Etihad Etisalat Company’s Marketing Tactics

Introduction

In the current globalized business environment, competition is one of the greatest challenges that firms have to face in their normal operations. Companies are forced to find ways of convincing customers that they offer the best value at the most reasonable price in the market. Janmohamed says that the stiff market competition in most of the industries has forced many firms to focus on marketing as a means of gaining a competitive advantage over rival firms (31).

Companies around the world spend millions of dollars to promote their brands and products in the market. Others pay top celebrities handsomely so that they can become brand ambassadors for their companies. Firms use different strategies to market their products. Social media has emerged as one of the most important marketing platforms in modern society. It is rapidly edging out mass media marketing, especially when handling a brand that targets teenagers and young adults. The investment that is made in these platforms should give returns to justify the need to embrace them. Marketing analytics help in determining the appropriateness of a marketing strategy that a company uses.

Marketing analytics is increasingly becoming an important tool that marketers use to compare the performance of different marketing approaches. Levinson and Lautenslager define marketing analytics as “the processes and technologies that enable marketers to evaluate the success of their marketing initiatives,” (45). Each marketing initiative requires a significant amount of investment. To undertake such initiatives, it forces a firm to sacrifice other important activities to ensure that the brand of the company is strengthened.

However, it is a fact that some approaches fail to register impressive performance. It is also true that some tactics can be more effective than others based on the target market, the nature of the products, and other marketing forces. It is critical to find ways of cutting costs of marketing while at the same time promoting a brand and company’s products in the market. It requires comparing the performance of the current marketing plans to select and invest in the most effective ones. Strategies that fail to register the desired level of success should be eliminated. The research focuses on critical analysis of the marketing tactics used by Etihad Etisalat Company. The paper will evaluate the current plans of the company and offer recommendations on areas that need improvement.

Etihad Etisalat Company

Etihad Etisalat Company, popularly known as Mobily, is a telecommunication services company in Saudi Arabia. Founded on December 14, 2004, the company has registered impressive growth over the past 14 years, and it is currently one of the leading telecommunication companies in the country. The company’s current operations are limited to Saudi Arabia, though the management is keen on spreading its services to the regional market in the future.

The management is specifically targeting the United Arab Emirates’ market. Etihad Etisalat Company’s main products include fixed-line services, internet services, and mobile phones. It is one of the leading specialist shops for iPhones and Samsung phones in Saudi Arabia. Sulaiman Abdulrahman Algwaiz is the company’s current chairman, and Ahmed Aboudoman is the chief executive officer. Mobily is currently one of the strongest brands in Saudi’s telecommunication market.

Its top rivals in the market include Zain Group, Saudi Telecom Group, and Bravo Telecom. A report by Plessis shows that the company has over 8 million regular customers using a variety of its products within the local market (32). The impressive performance of the company attracted regional investors who were convinced that the company is destined for greater success in the future. 27.45% of the company’s shares are owned by the United Arab Emirates’ firm, Etisalat (Salihovic 45). The rest of the shares are held by the public and other investors.

Etihad Etisalat Company’s Annual Report

It is always a general belief that the performance of a firm in the market is often represented in its financial reports. A firm that is registering impressive performance is likely to have improved sales and reduced expenses per unit product. Etihad Etisalat Company has been making huge investments in marketing its products and brand (Plessis 78). The investment is expected to reflect in its financial statement. One of the ways of evaluating the financial performance of a company is through its income statement. Table 1 below shows the income statement of this company:

