Mobily Company: Marketing Strategy Plan

Executive Summary

Mobily is a Saudi Arabian internet and a telecom service provider that is operating as a private company. Its main internet products rely on mobile broadband and fixed broadband technologies. The company uses fibre optic technology as last mile connectivity to homes and business or institutions. It faces an increasing need to shape its service provision to match changing consumer trends and customer expectations for minimal service thresholds.

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With a market share of 40 per cent, the company is looking to increase this size and to upgrade the service uptake by its core customers significantly. These developments should lead to considerable increases in revenue per user, which will allow the company to grow in profitability without having to rely much on an increase in actual customer numbers. The industry is crowded, with competitors offering similar services and enjoying adequate market attention similar to Mobily. The mission statement of the company is going to allow the company to achieve fast growth by the end of its financial year, working recently to exceed expectations and achievements.

The marketing strategy for the company involves segmentation of the market, according to revenue per user characteristics and positioning the company to capture the growing demand in the respective segments. The company will incur most of its marketing costs in the first year of implementing the marketing plan, before reverting to recurrent costs as its sales increase and break even, according to the presentations of the financial analysis section of the paper. The success of the plan depends on the maintenance of adequate brand visibility to sustain high quality consumer perception of the service.

Situation Analyses

Mobily is a fast growing internet service provider (ISP) in Saudi Arabia, handling clients in both retail and wholesale forms. It deals with national institutions, private businesses, and individuals requiring internet and related telecom services. Consumers are changing their expectations for service delivery and they are facing few restrictions for switching internet service providers (Mobily 2014).

At the same time, internet-reselling services are making consumers get more internet options without finding out the main supplier. A lot of consumer relationship data that can go towards improving service delivery is not being captured because of a number of things. Most of the factors causing the situation are unknown or untested, and they will need to be tackled for Mobily to optimize its service delivery strategy within its market (Mobily 2014).

Market Summary

Mobily knows a great deal about the market. It is already embracing segmentation strategies to satisfy its most prized customers. The company will be using this information to ensure that its customers with particular needs are catered for adequately through appropriate communication and service delivery strategies (Meijer 2011).

Young people are some of the most active mobile broadband users in the Kingdom. SMEs are the highest in number among the users of fixed broadband services (Husain 2008). At the same time, within the two major services, key segment differences are in the data demand per month. Light users in both fixed and mobile broadband form one segment, while heavy users looking for high speed and affordable mega data plans form another segment. Most of the market is aware of the importance and the existence of internet services provided by Mobily and its competitors (Han & Ryu 2009).

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Market Needs

The Saudi Arabian market needs dedicated internet access. Customers are looking for a reliable ISP that can guarantee uptime of internet service throughout. They want the experience of dealing with the company to be seamless and hassle-free. The market is also looking for custom internet solutions that can help leverage on the existing core practices and competitive advantages of businesses and institutions. Other than internet access, consumers are also increasing their reselling business and they demand internet as a wholesale package from service providers (Mobily 2014).

Many consumers are accessing the Internet on mobile devices. As a result, they are looking for flexible internet options that do not limit their use geographically. With this in mind, Wi-Fi and traditional cell phone networks are popular forms of internet access in Saudi Arabia. Mobily provides mainly 3G and 4G network connectivity for internet access to its customers. The company also has limited Wi-Fi access points in some busy locations in the country. Other than having internet, consumers also demand adequate hardware to deliver the full capabilities of the internet they buy from Mobily (Pengcheng 2014). They need reliable routers, models, and other gadgets used to deliver the service. In extension, customers are looking for reliable infrastructure so that they do not have to face unplanned outages (Pengcheng 2014).

Market Growth

Saudi Arabia has a population of 30 million people and its per capita income is about $22,750 (QFS Arabia 2013). The country had 13 million internet users by 2011 and the number is growing. It also has fixed broadband customers that number more than 2.2 million (QFS Arabia 2013). In comparison, there are more than 56 million cellular phones operating in the country. This is the number used to estimate the potential growth for internet services. Mobily commands 40 per cent of the Saudi Arabia market share. Mobily has been growing at more than 100 per cent annually in its mobile broadband subscribers (QFS Arabia 2013).

