which had a good brand. As it gained entry in the country and operated as VodafoneEssar, they had to prove themselves as the world leader (Dave,1996) Its international brand name enabled the corporation to show great performance. The income increased drastically by more than 50% due to the rapid customer base expansion which added 1.5 million customers monthly since its start in the country, India. It became also the second largest handset supplier in the country after shipping more than 6 million handsets in the year 2008.(O’keefe&Ibbott, 2004). Market Adaptation As Vodafone entered the market, they had a big challenge in handling the growth of customer base and at the same time they had to reduce infrastructure cost and personnel because they had spent a lot in the buying of hutch network. Vodafone installed more than 1000 self-service kiosk, automation machine which helped customers in toping up their prepaid account, post paying bills and information of new services being offered by Vodafone. The service provider also reduced their cost per transaction. Vodafone offered various products and services which are suitable to the Indian market which is designed according to the demand of the diverse customer base. They offered different services and products.(Dave,1996) Vodafone Product Pricing The telecommunication market was expanding very fast and with that speed the competition was getting stiffer, Vodafone managed in the increase of the rates and tariff for the airtime per minute and the short messages services in the beginning. These prices when they are compared to the United States or Europe rates are much lower. Vodafone started selling low cost handsets in order to attract the customers; the handsets were like, Vodafone 150 and Vodafone 360. It was also with low rates of connectivity (Vodafone annual reports, 2009). Thereafter was a stiff competition from other mobile operators who were cutting down their rates which forced Vodafone to cut down its rate by over 50%. Before that, Airtel made it rates lower by 43% (Wilson & Woodside, 1994).It even came up with the deal whereby customers called for free during weekends and night hours. This lead to enormous competitions but Vodafone managed to retain its customers and sell its products (O’keefe&Ibbott ,2004). Vodafone Payment System Vodafone has two kinds of distribution network of its services to the customer. It manages store under Vodafone brand name in this distribution. It has stores that sell services to the customers and the required support when needed by the customers. When Vodafone took over in Vodafone Essar, all the stores were rebranded and refurbished all around the world. This company sells its products and services using the franchise and exclusive dealers in the whole country of India. It also operates post-paid outlets and has mini stores which sell their services and products. It also uses internet in marketing and selling of its products and services which makes it easy for people who are busy and can’t go to the shops or stores can purchase from their websites. Vodafone has ties with independent dealers, for indirect distribution. It has retailers and distributors to access the rural areas which have limited access of the products and services. Its payment system is good and hassle free. Toping up by the prepaid users can be done via the recharge cards available in various stores. Bill can also be paid online by the post-paid users via self-service kiosks and payment centers(Dave, 1996) T-Mobile T-Mobile is a known mobile service provider which operates mobile networks in the United States and Europe. The company was formed in the year 1990 owned by Deutsche Telekom. T-Mobile teamed up with an internet based company and launched G1 in the united Kingdom in the year 2008. The phone was built for internet and it runs in android mobile software(Salvador,2013). Weaknesses Despite some success of the company, there are some weaknesses or flaws. There is a general average revenue decline per person which is becoming a big problem which they are trying to solve. Mobile operators give incentive to the customers if they do more business with the company. O2 are doing their best in giving the customers the incentive but the T-Mobile is not doing well in this which will eventually make the customers run away and join other mobile operators (Salvador, 2013). Critical Analysis As a manger of the T-Mobile if given that chance, as the strategy of Vodafone brand in India, I will have to imitate several of them in order to make T-Mobile prosper in business worldwide. For T-Mobile company to be ahead they must ahead of the game by running successful strategies just as what the Vodafone company is doing to make its revenue stick high. They must focus on the marketing principles. Scandals on T-Mobile have strong and serious effects on it. The company’s image was tarnished after the customer’s details were sold to competitors by the employees. It is facing a lot of compensation claims as well which is really damaging to the company. Looking at it critically, Vodafone has strategies in which the T-Mobile can draw some concepts and imitate its strategies in order to make it a better telecommunication company in the world. Vodafone marketing mix for instance in India, which is the combination of four major variables which the management must take care of and controlling in order to satisfy the customer in the target and in creating wealth. Vodafone has used marketing mix in gaining success in the vast telecommunication market in India as the second biggest corporation in the country in terms of GSM mobile technology which grows day in day out (Salvador, 2013). In order T-Mobile also to have a success in the revenue increase, it