The Marketing of PCCW and Various Environmental Factors - Essay Example

A Marketing Case Study On PCCW Submitted By: XXXX XXXXX Number: XXXXXXX of XXXXXXXXX XXXXX XXXXXX XXXXX Subject Code: XXXXXXX Date of Submission: XX/ XX/ 2009 Table of Contents Table of Contents 1 Introduction: 3 Background of the Company: 4 Micro Environment – SWOT Analysis: 5 Macro Environment – PESTLE Analysis: 8 Industry Analysis – Porters Five Forces: 14 Marketing Mix: 15 Recommendations: 18 Conclusions: 20 Bibliography 22 Introduction: Communication is becoming one most essential elements of the business. The ability to communicate with people on the move has evolved remarkable since Guglielmo Marconi first demonstrated radio’s ability to provide continuous contact with ships sailing the English Channel. That was in 1897, and since then the new wireless communications methods and services have been enthusiastically adopted by people throughout the world. Particularly during the past fifteen years, the mobile radio communications industry has grown by orders of magnitude, fuelled by digital and RF circuit fabrication improvements, new large scale circuit integration, and other miniaturization technologies which make portable radio equipment smaller, cheaper and more reliable (Barclays, 2005). This study has been based on a secondary research. The information collected is mainly from the secondary sources, which include various sources, studies, articles, newspapers and websites. Secondary data refers to information published by others and which is already available. It is also data collected by other people rather than the researcher who is carrying out the study. There has been a through research conducted to gain all the information of this PCCW. Great care has been taken while choosing the sources from the Internet and it has been ensured that the works chosen from the Internet are from published writers. As Berry refers to the Internet in his books, “an open door to nonsense to appear, and one way of checking on this is knowing about the author” (Berry, 2004). This report has been aimed at dealing with the marketing of PCCW and various environmental factors that affect the working of the company. A through analysis of the company in terms of the marketing has been made in the following sections. Also a detailed analysis of the marketing mix has also been included within this report. Background of the Company: Wireless communication is enjoying its fastest growth period in history; due to enabling technologies which permit wide spread deployment. Historically, growth in the mobile communication field has come slowly, and has been coupled closely to technological improvements. The ability to provide wireless communications to an entire population was not even conceived until Bell laboratories developed the cellular concept in the 1960s and 1970s (PCCW, 2009). PCCW Limited is a leading telecommunication provider of Hong Kong. It provides mobile, broadband, IT Solution and media services in Europe, America, Middle East, Africa, china and headquartered in Hong Kong. It is a huge company having 16, 200 employees all over the world established in 2008. PCCW has more than 2.5 million fixed line customers, more than one million broadband customers, almost 2.3 million IPTV customers and have a major market share in Hong Kong’s mobile market. It provides connectivity to more than 1,000 cities of 80 countries of the world (PCCW Global, 2009). Micro Environment – SWOT Analysis: Industry and competitive analysis for any product requires supervising, assessing and propagating information from the exterior and interior atmosphere through admiration for the launching of a product. A trendy way to perform such an examination is to initiate with environmental scanning using a SWOT analysis. SWOT is an ellipsis used to explain exact strengths, weaknesses, opportunities, and threats. The outside atmospheres of the organizations have both openings and intimidating exists and even the top management is not fully capable to remove them at once. In a four-cell matrix the strengths and weaknesses of the company are linked with each other. This matrix is referred to as the SWOT matrix. The basics of SWOT are the following: In the Opportunities (O) block, the external current and future opportunities available for the company are examined In the Threats (T) block, the external threats facing the company now and in the future are analyzed In the strengths (S) block, the specific areas of current and future strengths for the company are described In the weaknesses (W) block, the specific areas of current and future weakness for the company are stated. Strengths: The following are some of the strengths of PCCW: PCCW is one of the leading broadband, mobile, fixed phone, media and ICT Solutions provider company of Hong Kong It provides different telecommunication, media and ICT services in more than 1,000 cities of 80 countries of the world It has 2.5 million fixed line customers, more than one million broadband customers, almost 2.3 million IPTV customers and have a major market share in Hong Kong’s mobile market. It has a very diverse product portfolio It has a diversified presence in many major cities of different countries of Europe, Americas, Africa, Middle East and China (Cronin et al., 1991). Weaknesses: Does not have a uniform marketing strategy in different countries The competitors companies are also big companies which have huge customer base and it is not easy to penetrate and capture the due share of market There is a lack of business and marketing strategy for the promotion of new products (Cronin