The Mobile Segment of the Telecommunication Industry - Essay Example

Executive Summary There are many factors that influence the future and current economic sustainability and future growth of an industry. In the mobile industry the current status is very bright due to the introduction of new technologies which are opening doors for advertisers to finally realize full convergence to have one single medium channels which connects the marketing needs by making the telephone into a multimedia device which serves as a phone, computer and television all in the palm of your hand. This reports studies the mobile industry in order to analyzing the latest trends and the future of mobile advertising for the players in the telecommunication industry and all other companies which are very captivated by new form of advertising using mobile telephone as the medium to send the message to the large masses. The enterprise emphasized in the report is Company X, a new company in the telecommunication industry who does most of its business currently in Western Europe with manufacturing operation in Malaysia. The report includes an introduction which describes the methodology. The main body of the report provides various information and different analysis in order to determine the locations, strategies, and demographics Company X should target. Introduction This paper provides an in-depth analysis of the mobile segment of the telecommunication industry. The methodology approach utilized to prepare was mainly the use of secondary research in order to obtain data and information related to the topic. Secondary research is data available using external sources (Disc, 2007). Sources utilized through the secondary research approach included journal articles, textbooks, magazines, online publications, websites and professional databases. Primary was not used directly in the report, but there are two short proposals on how primary research techniques could be utilized by an investigator studying the industry to obtain relevant information and achiever further research findings. Both deductive and inducting reasoning was utilized in the preparation of the report throughout the different sections of the document. Deductive reasoning starts with a model, forms a hypothesis, gathers data to test the hypothesis, and then uses the data to conclude whether or not the model accurately describes reality (Ray). Inductive reasoning is an opposite process in comparison with deductive reasoning. In inductive reasoning a research begins with specific observations and measures begin to detect patterns and regularities, formulate some tentative hypotheses that can be explored and finally ends up developing some general conclusions and theories (Socialresearchmethods). The Mobile Industry and the emerging m-mobile market The telecommunication industry generated $3.32 trillion in sales worldwide in 2006 (Plunkett Research, 2008). The industry is growing and the mobile segment is one of the main drivers that are driving companies into diversifying and expanding within the industry itself with new opportunities that are creating niches in the market with great potential. Lower prices in offered by service providers due to the higher demand of mobile services has reached the level of 2.39 billion mobile subscribers as of 2007, a figure that is expected to reached 4 billion subscribers by the year 2011 (Plunkett Research, 2008). The speed of the mobile services along with technological advances have created new mobile units capable of many multimedia application which have turned cellular phones into min-computers with new innovative models such as the Nokia 62, the iPhone and the Tilt. These phones have capabilities such as full web browsing, productivity software tools, global positioning system, quality cameras and photos, mp3, Bluetooth, touch screens among other features. Mobile advertising has become a big business due to video messaging and broadcasting channels showing television type programming directly into the cellular phone. The new frontier for wireless services is the internet and transmitting high speed internet into the new telephones in the marketplace today. Mobile advertising has become the new medium marketing professionals have adopted to reach the large masses at cheaper price than traditional channels such as television or the radio. It has proven that mobile advertising is more effective at sending a message to potential customers than online advertising due to the fact the attention of the receptor is higher and the personalized campaigns can be send to the targeted customers utilizing demographic data such as age and gender of the customers. Mobile advertising is referred by people in the marketing industry as m-advertising. It is the only marketing personal channel enabling spontaneous, direct, targeted communication medium which supersede barriers of time since the message is guaranteed to reach the receptor instantly, thus the speed of advertising campaign is put on turbo and results from the marketing efforts are faster (Lepanniemi & Carcajal & Solo, 2004). The market for m-advertising is growing at an exponential rate. In 2006 the sales of mobile marketing increased by 225% and the outlook for 2008 is extremely bright with arrival of many new telephone models with multimedia capabilities (Lepanniemi, et al. 2004). The potential is great, but not too much is yet know on the effectiveness of the medium as on different types of ads considering the product characteristics and the customer profiles. In order for an advertiser of a company considering the introduction of this medium as part of the marketing mix of a company the executive could perform an experiment to text the technology. An experiment is a primary research technique performed directly by a researcher in order to obtain certain data that would otherwise be hard for the company to find elsewhere. The experiment that can be designed to be performed