Marketing Management and Mobile Communication - Essay Example

Introduction Mobile communication is one of the fastest growing and most demanding telecommunication applications. Today, it represents a continuously increasing percentage of all new telephone subscriptions around the world. Currently there are more than 45 million cellular subscribers worldwide, and nearly 50 percent of those subscribers are located in the US. It is forecasted that cellular systems using a digital technology will become the universal method of telecommunications. In the year 2005, there were more than 100 million cellular subscribers worldwide. It has even been estimated that some countries may have more mobile phones than fixed phones. In UK, every other person owns a mobile. The idea of cell-based mobile radio service was formulated in the United States at Bell Labs in the early 1970s. However, the Nordic countries were the first to introduce cellular services for commercial use with the introduction of the Nordic Mobile Telephone (NMT) in 1981. Cellular systems began in the United States with the release of the advanced mobile phone service (AMPS) system in 1983. Since its introduction in the 80s, the phone’s place in the market developed from a minority, specialized item to an essential commodity. Global System for Mobile communication (GSM) is a globally accepted standard for digital cellular communication. GSM is the name of a standardization group established in 1982 to create a common European mobile telephone standard that would formulate specifications for a pan-European mobile cellular radio system operating at 900 MHz. It is estimated that many countries outside of Europe will join the GSM partnership. GSM service is used by over 2 billion people across more than 212 countries and territories. Over the last two decades there has been an advance in mobile technology with a significant reduction in the operating cost. The mobile phones’ marketability is not an overnight success but rather a systematic evolutionary development. Presently, the world is on 3rd generation on mobile system. The 1st generation system was the initial stage which was based on analog technology. The 2nd generation is categorized by the digital technology, which includes international roaming, mobile fax, voicemail and SMS. The present system provides broader bandwidth services to the users. Now they provide services and applications that are facilitated by personal computers. It is more easy and trendy to take your mobile phones on conferences than a lap-top, which was used in yesteryears. Mobile phones now come with all such facilities. The Problem: But this trend has been changing, and there is an ever increase in the production of mobile by so many different companies, and their cut throat competition has reduced the cost. Now the consumers can choose from a wide variety of alternatives provided. They can choose according to their choice of brand, technology offered and the price. The supply has overdone the demand and there has been a form of stagnation in this industry. Twenty years ago, when the mobile phone industry started in the UK, phones were the size and the shape of bricks. The huge progress since is largely owed to a progressive, deregulated environment, and the work of some pioneers and evangelists who understood where mobile might take flight. There are now more mobile phones than UK citizens – 63 million at the last count. Three years ago there were only a handful of significant companies operating outside the network operators’ world; now there are hundreds. A recent survey by O2, conducted in conjunction with Real Business, identified more than 200 independent firms that were creating innovative mobile products and services for businesses and consumers. Aggregators such as WIN (Wireless Information Network) are building applications that save companies significant amounts of money. The UK mobile industry has reached a critical mass – not just of technology providers, but of the innovation that firms need to maximize the opportunities provided by mobile. In some organizations innovation is being expressed in relatively simple applications, such as PC-to-text services, that allow managers to communicate quickly and effectively across the entire mobile workforces without leaving their desk. It is being found in live financial services that allow people to manage their bank accounts or insurance policies, or to share trades securely from mobile devices. And in other cases, it is creating new retail channels that break the reliance on costly outlets and call centres. No organization can ignore mobile for much longer. The bigger issue is what you do with it, and how you blend it with existing technology and processes to ensure a sustainable fit. “UK companies have come a long way in helping people address those issues. There is no better place to be building mobile products and services, and there is no better way to help organizations give themselves an edge, not just in local markets but internationally too.” (Mike Short UK Mobile Industry has Hit Critical Mass, 2005). Mobile phone dealers have now started facing the threats. Carphone warehouse is UK’s largest mobile retailers. Over the past 5 years, the Carphone Warehouse has built up a significant telecoms business, which already contributes half of the Groups revenue and is set to be a major driver of future profitable growth. Now it has experienced a decline in sales. Same is reported from Carphone Warehouse’s arch rivals, Phones4u. 1. The External analysis- PEST Analysis: As an independent dealer of mobile phones it is necessary to make an environment analysis. The competition in this field is extremely fierce. PEST analysis can be followed here to evaluate the environment and build strategies for successful operation of the business. The PEST approach is the common approach for examining the general business