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Unit 2 Marketing Essentials Stp Assignment Sample
Diploma in Business (Marketing)
Unit Number and Title
Unit 2 Marketing Essentials Stp
The following pages perform a comparative analysis of the extended marketing mix of EE limited with that of Vodafone UK.
- Product: EE was the first company in UK to provide 4g network to its subscriber base and at the same time has the largest subscriber base in the country. However, one area where the company currently lags is the fact that the customer service of the company is reputed to be poor and there is a large of consumer complaints against the company at present (Curtis, S., 2016). As compared to EE limited the market share of Vodafone limited in UK is much less. However, it ranks amongst the top 4 operators in the market. The products of the company are offered to the customers with a number of different features. It also gives them opportunities to play games, receive and send sms, and share information about lot of different things.
- Price: EE limited markets its products as a premium quality. There are different pricing plans that are offered by the company and the consumer has the flexibility to choose one that suits him or her best (EE, 2016).The prices of the products offered by Vodafone limited are far less as compared to that offered by EE limited. The company also gives reward points to the customer for every pound that is spent by them on calls or other services. There are different price structures offered by the company to suit individual needs of the customers.
- Place: The services offered by the EE mobile can be purchased through omni-chanel retail outlets of the company. The products of the company are available at more than 700 stores across the UK and are also available to be purchased online from the website of the company.There are more than 300 stores that are owned and operated by Vodafone. There are number of independent retailers as well who sell products of the company and the products of the company are also available for online purchase.
- Promotion: EE limited tries to promote itself as a premium company in terms of both quality and price. However, the perception of the customers about the company is poor and they feel that the company is not providing them value for money.Vodafone is much more known face in the market of telecom operators and this is due to the efficient use of promotional tools by the company (Avery, Fournier and Wittenbraker, 2014). The company advertises its products on different media and uses personalities to communicate its brand value.
- People: The people who work for the EE limited are not that efficient and this is especially true for the customer service department of the company as the number of complaints against the company has risen in recent years and the customers feel that they are not being offered value for their money. Vodafone is also not good in terms of customer service but is better as compared to EE limited. Thus Vodafone also needs to train its people to meet the expectations of customers.
- Process: Although the company is good in terms of research and development and has vested good amounts of money in order to increase its network speed and cover maximum geographic area of UK, there are some defined areas where in EE limited clearly lags and one such area is customer service. Vodafone is good its research and development but needs to have development in technology to rival the competition and acquire greatest share of the market (Bayer, 2010).
- Physical evidence: The customer service department of EE limited is located overseas and this has contributed to the poor performance of the customer service operation at EE limited. The physical evidence of Vodafone is much better as compared to that offered by EE limited. The in-store experiences offered by the company are simply outstanding.
The following pages provide a detailed analysis of the EE mobile company. The analysis starts with an overview of the external and internal environment of the company. The external environment of the company is analyzed through the use of PESTEL and Porter’s 5 forces. The internal analysis of the company has been performed using the Porter’s value chain model. In addition to these analyses the following pages also perform a STP overview of the company and it unravels that there is a fault in the positioning strategy of the company. The SWOT analysis s also performed and it reveals specific areas of strengths, weakness, opportunity and threat. In order to address the identified issues, objectives, strategy and tactics are clearly defined with a definition of budget and control measures.
In the year 2010, major players in the telecommunication industry that are T-Mobile and orange collaborated with each other leading to the foundation of EE. EE was the first company to introduce 4G in the market. The company has made huge investment in the 4G infrastructure and is committed to the delivery of 4G to 95% of the landmass in UK by 2020. EE is perceived as the largest mobile phone network operator and as of 2012 had more than 700 stores which were used to provide services to about 27 million customers.
Current Marketing Situation Analysis
Internal analysis: The organizational structure of EE is very efficient and the staff morale in the company is quiet high. Additionally it is seen that the company offers enough opportunities for the customers to take part in social volunteering activities. The revenue of the company in 2013 was £6.5 billion which was little lower than in 2012 when the company had generated revenue of £ 6.7 B. T5he amount of net cash that was invested in investing activities had increased sizably from 2012 to 2013. This signifies a commitment of the company to invest in stronger network infrastructure and to reach its commitment of delivering 4G services to 95% of the landmass in UK by the year 2020. A more tailed internal analysis of the company is performed in the following section by making use of value chain analysis (Álvarez, Casielles and Martín, 2010).
Value chain analysis: EE is arguably the largest digital communication company in the UK. Being in that position the company has tried to expand its selling approach into one that is based on omni-chanel environment of retail. There are more than 700 retail stores through which EE operates in addition to the operations that take place through its website.
