Skype - Marketing Strategy - Essay Example

Skype: Marketing Strategy Table of Contents Skype: Marketing Strategy Table of Contents 2 Introduction 3 The company, Skype: an Overview 4 The marketing strategy of Skype: Using information technology towards globalisation 4 Conclusion 9 Reference 11 Bibliography 13 Introduction The worldwide business environment is rapidly changing its pace towards more competitive ones. Changes in a number of aspects have accelerated the pace. Today there have been changes in each and every aspect including communication, technology and transportation. With the collapse of trading barriers, a large number of organisations are shaping up their strategies to sustain in this competitive environment against their competitors. It is very much significant to modify the existing strategies, introduce some new ones with the changes in the business context. This report aims to offer an insight into the effort of an organisation to maintain its sustainability with the development of different marketing strategies to retain the pertaining competitive advantages and introduce new advantages over the competitors. The strategies have been discussed in light with the relative theories. Information technology has been a significant influential factor to shape up any company’s presence in the global market. As the numbers of elements in the business network have been increasing, maintaining the relationship between the elements has been becoming more and more difficult. This report aims to explore the contribution of the information technology to offer a sustainable position in the international business environment. A conclusion has been inferred from the analysis of the organisation’s marketing strategies to the enhancement and evolvement of new competitive advantages. The company, Skype: an Overview Skype has brought revolution in the world of communication. Globally, a huge number of people use their product to make free audio and video calls, share files with other users, worldwide. The organisation was institutionalised in the year of 2003. Based in Luxemburg, the organisation has its offices in the Europe, United States and Asia regions. In the third quarter of the year 2009, the Skype users made 3.1 billion minutes of calls to various landlines and mobiles, spread worldwide. This leading internet communication company has reported of 20 million people to be online in the pick hours. The wide range of products and services has given Skype to be one of the leaders in global internet communications medium. “What’s most important, however, is what Skype can do. Voice and video calling, IM and SMS are now available on a wide range of operating systems and mobile devices” (Skype, n.d.). Skype has been software to bind the world in a single thread. This has been quite appreciated to help the people to cut on their costs as they are now more enabled to communicate with other employees over the globe without incurring much communication cost. The marketing strategy of Skype: Using information technology towards globalisation When the company came up with its product, it was assumed to be just another one to hit the market. It was a common product in the online voice and internet service provider market. Arrival of this product meant that the customers would have now more choices than before. Customers were now more able to move from a product from the other one with more flexibility. However in addition to these very common characteristics of online internet services, the organisation came up with a product which had solved a simple but significant problem of the users worldwide. The companies have introduced a new facility of free talking over the internet. The company has used its information technology in an innovative way to meet the needs of the average customers and made it a huge success by this competitive advantage over its competitors in the information technology industry. However what is being influential to push this Skype to the next level is not its product, but its brilliance in marketing. Skype has used its advantage in information technology to reach at its users with more ease and simplicity. For the starters, the organisation has realised the importance and relevance of its own website. That is why the website has been kept simple, user friendly and stuffed with information which are mostly required by the visitors. Apart from that, the organisation has also introduced a forum to listen the ideas and views of their users about their products. No doubt this strategy will only increase the popularity of the products; people would be more inclined to their products as they can relate their ideas and opinions with the product. As their product got well recognised by the users, they started adding value added services to it to attract more customers as well as serve the exiting ones with better service and technical facilities. The research division has been quite dynamic to introduce some new technical facilities to make the whole process more globally recognised. All the value additions have been taken place gradually and systematically. The customer preferences were always there in mind. These preferences would mostly come from the forum, they have introduced. Skype has shown a better usage of the information technology and online platform to reach at the customers. They have used the information technology to turn it into the base of their brilliant marketing strategies. With the emergence of the information technology, effective cross border communication is the need of the hour. The introduction and enhancement of the information technology has offered new arenas to this communication to shatter the borders and to promote the globalisation. Skype has made it through the simple use of websites, ensuring the involvement of the end users. The latest has been putting success stories of Skype customers and the contribution of Skype to it. These simple ideas have won the hearts of its users to make the brand huge. The rationale behind the wide success of Skype lies with its secret technology, different from the others’. This popular service has introduced a peer to peer technology which can break through the firewalls and enable the people, worldwide, from one computer to another one and that too for free. No doubt, this information has excited a number of internet users, globally. This technology has been the competitive advantage of the organisation. However a number of analysts have questioned the competitive advantage of Skype with the arrival of new messengers with the audio and video facilities. As per an independent analyst, “Skype will need to standardize on Internet Protocol to as to become the de facto PC-to-PC calling technology, used with all Instant Messengers (IM)” (Bloomberg Businessweek, 2005). However some other possesses different views as they see the proprietary technology of Skype to be a competitive advantage for the same. As the business environment is getting more and more competitive, Skype has been finding more ways to sustain its competitive advantage. SILK has been one of the significant elements which have made the Skype calling sound so vivid and rich. Recently Skype has published the source code of this to one of the renowned internet’s standard bodies, “CODEC Working Group” (Wolff, 2010). Skype did this to respond to the changing business environment. “As for competitive advantage, Skypes advantage in talk audio and video quality over other VoIM operators (Microsoft, Yahoo!, AOL) disappeared when GIPS licensed their wideband codecs. Skypes advantage is really in the network effects (that more people have Skype dial tone than other networks)” (Wolff, 2010). Another competitive advantage point has been that the consumers do not bother about the technicalities, the codes offers. Even Skype does not bother about the same. In the evolving environment Skype’s