Analysis of Mobile Telecommunications Industry

Analysis of wandering Tele communication theory IndustryContents foodstuff butt Analysis and question mean (Word Count 912) food commercialiseing Research PlanCompetitorsMarket trends graduation AnalysisStrategic Analysis and Recommendations (Word Count 1117)2.1 swot up2.2 Portfolio analysis2.3 egression Strategy RecommendationsMarket Segmentation, targeting and locationBibliographyAppendicesMarketing Analysis and Research PlanMarketing explore planThe brief is to conduct an analytical discipline into the ready tele communication theory industry as a returns/nedeucerk hindquartersr in secernate to judge feasibility. After recent developments of Tescos entering the unstable prognosticate industry as a serve well/ meshwork leave behindr, Asda argon besides keen to explore and keep up with Tescos in this prolong a bun in the oven on also.Using secondary research we provide first look into the Mobile tele communication theory industry. This information pass on then be analysed from a play on perspective, followed by recommendations.1.2 CompetitorsInformation cited in this section has been adapted from MarketLine (2005). In appendix 1 (section 6), I encounter elaborated on the information given in this section.O2O2 is a spry communications service provider operating in the UK, Ireland and Europe. O2 nurse 19 million guests within slightly of the biggest consumer trades for rambling operate.SWOT analysisStrengthsStrong presence in the UK market.WeaknessesSm all(prenominal) scale European operations competitors atomic number 18 better placed.Over reliance on UK market.Opportunitiesfountainhead placed for 3G expansion.ThreatsDeclining penetration and saturation of voice services.Overexposure to UK market adverse essence of unforeseen market challenges.Impact of regulation. O2 operates in high schoolschoolly regulated markets.Hutchinson (3G) UK3G is a nimble mul fourth dimensiondia company think chief(prenominal)ly on t he providing 3G (third-generation) brisk communication services in the UK.StrengthsFirst m everyplace advantage. everyiance with profound strike outs.P atomic number 18nt company support.Weaknesses low-pitched presence in the wire slight market.Low bonnie revenues per user.OpportunitiesFocus on surfeit.Booming runny gaming market. up(p) 3G market.ThreatsRapid technological limiting.Increasing competition.Threat from separate technological products. chromaticO double is a prompt telecoms service provider with all over 44 million customers in 22 countries world good. chromatic is one of the worlds, and is UKs, capaciousst expeditious communications companies.StrengthsGlobal brand strength.Launch of OrangeWorld/Signature phones.Large subscriber sensual and strong subscription suppuration.WeaknessesReliant on information for growth.France Telecom buyout.Cost sharp could damage constitution.OpportunitiesWAP capabilityInvestment in untested engineering science.3G and P ush to talk. addition average annual revenue per user.ThreatsStrong competition. health risks and giving medication legislation.Market saturation in Europe.T-MobileT-Mobile is a market leader in prompt communication technology operating largely in Europe and US. The company is now realizing large profits, and at the end of twelvemonth end of 2004 achieved point revenue of E25 billion.StrengthsStrong backing of p arnt company.Strong alliances.Strong monetary growth.WeaknessesDecreasing average revenue per user.Lack of presence in high growth markets.OpportunitiesMost of T-Mobiles opportunities lye global markets, much(prenominal) as the growth in worldwide sprightly subscriptions and the freemove alliance.Rise in demand for 3G/UMTS technology.ThreatsSlowdown in the UK economyGrowing consolidation and competition.VodafoneVodafone is a communications company with melody busys in 42 countries worldwide. The company made a net bolshie of 7,540 million during fiscal year 2005, comp bed to 9,015 million net loss in 2004.StrengthsLeadership pip.Global brand strength. harvest of Vodafone LiveWeaknessesHigh debt.OpportunitiesGrowth through 3G.Increase ARPU.ThreatsIncreased competition.Market saturation in Europe.Health risks and government legislation.1.3 Market TrendsAll the information cited downstairs, unless mentioned otherwise, has been overhearn from Datamonitor, Wireless Telecommunications run in the United Kingdom, July 2005.Market ValueUKs wireless communications market reached a value of 9.8 billion in 2004. Although the value of the market has change magnitude, the growth of the market hasnt been so capitalizing on the previous years. I think this is overdue to the highly combative nature of the market, and saturation. Also, this high market value is on the back of some very strong economic performance by the UK.Market VolumeThe market exudes high market penetration. Linking this to the Market Value, it bunghole be seen that Market Value f ell in 2003 and 2004 due to few subscribers. One striking thing about this statistic is that the UKs population is 59.2 million (Mintel Telecommunications sell UK May 2004). This indicates that about of the UK population already subscribe to brisk services. because a near fully saturated market.Market SegmentationMarket Shargon by Ne iirkIn mold to view the supra t up to(p) much clearly, I suffer extrapolated the information into a pie graph down the stairsThe industry is highly competitive. The market pct (by volume) is very equal. It seems that the market is at an re