Income Statement: All numbers in thousands

Revenue 12/31/2017 12/31/2016 12/31/2015 12/31/2014
Total Revenue 11,351,301 12,569,397 14,424,125 14,004,011
Cost of Revenue 4,820,994 5,144,112 6,466,037 7,225,472
Gross Profit 6,530,307 7,425,285 7,958,088 6,778,539
Operating Expenses
Research Development
Selling General and Administrative 2,917,871 3,407,987 5,016,658 4,532,304
Non-Recurring
Others -33,190 -51,207 -51,207 -51,207
Total Operating Expenses 11,332,030 12,282,721 15,108,042 15,290,632
Operating Income or Loss 19,271 286,676 -683,917 -1,286,621
Income from Continuing Operations
Total Other Income/Expenses Net -666,802 -543,643 -240,231 -248,680
Earnings Before Interest and Taxes 19,271 286,676 -683,917 -1,286,621
Interest Expense -668,538 -556,414 -361,376 -269,145
Income Before Tax -647,531 -256,967 -924,148 -1,535,301
Income Tax Expense 61,410 -43,331 168,977 40,504
Minority Interest 1,500 1,500 1,500
Net Income From Continuing Ops -708,941 -213,636 -1,093,125 -1,575,805
Non-recurring Events
Discontinued Operations
Extraordinary Items
Effect Of Accounting Changes
Other Items
Net Income
Net Income -708,941 -213,636 -1,093,125 -1,575,805
Preferred Stock And Other Adjustments
Net Income Applicable To Common Shares -708,941 -213,636 -1,093,125 -1,575,805

Table 1. Etihad Etisalat Company’s Income Statement (Yahoo Finance para. 1).

The income statement shows that the financial health of Etihad Etisalat Company over the past few years has been questionable. In the financial year that ended on 31 December 2014, the net income of the company was a loss despite making an impressive gross profit that year. In 2015, the gross profit increased while the net loss was also reduced. The same trend was registered in the financial year that ended on December 31, 2016.

However, the performance of the company registered a negative performance in 2017 when the gross profit was reduced while the net loss increased. For four consecutive financial years, the company has registered a consistent net loss in its operations. It is an indication that there is an issue that needs to be addressed to improve financial performance. The company may not be sustainable if it continues to register losses as the current records show. The records show that the company has been consistently reducing its operating expenses from 2014 to 2017, including its expenses on marketing strategies. The net loss needs to be investigated and adequately addressed to enhance the sustainability of the firm’s operations.

The income statement shows that the company’s total revenue has dropped by about 18.94% from 2014 to 2017. Effective marketing approaches, as Schnerrer observes, is meant to improve sales (118). The population of people using internet services and call data in Saudi Arabia has increased significantly within the same period. More people now rely on social media to have access to entertainment, news, and to engage friends and family members.

It is normal to expect the company to register improved sales revenue within that period because of the increase in the number of customers saved. However, the sales of the company have registered a consistent drop in each year, an indication that there is an issue that needs to be addressed. It is necessary to investigate if the problem is related to the marketing strategies used by the company. It may be possible that the marketing approach used has failed to attract and retain a pool of loyal customers, leading to the sliding financial gains at the company. It will be possible to tie the marketing tactics that the company has been using over the last four years to its financial performance. It will be possible to know what needs to be changed to the desired financial performance.

Etihad Etisalat Company’s Business Strategies

Etihad Etisalat Company has once voted the fastest growing telecommunication company in the Middle East and North Africa region (Salihovic 38). Its market growth was impressive, and customers were satisfied with the quality of the services it offered. However, the firm has been struggling over the past four months. The company has failed to identify ways in which its revenue can be improved despite the stiff market challenge that it is facing.

According to Janmohamed, most of the telecommunication companies around the world have been registering impressive growth over the recent past as the global society embrace social media (28). Platforms such as Facebook, Twitter, and YouTube have become very popular, especially among youths. Accessing these social network platforms requires access to the internet. The more the local population in Saudi Arabia accesses the internet, the greater the size of the market for the local companies. Etihad Etisalat Company is one of the leading providers of internet services in the country. The company’s less-than-impressive financial performance over the recent past does not correspond with the growing size of the market. It is a sign that the company’s marketing plans may not be yielding the expected outcome.