by a company is to test the effectiveness of an m-mobile campaign involves selecting a location in the world in which the population has good cellular penetration, but has not yet ever received or seen any type of m-advertising. Such a population meets certain characteristics that provide valuable information to the advertiser. Since they have not seen the technology before their reaction will be truly genuine and bias will be minimized in this scenario. The company needs 1000 people to participate in the experiment. A phone with multimedia capability able to switch to wi-fi such as the Nokia n61 will be given out for free to the participants of the experiment in exchange for a two week participation in the project in which they will receive five advertisements each day. At a price of approximately $400 which may be lower by about 40% in bulk purchases the cost of giving out the phones is about $250,000. The subjects have to fill out short questionnaires on a daily basis about the advertisement they saw that day to be send back to the company via an online format which the subject will access using the internet capabilities of their phones. Questionnaires are another primary research technique which allows companies and researchers to obtain data fast and at very low prices. There are companies already making moves to grab a huge piece of the market share of the m-advertising business. One of leading players in this newly born niche in the advertising industry is the internet based multinational company Google. Google has had great historical success with online advertising, but it realized that this market even though still has a lot of potential for future growth for in the short, medium and long term mobile advertising is a virgin business which the company can capitalize and greatly increase their revenue stream. In order to penetrate this market Google invented an operating system for the new multimedia phone units which will enable the company a direct link into all the units allowing Google to send ads to the phone due to the company invention called the GPhone (Broadkin, 2007). The Google strategy is similar to the route a US giant in the computer industry utilized in the 1980’s and 1990’s to build a corporate empire by providing software to function as the operating system of an electronic device. Company X SWOT analysis In order to determine the strengths, opportunities, weakness and threats SWOT analyses of company X and its main marketplace was performed. A glaring strength in this marketplace is its size and the immediate growth in the next five years which will raise the number of subscribers significantly. There are many niches businesses in this market that can be exposed. The new features in cellular phones are geared towards a professional and youth crowd which are the companies target market. The age group worldwide with the highest consumerism tendencies worldwide is the group of people between the ages of 18 – 35 years old (Kotler, 2003). There are many opportunities in the marketplace for company. One of the opportunities is mobile advertising which is a business which a company such as Google are capitalizing on. Google Inc. a company with expertise into consumer behaviour and browsing patterns which made the transition into mobile adverting smoothly. The numbers of sales growth in this advertising channel are astonishing. In 2006 mobile advertising generated a hefty figure of $421 million dollars, but by the year 2011 the mobile advertising market will generate $4.8 billion (Plunkett Research, 2008). This immense industry revenue growth in a five year span represents a year grow of 122% yearly. That is Google penetrated this market since their current share will the company to increase its revenue in by over a billion dollars a year related to mobile advertising activity. The US is the world’s leader in creating revenues related to the advertising and branding generating over half the $600 billion in revenue in 2006 (Plunkett Research, 2008). Arrangement such as the one Google made can allow others to enter the market since the traditional positions in the past to make money in this industry was as a manufacturer or as a service provider or retailer of mobile units. M-advertising along with other business service offering in the mobile industry have open new doors and opportunities to many that did not exist before. Company X can take advantage of other opportunities in the marketplace. Three emerging technologies with applications for the mobile segment are voice over internet protocol (VoIP), global positioning systems (GPS), radio frequency identification tags (RFID). Global positioning systems were a luxury in many European and American cars or an expensive device with expensive monthly chargers which hikers, scientist and other travellers used in expeditions. Now a GPS is a free service which you receive as part of the mobile data service plan which comes for your cellular telephone. A GPS allows a person to know his exact coordinates to determine location as well as look at maps of territory and roads to find the precise location a person needs to reach on a business or leisure trip. A company such as company X which has not yet determined its actual international strategy has some competitive disadvantages. Not having international experience is a great weakness. The mobile industry is very competitive and there are many powerhouses in the industry such as Motorola and AT&T which have great expertise into operation in many markets simultaneously. There are licensing requirements which mobile companies must comply with by purchasing access in each new market it penetrates. Company X faces these regulatory constraints. Company X has yet to design its next generation cellular phone which is needed for the new multimedia application. The firm is in a very competitive industry and its lack of international recognition will make it hard to negotiate deals with