Service Marketing in the Mobile Industry

Introduction

Marketing is vital in all types of organizations and in order to be successful, there is the need to incorporate the marketing mix. The marketing mix elements are product, price, place and promotion. Good strategies for products should also consider the price.

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With the paradigm shift in the contemporary business environment and the increased competition, business entities have devised various strategies to deal with the challenge of losing market command. In a competitive industry and market, company should distinguished basing on high level customer service and extra ordinary services. Consequently, every business will want to make sure that it not only wins the next customer in the line but it also endeavors to ascertain that this particular customer is retained. For most businesses, customer relationship has been embraced as a good point of achieving this. Many companies are currently taking serious the idea of customer relationships and pricing hence compelling them to offer some sort of service promise to their customers. Thus the company will struggle to develop customer loyalty by bringing in issues like warranties and guarantees and other procedures that purport to offer full customer satisfaction as part of its overall customer relationship management approach.

Mobile industry

The sector selected for this assignment is the mobile industry. Mobile industry is among successful and leading service industries in the world today. The industry players are engaged in business through various operations which include airtime, carriers, entertainment and financial services like transfer of money. These makes one of the most comprehensive and diversified industry in the world. Customer satisfaction is major and fundamental responsibility of every top management in any organization. This enables the company to attract and retain customers. It is therefore necessary for the organization to itself in active process based on dialog with its customers hence taking any corrective measures required through pricing. This enables the company to deliver value and eliminating customers’ dissatisfaction hence proficiency in the company.

The most complex and challenging idea is the cost incurred in handling pricing and need to provide optimal customer value. The industry players have redouble their efforts to make sure that they adopt approaches that meets customer expectation and at the same time reorganizing logistic operations and optimizing asset recovery. This strategy enables the industry players to satisfy their customers hence retaining them.

The mobile industry has become the fastest growing industry in the world today. There are multi-national mobile companies such as Vodafone, virgin, orange, Zain, and many others. The mobile industry offers a wide range of services from communications to M-banking. It has made life very easier in various parts of the world through transfer of money communication and broadband services.

Current environment

The current marketing strategy for the industry players is very much involving. Great awareness has been created about industry players brands through various means. Mainly customers know about services through magazines, word of mouth and bulletins. Magazines show the type of services, their price, and the various segmentation. After sales services is available and a brief introduction of how use the service is also shown.

To reach more customers, advertisement is done through the internet. Most industry players own a website where we advertise their brand through. All the features like our location, price, after sale services, our contacts are all shown in the website.

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Porter’s Five Forces Analysis for the Industry

  • Buyer Power:- The industry faces the threat of buyers shifting their loyalty to other rival companies not only in the country of operation but worldwide. This phenomenon according to porter is referred to as backward integration. To curb this threat, industry players has come up with three generic strategies to counter this threat. Cost leadership: – It has reduced the price of some its products including the cost of offering services. They have also differentiation by coming up with alternative services that are differentiated from the rival firms. These products should be economical and are environmentally friendly and community friendly. Collaboration: – the industry players have expanded to other markets from the parent country.
  • Supplier Power:-industry players are faced with the threat of the suppliers being able to control the price of some of the materials they supply. The labor laws are also stringent and the workers are so unionized that treating of employees in a fair and equitable manner is inevitable. To counter this force, the company extends its supplier chain making the prices of for instance of mobile handsets to come down. The generic strategies adopted by the company against supplier power are by increasing the price of their products. In essence, the extra prices charged for the raw materials are borne by the customers. This is the differentiation strategy. Another strategy to insulate itself from this force is that of focus. In this strategy, the methodology has been improving the quality of their products. By so doing, the prices can be increased without harm being made to the customers. The suppliers of the industry include mobile handset companies cable manufacturers, government, community and other miscellaneous suppliers.
  • Barriers to Entry:-The other force challenging the industry is entry of new companies with similar products or even more products like internet. This would pose the threat of neutralizing the company’s profits as well as its market share. The generic position that the company has taken has been cost leadership. Through lowering its production costs and increasing operational efficiencies, the company has been able to lower its products prices while maintaining its profitability. This has deterred potential investors/ entrants into the industry. The company has also produced special products and services for special people and different market segments. This kind of focus strategy that also encompasses the differentiation strategy makes entry difficult.
  • Rivalry:-This force emanates from other companies within the same industry like telecom, ATT &T, Vodafone, virgin, orange, Safaricom, Zain and many others. The threat here is that these companies capturing the market. However, the company’s framework/ strategy have been reducing prices whenever faced with such a threat. Prices are then reverted to normal after the exit of that company the specific market segment.
  • Threat of Substitutes:- From the economist point of view, the threat of substitutes arises when the demand of that good is likely to be affected when the price of the substitute changes. This elasticity of price has formed a real force that the company has to fight if it has to be sustained in the near future. This bars the company from effectively increasing the price of its products whenever need arises.