Growth prospects lay in machine-to-machine (M2M) internet connectivity that could be useful for utilities, health, and connected vehicle solutions. There are more than 800,000 small and medium enterprises operating in the Kingdom, which constitute 90 per cent of the economic workforce. They offer a key demand segment for enterprise internet services (Husain 2008). This will be part of the business market segment, because individuals are mainly using individual devices that are not connected, as the case is for business machines. Therefore, capturing this market will require the delivery of services based on the demands of the segment and the characteristics of the competition that already exists in this space (Arab News 2012).

SWOT Analysis

Strengths

  • The provision of Wi-Fi and routers for home connectivity gives customers options on last mile connectivity. It enriches their experience of the internet services from Mobily. It allows them to use the Internet in any part of their home, regardless of their main connectivity option.
  • The online self-care option allows savvy consumers to bypass the need to communicate with customer care representatives or have a technician show up at their premises, which can take a number of days.
  • The option to choose between fixed broadband, which has more capacity for the same price segment, or the mobile broadband, which offers similar speed and location flexibility, is good (Kowalkowski, Kindström & Brehmer 2011). The options give customers more than one way of experiencing Mobily services to serve similar needs in their internet connectivity because internet is homologous in itself.

Weaknesses

  • Customers are sometimes misled to pick the wrong services for their needs due to too many bundle internet options with different features and key attraction (Berman 2005). This ends up being frustrating to them as end users. It can cause customers to form the wrong impression not because the services are bad, but due to the fact that the particular service fit to their needs was wrong.
  • Although the company provides permanent offers for some of its internet service packages, it may face a need to alter the characteristic of these packages in the future. It will be forced to violate its market promise, if the updated services have some negative attributes to customers, such as an increase in cost per usage or introduction of limits. Such events would cause customer distaste that can erode major customer relationship gains.
  • There is no real differentiation that can cushion Mobily against competitors onslaught, given that the competitors offer similar services to customers and target the same customer segments. Consequently, the company has to keep on modifying its offers to act as a market leader and to counter offers of the competitors. Unfortunately, such as strategy can introduce unplanned costs of marketing, which would then erode financial gains made previously.

Opportunities

  • SMEs are embracing more ways to engage with customers using internet based solutions, such as social networks and smartphone applications. The growth of these features will automatically lead to an increase in internet demand. This will be a good time for Mobily to upscale its subscribers to increase revenue per users. The company has adequate capacity of internet infrastructure technology that can cater for significant up-scaling of its customers. Therefore, it will not suffer service outages or situations where demand exceeds supply and cause slowdowns.

Threats

  • The increase in the presence of open Wi-Fi networks in most popular urban spaces is causing many internet subscribers to reduce their demand for mobile broadband. Rather than rely on internet services provided by Mobily, they can simply plan their days to allow them free internet access at restaurants, in school compounds, in buses, and even at home where someone else is paying for the internet (Liu, Chintagunta & Zhu 2010).
  • The erosion of a demand for internet services from a critical base of young internet users is a threat to Mobily. The company has to keep on looking for solutions that will lock in these consumers and prompt them to keep on buying mobile broadband internet bundles from the company (Smith 2003).
  • Privacy issues and laws when enacted can limit the amount of internet usage data that Mobily collects for the purpose of improving its services.

Competition

The key competitors are other telecom companies that also offer cellular internet services. Many already run 3.5G networks (HSPA) and are either implementing or planning to implement 4G networks. These companies are also increasing their sales of data-only SIM cards that allow consumers to access internet services only. Zain and the government owned STC are the main competitors, providing almost similar services to those offered by Mobily. The differentiating factor is in the packaging and customer engagement (Chopra & Lariviere 2005). Each company also tries to lock in customers by bundling internet and non-internet services together (Frow, Ngo & Payne 2014).

External environment PESTLE analysis

Political

Saudi Arabia enjoys a stable political environment. The Kingdom does not face challenges of elections and has a predictable political leadership succession. This has made the region attractive for foreign direct investments. It is also attracting a large population of foreigners. The movement of more people into the Kingdom opens it up to external influences, as other countries establish political connections. This can have both positive and negative effects on the level of business activity, thus affecting demand for the Internet services (Waite 2006).

Economical

The number of mobile users in the Kingdom is increasing rapidly, despite the relative conservativeness of the country’s culture. This shows that mobile phones are accepted by the society. The phone has become a primary internet access device for users and it will continue to command a significant share in the retail business of internet provision.