service providers in new marketplace. A threat that the company faces is competition from VoIP providers which may take business away from cellular phones if they don’t design their own phones with VoIP capabilities and expand into this marketplace as well. The new hybrid phones which can switch from the cellular network into a wi-fi network are a huge threat for Company X and the entire mobile industry. Location Taiwan is the nation with the top ranking in terms of worldwide market share for information and communication technology (World News Connection, 2007). These are the places where mobile technologies and its applications are a booming business. Companies must target such locations in order to optimize earnings since countries with such great capabilities who are G4 bound are prime locations to establish operations. Early penetration in these types market is critical to accelerate the learning curve process earlier than the competition. Any new business will have many areas of the service and product offering that must be tweak, adjustments that occur after the product is launched into the market The international expansion strategy for Company X includes finding the locations across the world with characteristics such as Taiwan in Asia, North America, Latin America, Australia and Africa. The expansion does not have to be into an entire continent. For example in Africa the company can target certain cities in South Africa. In Asia two emerging nation are China and India which are great target due to the size of their population and low relative cellular penetration in these regions. The US market is competitive so order to achieve the company’s goal in this area innovation is key to success for the company. PEST Approach A PEST approach is a management technique that enables an analysis of four external factors which impact an organization in making strategic decisions (Bnet, 2008). The four external factors are political economic, social and technological. The Pest approach should be applied at Company in order to determine the key objective of obtaining information about the key marketplaces in will enter based on variables studied utilizing the approach. The marketing people of the company determine that youth is a key consumer characteristic that must be exploited. By studying the demographics of nation worldwide the company can determine which location worldwide have the greatest amount people in their target age range of 18-35 who at the same time have a minimum income of 20,000 per year. The current cellular penetration in a nation is another factor to consider, if a nation is already saturated with many cellular offerings it may be hard to penetrate a particular market, and even if the company is able to establish themselves the possibility of large expansion is low. The overall economic condition of a marketplace is very important. A country such as Zimbabwe suffering from a hyperinflation crisis which brings political instability is not a place the company should target. On the other side of the coin a country such as Argentina whose $13,138 GPD per capita is the highest in Latin America and its total population is nearly 40 million make it a prime location for the company to establish operations (CultureGrams, 2008]. Recommendation and Conclusions Companies in the mobile industry are in line to profit from the new variety of technologies that open new markets and new types of services which may be exploit to optimize corporate earnings. Google is one company that already establish through innovation a product that will capture the industry by forcing manufacturers to use the new Google operating system which will allow Google to control the marketing venue of service providers to certain extend and allow them to profit from the sales of ads directly into the customer’s cellular devices. All companies in this industry must pay close attention to the new wave of services being offered and restructure their strategic plans to capture a piece of the pie early and establish a reputation into the new data service markets such as transmission of internet, mobile TV channels, VoIP, GPS service offerings, and music download sales among other services. Customer service has become a top priority in the new marketplace of the 21st century due to the fact that most of these technologies are new to the typical customer, thus they need technical assistance and helping during the transitional period of the technology becoming a mainstream reality in which most users use one or all of the new services just as the people from the 1990’s become accustomed to text messaging. The future is unknown, but business managers can utilize techniques such as regression analysis, time series and the Delphi model to predict the future and the trends that will follow their specialized business environments such as the current event occurring in the mobile segment of the telecommunication industry. There are opportunities for the taking and in order for companies to achieve recognition, market share and profitability in this fast moving business environment driven by technology the players must adapt and prepare themselves by educating its workforce and ensure they possess the skills and capabilities to compete in the business world of the 21st century. References: Broadkin, J. (2007). Google’s GPhone reportly to be announced Monday. Available from < http://www.networkworld.com/news/2007/110207-google-gphone.html> [Accessed 21 January 2008]. Bnet.com (2008). Pest Analysis. Avaliable from < http://dictionary.bnet.com/definition/PEST+analysis.html> [Accessed 24 January 2008]. CultureGrams (2008). Country Profile: Argentina. Available from [Accessed 24 January 2008]. Disc.edu (2003) An Introduction to Using Data at DPLS. [Accessed 17 January 2008]. Leppaniemi, M. and Karjaluoto, M. and Salo, J. (2004). The success factor or mobile advertising value chain. 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