principal(prenominal)der.Market share by ValueCall revenues (consumer using up on calls etc) by mobile ne bothrk, 2003Source Mintel Telecommunications Retailing UK May 2004Again, the hale industry is at more than or less at an equilibrium albeit very competitive.1.4 STEP analysis of Mobile telecommunications industrySocial fit to Mintel, Telecommunications Retailing UK May 2004 research, overall po pulation of 15-24 year olds is tag to reduce. This mean that the scope of effectiveness new customers is extremely low. Focus will cod to be mainly on customer retention, and prizing customers away from competitors. However the junior consumer does now see a mobile phone as prerequisite in every sidereal day life.Technological3G technology is the main stemma of change in this market. The younger market does however seem to pass over new technologies. It is now hoped that new technologies will further stimulate demand.stintingDue to the recent boom economy, Mintel reports that the population as a complete is becoming more affluent and more affluent phone users overleap more on mobile phone services. The below table illustrates thisUK socio-economic groupings of adults, 1998, 2003 and 2007 (proj)199820032007 (proj)% change000%000%000%1998-2007AB9,77320.811,88324.613,37027.1+36.8C112,99027.613,37127.714,06228.5+8.2C210,30521.99,84920.49,24118.7-10.3D8,43717.98,36517.38,2801 6.8-1.9E5,50411.74,7919.94,3448.8-21.1 inwardness47,010100.048,260100.049,297100.0+4.9SOURCE National Statistics/MintelUK has been on in an economic boom period since 1998 with low inflation and interest rates. This has meant that mortgage and loan costs will be cheap, hence consumers have higher(prenominal) disposable income. The economy now however seems to be slow down, this means that new services and technologies be offered to consumers will be less accepted.Political/legalMobile handsets give off radiation and various electronic/micro waves. The health implications of this is not quite clear. The mobile phone and service providers have strict international guidelines to adhere to because of this. There are also concerns in regards to mobile phone masts being erected close to residential areas, as the effects of these to locals and the environment is also not clear. These issues and the market being very competitive, saturated and an oligopoly, may lead to further regulation and government involvement in the future.Strategic Analysis and recommendationsSWOT AnalysisStrengths disdain picking up gross revenue in the knightly 4 years, Asda have faced s note sales in 2005. Nevertheless, Asda enjoys a firm customer base that has seen Asda overtake Sainsburys in the ranking of leading supermarkets in the U.K.Asda in essence is a multinational company through Wal-marts ventures in Mexico, Puerto anti-racketeering law and Canada. As one of the first businesses to recognise the importance of cutting perimeter systems and economies of scale, which have allowed them to keep determines low, from which consumers have gained greatly. However, Asda has managed to keep its distinct identity burst from its parent company.Asda have been in stages expositing their stores demonstrating their plans to provide consumers with the biggest picking of goods ranging from everyday groceries, to non-food products such as clothing, and small electricals. Unlike many other su permarket brands, Asda have foc utilize their efforts in stand-alone non-food formats.At group level, Wal-Marts performance over the past five years has been consistently outstanding. With sales growing by 46.8% over the period. , The growth comes on the back of 19.9% increase in store numbers, suggesting thinking(a) underlying performance. The companys price-competitiveness has undoubtedly been driving sales. Another outstanding factor, highlighted by Asda in 2004 is the expansion to non-foods, including the substantially-received clothing label George.WeaknessesAsda has seen an un habitually high number of changes at the top management level. This has caused uncertainty over how the company is run which in turn has had an effect on its sales. However, it should be noted that in the pillowcase of Asda, most of the top men had been with the company for a number of years before taking the lead, which should have helped the transition.The companys much publicised price hope has no t helped the companys revenues. Increased competition has created downward pressure on the supermarket industry. The price war between Tesco and Asda has impacted heavily on both companies, however, it would fall out Asda have felt the effects of this much more than Tesco.In more recent times, and by chance more seriously, the company have fai lead to meet sales expectation in the three-month period finis in October, when its market share had also failed to improve.OpportunitiesThe company has faced criticism for its destructive seafood policies of all the UK supermarkets. writing published by Greenpeace states thats Asda sells 13 species of threatened fish. This does not help the companys characterization in todays environment, where consumers are more environmentally conscious and healthy lifestyle society.In terms of the mobile industry and the possibility of entering the mobile telecommunications market, the spare capacity that has resulted from huge infrastructure investm ent has created opportunities for companies wishing to set up as virtual network agents (MVNOs).The market leading actors buttocks sell their spare capacity to MVNOs, whom maybe in a better