Pestle Analysis of the Mobile Industry

  • Socio-Political Trends:-The industry’s main suppliers are from those inside developed countries. However this has been complicated by the crisis of terrorist, competitors from neighboring countries. This has made the control of information be based on international politics.
  • Technological Trends:- Stay up to date with technological factors such as internet marketing. Nearly half of the world’s populations have access television and Internet connections in their homes.
  • In Far East things have taken a new dimension majority of the parents have resorted for internet for academic purposes this has led to increase in the needs of broadband connections in homes.
  • Economic Trends:- The financial crisis has already had a global impact on global financial markets and could affect consumer spending worldwide. At first sight, this would seem a disproportionate reaction but banks all over the world are exposed to US debt.
  • These trends affecting world economy is contributing to the fall in demand for mobile and other consumables that use the products of the industry. Currently there is a high food price which is contributing to decrease in the demand for these services.
  • Environmental:-The industry is very competitive; most industry players are balancing its e-commitment to communities they operate in through its corporate responsibility. They assist in environmental activities.
  • Legal constrains:- Each country have the own laws to complied with. The management finds it difficult to for example convert financial statements prepared in different accounting standards and procedures. These is one of legal constrain facing this company, although accounting standards board are solving this problem though convergence of accounting standards.

Opportunities and threats

The biggest threat industry players are facing at presently is from rival from media and banking industries which offers similar services that can lead to their market share dropping as well as revenue.

Opportunities

It has a very strong financial base:-The industry has grown and has been able to perform efficiently because of strong financial base available to them. To be able to serve all this population efficiently means that this industry is strong financially. Also the industry because of its strong financial background runs many other projects like giving donations to needy students in the form of scholarships.

There is potential of growth through the increasing of market share if the strategic alliances, mergers and acquisitions strategies are adapted.

The company has a potential of growth to various parts of the world especially the untapped market in Africa, the growing economies such as china and India in order to be one of largest multi-national in the mobile industry. In Africa, the company should enter into strategic alliances with small mobile companies or even collaborate, with these companies for the purposes of increasing the market in that continent. With over five hundred million people living in Africa, 1.3 billion people living in China and almost 1 billion people in India Virgin will definitely have huge profitability if they explore these markets. These markets are not only big by size but the population is moving towards middle level income economies. This is why it is advisable for this company to explore this market.

The industry also has a potential of enlarging the market by creating a community trusted business through social responsibility such as sponsoring wild animal conservation especially the white elephant drilling boreholes in various parts of dry lands where they operate. This will give the companies a more community based and acceptable institutions.

The new services developed are linking the changing lifestyles of people in the world therefore attracting the large market. The companies in this industry are able to attract people from different lifestyles. Some services target the youth while other services target old people. There is also market segmentation where people are targeted according to income level.

Another opportunity that exists for industry players is the launch of online services where possible they will link mobile banking with some online banking companies. This will ensure a diversification in the services they offer. Take for example the linkage of the industry players with western money union will ensure a person will send money right inside his bedroom to an international destination using his handset. This is one of the greatest opportunities that the industry has to explore.

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Threats

There are many competitors in the market. This is one of the major threats of the industry because majority of businessmen have realized that this industry is endowed with a great potential of growth. Therefore they have invested in this industry. It is easier to enter and leave the industry for businesses with huge capital. This threat becomes real because majority of capital ventures are ready to put their money into this industry. This ensures that the industry is always attractive to many people.