- Devices like the mobile and tablet
- IT and Network related equipments
Operations: Operations on the network
Outbound logistics: There is an online store in addition to 700 retail stores which are operated by the company
Marketing and sales: There are separate marketing and sales departments in the company
Customer service: After the customer service of the company was rated poorly by the customers of the company, the company has made a decision to bring the customer service of the company back in UK.
External analysis: The analysis of the external environment of the company can be performed with the use of PESTE analysis that includes the factors like political, economic, social, technological, Environmental and legal. Porter’s 5 forces that are used to analyze the competitive landscape can also be used to perform the task of external analysis. These two analyses are provided below.
- Political:The government in the United Kingdom examines issues that are related to sufficiency of network coverage in the rural areas or areas that are far from urban areas and are likely to face problems. The UK government wants to invest a huge amount on the providers in order to meet the goal of increasing network coverage in rural areas.
- Economic:The economy of UK suffered from a period of decline in the period of 2008-09. In this period the action plan by the government to combat the recession affected the households. These steps included augmentation of vat and the reduction of national benefits. These led the customers to make wise decisions making regarding investments or expenses and cut spending on those items that were not necessary (Aguwa, Monplaisir and Turgut, 2012). Although the economy has started recovering from 2013 but being an ongoing process it will take some time before the consumers can feel relaxed and start their spending spree.
- Social:Within the telecom market, each segment of the customers has differences in their purchase behavior. The number of teens or the proportion of teens that are using a mobile phone underwent serious augmentation from 61% to 81% between the years of 20111 and 2013.
- Technological:Technology has a major influence on the telecom operators. The goal of the different operators in the telecom industry is to enhance of the coverage area of the network and deliver data or network services that are exceptional in quality. In order to address the above needs or requirements the telecom operators brought in the 4G network at lower cost and it was aided by the technology to bring this facility to the customer.
- Legal :Of com, the regulatory authority of the telecom operators in UK, is responsible for reinforcing the base for companies to be able to provide their products or services through competitive and healthy approaches. The roaming rates have also been greatly slashed over the years. It was stipulated by the regulator that there is right of the consumer to terminate their contracts with the operators in the telecom industry without incurring any penalty under special circumstances of price increase by the operator without appropriate notice.
- Environmental:The telecom companies are required to take into consideration constraints and other noticeable environmental factors. This is related to the production and development of the headsets and the effect that development of infrastructure has on flora and fauna.
Porter’s 5 forces
- Competition between existing players- High: As per the distribution of market share amongst the major telecom operators in UK, it is seen that EE had about 31% of the market under its control in the year 2013, thus making it a leader in the market and was closely followed by O2 which had a share of 23%. The completion between the rival firms in the market is noticed to be quite intense. It is seen that the telecom market is already saturated and the different players have advantages in different areas or domains. The vulnerability of EE arises from its poor performance in the field of customer service which can knock it off from the leadership position it now has.
- Threat of new entrants- low: Being one of the most attractive markets available the telecom market is highly attractive for the new entrants to try and enter into the same. However, the market is very capital intensive and this result in a high entry barrier for the companies who would like to enter into this highly lucrative market. In addition to this the current players seem to have a dominant and established position in the market and also cater to a customer base that is loyal with attractive differentiation of product (Dixon, Freeman and Toman, 2010). Thus in these circumstances the entrance of a new operator in the market is highly unlikely event.
- Buyer’s bargaining power- Medium: In the telecom market the customers have the right to change their network operator in search of one that provides them with the best offer. This has a negative impact on the mobile network operators. However, it is important to take note of the fact that the portability of number is not an important thing to accomplish as the customers are required to inform the network provider or operator with an advanced notice of cancellation which might lead to creation of inconvenience for the customers. Thus the bargaining power of the buyer is medium in the industry.
- Bargaining power of supplier-high: In case of the 4g market in which EE operates, it is not easy to be the technology leader. It is required for the EE to maintain its performance at a very high level which in turn demands high level of performance from the suppliers. Thus the bargaining power of the supplier is strong and it is required for the EE to maintain good relationship with the suppliers for retaining its competitive advantage and the loyalty of customers.
- Threat of substitutes- medium: Now days, it is more than evident that mobile operators are not the sole providers of voice and message service. They have lost their exclusivity to telephony services that are based on internet like Viber and Skype and application for messages like the Whatsapp. This is posing as a large threat to the telecom companies who have long used SMS and MMS services as vehicles to generate cash flow. However, there is a distinctive advantage of the telecom operators over the internet based services in the fact that the telecom operators offer to the customers a more simple and cohesive way to talk with one another.
