The present report is devoted to the analysis of the marketing strategies of Etisalat and du in the UAE market. The theory of the marketing mix is described to offer the theoretical ground for the analysis; the relevant features of the strategies of the companies are then described and compared. Apart from that, the mutual influence of the industry and the market is described. It is concluded that the strategies of the companies differ in terms of product and price correlation. At the same time, both companies share the crucial ideas concerning the product quality, people, place, and promotion; in fact, they seem to share the same flaw of the latter element (the promotion that is perceived as too aggressive). It is also pointed out that the differences of the strategies are defined by the companies’ positions and specific features, and that neither of the strategies is better; rather, they are adjusted for different purposes.
The present report is devoted to the two telecommunication (telecom) companies of the UAE: Etisalat Group and Emirates Integrated Telecommunication Company (most often called by its marketing brand du).
Etisalat is a telecom company that offers “the complete range of fixed-line, mobile, data and internet services as well as innovative convergence technologies” to the customers in the UAE and other countries (“Etisalat Group” par. 1). Etisalat and was founded in 1976; nowadays, the UAE government holds 60% of the company’s shares, the rest of them being publically owned (“Investor Relations” par. 1, 6). As a result, the government is the only company’s shareholder that owns more than 5% of the shares (“Etisalat Group” par. 2).
In 2010, Etisalat was the second largest telecom company in the Gulf Cooperation Council (GCC); in 2015, its market cap amounted to 87.7 billion AED (Amine and Khan 95; “Company Profile” par. 1). In 2012, Etisalat was awarded the title of the most powerful UAE company by Forbes Middle East (“Etisalat Named Most Powerful Company in UAE” par. 1).
Since 2004, the company started to develop internationally, entering new markets, the first of them being that of Saudi Arabia (George-Cosh par. 22). Nowadays, the company has “169 million subscribers in 19 countries across the Middle East, Asia and Africa” (“Company Profile” par. 2). It is rightfully claiming to be “one of the world’s leading telecom groups in emerging markets” with “a strong footprint across 18 markets” (“Company Profile” par. 1; “Etisalat Strategy” 11). Until 2006, Etisalat was the monopolist of the UAE telecom market (George-Cosh par. 1-4).
Du is a much younger company that was created in 2006 (“Who we are” par. 1). The company was growing rapidly: it achieved a market share of 28% in the UAE within the year since its launch against Etisalat (Amine and Khan 76). Almost 40% of the company’s shares belong to the UAE Government, and about 20% of them are owned by public shareholders (“Shareholders structure” par. 1-4). Nowadays, the company offers various telecom services to the population of the UAE, and, by the year 2015, the company has gained almost 50% of the UAE mobile market share by serving 6.5 million customers in the sector (“Who we are” par. 1-3). Apart from that, du has “555,000 fixed-line subscribers, 180,000 home services subscribers and over 70,000 business” customers (“Who we are” par. 3).
Du has effectively ended the monopoly of Etisalat; as a result, the two companies have to compete for their share of the UAE market. In this report, the comparative analysis of their marketing strategies from the marketing mix (4 Ps) theory is presented, and a conclusion is made about their relative success.
Theoretical Perspectives of the 4 Ps
The “marketing mix” of 4 Ps is one of the earliest marketing strategy concepts; it was developed by McCarthy in the 60s (Shaw 34). It was based on the idea of a marketing executive being a mixer of ingredients. The researchers of the time tended to dwell on these ingredients producing long lists that consisted of dozens of items. McCarthy, on the other hand, created the shortlist, which included only four elements: product, price, promotion, and place. The list quickly became much more popular than its longer counterparts. Indeed, the invention of 4 Ps was an action of simplification and popularization of the idea of the marketing mix; given its convenience, this formula became the basis for many marketing strategies for years to come. As the concept was developing, other Ps were also suggested (for example, people or processes), but these additions are not as popular as the 4 Ps of McCarthy (Shaw 35).