should also use marketing mix so as to gain the success in the vast telecommunication in the countries in which it is based that is Europe and Germany. T-Mobile in the marketing mix should look at the following: Product: This is the major variable in marketing mix. Without the product, there is no other variable which will work. This refers to tangible and products and services which are physical. T-Mobile should be able to sell its products in the German and Europe market and should also introduce suitable and affordable ranges of products and services for range of customers in Germany and Europe. For the customers who have low income, T-Mobile should provide facilities of prepaid mobile and for the high income customers, they should serve with post-paid mobile phones and T-Mobile should also introduce easy to use handsets which addresses the community of the concerned countries which cannot afford the expensive handsets. Price: In buyer and seller relationship, price plays an important role. There is a trust development between the sellers and the buyers, who agree a certain level of the price. Price’s significance can be reduced only when the factors like quality compromise the price of the product or the service delivery(Jobber, 1998). Like Vodafone, T-Mobile should use a lower price strategy in gaining high market share of the people who are in the rural areas of the countries concerned. As Vodafone took this strategy, T-Mobile should imitate the same to reach out to the higher volume of people. There should be an introduction of various products with the price range which a customer has option to choose and customers receive the quality service they pay for the product they want. Place: T-Mobile should open maximum number of outlets in every part of Europe and Germany. These are direct distribution through distributors of their own, and indirect distribution through associate distributors to the local retailers who provide products and services to the local customers. As Vodafone has established many services centers in many parts of India, T-Mobile should also implement that so that the customer is always satisfied with the products and services and we can see that the customers are increasing significantly every month. Vodafone sells its products and services through the internet on their website, a strategy which should be mimicked by the T-Mobile in German and Europe. Promotion: This mix comprises of advertising sales promotion and public relations. (Jobber, 1998)Promotion means to inform the customers about the products and services and convincing them to buy. This strategy has been used by Vodafone since its inception in India as Vodafone Essar. The T-Mobile should also practice this mix by advertising and promoting its products in order for the customers to buy them. There should be introduction of the advertisement of zoo zoos and pug and a great sensation which will get popularity in many social networking sites like Facebook. It should also sponsor sporting clubs just as Vodafone supported Indian Premier League which helped attract attention of the customers. For Vodafone, other sponsorship like the MTV show named the splits villa which in the circle of Indian youngsters was famous, helped the company to gain success in a very short time. New beneficial schemes should be introduced to attract the customers, like tariff offers; validity offers bonus cards and low cost handsets. Conclusion Vodafone has been very successful in applying their marketing mix strategy and the step strategy in the Indian market. This is also a challenge to the T-Mobile company which should cope with such a mix strategies. It is now the third year that Vodafone are in full control of operation in the Indian country. They secure second place annually and always seek opportunities to be number one. As we said earlier, Vodafone has vision and mission. As per their mission, they want to be the world leader in the field of communication. India market will lend a helping hand greatly to grow the base of it as they have potential in the telecommunication sector. Recommendation T-Mobile though a good company, it has its failures and flaws in which as a manager, some strategies and decision should be made in order to correct the flaws in the company. As seen earlier by the Vodafone mobile service provider company, it has a slogan which governs the company. T-Mobile management should sit down and decide on what should be the slogan of the company which will be their guide in making the average revenue per person increase instead of decreasing as shown earlier. The management should also set the type of management and the marketing campaigns used as that one of the VodafoneCompany. As the T-Mobile manager, they should also sit down as a company panel or board of governance and set up the strategy also which project a good image to the customers of the company. To add on that, the employees should work tirelessly in order to satisfy the customer needs and they should maintain the relationship between the customers and them, employees. The marketing communication mix strategies used by Vodafone has made the company successful in all areas and much as written in this report, in India. T-Mobile should mimic the company’s communication mix strategy which will help eliminate the low average revenue per customer. This will increase the total revenue per annum in the company. References Brown, A.S & Thatcher, B.M.S. individual creativity in teams: the importance of communication media mix. Decision support systems, vol 49, p 291-299. Browning J. (2012). Vodafone agrees to buy cable and wireless for $1.7 Billio. Bloomberg, retrieved June, 2012. Dave, N. (1996). 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