There is economic downturn brought by financial crisis. The financial crisis that has hit the world caused a lot of financial constraints to the inhabitants of the world reducing consumption. The collapse of financial institutions also reduced the amount of capital that is available to the industry players and this has made growth of some players in the industry very difficult. It is now difficult than before to acquire credit facility to assist the companies in growth.

Rules and regulations of different countries differ. Different countries have different rules and regulations managing the affairs of trade in those countries. Take for example; business environment in Australia is different to business environment in Zimbabwe. Entry into a Zimbabwean Market will be very difficult because of the rules and regulations that are used in country by the Mugabe Administration. Another good example is the former sleeping giant, China where there is preference to local companies as compared to international companies.

Reaching all customers for the company is also very difficult because, airwaves are regulated by government and it is upon the government authority to decide to curtail the businesses of one institution or allow them to continue with one business.

Сommonalities and differences of industry

There are many strategies that are used by the industry players. The common strategies used include use of six sigma, pricing and mobile banking.

The mobile companies and six sigma

Companies envision that they would remain in the corporate world and maintain their strong foothold in whatever industry they are dealing with. One way of doing so, is to build a good reputation. Good reputation may be built upon customer satisfaction since if one customer was satisfied with the product, it may spread by mouth bringing the company’s name and the product into popularity. Hence every company should aspire for total customer satisfaction in all their products. That is why constant innovation and research on how to fully meet customers’ needs are always conducted by companies. Six Sigma is a business approach employed by companies to process improvement, cost reduction and increased profits. This was initially developed by Motorola during early 1980s to answer the CEO-driven challenge of achieving tenfold reduction in product defects and tenfold quality improvement that should be achieved in five years. In order to meet the challenge, swift and accurate root analysis and correction of the problem was required. Motorola finally shared the details of how they achieve quality improvement. Since then other large companies adopted the strategy.

The fundamental principle of the Six Sigma is to improve customer satisfaction through reduction of defects in their products and as much as possible eliminate defective products. It follows five fundamental steps in achieving its goal. These are defined, measure, analyze, improve and control or commonly known as DMAIC. Within the company, everyone has role towards the improvement goal (Siviy, 2001). Everyone working in a company has a significant role and contribution to the company’s success. But this could not be attained without letting everyone know what are expected of them by the company. Here comes the need for a good motivator and a good leader who would implement the Six Sigma within the company.

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Six Sigma may have played a significant role in helping companies achieve their goals. This paper will deal tackle the history of Six Sigma and how Motorola and other companies benefited from its methodologies and processes. To provide full understanding of the Six Sigma, the implementation roles as well as the responsibilities of each part of the company will be discussed. It will also examine cultural changes within a company which may be brought by Six Sigma approach.

Mobile companies have ensured that they have proficiency in four areas. First, they have known the mobile business well and operations interface. They have mastered the business process and ensured that the process runs smoothly. For any company to succeed, they have to make sure that operational level projects will always be kept aligned with the business objectives. They are allowed to review projects to assure that the project is progressing at the required pace and according to plan. By so doing, they can identify areas which need improvement. Second, the mobile company must be proficient in Six Sigma project selection. Instead of viewing it as a career limiting opportunity, they must view it as an opportunity to improve the process. Project selection will become less of a treat if alignment is practiced in an organization. Third, the mobile company must be proficient in pace mediation. The deployment plan is usually generated by the Six Sigma provider or the internal sponsor. Choosing an internal sponsor has an associated. Once a plan is generated, it would be difficult to modify the plan since internal people rarely adjust the plan. When the pan is constructed, it should be complete. It should have goals, specific targets which are to increase customer satisfaction, competitive position, technology. Metric must also be present. The program must then be adjusted based on whether metrics would be met or not. The fourth is that Mobile companies must be proficient in results implementation. When projects are completed, potential savings will be calculated. Measurement of savings is not mainly about financial savings but it must e calculated with the time bounded. The number that they would come up with will represent a reduction in waste resources. The Mobile companies are accountable for this number (Carnell et al., 2008).