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The number of internet users is increasing in the Kingdom because of changes in the economic status of most households and the movement of most businesses to transact or complete their operations using online technologies. Growth in the economy will continue influencing an increase in internet technology usage and drive up the demand for internet services. At the same time, many internet start-up companies are coming up in Saudi Arabia. They are contributing to a surge in the number of single owner businesses that demand internet services, but their usage characteristics put them in the individual user category.

Social

Social dynamics are changing in the Kingdom. Changes relate to the way people study, work, and entertain themselves. The growing awareness of the Internet has caused many consumers to interact with multimedia content for entertainment purposes, which fuel the demand for broadband internet. For example, video sharing networks are changing the ways people connect with each other and share common interests.

At the same time, small start-up companies prefer to have their employees work from remote locations to save on business running costs. This is changing the definition of business customers in the Kingdom. The Internet is helping women become more vocal within the Kingdom, thereby creating avenues for social debate. As a result, more women are spending more time online as an avenue for socializing beyond the cultural and religious boundaries placed on them (Renard 2008).

Technological

The entire mobile broadband industry across the world is moving beyond WiMAX technology to embrace 4G technologies to deliver fast internet services to business and retail consumers. Companies have no option, but to invest in upcoming technologies. Those that are quick to jump into the new trend are the ones that eventually succeed in becoming dominant in their respective market segments (Pengcheng 2014).

Legal

The government has regulatory control over the use of the Internet. It has laws prohibiting the promotion of hate messages and monitors the Internet to police against extremist groups (Black 2014). The government can enact privacy laws that govern the use of the Internet to prevent abuses, which will likely limit the demand for internet services among individual consumers (Husain 2008).

Environmental

There is no direct link between the internet and the environment. However, the infrastructure deployment for delivering internet connectivity solutions disturbs the natural ecosystem. Without careful planning and reclamation of damaged land, the effects of erecting cellular masts and laying fibre optic cables will be felt by the society. At the same time, the use of the Internet relies on power sources. For the Kingdom, most operators still rely on fossil fuel to power generators and provide backup power sources when there is no main grid electricity (WHO 2014).

Service Offering

Mobily offers internet services under two main products. It provides a fibre optic technology connection to physical premises. It also offers wireless cellular internet through its 4G and 3G network. While these are just the backbone technologies, enabling service delivery, the main product packages that consumers interact with and actually buy are the eLife Connect and the Mobily Connect. They represent fibre optic and cellular internet options respectively.

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The company also uses its website as an information portal to inform customers about the features of its available services and the nature of its business so that they are able to troubleshoot problems (Meijer 2011). The information and self-help sections, such as the Frequently Asked Questions (FAQs), provide a two way simplified communication system to capture key requests and concerns of customers. At the same time, they offer timely mass responses that enhance customer service experience (Lagrosen 2005).

Keys to Success

Having a world class 4G LTE network, excellent customer support services, and adequate advertising presence in the region is important for continued growth (Iyer & Padmanabhan 2006). Given that the Internet is a service, Mobily has to work hard on its employees because they are the only physical elements that consumers can contact when they experience the product from the company. Employee delivery of service forms a critical component in the success of marketing and advertising campaigns seeking to increase the adoption of new services to established consumer markets (Chang & Chen 2011).

Critical Issues

Critical issues for Mobily include the connection process for new customers to the eLife Connect service. Service reliability of both eLife Connect and Mobily Connect is also salient for continued growth of the company. The company has to ensure its internet experience for its more than 8.7 million customers remains tolerable. Customers have a service expectation (Parasuraman, Zeithaml & Berry 1985; Berman, 2005), and the company has peak offerings that exceed customer expectation. However, service delivery remains within the tolerable range in terms of internet speeds and network availability most of the time (Lovelock & Wirtz 2011).

Marketing Strategy

The important thing about the marketing strategy is the focus on internet speed and user experience. Users generally do not notice variations in speed, unless they are undertaking heavy internet usage activities. However, they quickly notice the absence of network coverage or fluctuating network coverage. Mobily can cover the entire Saudi market needs because it offers both fixed broadband and mobile broadband internet solutions. The company understands the uniqueness of each market segment in terms of internet demand. Thus, it uses this as the basis for coverage and pricing. It also deploys technologies with regard to customer expectations for each segment.

Mission

Mobily’s mission is to provide high speed internet services to consumers for them to enjoy uninterrupted and experience rich entertainment, business, education, and communication. We aim to exceed the expectations of our employees. We also aim for the same achievement for our customers, which we do by ensuring we operate at our best potential. Leveraging our capabilities is our key to success.