authority to win over certain customer sectors. It is better for an operator to lose customers to MVNO that is using its network than to a market-leading rival.The wide range of content and service made possible by 3G technology and converging technologies has created pure opportunities for operators to put together compelling propositions tailored for diametric customer sectors, rather than relying on one-size-fits-all approach.ThreatsRise in demand for organically grown get to has resulted in loss of revenues for all of the supermarkets, losing their custom to smaller self-supporting grocers and bring forth shops.Wireless fidelity (WiFi) and its successor WiMax pose dangers for 3G operators as they are able to capture a signifi asst part of the wireless broad phone market by enabling users to download info at faster speeds and provide a much cheaper service than existing products. Going into an industry, which has yet to settle, would be a risk that has to be taken under consideration.As the market has become more saturated it has become more difficult for the main operators to achieve revenue growth from voice calls. Increased competition and the extra capacity created by the 3G networks have raised the prospect of a alter price war on voice minutes. Operators must attract new customers to 3G however, this will lead to alienating users of 2G mobile phones, and cutting revenue obtained from this.The MVNOs that are differentiating themselves on price and offering a no-frills service are vulnerable when the major operators cut the cost of voice calls in order to gain market share in the 3G environment.Portfolio AnalysisMuch of Asdas body politic development is concentrated towards expanding in the non-foods offer. The company introduced optician centres, pharm acies photo centres and jewelry departments in its stores as recorded in march 2005.Asda clothing range George currently has 6 stand-alone stores, which have been introduced since 2003.A full-service Asda Superstore typically carries some 30,000 products. Of these some 60% are food items. In addition to the usual branded goods, Asda stocks a strong own-brand offer. However, sales of organic food are booming and shoppers are increasingly spurning supermarkets to buy produce directly from growers and free-lance retailers.The company has also introduced a finance service in order diversify into other industries. The services include home, motor and pet insurance, along with trust funds and credit card facility also accessible.BCG hyaloplasm for the food industry10* Non-foods* Organic foodsMarket growth* Asda bread and butter* Store Clothing rangeFinancial Services*02.0 0Relative market shareGrowth Strategy and RecommendationsAnsoffs Matrix harvest-homePresent NewPresentOrganic foo dsMarketNew Non-foods Mobile communicationsoperatorFrom the BCG matrix, we can see that there are 2 groups of products, which have room to be developed in order to capture more revenues. With the increase in demand for organic foods, Asda is in a position to be able to introduce a larger infusion of organic foods. Much greater promotion of organic needs to take place if the company is to bring back lost consumers from local and independent food producers.Asda can also promote its non-foods range to a greater extent, however, it maybe possible for the company to promote its non-food products to a different market, perhaps to rival Ikea in the home products market.In light of Tescos entry in to the mobile communications market, diversifying to a different market may also help improve Asda revenue. With Asdas main focus on its non-foods range, moving into the mobile communications market maybe more suited to Asda policy of expanding its non-food section. Asda already has sire in mo ving in to industry to which is not ab initio been related, as we have seen Asda clothing range George, has enjoyed relative success disrespect strong competition from more established high street retailers.The mobile communications market will however pose very different problem, as this is a fast moving industry, with technological innovations leading the way. In a saturated industry, it will be difficult for Asda to be competitive against the more established network operators, but network space available through virtual networks, now is likely to be the best time to enter the mobile communications industry. In addition, it maybe more feasible for Asda, if more resources are concentrated on attracting consumers to a 3G service which will provide a more level playing field as the 3G services are still relatively new to the market.Market Segmentation, Targeting and PositioningMarket segmentation, targeting and positioningVodafoneThe Vodafone group has the largest share of the co rporate mobile communications market with around 15 million customers. The company offers a wide range of voice and data communications. The Vodafone 2G/2.5G covers 99% of the population. Vodafone was the first mobile operator to introduce international roaming service. describe segmentsThe mobile communications industry has two main types of customers. These are consumers and business users.The volume of the mobile phones costs are met by users themselves, mainly using the mobile phone service for private calls. With the existence of a number of leading companies with in the market, the market place has become saturated. The trend now is to concentrate their efforts on retaining their most treasured customers. Vodafone along with other leading