Six Sigma is not only about fostering quality program, it also changes culture within an organization. Culture change within a company requires strong leadership and focus on project implementation. The company’s top leaders should agree to drive deployment of Six Sigma approaches at all levels. They should also integrate Six Sigma approaches in business planning and deployment process within the organization. Competencies in statistical data analysis should be developed by individual leaders. They must also be able to cascade their competencies to other leaders. Leaders must make use of sophisticated communications techniques and creative incentives to drive employees into constant engagement in the Six Sigma projects. For the company’s top leaders to be successful in implementing Six Sigma in all levels in the organization, they must understand seven steps of deploying Six Sigma. (1) For Six Sigma initiatives to spread there should be support from committed team leaders. (2) Strategy planning and deployment must be integrated with strategic Six Sigma thinking and best practices. (3) Wherever the company operates, it needs to establish a close connection with the customers and the whole marketplace. (4) It must ensured that leaders do not view the company as mere isolated functions rather a family of closely related business processes which is supporting the business’ value. (5) Quantifiable measures must be developed. Other than that, leaders must demand from their employees their expectations and the aspired tangible results. (6) To compliment the employees’ performance, incentive and rewards system must be developed by the company. This would also entice the employees to perform better. (7) Lastly, top leaders must commit to all of the six strategies (Smith et al., 2002).

Keeping customers is very important in every company. They must be able to retain their customers so they would be able to remain in the industry and flourish. One of the best way, to get more customers and keeping old customers is to provide them with the products which are of best quality. The main objective of the Six Sigma is to reduce near-perfect products and reduce wastes. In this way, revenues and savings would be high. The Six Sigma is also versatile as it can be applied in almost all industries. It just needs to be adjusted to fit the company’s goals. The effectiveness of Six Sigma has been proven by many companies which adopted the process.

Virgin Mobile Company being one of the industry players has adapted this strategy in ensuring the success of their services. The price structure the company adapted has made the company grow to the level they have reached.

Mobile banking and payments

Mobile phone payments started in Japan in 1999 and it evolved over the years and significantly contributed to their progressive economy. Currently, mobile phone payment in world could settle various billings such as rail tickets, shares and investment, books, fashion and clothing and many more. Through this medium of payment, it added convenience to people just like in purchasing train ticket in Tokyo. Mobile phone payments help the people to purchase almost any commodities conveniently. Apparently, people always like to bring their mobile phones everywhere and therefore payment through phone increased economic impact. Phone industry look for new business models in order to further improve and develop their mobile services. The trends in mobile phone payments focused on mobile internet innovations and tend to have global standard (Mobile Commerce, 2008).

VIRGIN

Virgin is one of industry player that is based in the UK and the United States of America. This mobile company has managed to have a big share in the market by understanding the customer’s needs before setting any price. This company has adapted various strategies which are common for the industry players and some of the strategies are different from other industry players.

Before this company sets the price for the product or services they are offering to the public the company analyses what the customers needs are what they expect, and what the competitors offer. This is a common strategy among the industry players. The other issue in question here is the objective of setting the price. In a normal business environment price is aimed at ensuring that the company attracts, retains, and makes profit. This the same case with virgin mobile company. The price should also satisfy the customer’s needs by being affordable to the customer. The price set by the company should aim at achieving the organizational goals.

Virgin mobile company has different price settings for different market segments. The setting of the price differently for different market segments is aimed at attracting some customers into the company. The pricing strategy and policy of virgin mobile company is aimed at reducing conflict between business objectives and customer optimization of services. The price set actually is above the cost of production of the service. This ensures that there is a profit above sales. The price set is usually aimed at attracting or capturing the customer’s perspective. If there is any change in price that will affect the customer competitor then the company will analyze the effect of the change. Virgin has this in mind and they charge the price accordingly. The price set by virgin mobile company is not only aimed at giving the best services to the customers but also ensuring the customers are retained.