et al., 1991) Opportunities: The following are some of the opportunities: Reorganization and quality update of the product It can distribute its advertisement through new channels like the Internet, digital television etc. Offer different discounts to people Offer discounts and cut-price to people Offer fabulous incentives to the people using that specific product Expansion of Services in different cities of most of the major countries of the world (Cronin et al., 1991). Threats: Following are some of the threats faced by the new product: Losing customers to other Telecommunication companies Loosing the less beneficiated as customer or members, those who like but cannot afford the leisure of using the specific telecommunication product Risk of loosing people that are choosing away the specific product Financial Crisis all over the world (Cronin et al., 1991) Macro Environment – PESTLE Analysis: Science, technology and society (STS) is embedded in a complex and interwoven plethora of relationships around a wide and dispersed field of interdisciplinary and disciplinary approaches to the domains of science and technology. Theories under STS are varied and extensive because of the differences in the phenomena to be evaluated and the factors/actors that are involved in each process. Data collected from primary and secondary sources will be analyzed using PESTLE tool while the case study presented in the Literature review section will be analyzed using PORTERS tool. PESTLE is a large-scale albeit a comprehensive means of envisioning multifaceted interrelationships such as telecommunication in Hong Kong and its impact on the society (Jobber, D., 2004). While several theories have attempted to provide a structure for analysis on ICT in general, and telecommunication, in particular, PESTLE became a popular framework that resolves the limitations of most theories on ICT and organizational innovation which is to adequately elucidate the interwoven relationships between them. With the help of PESTLE analysis tool, we can analyze the political, Economic, Social, Technological, Legal and Environmental factors of ICT, Mobile Communication and other telecommunication products. For case study Analysis, we will use PORTERS analysis tool (Johnson, et.al, 2006). Political: Politics, has affected the success and growth of ICT and telecommunication by affecting the decision-making processes as revealed by the studies of decision-making. Politics in this means the political environment going around the exiting country. Information filtered by the political process is the rich information. Politics opens ways of gaining information that the formal communication setups do not offer. Managers favour the use of rich information when dealing with situations of equivocally when situations involving messages that are ambivalent and open to multiple meanings arise such as negotiating, bargaining, and persuasion (Johnson, et.al, 2006). Executives favour face-to-face meetings, both scheduled and unscheduled, over written media when dealing with entrepreneurial tasks and handling disturbances though they had computer-based systems at their disposal but none of them relied on computers as their sources of information. Politics usually involves answering questions of who gets what, when and how and sharing and allocation of resources. There are many vested interests of political parties in the public projects. Political considerations play a major role in public decisions-making processes. For example, appointments of key management personnel in any public project have more political considerations than any other (Ho, 2002). The Government of Hong Kong, fully understand and appreciate the importance of technologically advance and sophisticated infrastructure of telecommunication, which is, according to the statistics, the backbone of present day economic and social development of a country. The advance and free network of telecommunication is not only necessary for the development of ICT industry but it also plays a pivotal role in economic development of the country (Johnson, et.al, 2006). The statistics of Hong Kong telecom industry revealed that the major chunk of Country’s GDP has come from Information and Communication sector. Although government has loosen its grip on telecom industry but gave ultimate power of regulating telecom companies, which means the government of Hong Kong has the final power of regulating the existing operators as well as issuing licenses to the new operators. Economic: The primary and secondary data depicted ICT and mobile communication is one of the major players in the economic development of Hong Kong. Hong Kong has one of the most sophisticated and mature telecommunication markets of the world. The Office of Telecommunication Authority is the regulatory body of Hong Kong telecommunication. It gives full liberty to all telecommunication operators of Hong Kong and there is no restriction on foreign ownership (Murphy, 2003). The telecom and mobile telephony industry of Hong Kong is growing with a steady rate which is continuously increasing (Barclays, 2005).More people start relying on mobile to make it the main method for making a call. The Mobile communication is growing with an exponential rate in Hong Kong and expected to do so in future. It has also expected that in near future mobile phone subscribers will exceed the fixed phone subscribers (Keynote, 2005). Social: Preoccupation with information and knowledge as an individual, organisational, and societal resource is stronger today than at any other time in history. The present world has several new dimensions