environment in order to manage the future opportunities and threats from probable changes in the environment (Mullins, 2002; Farnham, 1999). It is a useful strategic tool for understanding the market growth or decline, business position, potential and direction for operations. PEST (Political, Economical, Social, Technological) are macro environment that affect all firms. These are beyond firm’s control and so present themselves as threats. The political factors that may influence are political stability, legal framework, intellectual property protection, trade regulations, pricing regulations, taxation-tax rates and incentives, mandatory employee benefits, industrial safety regulations and product labelling requirements. Each country has its own political structure and the good system is those that benefit both the customers and traders. PEST analyses political and legal factors. Political factors have increased in toughness for mobile phone operators as phones become more advanced. In particular, the way in which billing information is handled in the future will be affected by new anti-terrorist legislation imposed by the government. The government has invested in research into effects of mobile phones on health. The outcomes have been inconclusive. However, scientists have stated that the use of mobile phones does affect brain activity. This is not proof of damage; however this could have negative impact in future use of mobile phones. The intervention of government noticing the increase in crimes focused on or around mobile phones also becomes detrimental to their development. The economical analysis would include: Type of economic system in countries of operation, government intervention in the free market, exchange rates & stability of host country currency, efficiency of financial markets, infrastructure quality, skill level of workforce, labour costs, business cycle stage (e.g. prosperity, recession, recovery), economic growth rate, unemployment rate, inflation rate etc. The economic factors are strong in UK, with high employment rate and income rate and people have income to spend on mobiles. But if the people slow down, thinking of a recession, it can affect the mobile industry. But it is less likely to happen as the indicators of continued economic stability are stronger. The Social factors include: demographics, class structure, education, culture, attitudes, etc. For example: the increasing concern over the number of masts being installed. They are the networks supporting the mobile phones that affect the environment. The Technological factors includes: Recent technological developments, technological impact on product offering, impact on cost structure, etc. The mobile industry offers the most advanced technology. People are now on the fast pace and they don’t like to wait for information mobile communication provides them with the up to date information in no time. The instant SMS regarding any enquiry, the internet facility, etc do have a great impact. The additional technologies on smaller packages also are assigned to attract the customers. The number of macro-environmental factors is unlimited. In practice, the firm must monitor those factors that influence its industry. Even so, it may be difficult to forecast future trends with an acceptable level of accuracy. In this regard, the firm may turn to scenario planning techniques to deal with high levels of uncertainty in important macro-environmental variables. Considering the above factors one could get a guideline to the future of the business. Threats The major threat that mobile industry faces is market saturation. It is found that about 73 percent adults use or have mobiles (OFTEL research). And this could mean that a few more customers would bring market to saturation point. But the children cant be targeted as their expense would be taken by their parents, who may not spend on the latest device. Competition from other mobile distributors: There are already established dealers like the Carphone Warehouse, Vodafone etc in the market. To keep pace with them initially would be difficult. Capital: high initial investment is needed in this business. Marketing strategies have to be developed as a new entrant comes into this market. People should be aware of the new comer and gain some confidence in the brand. Traditional Landlines: most of the homes are having landlines which are much cheaper, and they do provide with internet facility. Internet facility: Most of the group organisations would be preferring internet facility. Like offices, schools, universities, library etc would prefer the internet facility. Reduce in disposable income: UK is having high employment rate and a good average income and so people have high disposable income. But a fear of recession can make them save and it could reduce spending on luxury. Health Concern: people are concerned about the radiation from handset. There has been many debate and research over this concern. This could discourage potential buyers. Even though of all these are present, mobile phone’s popularity has not decreased. Irrespective of any class or age, everyone likes mobile phones. The latest of the 3G mobile phones has attracted the mass. The internet facility, where ever you go, music download, movie download, motion video, etc have added advantage over the others. Providing phones on contract basis: this would help the customers get phones on a reduced rate by signing a contract with the tariff companies. Reputation of the mobile phone brand: Nokia tops the charts; it is the leading authority in the development of mobile. So people would be choosing the best. So taking distribution of the top brands like Nokia, Samsung, and Sony Ericsson would help the new entrant. The above said threats and opportunity has been formed from the market study. And considering this for the further research would help the dealer in achieving its goals. 