It is possible that the current challenges faced by the firm are not marketing-related. However, one must appreciate that the reduced sales revenue has a lot to do with the sales and marketing department. It may be the issue of pricing or inability to understand what the customers need in the market. Assuming that other factors within the company are held constant, the researcher will look at the company’s business strategies to help identify the possible causes of the consistent drop in the sales revenue from 2014 to 2017.

Diversification

One of the most important business tactics that the Etihad Etisalat Emirates has embraced over the years is the diversification of its products. The company offers a wide range of services in the telecommunication industry. The approach is meant to help the firm expand its market share. The following are the main products in the company’s portfolio.

Fixed-line

Fixed phones are not as popular as they were before the emergence of mobile phones. However, Farris notes that many homeowners still consider installing landline phones for use while at home (35). The new technology has made it possible to have fixed-line telephones which are wireless. It was one of the pioneer products of this company. Although revenue from this communication sector is dropping because of its reduced popularity, the firm still considers it an important segment of the market.

Mobile telephony

Mobily shops are known to stock high-end mobile phones. iPhones and the latest Samsung phones are some of the main products stocked by this company. The company is one of the few authorized iPhone dealers in the country. The Smartphone market has been growing rapidly in the Saudi market. Samsung and iPhone are the most popular brands among the middle class and the rich. They are considered to offer the best value to their users.

Internet services

The company has diversified its products into the internet service sector. According to Levinson and Lautenslager, the data market is currently one of the biggest and fastest developing sectors in the global market (19). In Saudi Arabia, there has been a consistent increase in the number of those subscribing to internet services every month. Others, especially teenagers, prefer making daily subscriptions or purchasing bundles based on their budget. The popularity of social media, especially Facebook, YouTube, and Twitter, has bolstered growth in this sector. Etihad Etisalat Company has made a huge investment in the internet sector. In 2016, it launched a submarine cable (AAE-1) in Jeddah, a clear indication that it is keen on pursuing opportunities in the industry. Its 4G internet speed is very popular in the country and is currently one of its main sources of revenue.

Push-to-talk service

The company has come up with a series of new products in the market, one of which is the push-to-talk service. The service offers customers the opportunity to make group calls. The new service, which borrows heavily from the traditional concept of a walkie-talkie, allows up to ten users to engage in a phone call irrespective of their geographic distance as long as they are within the country. When using this service, customers can hold discussions while in different parts of the country. It allows one person to talk at a time as others listen. It is one of its kinds in the country.

Innovativeness

The company is one of the most innovative firms in the region. It has come up with unique products and product delivery methods to improve customer experience. It was the first company to introduce push-to-talk technology in the Saudi market. As a leader in technology, it invested heavily to lay a submarine cable to improve the experience of its customers. Other new concepts that the company has taken the lead on including Mini-FBO and TD-LTE.

Aggressive Marketing

Mobily has an aggressive marketing strategy to help in popularizing its brand in the market. As Farris observes, having superior products in the market is not enough to achieve a competitive edge (40). A firm must embrace effective marketing strategies to inform its customers about the existence of the products. As such, this company has made a considerable investment to promote the company’s brand and products in the market. Figure 1 below shows one of its promotional advertisements commonly used in the print media.

Mobily’s advertisement
Figure 1. Mobily’s advertisement (Plessis 83).

It is important to note that the advert emphasizes the quality of the service offered instead of price. It is an indication that the company is embracing a differentiation approach instead of cost-leadership.

Etihad Etisalat Company’s Key Marketing Actions that Support the Business Strategy

The analysis of Etihad Etisalat Company’s business approach shows that the company has embraced diversification, innovativeness, and aggressive marketing as its core approaches to achieving success in the market. The strategy has enabled it to become one of the leading companies in the data market. However, it is important to note that the above tactics can only achieve the desired success if they are supported by key marketing actions. The following are the specific areas of marketing that must be embraced to ensure that the above plans are successful:

Marketing Research

The emerging technologies are redefining the market landscape, and firms must understand the evolving events and align their products and product delivery methods with the changes. Marketing research is the most effective tool for managing the changing forces. According to Flores, market research should be considered a continuous process that primarily focuses on monitoring the changing tastes and preferences of customers (60).

