Vodafone Company Market in Australia - Case Study Example

VODAFONE IN AUSTRALIA By students Name Institution Course Prof Date 1.0 Market Segmentation Vodafone Company operates in a telecommunication industry and provides mobile phone and data services to their customers. The telecommunication market in Australia is a board market with a wide range of customers’ requirements. The market is characterized by different market segments that have distinct mobile phone and data services requirement. The distinct segments make market segment a prerequisite for success in the telecommunication industry in the country. Vodafone Company cannot afford to overlook the market segmentation in the country and make any considerable success. This section will analyze the telecommunication market segmentation in Australia, which the Vodafone should apply to enhance their operations in the country. Telecommunication market in Australia can be broadly classified into mobile service segment and data service segment. This segmentation is based on the types of services which Vodafone Company provides to their customers. The two segments have distinct characteristics from each other. Each of these segments can be segmented further depending on the various aspects such as income, lifestyle and geographical factors. Figure 1: Telecommunication industry in Australia 1.10 Mobile services Mobile phone services are the major market segment in the telecommunication market in Australia. According to a recent survey, 83 percent of the total population in the Australia have subscribed to one of the mobile service providers in the country. Australia has a large population of 23 million people, and 83 percent of the population translates to about 20 million (Appleton 2014). The market can be segmented into three geographical segments namely, urban, rural and semi-Urban. 1.11 Urban Segment Urban population in Australia accounts for a considerable percentage of the total population in the country. Statistical records indicate that the largest numbers of the mobile phone services users are urban dwellers. The large number of the people in the urban areas includes business people, skilled and unskilled labor, government employees and students. These groups of people are characterized by the large use of mobile services to communicate with fellow employees, connect with other business people and communicate with fellow students. In addition, their income is relatively high as evident from the high spending rate. The segment is flexible to change in the market prices and requires and is always looking for affordable but quality services (Australia 2012). The population comprises the highest users of the mobile services. Vodafone Company needs to consider the urban population as one of an essential market segment in the telecommunication industry in Australia. The marketing strategies should be tailored towards penetrating in the urban segment and meeting the unique needs of this segment. The company needs to provide services that balance between the costs and the quality. 1.12 Rural Area Although the rural area comprises the largest percentage of the total population in the Australia, their use of mobile services is considerably low. Rural lifestyle does not encourage the large use of mobile services. Most of the people use the services when communicating with different people who are not as often as the case in the urban areas. In addition, most of the rural population are low-income earners and cannot afford to make frequent calls. In addition to these characteristics, rural customers have high customer loyalty that is not in urban and semi-urban areas. Therefore, the market comprises of a significant market segment and a Vodafone cannot afford to ignore the segment. The company needs to consider how to penetrate best the rural segment and encourage and win the customers in this market segment (Australia 2012). 1.13 Semi-Urban The semi-urban market segment is characterized by middle-income earners. Most of the people in these segments are government employees and small business owners. As a result, their use of mobile phone services is higher than in the rural area. However, it is lower than the urban market segment. Appleton argues that the semi-urban population has increased rapidly in the recent past in Australia, and he predicts that the population will be higher than the rural area at the end of this decade. Vodafone needs to monitor this segment so that it can capitalize on the opportunities that come with the increasing semi-urban population (Viardot 2014). Figure 2: Population distribution in Australia The telecommunication market in Australia can also be segmented on the based on the level of income. In this classification, there are three segments namely lower, middle and high class. 1.21 High Class High class in Australia comprises of a small percent of the total people in the country which live a luxurious lifestyle. Most of the people in these segments are business men and senior governments’ official and are live spendthrift kind of live. Although their percentage is small, their use of mobile services is high (Merriden 2013). This is an important market segment for the Vodafone Company. The company needs to address the needs of this market segment that is distinct from the other market segment. For instance, the segment requires customized services rather than general services. 1.22 Middle class According to a survey conducted in the year 2013, the middle class in Australia accounts for more for about 60 percent of the total population (Viardot 2014,). This segment is characterized by people earning enough money to enable them live a comfortable life. Although they do not have a luxurious lifestyle, their spending is relatively high. Therefore, this is the most important market segment that Vodafone Company needs to focus most. 1.23 Lower class This class comprises of the poor people in the country whose dairy spending is about a dollar. Most of these people are rural individuals and unemployed people. The low spending among these people means that this class in not profitable. Although the company should not avoid this class, a lot of focus in the market segment would not be necessary. Figure 3: Population classes in Australia Table 4: Mobile phone services rate of usage among different market segment Vodafone Company also provides data services, and this market can be segmented into two major segment namely low usage customers and big spenders customers 1.31 Low usage customers The low usage customers comprise of home, individual and small domestic data users. A large number of people in the Australia are low usage customers as they do not require a large amount of internet data. The customers in this segment are sensitive to change in the cost of the data. They are characterized by low data usage, comprise of young generation and are spread across the country. The setup cost is little with large number of the people using the data in their mobile phone to access internet materials. The customers are very flexible, and a change of the price of the data can have a tremendous effect on their use of the data (Viardot 2014). 