Marketing Objectives

  • Increase the number of subscribers to allow the company to command at least 40 per cent of the market within three years.
  • Reduce customer acquisition costs by 1 per cent since the first year of implementing the marketing plan. The objective to be achieved by the marketing and sales department to ensure the company keeps costs of sales down.
  • Make Mobily the preferred choice for customers to access popular internet services by becoming the preferred partners of the three most popular interest services used by the 15 to 30 year olds in Saudi Arabia.

The first objective is to maintain a strong growth momentum, until the attainment of market saturation. The company has to aim to increase its subscriber numbers annually to ensure it grows its market share beyond the present 40 per cent. A second objective is to reduce customer acquisition costs by a percentage point every half year. Thirdly, the growth momentum should be sustained by the existing consumer upgrade of their services into most prized segments. This calls for an increase in the amount of usage data collection and other consumer attributes, with an added key indicator included every quarter.

An additional goal is to make Mobily the primary gateway for consumer access to popular internet services, which entails being the preferred partner for major social network companies and internet related service providers in Saudi Arabia. It calls for the signup of at least two major providers annually, which should translate to better visibility of Mobily, and increase in customer interaction, and enhanced customer experience through the supplementary services that add to the core internet experience provided by Mobily (Anderson & Narus 1995).

Financial Objectives

The first objective is to reduce the average costs of maintaining the internet service provision network by increasing capacity and sign up to benefit from economies of scale. Here, the goal is to increase signups to reach at least 80 per cent of installed capacity. A second objective is to increase the revenue per user for internet services to double the present amount for all market segments by the end of the financial year. This should translate to an increase in annual revenues by at least 50 per cent for the upcoming financial period.

Target Markets

Thirty-five major cities in Saudi Arabia are home to most businesses. These are the geographical target markets for Mobily’s business centred internet services. The company’s fibre optic infrastructure covers these cities and aims to ensure that all streets and buildings in these areas are covered. The investment has reduced the cost of connection to businesses for the high-speed internet service. All they have to do is sign up for the services and the company wires their premises and provides them additional last-mile connectivity options through wireless routers that are reflective of their internet demands. The corporate market is mainly in need of high capacity bandwidth and is suitable for the fibre optic network.

This market is also in need of mobile connectivity solutions for staffs that are operating out of the office but need to use internet office. The company offers virtual private networks for staffs to connect to their offices and work remotely. It also offers packages for cellular broadband internet that are billed to the company rather than the individual.

The retail segment for Mobily is not homogenous. The company will be looking for specifics among the general identified demographic that forms the largest number of internet users in the Kingdom. Currently, 15 to 30 year olds make up the biggest percentage of internet users in the country. In addition, there are specific trends of internet usage that separate college students from working adults. Similar trend differences are also noticeable among the genders and within the age gaps that fall within the overall target group (Smith 2014).

Average revenues per user will be the main unit used to differentiate target markets. Therefore, at the same demographic level, there will be high spending consumers who have access to advanced internet devices that can take up high capacity data services (Ryals 2008). At the same time, the company will be considering the low spenders, with the aim of upgrading them to the high spending tier. Promotions will tend to offer experiences of the high valued services for the non-consumers to entice them into moving to the high spenders segments (Anderson & Narus 1995). Meanwhile, for the already identified high spending segments, the aim of marketing will be to offer lock-in services and increase average consumption per user as a way of increasing revenue.

Positioning

The Mobily internet service will be positioned as a premium service that delivers fast speeds and high quality reliability standards. At the same time, it will be priced just slightly above market rates to keep the business sustainable and to keep it affordable to the majority of the market that already uses other Mobily services such as voice. Pricing for business will be different from that of the retail segment. In the former, there will be subscription and post-paid options to encourage wholesale and high capacity usage. In the latter, the emphasis will be on reducing the cost of managing customer accounts, thus, services will be offered as pre-paid, unless in cases where customers are willing to commit deposits for post-paid services (Chau & Kao 2009).

Strategies

Mobily sees every customer being unique. Thus, it aims to provide different market solutions to separate segments of its consumer base. The company divides its market segments into subgroups based on age, income, spending pattern and cultural values. It also looks at ethnic origin so that it has a comprehensive understanding of the population. It relies on market research and customer relations to grow a profile of its customers and inform its segmentation patterns and decisions.