At Mobily, marketing research is always at the center-stage of marketing activities. In one of its market researches, the company realized that a significant number of people were looking for platforms that would allow them to engage in group conferences through phone calls (Schnerrer 86).

This service was not available in the local market, but the company identified the potential of the product. Through its innovative ways, it developed a push-to-talk service that allows about 10 people to engage in group conversations using their phones. The product is registering impressive performance as it is embraced by families, friends, and business partners. It allows them to engage in discussions without having to meet physically. The company has one of the most preferred data packages in the country, a result of extensive market research that was conducted by its representatives.

New Product Development

The telecommunication market is currently one of the most competitive ones not only in Saudi Arabia but also across the world. Local and international companies have emerged offering similar products to those already in the market. It forces the existing companies to consider strategies such as lowering of prices to manage the disruption in the market. Flores advises that one of the most appropriate ways of managing such disruptions in the market is to introduce new products in the market (92).

Etihad Etisalat Company has embraced this approach of managing competition in the market. Call and data services were its primary products when the company was introduced in the market. However, the firm appreciates the existence of stiff competition in the market and as such, has introduced new products to help it in improving its revenue stream. Other than the push-to-talk service (PTT) service discussed above, the company has also introduced various other products in the Saudi market. Mini-FBO, a franchised retail store was introduced in over 60 urban centers in the country. The stores are meant to help the company improve its sale of smartphones and other electronic products such as tablets, iPads, iPods, headsets, and other electronic accessories. The plan has helped in diversifying the company’s sources of revenue.

Brand Development Strategy

In a highly competitive market, differentiation is one of the best ways of ensuring that a firm’s products achieve superiority over that of rival companies. One of the most important aspects of differentiation involves developing a brand. Coca-Cola Company is one of the most successful multinational corporations in the global market. The brand image and name are known all over the world, even among minors. The minors associate it with fun and reward, and so does the teenagers. Developing a strong brand such as that of Coca-Cola takes time and a significant amount of investment. A firm must be ready to spend on promotional campaigns both in the mass and social media. The following figure shows the brand logo of Etihad Etisalat Company.

Brand name and logo of Mobily
Figure 2: Brand name and logo of Mobily (Salihovic 56).

The brand image, name, and color are easily memorable, which is critical when developing a powerful brand. It is also clear that the company uses both English and Arabic in its brand development. The strategy is great given that majority of its customers are Arabs. However, it is important to take note of one main issue with the branding approach used by the firm. The company operates under the brand name Mobily. However, it is traded as Etihad Etisalat Company. Using two unrelated names in its corporate activities may work against developing a strong brand. A section of the investors and customers may think that these are two different companies. The management may need to reconsider its branding tactic, especially the brand name.

Promotional Strategies

Creating awareness of the existence of a brand and its products is one of the main important marketing activities within the marketing department. Schnerrer argues that the promotional approach is taking a new approach (32). Successful firms are currently trying to develop a relationship with customers whenever they come up with promotional plans. At Mobily, the management has been keen on ensuring that its brand and products are promoted in a way that emphasizes their superiority over those of rival companies. The company’s promotional campaigns, such as the one shown in figure 1 above, reminds customers of the superior value that the company offers to its customers. The message is very appealing to the rich and the middle class who are always willing to pay extra for reliable and fast internet connectivity. Most of its promotional campaigns are channeled through mass and social media platforms.

Distribution

Distribution is one of the most critical marketing activities that can enable a firm to achieve success in the market. Etihad Etisalat Company has a wide range of products that it offers to its customers. These products must be easily accessible to ensure that clients do not strain whenever they want to make purchases. The Mini-FBO retail outlets have helped in the distribution of the company’s products across the country. The company currently has 60 of such outlets in major urban centers in Saudi Arabia. The retail outlets have certified Mobily agents who can address all the concerns that a customer may have. It means that customers can now purchase any of the services and products of this company at these Mini-FBO retail outlets.