Key strategies

  1. Pricing approach at Virgin: The pricing strategy adopted by the company is divided into three, depending on the target market. There is a price which is set below the industry average which is called cloning. This price its aim is to attract new customers. Once the customers have been attained, they change the price into a normal price in the industry. The company also offers periodical discounts especially during festive seasons for example; price differs for customers depending the amount of credit that they buy. A customer who purchases an airtime card of 20 dollars will be charged a different rate as the customer who buys airtime card of 5 dollars. This attracts the customer to purchase bigger units of airtime. The other price that is charged is a price level which is higher than the industry average and the target is people of high income levels.
  2. Virgin target:-The company targets people of age groups of 15-29 who they feel that are not properly covered by the current service providers. However market audience for the company should be segmented into various demographic profiles. This audience will range of from family life cycle, family size, sex, age, income, race, religion, education, occupation and nationality.
  • Income: The target for the services will involve people from different age groups. These are groups of people who are financially able and who will afford to services while others have less income that can not afford some services. Therefore the company should target both those with extra and enough disposable income.
  • Sex:- The audience to the in communication industry is for both men and women ranging from the age of 15years old to as old people as of 80years old. Some of the audiences will to be doing business while socializing using the services. Both men and women are great consumers of service.
  • Age and life-cycle stage: – Both young and old generations are among the target for the services. The younger will be the greatest consumer of communications while the old may consume less therefore company should target these groups.
  • Family size:- Some people have a big family size and that are form part of the target in the of services in the world today. Some people will have a family of up to 5members; all these members will be consumers of the communications industry for business and socializing.
  • Education:-People with different education backgrounds will be forming part of the audience in the industry. College graduates, high school graduates, lectures and grade school levels will need the services of the company.
  • Race: – communications attracts all races from all over the world and consumption is the influence of culture and race. The company through their international presence will known likings of each race. These will enable them to skim their marketing.

From the foregoing discussions the company should not only target this market segment but cover market segment. The company should come up with services that are easy to operate so as to make the customers more comfortable. Proper studies should be done to the market before coming up with new ideas. Customers’ understanding is also very important through face-to-face encounters and discussions with them. This is also possible through market research to understand how they feel about the product features added to the product and what influences their patterns of purchase and what motivate them to use some services. Major competitors are identified and described in terms of size goals, market share, product quality, strategies and this enables us to understand their intentions and behaviors

The company has the following strategic plans for the next five years.

  • Developing new state of the art products
  • Continuing the past legacy of innovation
  • Enhancing the R & D funding for the two objectives above
  • More acquisitions
  • Developing and building an efficient and aggressive marketing technique
  • Reaching out to the overseas market.

Relationships of marketing of services

In the marketing of services, distribution is essentially direct and the normal physical distribution processes are not involved. This need for the use of middle men seldom arises. In this regard the growing importance of services and intense competition are likely to promote innovation in the use of middlemen. Convenient location and delivery are factors of dominant importance in the distribution policy and strategy of a service enterprise. For some services the location is less important, for others optimal location is dispersed, while for a third group it is concentrated. The optimal location is dispersed, while for a third group it is concentrated. The modern trend is a way from concentration. Banks in particular have branches whenever there is a demand for their services. Such enterprises try to satisfy the consumers’ requirements of availability and convenience.

The fact that services are intangible complicates the task of marketing management, not only as regards marketing communication but also the choice of distribution channels. Depending on the nature of the services the characteristic of intangibility can compel the marketer to sell his service direct especially because of the need for personal contact between the consumer and the seller. Some services are created and marketed simultaneously, such as in the case of a hairdresser or plumber. Services are in a sense perishable and the demand for some services is unstable. The marketer must find channels which will have the service available at periods of peak demand, and possibly look for other channels slack periods.

Another reason why middlemen are not normally used in the marketing of services is that services cannot be stored and do not have to be transported. This leaves the marketer with two alternatives, namely direct selling and/or the use of middlemen who usually do not take ownership.

With certain kinds of service transactions there is a different relationship between the consumer and marketer than there is regarding the marketer of goods for example the relationship between doctor and patient or that between an investor and a financial institution. Here the consumer places himself in the hands of the provider of the service and acquiesces in his advice and action. The consumer will therefore prefer more direct contact and negotiation with the marketer.

Conclusion and recommendation

Mobile phones indeed made headlines in most developing countries because of its role in organizing the world. The true power of mobile phone technology has been realized in world and it is revolutionizing the circulation of information and money. In developing countries, the markets utilized mobile phones for banking services and the intervention of technology was considered as crucial especially for those people who lived in rural areas and only rely on money sent home by their relatives or members of their family. The dramatic growth of mobile phones outnumbered the cash machines and they paved new set of services that turn mobile phone as banking tools with the potential to increase the economy and globalization. The people have vast number of access to financial products wherein the expansion of technology was even directed to microfinance which could allow small loans and could changed lives of millions.

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