relative to the information resource: modern ICT collect and generate information automatically; they provide rapid, high-resolution access to the corpora of information; and they manipulate information with previously unattainable versatility and efficiency. The proliferation of ICT devices in scientific laboratories, hospitals, transportation, and many other areas has created a huge body of primary data for subsequent analysis. Machines even generate new information such as original musical scores (Kotler & Armstrong, 2007). ICT has a substantial effect on those who make decisions and take actions on behalf of the state, at its various levels. It seems indisputable that applications of ICT are increasingly pervasive in the world of public administration. Recent reports indicate that the uses of ICT in the administration of public organisations are proliferating, from relatively straightforward office automation to a vast array of more sophisticated and complex applications that support many functions. There is a rapid diffusion of more advanced ICT applications available for government, based on such capabilities as digital communications, IT-integrated processes, sophisticated data-sharing capabilities and web-based systems enabled by, inter alia, office document automating systems, data warehouses, data mining techniques, Internet and mobile technologies (Kotler & Armstrong, 2007). Such uses of ICT make it feasible to access, integrate and analyse far more extensive data and to facilitate new patterns of communication, cooperative work, citizen-government linkages, and so on. Indeed, ICT has been portrayed as a technology that might usher in an era of digital direct democracy. Modern ICT brings new efficiency to the organisation, retrieval, and dissemination of recorded information. The control of the worlds information store has been truly revolutionized, revealing its diversity in hitherto unattainable detail. Information in information society can be understood as increasingly produced from beyond the organisation and organisational workplaces. Workplaces and organisations are characterized by information that transcends the organisation and workplace. Information society involves an increasing focus within society on organisations and workplaces that are characterized by their own transcendence. Thus the task here has been to focus on everyday, cultural experiences of ICT in workplaces and organisations. Organisations and workplaces may appear to be increasingly abstracted, disembodied and defined by information given meaning from beyond them, but the cultural experiences of work remain embodied. Thus we can say that the technological development of ICT and mobile communication has influenced the social environment of Hong Kong (Maier, 2002). Technological: The technological development of ICT and mobile communication has influenced the society and environment. The digital gap is most evident at the phase of connectivity; the lack of affordable access to telephone lines, and Internet Connections. Steps to reduce this gap include devising cheaper access devices and bringing down access prices by creating a favourable climate of competition among mobile operators. The cost of fixed telephones and mobile telephony is dropping, but they could become even more affordable. Organizational adoption of mobile phone companies is now emerging. Universal access issues and peering agreements will continue to dominate the mobile telephony scenario in many technological emerging countries of the world. Special concerns arise in cross-country wiring for regions with mountainous terrain, with large arid tracts or with a high density of island space. The quality of services of mobile communication has affected because of the technical restrictions like low bandwidth, coverage limitations, unstable connections etc (Maier, 2002). Although these restrictions have affected the quality of present mobile services, but it is hoped that these all would be alleviated as the field of mobile telephony become more and more advance Current mobile communication infrastructure, whether it is GSM, GPRS or UMTS, do not provide any authentic method of user identification. There is no restriction on sending any text or multimedia message to anyone from anyone. Thus security is a big hindrance in the rapid growth of mobile telephony (Murphy & Lai, 2003). Although Telecommunication in general, and Mobile communication in particular, is experiencing tremendous growth, it is still in its infancy and thus facing many limitations and drawbacks from the technological front. Legal: Hong Kong government has recognized the importance of ICT and Mobile communication for the economic, social and technological development of the country thus loosens its grip to allow operators to come into the market. Environmental: Although ICT and mobile communication has lot to offer to society and country but it is also responsible for some health hazards for the users. Mobile phones are supposed to cause genetic damage, memory loss, increased blood pressure, tumours etc. Mobile phone industry is now emphasizing to introduce such devices which can absorb the hazardous waves emitted from the cell phones (Murphy & Lai, 2003). We hope that the advancement of technology may be able to provide the solution of this problem soon. Industry Analysis – Porters Five Forces: Michael Porter has devised a framework which provides a better understanding of the industry and how companies can be affected by forces within the markets (Porter, 1998). The five forces that he has described are: a) Threat of new entrants, b) Determinant