The four elements of the popular marketing mix are the “controllable marketing variables” that are adjusted to suit the target market in a way that allows achieving the desired level of sales (Kapoor 24). To define the first one, the product, one should consider the needs that the product (or service) is supposed to satisfy, the functional features of the product, its appearance, name, and brand, the feature that would differentiate it from competing products, and so on. Defining the price includes deciding on the price-setting methods, payment and discount policies and so on. Naturally, this element is also supposed to ensure the competitiveness of the product.
The place element is concerned with the way the customer is going to be reached: depending on the product or service, it is necessary to define, where the customer would expect to find it, and ensure the right distribution channels. Finally, the element of promotion is the ingredient that is supposed to provide the information about the product and persuade the customers to purchase it. It incorporates the issues of advertising, public relations, sales promotion methods on various levels (customer, salesperson, dealer) as well as other aspects including selling objectives, salespersons training, and so on. To sum up, the promotion element presupposes the creation of a coordinated promotion strategy; typically, it does not only increase the sales but also serves to create the company’s image and brand and improves its reputation (Kapoor 20-23).
Market Segments of the Companies
Market segmentation presupposes singling out the segments of the heterogeneous market in such a way that the segments can be defined as homogeneous for certain parameters (Kapoor 84). Instead of serving the entire market, a company can choose the segment it is going to appeal to and adjust its marketing strategy for the maximum promotion of the product within this segment (or several of them). The parameters (bases of segmentation) typically include geographic and demographic ones as well as psychographics (lifestyle and personality) and behavioral (loyalty status, usage patterns, preferences and so on) ones (Kapoor 89). These bases are used to create the profiles of the customers from the segment.
The global telecom industry has been developing rapidly in the past decade. The products and services offered by telecom companies have also grown diversified due to the development of related technologies; apart from that, the industry is affected by trends and fashion, all of which make it a highly-competitive business. While posing a challenge, this aspect also spurs the development of the companies’ assets, resources, and strategies (Amine and Khan 75). In 2013, the revenues of the telecom industry worldwide amounted to USD1.7 trillion, and it is expected to grow due to the global economic and technological development (“Etisalat Strategy” par. 3).
Etisalat operates in several markets outside the UAE, but du is effectively restricted to the UAE telecom market, and the current report is mostly devoted to the latter. For the sake of consistency, it will be mentioned that Etisalat has been among the champions of the technology in most of its markets as it chose to serve primarily under-serviced regions (Al Gergawi par. 7). As for the UAE (as well as other GCC countries, where Etisalat operates as well), this market has its specifics that are worth mentioning (Amine and Khan 75). In particular, the countries of GCC are oil- and gas-exporting economies; household incomes in them are relatively high.
Apart from that, these countries have been demonstrating high rates of technological development, and technology is a significant part of the life of their citizens nowadays. For example, Etisalat claims that Abu Dhabi is the first fully connected capital in the world (“Company Profile” par. 4). It can be deduced that the UAE market expects state-of-the-art technology for telecom products and services. Apart from that, while both companies appear to target the UAE population as a whole, du has expressed the opinion that it is the younger population that is of particular importance to the industry due to the increased demand for state-of-the-art and trendy technology within this market segment (“Sustainability Report 2014″ 52).
Another specifics of the UAE market is the large number of expatriates who constitute about 80% of the population as of 2014 (“The World Factbook: The UAE” par. 3). As a result, the market appears to be very diverse and, what is more important, extremely broad. Indeed, the UAE with its population of over 5 million people (as of 2012) is a very attractive market, and the two companies had been sharing it for almost a decade by segmenting it “geographically” (Amine and Khan 76). In other words, they had been confined within specific locations about home services (El Gazzar par. 2). This situation, however, is being changed on the initiative of du, and such an artificial segmentation of the market is expected to end soon.
It can be concluded that the competition in the UAE telecom market has specific features. The two largely government-owned companies are expected to provide the telecom services to the country, which makes their market segmentation rather broad and inclusive of the diverse population of the UAE. At the same time, while it is not deniable that du has achieved stunning results in winning a large share of the market, the geographical division of the market does not appear to spur competition. Still, the fact that du endeavors to change this situation indicates that the companies will have to proceed with their competition in the future, and this connection, it appears logical to analyze their marketing strategies.