operators, require consumers to spend more money on non-voice services and have become increasingly engrossed with levels of average revenue per user.There are several areas within the consumer group, which accounts for a large share of th e revenue generated by Vodafone. Mintel have reported that the group of 15-24 year old mobile phone users are set to prepare.Mobile phones are particularly popular among 15-24-year-olds, and Mintels consumer research section demonstrates that consumers in this age band are motivated by style. These younger consumers are familiar with mobile phone technology and are willing to adapt to new skills and habits as the new technology appears. Their social lives tend to be very active, qualification the mobile phone a necessity for them and they are also viewed as a necessary fashion accessory.The ownership of mobile phones demonstrates the areas in which Vodafone should be feeling to concentrate their efforts in order to generate revenues from voice and data transmissions. takeership of mobile phones, by gender and age, 7-19s, 20031Base youths aged 7-19AllMalesFemales7 to 1011 to 1415 to 19%%%%%%Own mobile666369257791Shared mobile444741None30342768208Text pass666370267791Games57536122 6479Taken from the TGI Youth survey of 5859 youths aged 7-19Income generated from voice and data transmission services delivered to companies and other organisations is an increasingly vital revenue pour out for Vodafone and most mobile operators in general. Vodafone has treasure that in present day climate of highly competitive business environment, efficient communication is a key factor, which must be developed in order for a mobile operator to gain a competitive edge over its rivals.The importance of business customers can be demonstrated by spirit at the levels of expenditure on business advertising. In the year ending September 2004, around 14.4m was spent2. Even though this is nothing when compared to the arrive spent on consumer advertising, the big players such as Vodafone and O2 have gradually increased their spending to attract business customers while Orange and T-Mobile are slowly following suit.Targeting strategiesCurrently, the market leaders in the mobile communi cations are all competing for the same customers, employing similar tariffs and services so as not to fall behind its rivals.With the introduction of the 3G networks, many of the mobile operators have also introduced 3G tariffs on to their respective networks. Even though new technology is continuously being developed, the targets for each of the mobile operators remain as it is. In general, there are no specialist tariffs which concentrate on a particular area of the market with the exception of the business tariffs which are knowing to provide efficient and reliable communication service to businesses.Some mobile operators provide tariffs, which can be considered, for a particular group, however, this is not an area, which can be considered as a specialist group. T-mobile for example have of late introduced the Best of Both Worlds tariff, and even though this may seem specimen for younger users of mobile phones, the tariff is appealing to many who desire more complete control o ver the cost of the service they use.PositioningWith the majority of mobile phone operators providing a similar service with similar tariffs, it is fairly difficult to evaluate the positioning of the respective brands in the market. Regardless of this, there are factors, which influence consumers when deciding which network to choose. A list of the factors influencing the alternative of networks is shown belowMost important factors when choosing a mobile phone network (% of adults), 20043Tariffs 31.9Network Coverage 21.1Reception 17.2Personal experience 9.8Special offers 8.3 connection reputation 7.5Recommendation 6.6Additional services offered 4.4Advertising 0.8Using the net price plan and the service available on that plan offered by each of the leading mobile operator companies, we are able to look at the brand positioning of the Vodafone in comparison to its major rivals.perceptual map for mobile operator marketHigh price* Orange* O2High service Low service* T-mobile * Vodafo neLow priceAlthough the position of Vodafone at a glance does not appear to be desirable, Vodafone boasts an extremely high level of network coverage, reception, and a level of customer service, which is rivalled unless by Orange. Vodafone has a reputation as a global company, and is the worlds largest telecommunications company, which provide a whole range of services. Vodafone was the first of the four largest networks to launch its 3G consumer services in November 2004 and continues to be one of the leading innovators in terms of providing the current products, which are accessible to a large sector of the market.The Vodafone brand is recognised through out the developed world and has since enjoyed a reputation for representing caliber of product and service. The Vodafone shops all trade under the same corporate brand and logo. Its chain of some 350 stores has remained roughly the same size for the last two years, although many of the smaller shop units have been abandoned in opt of larger premises. The stores have a strong corporate identity, featuring the red and egg white livery of the brand.Vodafone has strong and consistent retail branding and in Mintels research Vodafone was mentioned by 8% of consumers as a source of their last mobile phone, placing them just behind Orange. Vodafone is the only