of buying power, c) Threat of substitutes, d) Determinants of supplier power, and e) Rivalry among the firms (Business Strategy – Marketing Strategy, 2009). Supplier Power: It is not easy for PCCW to drive the prices of mobile subscription and mobile phone higher because of the competition in the market. Everyday new entrants emerge with lower call and subscription rates. In this situation it is not possible for PCCW, if it wants to remain in this competitive market, to increase the call rate or subscription prices of mobile phones. Buyer Power: Number of mobile phone users is increasing continuously. As the market of mobile telephony expands, mobile telephony providers also increase. In this ever-expanding market, every new entrant enters with relatively low rates of calls and subscription (PCCW Products, 2009). Thus the real power of driving the prices of mobile phone down is in the hands of the mobile phone users. Competitive Rivalry: Other mobile phone companies are the competitors of PCCW. Good relations with competitors help forestall uneconomic price wars and help raise the level of competition. The philosophy of free enterprise does not require competitors to be constantly at each other’s throats. It is also possible to get better cooperation from competing firms through the organization. PCCW goes head to head with its competitors. It contests the competitors in most of the categories from price to advertising to distribution channel. Because it knows that to be victorious, the attacker must not only have greater resources but also the willingness to persist. This usually is an expensive approach and operation of a trade association. PCCW has introduced several new packages to remain competitive. Thus it can easily be said that PCCW has enjoyed great Competitive Rivalry power in the market. Threat of Substitution: Substitution of PCCW services is although not impossible, because of the so many mobile phone operators in the market, but it is difficult to substitute because of its competitive new packages and relatively low rates. Hence I must say that PCCW is not facing threat of substituting Threat of new entry: Not only PCCW, but all the mobile phone companies face this threat. New companies continuously emerge but these are not a severe threat for PCCW. Marketing Mix: This is one of the most essential concepts of marketing. The marketing mix, also called the marketing tactics, includes the basic elements and main components of marketing. These include the four P’s, i.e. Price, Place, People, Process, Physical Evidence, Product and Promotion. The newer version of the marketing mix however includes other elements like the people, packaging, and physical evidence. Product: PCCW offers a number of different products and services. They have a wide variety of products in their portfolio, which totals to almost a hundred and fifty. These include items like the fixed lines, mobiles, and value added services for businesses and consumers. This does not include the additional products and services that are provided by the company to people with special needs. The company has in the marketing sense covered a number of products which keeps them one to be one of the biggest providers in Hong Kong. PCCW has provided the customers with a range of products both for home as well as businesses use. The products of the company provide PCCW with a competitive advantage. Price: PCCW’s objectives are very simple and are aimed at ensuring that the network is well spread and is reachable to all. The company intends to increase their reach to the maximum extent and ensure there are higher opportunities internationally to use innovative technologies. The company has priced its products at very competitive prices and the core strategy is customer focused Place: The company operates in eighty markets and the growth of the company has been steady and uniform across the world. These provide the company with a chance of reaching out to a number of countries and market it across all locations. Promotion: PCCW as mentioned earlier is very customer centric. They aim at ensuring that the customer’s are provided with the latest and most highly developed technologies. PCCW has also taken into consideration the group of people who have physical disabilities and have problems dealing with the new and latest technologies. This shows how customer driven the company is and its business strategies. The company develops it promotional activities based on reaching out to the various groups. It is essential to understand that the promotion is a combined effort of the latest technology along with a strong emphasis on innovativeness. There is also a strong emphasis on corporate social responsibility as well. People: PCCW have focused all the strategies based on the needs of the customers and also including the needs of special customers. The company has also created a differentiate market and a higher level of market penetration by being the most technologically advanced in the regions of operations. The marketing strategies are also based a lot on the innovativeness of the company and its products along side with the corporate social responsibility, which is an important element for the business. Process: The company’s processes are simple with a lot of focus on the corporate social responsibility. This makes the company very desirable in the market. Also with the processes being simple and straight forward the company is well recognised and easier to work with across the locations. Physical Evidence: This is one of the most essential aspects of the marketing mix. PCCW has been able to rightly