Strategies of the Companies: Key Features
When defining its strategy and mission, du claims that it strives to enhance the life of its stakeholders, with particular attention paid to customers and employees. Apart from that, du proclaims the importance of innovation and product quality and claims to intend to change the community by contributing to its technological and economic development. The company values being “Confident, Friendly, Honest, and Surprising,” which can be regarded as a part of brand image creation that is included in the promotion element (“Who we are” par. 4-7). By setting the high social corporate responsibility standards, the company may be attempting to improve its reputation, which is also a part of the promotion element.
Etisalat also provides some official information about its missions, views, and strategies (“Etisalat Strategy” par. 1-13). According to the company, it aims both at expanding to other regions and maintaining its position in the domestic market. The key emphasis of the strategy is put on the technological development, which can be interpreted as the P of the product. The company strives to become the leader in the industry within the market of developing countries by providing outstanding service and excellent customer experiences; an important pillar of Etisalat is its people and culture, and the company emphasizes valuing talent (“Etisalat Strategy” par. 12).
In other words, the Ps that the companies choose to consider in their official statement of the strategy include product and people; apart from that, du dwells on the promotion of the brand image, while Etisalat mentions the place element and purchasing experience. Naturally, the strategies, which the companies present, deal with the general development, not only with marketing. To focus on marketing specifics, the performance and decisions of the companies are going to be analyzed and illustrated.
Du’s differentiation strategy that has allowed it to gain a large part of the UAE’s market was connected to technological advancement. Indeed, by 2011, the company was the only one in GCC to offer new high-bandwidth mobile applications; this change was enabled through the collaboration with Cisco Systems (Amine and Khan 76). At the same time, Etisalat has always been investing in modern technologies as well (Amine and Khan 87). Currently, it is navigating its efforts towards the development and implementation of “ICT platforms for the fifth-generation mobile broadband” (“Company Profile” par. 4). In other words, both companies realize that their market segment is exceptionally technology-savvy; to stay competitive, they both continuously invest in the development of their service to provide the customers with state-of-the-art products. In this respect, the marketing strategies of the companies are very similar.
Product and Price: Key Deductions
The offers of the two companies are similar in their essence (for example, so-called “bundles” suggest the packages of phone and internet or phone, internet, and television services), but differ in details. For example, du’s bundles (“Talk and Surf” as well as “Talk Surf and Watch”) suggest the speed of 8 Mbps (only for “Talk and Surf”) as well as 16, 24, and 100 Mbps. The TV service of du offers 31 premium channels for every plan. Etisalat’s service eLife Double Play offers a slightly different set of speed possibilities (10, 20, and 50 Mbps) while the Triple Play service offers various speed parameters and channels for a varied price. The more or less comparable packages of the companies (100 Mbps for a three-service bundle) differ in price with Etisalat’s one being more expensive (by Dh189). Still, it should be pointed out that this service of Etisalat provides “Premium TV” as opposed to its Basic one: in other words, the two services are not completely interchangeable. These fees do not include the installation costs, which can be applied in particular situations (Samoglou par. 28-31).
Naturally, the mentioned packages are not the only ones suggested by the companies, but they are most popular and tend to be aggressively promoted by the companies (“Etisalat” par. 1; “Personal Packages” par. 1). Therefore, they offer a ground for comparison. It is not difficult to notice that the two companies tend to differentiate their products, which is a sound strategy for the two competitors within one market. At the same time, both offer relatively similar services with the possibility of “premium” service (premium channels for TV). They have created original names that are modern and inspiring, which is ensured by the use of imperatives in one case, and the application of a newly coined word that is built of the letter “e” for electronic and the word “life” in the second case. As for the price, it is difficult to compare the offers of the companies, but the mentioned relatively analogous service is more expensive when provided by Etisalat. Apart from that, unlike Etisalat, du does not offer the triple service with the speed of 300 or 500 Mbps (Samoglou par. 28-31; “Personal Packages” par. 1-4).