retailer to achieve significantly higher penetration among 15-19s than for other age bands, probably connected to its high pen role in sports sponsorship. The companys long-standing in the market means that it is well used by a wide range of consumers from a broad circularise of age and social groups.The Vodafone shops sell handsets that can only operate on Vodafone tariffs. Vodafone are in general up to date with the latest technology and handsets accompanied by a large range of accessories.Market Segmentsharmonize to a market report on Mobile hollos by Key discovers in 2005, the Mobile telecommunications industry can be separated into two main secto rs, which can be then further segmented pillow slip of revenue, and Type of customer.Type of RevenueThis relates to how a customer uses a mobile phone. This can be calls and fixed charges, text edition and picture messaging, or interconnection fees (for when a call is made from one service provider to another). The below table illustrates the revenue of each segment. Mobile operators are now expanding and looking to earn more from the text and picture messaging sector in particular, with the advent of 3G.The UK Cellular Telecommunications Market by Revenue Source by value (m)1999/20002000/20012001/20022002/20032003/2004Value (m)Retail RevenuesCalls and fixed Charges5,0496,2537,0417,9919,185Text and picture messaging1265531,0731,5291,854Connection fees765664245Total retail revenues5,2516,8628,1789,54411,044Source The UK Telecommunications industry Market Information, Office of Telecommunications (oftel)/ Key Note Mraket Report 2005, Mobile PhonesType of customerCustomer type can b e of 2 kinds care user or Consumer. Business users primarily use voice calls, and have to pay fixed charges. Consumers on the other hand are a lot more varied, they contribute to all 3 of the segments mentioned above.Buyer BehaviorSurvey by BMRB planetarys Target class Index (TGI) 2004, suggests that Mobile phones are primarily owned by younger consumers, with more than 80% of under 55 year olds owning mobile phones. It is also reported that Pay-as-you-go (PAYG) is the more popular than pay-monthly or contract services, especially among the lower income earners (those below social grade C2). Males are more likely to have fixed monthly contract phones, and the reverse in true for PAYG.The below table indicates that the type, value or content of the tariff mainly affects consumers choice of network, followed by network coverage and signal/reception.1st 2nd most important factors when chosing a Mobile Phone Network (% of adults), 2004Most important2nd Most importantAddittional serv ice offered4.45.4Advertising0.85.3Company reputation7.56.7Network coverage21.110.8Personal experience9.86.8Reception17.213.5Recommendation6.68Special offers8.39Tariffs31.914.2Source Target Group Index (TGI), BMRB International Ltd, 2004Again, BMRB Internationals Target Group Index (TGI) 2004, suggests that phones are mainly used for text messaging, and games.Competitor Strategy and Positioning of 02 (mm02 PLC)O2O2 is a mobile communications service provider operating in the UK, Ireland and Europe, who generated 4.8 billion of revenue in 2003.Business Description O2 have 19 million customers within some of the biggest consumer markets for mobile services. 02 is now a well-established and profitable business. They are now looking to expand their product portfolio horizontally, exploiting existing distribution channels and new product opportunities. This could well prove to take investment and focus off/away from its main business which is the mobile services provider.Revenue analysis O2s turnover increased by 22% from 2003 to 2004. The main reason for the increase was the overall rise in subscriber numbers and the increased usage of the Groups services by subscribers.Competitor StrategyO2 have reduced there employee base by 3000 to 12000 employees through restructuring. And achieved an increase of one million customers in the 2003/04 financial year. In 2004/05 O2 have developed and moved into 3G network services, which enables them to offer high-speed drift of videos and other multi media.O2s strategy has focused on three key areas amend operating performance managing businesses cohesively and leading in mobile data services. in spite of appearance the market, 02 are expected to continue to look to acquire and retain high value customers.Companies are forever trying to increase the ARPU (average revenue per user). This has led to heavier targeting and strategies, creating more services and getting consumers to use them, i.e. OrangeWorld and VodafoneLivePositi oningAll the mobile phone networks look to offer a wide range of services, and position themselves in the market to cater for all. Companies need to maximize their revenue potential in a highly competitive and ever saturating market. The below tables will help me position the mobile phone companies in a perceptual map.1st 2nd most important factors when chosing a Mobile Phone Network (% of adults), 2004Most important2nd Most importantAddittional service offered4.45.4Advertising0.85.3Company reputation7.56.7Network coverage21.110.8Personal experience9.86.8Reception17.213.5Recommendation6.68Special offers8.39Tariffs31.914.2Source Target Group Index (TGI), BMRB International Ltd, 2004The above table shows what consumers look for in a network.Mobile phone users, year to April 1999-2003 and Q1 2004Year to April199920012003Q1 2003/04% changem%m%M%m%1999-2004Vodafone7.932.913.228.012.12