1.32 Big Spender Customers This segment comprises of big companies and organizations that use a large amount of data. The companies spend a large amount of money to buy the internet data. This segment is characterized by the large amount of money required to install the internet facilities, value qualities and are less sensitive to prices. They demand high-quality services and are concerned with the data transmission speed. Most of the customers are found in the major cities and towns in the country. Although the number of the companies is not many, this segment is the most profitable data market segment. 2.0 Competitive pricing Vodafone Company is operating in a competitive telecommunication industry in Australia. The telecommunication market is characterized by major firms such as Telstra and Optus Company. Vodafone is one of these major companies, and it is the leader in some market segments in the telecommunication market in the country. In this competitive market, pricing strategies become a major aspect of consideration. There are numerous pricing strategies, but not all of them are applicable in all situations. Therefore, the choice of the pricing strategy is essential for the success of Vodafone in the market. This section will review the competitive pricing strategy for the Vodafone Company in the telecommunication industry in the Australia (Piercy & Morgan 2014). In the competitive telecommunication market, various firms in the industry are constantly evaluating their position to determine the best pricing strategy to use. However, since there is no company that has dominated the market, competitive pricing has not been successive in the market. Competitive pricing is based on two major factors. First, the ability of the customers to respond to prices changes affects the pricing strategy. Second, the marketing forces are also a major consideration in the competitive pricing strategy (Day & Nedungadi 2012). The rates at which the customers react to change in the price of products or services affect the use of competitive pricing strategies. In a market where the customers react faster to the change in the prices by shifting to competitors means that an increase in the price will have a huge impact in the organization sales and profit. On the other hand, markets, where customers do not react faster to the change in the prices, means that competitive pricing can be effectively applied. Customers loyalty is one of the main factors that make customers show reluctant to respond to increase or decrease in the prices of product or services. The telecommunication industry in Australia is characterized with high flexible customers who are fast to respond to the changes in the prices. Most of the customers in the market are middle-class earners and low data users who are willing to change their provider with an increase in the prices of the mobile phone and data services. Therefore, the use of the competitive pricing is limited due to this factor (Paley 2012). Marketing forces are also essential for the success of the competitive pricing strategy. Marketing forces such as market domination results to high customers’ loyalty and inflexibility in the market. In addition, marketing forces that hinder competitors from responding to the change in prices are also favorable to competitive pricing. If the competitors have the ability to respond fast to change in the price in an organization, the net effect is easy neutralized and hence not impact on the organization sale. In the telecommunication market in Australia, the lack of domination of the market by any of the firms means the firms do not have any marketing forces. As a result, Vodafone does not have these marketing forces to apply the competitive pricing strategy in the telecommunication market in Australia (Piercy & Morgan 2014). Despite the lack of the marketing forces and customers loyalty, Vodafone Company has a chance of using competitive pricing in different market segments. In the big spender customers’ market segment, the company can apply the competitive pricing strategy to increase their profit margin. As noted early, the segment is characterized by low flexibility and less concerned about the cost of the data. Customers in this segment focus on the quality and reliability of the services they receive. Vodafone Company provides the quality and reliability data to their customers and hence the company has an opportunity of apply competitive pricing in this segment. In addition, the fact that customers in this segment are inflexibility makes the competitive pricing strategy the best pricing strategy in this market segment. The company can also apply competitive pricing strategy in the high-class market segment. Like the high big spender customers in the data market, high-class market segment are characterized by low flexible customers who are less reactive to changes in prices of the call services. These customers have a high level of customers’ loyalty as they do not change with the changes in prices of the services. Consequently, the company has a chance of using competitive pricing strategy (Piercy & Morgan 2014). Lastly, although the competitive pricing strategy is limited to a few market segments in telecommunication industry in Australia, there is a chance of using the strategy in the future. Paley (2012) writes that a firm that intended to use competitive pricing strategy can increase the market share by utilizing various advertisement, differentiation, and product promotions. The increased market share will result to market domination and customers’ loyalty. As a result, the company will have the opportunity to using the competitive pricing in the future. Therefore, Vodafone Company needs to increase their operations in the telecommunication industry, penetrate to all market segments and attract large number of customers. The increase in the market will result to market domination, and the company will be in a position to apply competitive pricing strategy. References Appleton M., 2014, The people of Australia: Statistics from the 2011 census. Australia., 2012, Telecommunications carrier industry development plans progress report. Canberra: Dept. of Communications, Information Technology, and the Arts. Day, G. S. & Nedungadi, P., 2012, Managerial Representations of Competitive Advantage. Journal of Marketing, Vol. 58 (3) pp. 31-44. Jenkins, M., & Cole, T., 2011, How Managers Define Consumer Markets. Advances in Consumer Marketing. Vol 3 (7) pp. 185-197. Merriden, T., 2013, Rollercoaster: The turbulent life and times of Vodafone and Chris Gent. Oxford: Capstone. Paley, N., 2012, The marketing strategy desktop guide. London: Thorogood. Piercy, N. F. & Morgan, N. A., 2014, Strategic and Operational Market Segmentation: A Managerial Analysis. Journal of Strategic Marketing, Vol. 1 (9), pp. 123-140. Viardot, E., 2014, Successful marketing strategy for high-tech firms. Boston: Artech House. Vodafone W., 2012, Vodafone Warriors. 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