The customer acquisition strategy follows a differentiation and segmentation of post-paid and pre-paid customers. This is what happens in the voice market, and will be implemented in the internet market because the target customers are in the same general market, and the company wants to leverage on its resources for the growing internet business.

The company has thousands of sales points that cover all the cities of the Kingdom. The overall sales strategy breaks down into distribution channel, corporate and VIP sales, flagship sales and commercial support (Husain 2008).

Services Marketing Mix elements—the 7Ps.

Product

Other than the fibre internet subscription, there will be complementary services. The aim of the complementary services is to increase the service portfolio flexibility. This should then translate to increased profits for the company. The product quality threshold will remain high, and will be determined by internet speeds, availability, and ease of use of the equipment provided for access. High quality of products places Mobily at a competitive advantage (Lovelock & Wirtz 2011; Chopra 2005).

Prices

Pricing will be tailored to specific customer segments. Instead of just adding more services and assigning the prices, customers will take up a subscription service and choose a number of options for internet. They can go for the pre-paid options or the post-paid ones depending on their demand for the Internet. Pricing will be variable based on the needs of an identified market segment (Anderson & Narus 1995).

Promotion

Promotion will aim to increase customer loyalty, so that the revenue per user for Mobily increases over time to make a sustainable business case. Customers become more profitable when they stay longer with the firm. Every additional promotion impact on existing customers becomes more effective with little additional expenses (Flow, Ngo & Payne 2014).

Mobily has invested heavily in a strong brand name. It uses television, newspapers, billboards and sponsors leading football clubs to target the younger demographic of 15 to 30 year olds. It also uses the promotions to capture the business market (Han & Ryu 2009).

Place

Internet services are accessible in retail outlets all around the country that also sell other Mobily products. The retail centres are under private dealers licensed to offer Mobily services, and trained in customer care. There is also an online portal for self-service offerings such as bill payments and modification of internet subscription details. A lot of selling will continuously move online and on mobile devices as the value of digital information and delivery channels increases (Wu, Ray & Whinston 2008).

Packaging

Distribution partners offer the company’s product with the Mobily brand. In addition, there are co-branded products that are available in co-branded outlets. Consumers can get an internet device from a different company that is co-branded with Mobily as the supplier of internet services for the product. Internet sales and automated teller machines for top-up of credit to purchase internet bundles all have full Mobily recognizable brand colours. However, given that internet is a service, packaging is mostly done to the personnel providing the service (Kowalkowski, Kindström & Brehmer 2011).

Positioning

The internet services are positioned as basic and premium products for retail and business use. Customers can shift to any package (Baker, Magnini & Perdue 2012). However, the position aims to upgrade customers from the basic buy and go products, to the subscription services that keep them locked-in on the internet services from Mobily (Han & Ryu 2009).

The company has majority shares in the country’s national fibre network that gives it access to over 12,800 kilometres of structured fibre cable. It can offer internet services through fibre to 35 Saudi cities using ringed networks. This allows it to meet the needs of its entire target population in terms of internet capacity (Jääskeläinen & Antti Lönnqvist 2011). The national infrastructure is also linked to its cellular network and international submarine cables that give it redundancy and fast international connectivity (Husain 2008).

People

The staffs of Mobily are responsible for its success in the market. The company lays a special emphasis on recruiting and retaining the best talent in all its departments (Husain 2008). The company also works consistently to increase the skill levels of its employees by offering on-the-job training opportunities. It seeks to put the right people to the right job positions to make them highly productive (Harris & Reynolds 2004). Empowerment of staffs will allow them to provide organizational benefits such as increased contribution to marketing and quality service delivery (Gill et al. 2012).

Marketing Research

There are more than 7 million internet users in the Kingdom. This is one of the highest numbers in the Middle East and continues to increase. Penetration of the Internet is more than 26 per cent. Growth in the last decade has been about 40 per cent. Broadband has been the main growth area, especially mobile broadband as service providers join the market. This was after the liberalization of the market (Husain 2008).

  • Growth comes from a young demographic. The kingdom has a growing young population and a continued influx of expatriate workers.
  • Hardware costs are also reducing due to the innovation and completion of vendors and manufacturers. Foreign competition in the market is also increasing decrease in cost and increase presence of services.
  • The government’s policy is to promote internet use in educational institutions and to provide hardware at reduced prices (Meijer 2011).
  • Technologies for connectivity such as 3G and 4G are also allowing companies to offer greater services at minimal additional costs per subscriber.
  • The content of Arabic language is also increasing on the internet, and it boosts internet usage in the Kingdom.