provide its customers with excellent ambience and a great shopping experience. It is essential to note that even if a company has the best products, it is the physical evidence of the company which make the difference and attract customers to come into the stores to buy the products. Recommendations: Based on the above mentioned SWOT, PESTLE, marketing mix and 5 forces analysis, following have been recommended for PCWW Company. PCCW has a drawback and lacks a lot on the marketing efforts. The company offers a lot of high tech products, however the company’s website is not as well developed and as effective as can be. Hence the intended marketing strategies are as follows: ~ Improved Website ~ B2C website developed ~ Search engine optimized ~ Create an e – Commerce Website The improvements that are required for PCCW based on the analysis that has been made are discussed here (Sloman and Sutcliffe, 2004). Firstly the company is lacking a lot in terms of the website development. PCCW’s website provides for simple details and is not well developed. Hence this is one of the biggest changes required company. Also the customer service and the advertising are not up to the mark and require a lot of improvements. PCCW is already known for the differentiation in terms of the products, however the company can increase the horizontal differentiation to a greater extent to thereby provide the users with a larger choice to choose from and increase customer satisfaction. PCCW also has high chances of diversifying into a number of businesses across newer markets. The company can develop new products for the new markets which will thereby increase its market presence and recognition across the markets (. The company can use a combination of the differentiation and the market penetration. This will form a base for the products and the services. However the biggest strategy for the company is to improve the website and include an e-commerce website for the company. The inclusion of an E – commerce website for a company as large as PCCW is a simple process. Since the marketing strategy is one of building an e – Commerce website, the marketing tactics are more based on the website and the user friendliness of the website. Also it is essential to understand that making sales via this medium is more beneficial to the comp any as it reduces the cost of transactions. Also as the customer is not present the cost reduces as there is lesser need for human resources to complete a transaction. Also the use of a website to make a sale also increases the use of direct debits which helps reduce the transaction costs and time spent on cheque payments. These form the basic tactics for the company as the strategy is to include an e – Commerce website for the company (Beynon-Davies, P., 2004). Conclusions: The primary goal of every privately owned business is profit. Profits must be earned to reward the entrepreneur’s acceptance of business risks and to assure business continuity. Without profit, a business firm can make no long-run contribution to employees, customers, or the community. Profit making is not a short-range concern but rather a matter of long-range significance. Hence, the owner cannot be unduly concerned with the net profit reported on the income statement each month, each quarter, or each year unless this is a part of long-run trend or condition. Undue concern with short-range profit making is somewhat like clock watching on the part of the employee. Profit maximization over the long run should be the major goal, with the periodic statement regarded as a progress report (Beynon-Davies, P., 2004_. When a telecom company introduces a new policy, it may be practical to launch only one version and undifferentiated marketing or concentrated marketing may make the most sense. In the mature stage of the product life-cycle, however, differentiated marketing begins to make more sense. Another factor is market variability. If most buyers have the same needs, buy the same telecom product, and react the same way to marketing efforts, undifferentiated mar­keting is appropriate. Finally, competitors marketing strategies are important. When competitors’ use differentiated or concentrated marketing, undifferentiated marketing can be suicidal. Conversely, when competitors use undifferentiated marketing, a firm can gain an advantage by using differentiated or concentrated marketing. All the companies that are in the telecom industry in Hong Kong are competitors and they all use different marketing strategies to capture more market share. However, it has always been noticed that the more number of players is seen as a frequently alleged cause of failure but good relations with competitors help forestall uneconomic price wars and help raise the level of competition. The philosophy of free enterprise does not require competitors to be constantly at each other’s throats. It is also possible to get better cooperation from competing firms through the organization and operation of a trade association. The thing that motivated a customer to buy any specific telecom product is its marketing strategy. This research has been conducted and a clear understanding of the company has been gained by analyzing all the factors that might influence the company’s working. Also based on the study of the company and including the various marketing theories and concepts a recommendation for the company to start an e – Commerce website has been devised. This will prove to be very beneficial for the company both in terms of financial as well as non – financial basis. 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