In other words, it can be suggested that du’s services are somewhat less expensive than those of Etisalat while the latter suggests more exclusive offers that could be of particular interest to more wealthy customers. The latter conclusion also correlates with the fact that Etisalat is an “old-timer,” an incumbent of the industry that has the reputation and position, which the newcomer does not immediately have. Given the fact that the newcomer has been extremely successful, the old-timer had two opportunities: reducing the price to ensure competitiveness or lose a certain segment of the market but instead create the air of elitism for its product; Etisalat appears to have chosen the latter option (George-Cosh par. 7).
To sum up, in the terms of the product and price balance, Etisalat appears to provide the more expensive service with more options including most exclusive ones while du settles for a slightly cheaper but equally technologically advanced and modern service. The two marketing strategies differ, therefore, and appear to be the logical result of the way the competition was developing in the market.
Place. The primary channels of distribution of the companies are the Du shops for du and outlets and business centers for Etisalat. Apart from that, both companies offer wifi locations; the maps for all the company-related buildings and locations can be easily found on the companies’ websites (“Our shops” par 1; “Find A Location” par. 1). The similarity of the distribution channels suggests that they are most effective within the industry; apart from that, the existence of specialized shops can be described as a logical promotion choice as it reminds the customers about the brand and makes it associated with the purchase experience. In general, the place strategies of the companies are comparable.
Both companies have adopted the ideas of corporate social responsibility (CSR) and sustainability, which naturally serves to improve the image of the two brands. For the companies, these terms presuppose attention to all the stakeholders (for example, excellent experiences for the customers and opportunities for the employees), the minimization of the possible negative impact on the society and environment (for instance, tackling waste and controlling emissions), and the improvement of the level of life (for example, improving the employment possibilities for the young) (“Sustainability Report 2014” 1-2). Etisalat, for instance, is proud of joining the Energy Star project that is aimed at carbon footprint reduction (“Etisalat CSR & Sustainability Report 2012” 7, 25).
Du emphasizes its contribution to the UAE’s Smart City vision (the company is the Smart City Official WiFi Provider), demonstrating its desire to transform and improve the lives of the country (“Sustainability Report 2014” 1-2). Given the fact that the Smart City initiative (the initiative of improving the telecom infrastructure in the city) is crucial for the upcoming Expo2020, the contribution of the company is especially significant for the UAE (“Why Dubai?” par. 1-4). Du also proudly mentions following the government’s endeavor of Emiratization and points out that 50% of the senior management of the company are Emirati (“Who we are” par. 2). In general, the companies are working hard to promote their brands and gain the trust and loyalty of stakeholders even concerning the issues that are not connected to their services directly. Their strategies coincide in this respect.
Promotion Issue: Aggressive Marketing
Another feature of the strategies of the two companies that is similar for both of them can be termed as “aggressive” marketing. Naturally, this is a relative characteristic, but for a marketing strategy, where the customer is regarded as the one to choose from the competitors (the principle of consumer sovereignty), the perceived aggressiveness is most important (Kapoor 84). As it appears, the customers of the two companies have been upset by the way the “bundled in” broadband internet, phone, and TV packages are being promoted by both companies on the individual level: they tend to find the promotion aggressive (Samoglou par. 1-15).
They claim that the companies are unwilling to provide other services and insist on suggesting the packages. Such a behavior could be blamed on the employees, but the customers also claim to have complained to higher-level employees and executives to no avail (Samoglou par. 21). Such a situation is not beneficial to customers and does not appear to be a wise marketing action. In a way, it could be explained by the lack of competition in the market. Still, this factor does not explain the lack of desire to understand customers and suit the marketing strategy to fulfill their needs.