Pricing

The strategy that a firm takes when pricing its products always determine the kind and number of customers it will attract. It defines the perception of customers in the market. When a product is highly-priced, most customers often believe that it has a superior value when compared with the products of rival companies. The problem with high pricing is that in many cases it limits the number of customers who can afford to purchase the products.

On the other hand, low-priced products are often perceived to be of poor quality. The number of people who can afford the product may be high, but the problem is that it may not be considered the most desirable brand. A balance between these two extremes may be necessary. Mobily prices most of its products slightly above the market average. The strategy is meant to ensure that as many customers as possible can afford the products while at the same time be reminded of the high value that it offers.

Metrics Used in Measuring the Performance of the Strategies

A company may choose to use a specific approach or a set of tactics to achieve the desired goal in the market. The choice of strategy is often determined by the internal business culture within a company, core competencies, financial strength of a company, approaches used by the competitors, and a host of other factors. Irrespective of the business plan chosen, the most important factor that one must consider is the ability of the chosen tactic or a set of plans to achieve the desired goals. It means that it is necessary to evaluate the performance of the strategies to determine if they are enabling the firm to achieve the set objectives.

The metrics used in such measurements often depend on the desired objective of the plan. Customer satisfaction is one of the popular metrics that is often used to measure the performance of a given approach. Companies often come up with strategies to help them promote customer satisfaction to develop a strong base of loyal customers. A company can determine the level of customers’ satisfaction by initiating an effective feedback platform.

Companies such as Mobily are now using online platforms to make it easy for their customers to give their feedback about the quality of products offered to them. Using website pages, a customer can register their level of satisfaction with the services of the company. They can also use the company’s social media platforms to express their views about the quality of the company’s products and product delivery methods.

Profitability is another important metric that is used to measure the performance of strategies employed by a firm. Sometimes a plan may be introduced to increase revenues of the firm. The management can easily measure the performance of such a strategy after a specific period set when developing the approach. The metric involves determining how the tactic has directly or indirectly increased the revenue in a way that boosts its profitability.

Strategies that fail to achieve such an objective should be replaced. Cost is one of the popular metrics used by companies around the world. Flores notes that many companies operating in the oil and gas industry have been using this metric as they suffer from reduced international oil prices, which affects their revenue flow and profitability (38). Some plans are employed specifically to reduce expenses in a firm’s operations.

If it fails to achieve that goal, the strategy would be considered ineffective. Having a team of highly skilled and dedicated employees is critical in ensuring that a firm is successful in the market. Some tactics are introduced to help boost employees’ morale and commitment to the firm. The metric for such a plan would be the level of employees’ satisfaction and the rate of their turnover. The tactic would be effective if it enhances the motivation of workers and reduces the chances of them moving to other companies. Other strategies may be designed to attract more investors to help the company raise additional capital.

The plan may involve giving impressive bonuses to the current shareholders or making them appreciate the value of their investments in various ways. The metric for such a strategy would be a possible increase in the share prices in the capital market. Schnerrer strongly advises that whenever a plan is considered effective based on the above metrics, it is justified to increase its funding (78). Those that fail to meet the set threshold should be adjusted or replaced.

Etihad Etisalat Company’s Marketing Metrics Used to Measure Performance

Understanding the Metrics

Etihad Etisalat Company, just like any other company, has unique challenges that require a variety of business plans to address. Each of these strategies must be measured to determine if their performance is satisfactory. The following are the metrics used to measure the performance of these strategies:

Improves sales revenue

One of the main approaches used by the firm focuses on improving the sales made in various sectors in which it operates. The metric used is to determine if the strategy indeed improves the sales revenue as desired. The performance measurement is often conducted after a specified period, mostly quarterly or yearly based on the set timeline.