competitors have been changing their facets. Now the big companies like Microsoft, Google, and Yahoo are not its competitors. Skype has extended its domains to compete with the local and long distance carriers. So Skype welcomes anything that would allow it to make allies to sustain in the market (Wolff, 2010). Companies introduce some new strategies to maintain a sustainable growth in the industry, it is operating in. A number of organisations adopt diversification to survive and sustain in a challenging business environment. There can be two types of diversification in the context of growth strategy. One is the concentric diversification and another one is conglomerate diversification. Diversification has been a risk mitigating growth process in a number of businesses. Skype too is looking to bring more diversification in its business to sustain its rapid growth pace. That is why in 2007, the organisation introduced some new features. The internet communication company introduced a new international pricing structure which would allow the users to make calls to the mobile and other landlines through internet using s reduced price structure (Skype, 2007). The structure offered a simple, cost effective and convenient way of talking to the customers, world wide. Actually this new pricing structure complemented Skype’s success in the introduction of calling over the personal computers and that to for free. Again Skype has established its innovativeness by offering easily understandable, value added internet communications packages (Skype, 2007). Initially this has mainly been focused on the Europe region, but later on Skype has been able to introduce the same to a number of regions. This new pricing strategy considered a premium subscription package which was known as Skype Pro (Skype, 2007). This feature includes a small connection fee and instead removed the charges per minute of Skype calls to the domestic landlines (Skype, 2007). This was meant for the people who were looking for some excellent service and do not even bother paying some hard cash for the same. Skype has noticed that the number has been quite large and that is why the organisation introduced this new premium package to meet the customer needs to of excellent products. To meet the customers’ demands of new innovative technology, in 2009 Skype has introduced internet phone applications. This has been a wider strategy of sustainable growth in this immensely competitive market. The application has been built to allow Skype users to make free calls to any Skype accounts. Even the users can take the advantage of calling landlines and mobile phones at a much lower rate. However to fetch all these features, the users need to be in any wi-fi zone. The company is on its way to roll out some new products to enhance its offering as one of the leading communication software industry (Financial Times, 2009). Skype has been doing concentric diversification to sustain its growth in the market which consists of many big names from both the industries; the software ones and the telecom ones (Bradshaw & Palmer, 2010). The company has been trying to introduce new products as well as value added products which are technically quite related to the existing ones. Company has diversified its business but have not changed its competence of technology in communications. Based on this competence, it has introduced some new innovations to serve the customers better with the introduction of better information technology facilities. The company is coming up with new products on a regular basis to reinforce the effect of each other with the introduction of communications with more technology enabled, still with more ease and simplicity. Skype has been an excellent growth in the recent years. In the year 2009, some 350,000 new users used to get registered on Skype each day. At the same time the existing users have also increased their activities. Last year 8 percent of the total international calls were carried out through the Skype. As per a research firm this has made this information technology company the largest international carrier (Financial Times, 2009). Even in the year 2010, Skype has taken the video calling to a broad arena. It has introduced video calling with high quality pictures enabled and integrated with the TV sets (Nuttall, 2010). The video calling has been much more technology enabled with more ease for the users. As the desktop products of Skype has gained its foothold in the respective market, now the organisation is looking for new revenues from the mobile and business offerings. Earlier in the year of 2009, the organisation has come up with new and enhanced versions of software for mobiles with Java technology, windows mobile. Even the company as introduced some built in functions for the Nokia mobile phones. In March the company put forward its new innovations, Skype for SIP (Financial Times, 2009). The innovation has introduced calling service for the users in the small and mid sized businesses. Through all these activities Skype has been able to found its toehold in the two markets of internet service and communications. No doubt the strategy of Skype has always been to seek growth by widening the product and service range to extend its reach in near future. Conclusion Today the Skype users around the globe are able to make free audio and video calls to other registered Skype users. At the same time they are able to send instant messages to other, transfer files over the net and also take part into the Skypecasts. The Skypecasts make oneself to indulge into live enhanced conversation process with up to 100 people. The users can also fetch the advantage of some other calling features which enable them to make calls to other local or international mobiles and landlines at a very minimal rate. As the organisation has been operating in both internet service and telecom industry, it has to face immense challenges from its competitors coming from both the worlds. As the globalisation has faded away the trade barriers between countries, more and more companies are looking towards the expansion in the foreign countries s as part of their growth strategies. Skype has also expanded its business in a number of countries, worldwide. This has enabled the company to get the advantage of the technological competence of many countries. At the same time, the company has to face a number of challenges from the local as well as global competitors in those respective countries. As the information technology is in continual changes, the competition is getting immense day by day. To survive this competition, the company has introduced a number of products to widen the reach. To be the largest internet communication arena of the world, the organisation is devoted to offer the customers to have their conversation at home, office and on mobility. It has now focused upon the further development of the network of above 50 hardware associates and above than 150 devices, which have been certified by the organisation itself, to widen the customer base. This innovation has been for the users who want to use the Skype in other devices, away from their computers. Even a number of mobile operators like Verizon have been into partnership with Skype to enable their customers to make low rate calls on Skype (Taylor & Parker, 2010). No doubt, in near future apart from the computer users, the company is looking forward to attract a larger base of mobile users to enhance its competitive advantage using information technology in a much wider arena. Reference Bloomberg Businessweek. September 06, 2005. Should Skype Migrate Away From Its Proprietary Technology? [Online]. Available at:http://www.businessweek.com/the_thread/techbeat/archives/2005/09/should_skype_mi.html [Accessed on April 28, 2010]. Bradshaw, T. & Palmer, M. March 21, 2010. 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