Financial

This section offers the financial overview of Mobily in relation to the outlined strategies for its marketing activities. The analysis and presentation covers the expense forecast, the sales forecast, and the break-even analysis. It presents an outlook based on monetary terms in the next one year of the plan, with projections going into the third year of its implementation.

The company’s marketing and advertising costs are expected to go up every year as the focus on promotion of existing and new internet services increases. In the absence of physical goods, the increase is expected as perception and pre-buying choices are the main targets for marketing campaigns (Parasuraman, Zaithaml & Berry 1985).

Break Even Analysis

The company will break even in the second year of the marketing plan, when the projected sales exceed the total expenses. The threshold amount of sales necessary to break even is SAR 490,000 based on the estimates used for this plan. The figure below presents the break-even analysis from annualised figures.

Sales Forecast

Sales will slowly pick up in the first year and the results of the marketing plan show. The momentum will be sustained in the following three years.

2015 2016 2017
Sales
Retail 3,000,000 3,000,000 3,400,000
Business (corporate and VIP sales) 1,000,000 2,000,000 2,700,000
Flagship sales 400,000 500,000 600,000
Commercial support 300,000 300,000 350,000
Total Sales 4,700,000 5,800,000 7,050,000
Direct cost of sales
Retail 2,130,000 500,000 550,000
Business 800,000 300,000 350,000
Flagship sales 100,000 10,000 12,000
Commercial support 100,000 30,000 40,000
Total direct cost of sales 3,130,000 840,000 952,000

Expense Forecast

Expenses for the company will be significant in the first six months, as the company embarks on an aggressive campaign to grow its broadband user base. Expenses should reduce later in the first year of this plan after the company acquires enough users to reach a threshold utility level for the business.

Inventory 200,000
Salaries 2,000,000 2,000,000 2,000,000
Suppliers 100,000 120,000 140,000
Repairs and maintenance 45,000 100,000 150,000
Advertising 3,130,000 840,000 952,000
Rent 300,000 200,000 200,000
Interest and taxes 100,000 100,000 100,000
5,875,000 3,360,000 3,542,000

Controls and Contingencies

The marketing plan seeks to guide the company to levels of increased profitability and enhancement of its market share. The following areas will be the focus for monitoring and evaluating Mobily’s performance (Lovelock & Wirtz 2011).

  • Revenue at monthly and annual levels
  • Expenses on annual levels
  • Customer satisfaction trends based on data collected monthly
  • New product development and the performance in respective customer segments

Implementation Schedule

For the plan to succeed, the company will have to meet the following milestones and adjust them appropriately to reflect changing circumstances of doing business (Berman 2005). First, there should be plans do not determine the response of the business to changes in the competition and other external factors affecting its profitability and growth. The plan is only a guide to inform both the management and leaders on the on-going and future demands of the business internally and externally, which need to be fulfilled.

Start End Budget Department
Advertising Jan 2015 Dec 2015 1,000,000 Marketing
Marketing plan completion Dec 2014 Dec 2014 30,000 Marketing
Promotion campaigns Feb 2015 Nov 2015 1,000,000 PR
PR events Feb 2015 Jan 2016 500,000 PR
Direct marketing Feb 2015 Dec 2015 200,000 Marketing
Holiday promotion July 2015 Jan 2016 300,000 Marketing
Data promotion Mar 2015 Sep 2015 100,000 Sales
Total 3,130,000

Contingencies Planning

The average revenue per user in the broadband market segment is expected to grow. The company will also look at the introduction of new products for the business segment to increase revenues, if the uptake of the present offers stagnates.

  • The biggest risk is finding out that the demand for broadband services cannot sustain the investment made by the company in that sector.
  • Another big risk is the need to use company assets to meet debt obligations, should it arise that the company is unable to use existing revenues to meet its debt repayment schedules.

Difficulties for the company are as follows:

  • The problems of maintaining visibility for delivering a service that can easily be repackaged by resellers and lose brand identity for retail consumers.
  • Having to invest in technology upgrades after a few years to keep up with demands and to take advantage of new market leadership opportunities, which is costly.

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