Improved net profit

The net profit made by this firm over the last two years has been less than impressive, which means that some plans may need to be reviewed. This metric focuses on determining how directly or indirectly a strategy helps in improving the company’s net profits.

Reduction of costs

When using this metric, the focus of the management is always to determine how effective a given strategy has helped in lowering the cost of making a product available in the market without compromising the quality or method of delivery.

Cost of customer acquisition

It is costly to acquire new customers because it involves heavy investment in promotional approaches. The metric focuses on determining if the cost of customer acquisition reflects the benefits accrued.

Customer retention

This metric is used to determine if the strategies used by a firm is effective enough to retain the current customers for a specified period. It helps in determining the capacity of the tactic to create a pool of loyal customers.

Employees’ morale and output

When a strategy is focused on improving the morale of employees and their output, it should achieve that goal. The metric helps in determining the level of employees’ satisfaction and their output in the workplace.

Value of market share

When a company is traded in the capital market, it may be necessary to boost share value and attract more investors. The metrics investigate how well the employed strategies help in improving the value for the shareholders.

Brand value

The metric is used to investigate whether a strategy used is strengthening the value of the brand in the market. The value is defined by its popularity in the market (Flores 85).

Online sales

Etihad Etisalat Company sells some of its products on the online platform. The metric helps in determining the improvement made in the sales of products on the online platform.

Total conversions

People often visit the website of the company for various reasons. The metric measures the percentage of these online visitors who end up making purchases through the company’s website.

The Portfolio of Metrics at Mobily and the Significance

Mobily uses a wide range of strategies to address a variety of issues meant to ensure it achieves sustainable growth. That is why it has a large portfolio of metrics. Each of these metrics discussed above is critical in different ways. They not only ensure that the company achieves market growth but also helps in maintaining a team of skilled and motivated employees. The strategies also ensure that investors get value for their money.

How Mobily Uses the Metrics

All the metrics discussed above are actively used by Mobily, though at different times based on the primary focus of the company. Some of them are used concurrently because they are interrelated. Others are used independently because they focus on unique factors within the firm.

The Relationship between the Portfolio of the Metrics

The metrics discussed above are intertwined. Others are meant to improve sales, profits, several loyal customers, and brand value while others are meant to reduce costs, occupational burnout, and customer dissatisfaction. All these strategies seek to enhance the growth of the company and its competitiveness in the market.

Source of Data for the Metrics

The company relies on various sources to access data for the metrics. Feedback from the customer, employees, shareholders, and other important stakeholders left on the company’s website and social media platforms is the most important source. The company also uses Google Analytics to understand the activities of online visitors on its website. Data from the sales department is also used in the analysis.

The Nature of the Metrics

It is important to understand the nature of the metrics. Most of the metrics discussed above quantify the outcome of business decisions. They include improves sales revenue, improved net profit, reduction of costs, cost of customer acquisition, customer retention, employees’ morale and output, the value of a market share, brand value, online sales, and total conversions. They all focus on the financial improvement needed for the company. Only two out of ten can be classified as subjective because they may not directly define the output. They include customer retention, employees’ morale, and output.

Business and Marketing Decisions Impacted by the Portfolio of Metrics

The portfolio of the metrics has a significant impact on the business and marketing decisions made by the management of this company. The subjective metrics define the unique approaches that can indirectly improve the performance of the firm in the market. The metrics which quantify the outcome of the business decisions directly define how financially beneficial the company can be if applied properly. The decision of the company is influenced by the level of effectiveness of each strategy.

Recommendations

The telecommunication industry is one of the most competitive but very lucrative businesses that have huge potential, especially in a modern digital society. Etihad Etisalat Company should consider improving its brand awareness campaigns in the local market. It should always measure the performance of each strategy regularly. Successful strategies should be rewarded with improved investments. Those that fail to perform should be eliminated.

Works Cited

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Yahoo Finance. “Etihad Etisalat Company Income Statement.” Yahoo. Web.