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Economic Analysis - Essay Example

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Competition is high in the telecommunication industry in Malaysia and this has called for Celcom to adopt competitive measures like the reduction of cost of services and products in order to attract more customers and to acquire a competitive advantage which will help the…
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Economic Analysis
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………………………………………………………………………….xxxxxx …………………………………………………………………….xxxxxx …………………………………………………………………………xxxxx ………………………………………………………………………..xxxxx
@2012
Economic Analysis of Celcom Axiata Telecommunication Company
Qualitative assessment on the market demand
1. Elasticity of demand compared to the industry products
Competition is high in the telecommunication industry in Malaysia and this has called for Celcom to adopt competitive measures like the reduction of cost of services and products in order to attract more customers and to acquire a competitive advantage which will help the company in obtaining a large market share (Armstrong and Kotler 2010). The reduction in prices of products and services leads to decreased revenue. This means that price elasticity of demand for the company is elastic and the same applies to the other products and services offered in the telecommunication industry.
There is an elastic demand for the industry products and services. Perfect elastic demand means that the responsiveness of the consumers towards a price change is high than the price changed. With the reduction in call rates and message rates, Celcom will register an increase in the number of consumers using this service. The elasticity of demand in Celcom Company will increase the demand of the company products services and products as compared to the other services and products offered in the telecommunication industry. The introduction of a new telecommunication service provider known as the U-mobile in the country has increased the number of close substitutes when it comes to provision of telecommunication products and services. The availability of the close substitutes has led to a greater elasticity of demand (Armstrong and Kotler 2010). The elasticity of demand in the Malaysian telecommunication industry has led to the adoption of price penetration strategy.
2. Product and service differentiation
The products of Celcom are highly differentiated from those of its competitors. That is, its products are highly customized to meet the customer demands. As part of its product differentiation, Celcom has reduced the cost per message from 50 cents to 25 cents and the cost of a call from 35 cents to 20 cents per minute. This has been done to fully differentiate its services from those of its potential competitors. Celcom has also differentiated its broadband network in a way which keeps up with the current technology in Malaysia. The broadband network has been differentiated in a way which makes it the fastest network in Malaysia compared to the networks provided by its competitors (Armstrong and Kotler 2010). Its network has been updated with the current technological advancements.
The company also intends on launching a new differentiated product from those of its competitors. The U-verse will allow customers to pay their bills using the phone, book online hotel reservations and flight tickets. U-verse is popularly offered in the US and its introduction by Celcom will be a total product differentiation from the products of its close and potential competitors. The U-verse will be differentiated in order to meet the needs of the market and the traveler’s needs both which are target markets for the company (John 2003). The new products developed by Celcom have intangible attributes or differentiated attributes aimed at meeting the demands and expectations of existing and potential customers.
References
Armstrong, Gary and Kotler, Philip, 2010. Principles of marketing. Wiley publishers
Joe, T, John, B & Keith, P, 2005. Managing innovation: integrating technological, market and organizational change, 3rd Ed, john Wiley, England.
John, Joby, (2003). Fundamentals of customer-Focused Management: Competing through Service. Greenwood publishers.
William, D & Jerome, M, 1999. Basic marketing: a global-management approach, McGraw-hill, London.
William, M & Ferrell, O, 2005. Marketing: concept and strategies, 10th Ed, Houghton Mifflin, New York. Read More
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