International Marketing of Etisalat: A Note
Etisalat has a longer history and a greater experience in marketing: various markets demanded different strategies. For example, in Saudi Arabia, Etisalat promoted the brand name and offered a lower price (Amine and Khan 78). This market segment was not the domestic one, and Etisalat was not the first company to offer its services; this fact defines the strategy that is almost completely different from that in the UAE. Still, there was a certain pattern to Etisalat’s behavior. As a monopolist in the UAE and a very significant player in other under-serviced countries, Etisalat tended to take the customers for granted (Al Gergawi par. 7). It has been pointed out that while the quality of the service stayed high, other aspects (price, customer service) could have been improved only with the help of the competition (Al Gergawi par. 7).
Indeed, once the monopoly ended, the importance of the customer satisfaction became much more noticeable, and the company appears to be improving in the mentioned respects. It is explicitly stated in “Etisalat Strategy” that the strategy has been refreshed to answer to the modern challenges, and du is obviously one of them. Still, as it has been mentioned by Etisalat executives, while the company intends to maintain its share in the domestic market, the penetration and development of other markets is also of crucial importance for it (George-Cosh par. 1-15). In other words, Etisalat is not too dependent on the UAE market, which also contributes to the choice of the strategy: the company has more opportunities and options and may afford to lose a certain share of the market, which defines its behavior.
The Mutual Impact of the Strategies on the Market and the Market on the Strategies
In general, the strategies of the companies are explained by the history of their development and are the logical result of the market structure. The fact that du offers the less expensive but high-quality service is supposed to attract more thrifty customers while Etisalat serves the segment of the market that is more interested in an exclusive product, even though some of the offers can be considered economic as well. The endeavor of the companies to provide only high-quality service is both shaped by the market (of a technologically-savvy country) and shapes the market by pushing its technological development further. At the same time, the specific kind of competition that exists in the UAE market also tends to affect it and, as it has been mentioned, the effect is not strictly positive. The relatively weak competition, while it appears to serve to improve the service, may also result in the comparative carelessness that has been demonstrated in the aggressiveness of the marketing strategies of the companies.
The situation, however, is about to change. Du intends to increase its market share by offering home services (currently, the internet and phone with TV programs planned for the next year) outside of its usual areas (El Gazzar par. 2). This strategy appears to be approved by the Government, which may be regarded as an attempt of supporting du that has been experiencing a decline in growth and profits. At the same time, it can be viewed as the sign of the encouragement of competition on the behalf of the Government (El Gazzar par. 3-15). In any case, if the current geographic segmentation changes, the competition between the companies is bound to grow more intense. From the point of view of the customers, this is a positive outcome since they will have more choices and the competition will encourage the companies to provide better services. As for the companies, they might need to make certain changes in their strategies in the future, in particular, they might reconsider the necessity of aggressive promotion.
Strategies: A Conclusion
The analysis of the two UAE telecom companies, Etisalat and du, provides an understanding of the two possible ways of using the 4 Ps theory for a marketing strategy. It can be concluded that the two strategies are similar in emphasizing the quality of the product and the significance of the people (an additional P). The companies are also similar in their place and promotion strategies; in fact, they appear to share the same flaw in the latter, which is perceived as overly aggressive by customers. Naturally, this perception is a subjective matter, but in a competitive environment, a customer has the right to decide.
The primary differences in the strategies of the company lie in the correlation of price and product: du’s services appear to be cheaper. At the same time, the two companies provide differentiated services, which makes it more difficult to compare them. Still, it is Etisalat that offers the product that could be called exclusive: for example, the packages of extremely high-speed internet, phone, and TV. This is what defines the slight differences in the companies’ market segments, but it still can be pointed out that they are sharing more or less the same segment: the diverse population of the UAE.
In general, it can be concluded that neither of the strategies is more successful or logical; their differences result from the position of the companies in the market. As an incumbent, Etisalat secured its position by differentiating its product as an elite one to avoid drops in the price; as an entrant, du chose to suggest a lower price for a differentiated, well-promoted and high-quality product and gained its share of the market. It should be pointed out that the current geographical market segmentation does not spur competition. Still, given the fact that the situation is changing, increased competition may cause new changes in the companies’ strategies in the future.
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