The SWOT analysis of the company is presented below
Strong presence in 4G
Omni channel retailing strategy
Pioneer in 4G network
Customer service of the company is weak
The value for money proposition of the brand is low
Less recognition of the brand
High levels of complains by the customers
Opportunity to drive more profit through strengthening of the 4G customer base
Ability to offer new customers and packages and thus advance its products and offerings
The own brand of mobiles and tablets can be sold for higher profits by the company.
Other competitors of the company can dethrone it from leadership position
The popularity of alternate ways of communication is increasing
Aggressive competition from other players in the market
Following the above analysis it is apparent that EE’s greatest weakness which can threaten the leadership role of the company in the market and its position is disparity in its positioning strategy with the perceived value by the customers. Customers see the brand as one that offers low value for money. Thus the main objective of the company is
Objective 1: Improve the customer service of the company to improve the value proposition of the company and retain or improve upon its market leadership position.
Objective 2: Increase the subscriber base for its 4G services
Strategy: In order to achieve the above objectives the company should focus on taking part in PR campaigns to promote the features of their service offering and present it as one that makes it more attractive to the customers. Additionally the customer service of the company needs serious improvement and the company needs to entice more customers using the offering of a faster and more reliable internet connection.
Segmentation, targeting and positioning (STP): Segmentation is defined as the process by which the market is divided into several different segments based on characteristics of special affinity of them (Smith and Zook, 2011). This is done so as to analyze each group’s buying behavior and adjust the way in which company communicates to them. There are several demographic variables that are used for the segmentation of consumer markets and this involves age, socio economic status, level of income etc. However, the segmentation effort that is more suitable for the telecom markets is behavioral segmentation. In this type of segmentation the variables that are used to segment the market are promotion score, stickiness and average value.
After EE has been able to segment the market into a number of different segments, there are some particular segments amongst those identified which needs to be targeted at by the company. In order to target the perfect segment the company needs to remember the Pareto principle and target the top 20% customers who have the highest effect on the profitability of the company. EE should aim the customers of Vodafone who are mainly young people and thus are tech-savvy with their 4G network which is arguably the fastest in UK. In terms of positioning, it is seen that the company is trying to position itself as a premium brand as compared to Vodafone and UK in terms of both pricing and the quality of service that is offered.
Tactics & Action: In order to achieve the objectives stated above the strategy and objectives the company needs to modify the 7p marketing strategy of the company. The new 7P should focus on a service offering by the company that is unparalleled in the history of telecom industry. Since the company is lacking in terms of customer service the elements where in it needs improvement are mainly related to the additional elements of the marketing mix that are related to people, place and process. The people need to be given proper training so that they can handle the customer service requests of the company in a manner that is efficient.
Budget: The company needs to invest a good amount of budget in order to improve the customer service of the company by training the people in this regards and bringing the customer service department back to Europe. The company also needs to invest money for improving its network infrastructure and make it more robust. Money also needs to be invested to increase Pr activities so that the company is able to capture customers from rival companies.
Control: The expenditure in the budget and the execution of the plan or objectives of the company needs a careful control on part of the company. It is required for the company to schedule its investment in a part by part manner and carefully evaluate the success of failure of one part before proceeding to next part.
The above pages analyze the EE mobile company through a thorough analysis of the external and internal environment of the company. The SWOT analysis and STP of the company is also performed to understand the current position of the company. In accordance to the analysis a definite strategy and objective of the company has been defined. There has been also definition of tactics which the company can use to achieve those objectives.
Aguwa, C.C., Monplaisir, L. and Turgut, O., 2012. Voice of the customer: Customer satisfaction ratio based analysis. Expert Systems with Applications, 39(11), pp.10112-10119.
Álvarez, L.S., Casielles, R.V. and Martín, A.M.D., 2010. Analysis of the role of complaint management in the context of relationship marketing. Journal of Marketing Management, 27(1-2), pp.143-164.
Avery, J., Fournier, S. and Wittenbraker, J., 2014. Unlock the mysteries of your customer relationships. Harvard Business Review, 92(7), pp. 72-81.
Bayer, J., 2010. Customer segmentation in the telecommunications industry. Journal of Database Marketing & Customer Strategy Management, 17(3-4), pp.247-256.
Curtis, S., 2016. EE takes drastic measures to improve customer service after being named one of UK's worst mobile operators.Available at < http://www.mirror.co.uk/tech/ee-takes-drastic-measures-improve-7812924 > [Accessed on 12 November 2016].
Dixon, M., Freeman, K. and Toman, N., 2010. Stop trying to delight your customers. Harvard Business Review, 88(7/8), pp.116-122.
EE., 2016. Pay monthly phone sim only plans. Available at < http://shop.ee.co.uk/sim-only/pay-monthly-phones-AB > [Accessed on 12 November 2016].
Smith, P.R. and Zook, Z., 2011. Marketing communications: integrating offline and online with social media. Kogan Page Ltd..