2. THE MARKET SEGMENTATION: “The purpose for segmenting a market is to allow the marketing/sales program to focus on the subset of prospect, that are "most likely" to purchase your offering. If done properly, this will help to insure the highest return for your marketing/sales expenditures. Depending on whether you are selling your offering to individual consumers or a business, there are definite differences in what you will consider when defining market segments.” (Michael Treacy and Fred Wiersema). Little of what is best in marketing theory and practice works without correct market segmentation. It is the most fundamental concept in marketing and the choice of which approach will affect your business. Market segmentation, correctly applied, is about understanding the needs of customers and, therefore, how they decide between one offer and another. A company is then able to determine which groups of customers it is best suited to serve and which product and service offers will both meet the needs of its selected segments and outperform the competition. The primary objective of segmentation, therefore, must be how to win and retain the customers you want to serve. This underpins the approach, taken by The Market Segmentation Company (MSC). Market segmentation is the process of splitting customers or potential customers into groups or segments within which the customers share similar levels of interest. Customers select their proposition that meets their demand and does not consider the company’s segmentation. Therefore, the business has to take that into mind and make sure it meets the customers’ needs. It may help the company to meet the customers business but it needs to reach them. By really understanding what underpins a customers choice a company can gain an insight into his or her motivations, which will lead it to understand what promotional stance to take. The key elements of the process are: -Establish a sample customer which will represent the different decision makers. -Record the personal details of decision makers which can be to identify them. - understand the real needs of customers and the benefits they are seeking. - Bring together those micro-segments that illustrate similar patterns of importance for the benefits in order to form clusters. - verify that concluding elements can be considered as segments. - Establish the attractiveness of each segment to the company based on how well each of them meets its requirements - Determine the relative competitive strength of the company for each segment based on how well the, company compared with its competitors, meet their requirements. By combining the segment attractiveness and company competitiveness one can form a strategic picture of the company, which helps it form the market segmentation that will help the company to achieve its goals. The primary bases for segmentation are: Geographic segmentation is based on regional variables such as region, climate, population density, and population growth rate. Demographic segmentation is based on variables such as age, gender, ethnicity, education, occupation, income, and family status. Psychographic segmentation is based on variables such as values, attitudes, and lifestyle. Behavioural segmentation is based on variables such as usage rate and patterns, price sensitivity, brand loyalty, and benefits sought. A company should now get a clear indication as to the largest segment interested in its products and services.  The largest segment will probably be the group which brings in the most revenue for the company and so it goes without saying that it is this group the company should be aiming at the most.  Once it has its target group in mind, the next step is to examine this group in greater detail. From the above report one could find that mobile communication is facing stagnation. So the major problem would be retaining the existing customers. The sales focus should be from customer acquisition to customer retention. So the segmentation could be done on the basis of the behavioral pattern of the consumers. Find out the largest segment of consumers that is interested in the product. That is which brings the most revenue for the business. Now the marketing mix should be applied to retain those customers. It would be possible through modernizing its dealer management process and through CRM (Customer Relationship Management) solutions. Providing proper after- service to the product, constant feed back and maintaining a sound relationship with the customer. The business does not end with the selling of the product. Unless a good relationship is maintained the customers will not come back. They will be in constant touch and one can update with the latest technologies and services to increase sales. The existing customers can provide the company mouth publicity which can attract new comers. So a good sales force and as well as a CRM should be implemented in the organization. The focus should on that segment which gets the company the highest income. Once it has identified the segment then it can concentrate on that particular segment. By doing this the company will be ale to convey the benefit of its product and services to that focused segment. It must concentrate on the segment those which are relevant to what it hopes to achieve. Always place the largest segment first and then consider the others. The company should not compromise the profit factor. If its products cost too much to reach them then the company should rethink about the segmentation. Works Cited Sheriff, Edward., Ray, Y. mobile satellite communication Networks. About GSM Innovation. GSM Association, 2007-01-08 Treacy, Michael. D. Wlersema, Frederik. The discipline of market leaders. Mike Short UK Mobile Industry has Hit Critical Mass. Computing. Vnunet.com. 2005. 12 May. 2007. http://www.computing.co.uk/computing/comment/2145798/uk-mobile-industry-hit-critical Read More