Vodafone Global Marketing Strategy (Essay Sample)

Global Marketing Strategy of Vodafone
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Executive Summary
This report analyses the marketing policy of Vodafone UK services. To examine the marketing policies of Vodafone, the report analyses the industry of the firm by carrying out the Porter’s five forces analysis as well as exploring the differential advantage of the firm. The analysis establishes that Vodafone is the leading communication company in the United Kingdom. The report establishes that the success of Vodafone is attributed to its good investments, constant innovation as well as its focus on consumer services. On the other hand, the report establishes the product life cycle standing point for Vodafone is at maturity stage, fierce rivalry in the European market, and the fact that Asian market restricts the objective of Vodafone of being a global leader are the challenges facing Vodafone. Further, the report establishes that Vodafone maintains its competitive edge through mergers and acquisition. One of the crucial recommendations of this report is that Vodafone ought to work more aggressively in improving data communications to counter the business risk in an explosive European market, which will enable the firm to develop in the short and medium term. Vodafone also ought to develop mobile applications as well as new digital media to stay competitive in this industry.
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Contents TOC \o "1-3" \h \z \u 1.Introduction PAGEREF _Toc396655294 \h 32.Industry Analysis PAGEREF _Toc396655295 \h 32.1.Porter’s Five Forces PAGEREF _Toc396655296 \h 42.1.1.Bargaining Power of Buyers PAGEREF _Toc396655297 \h 42.1.2.Bargaining Power of Suppliers PAGEREF _Toc396655298 \h 42.1.3.Threats of New Entrants PAGEREF _Toc396655299 \h 52.1.4.Threat of Substitutes PAGEREF _Toc396655300 \h 52.1.5.Rivalry among Extant Firms PAGEREF _Toc396655301 \h 53.Critical Success Factors PAGEREF _Toc396655302 \h 63.1.Sufficient Regulatory Framework PAGEREF _Toc396655303 \h 63.2.Successful Organizational Model PAGEREF _Toc396655304 \h 64.Capabilities and Competencies PAGEREF _Toc396655305 \h 75.Strategic Options Available PAGEREF _Toc396655306 \h 85.1.Marketing Strategy PAGEREF _Toc396655307 \h 85.2.Bottom of the Pyramid Strategy in Emerging Markets PAGEREF _Toc396655308 \h 96.Marketing Objectives and Implementation PAGEREF _Toc396655309 \h 107.Conclusion and Recommendation PAGEREF _Toc396655310 \h 10
1 Introduction
Vodafone is regarded as the biggest telecommunication operator in Europe as well as globally and provides data and mobile voice communication to businesses and consumers (Borrman, 2013). Currently, Vodafone is placed second on the FTSE 100, and has a market capital of £85 million (Dimireva, 2010). In addition, in the 2010/2011 financial year the group had recorded revenue of £46 million, an increase of approximately 3.2% from the previous year. This report analyses the industry of Vodafone through the Porter’s five forces to discuss how the firm can develop its competitive position in the global industry. In addition, the report analyses the critical success factors and capabilities and competencies of Vodafone. Lastly, recommendations that will enable the firm to remain competitive in the global market are provided.
2 Industry Analysis
To offer viable and practical recommendations on how Vodafone may improve their current position, it is vital to first develop an understanding of the kind of industry Vodafone operates within. This is established through the Porter’s five forces as well illustrated below.
1 Porter’s Five Forces
To evaluate the attractiveness of the particular sector the five forces are implemented based on the measurement of the
Figure 1: Dimensions of Porter’s Five Forces
Source: (Kotler and Armstrong, 2010)
1 Bargaining Power of Buyers
The bargaining power of buyers is low, as a result of the strong market presence in the United Kingdom and globally. In addition, because of the complexity of the mobile market structure, services and products, it is hard for consumers to implement backward integration. This proposes that the power of buyers is low.
2 Bargaining Power of Suppliers
The bargaining power of suppliers is moderate. Vodafone has a number of key suppliers, with whom they have long standing relationships. One of the key suppliers of Vodafone is Huawei and they have been supplying the firm from 2005 (European Commission, 2009). Nonetheless, as the market research shows, there are numerous suppliers in the telecommunication industry, which can substitute Huawei.
3 Threats of New Entrants
The threat of new entrants is low. In addition, the barriers for new entrants are moderately high as a result of the complexity of the structure of the mobile market along with the need for a high level of investments. Moreover, given the present poor economic circumstances, the entrance risk of novel mobile players is reduced. It is similarly supported by the intense competition in the UK telecom sector, with such apparent leaders like Vodafone and 02 (Guardian, 2009).
4 Threat of Substitutes
The threat of substitutes is high. There are numerous alternatives that may be employed rather than the mobile phone, owing to the fast growth of new technology (OECD report, 2007). The most popular substitutes are video conferencing and landline phones. Furthermore, VOIP services are quite prevalent lately, as a result of the associated low communication costs (Vodafone, 2012).
5 Rivalry among Extant Firms
The level of rivalry is high, as there are basically two mobile market leaders in the UK, that is, Vodafone and 02. Furthermore, the mobile firms tend to develop strategic alliances, like Orange and T-Mobile have done lately (Vodafone, 2013). This therefore intensifies the competition. Secondly, the switching costs are low particularly on prepaid, whilst the switching costs are higher on post-paid subscribers. This is further supported by the amplified loyalty towards a specific operator using post-paid contract. Thirdly, the barriers of exit are high as well, owing to the complexity of the mobile sector as well as its structure.
The analysis of the Porter’s five forces has shown that there are three forces with low, or moderate strength which might be capitalised on, that is bargaining power of buyers, bargaining power of suppliers as well as the threat of entrants.
3 Critical Success Factors
2 Sufficient Regulatory Framework
The Vodafone Group strive to work with regulators to develop a suitable regulatory framework for successful provision of services. It is essential that the national regulators are well briefed on how Vodafone service systems work and how issues like terrorist financing and money laundering are addressed
3 Successful Organizational Model
Another key success factor for Vodafone has been the establishment of accredited and trained agents who serve as channels for the services offered.
4 Transparent Customer Processes
Through constant communication and working closely with their main stakeholders, consumers and regulators, Vodafone has made sure that its operations are crystal clear. Additionally, Vodafone provides customer support that enables them gain trust from their customers.
5 Transparent Pricing System
Vodafone ensures that the cost to transfer money is uniform across the entire network of outlets in spite of local mobile phone operators. This is also well communicated to subscribers. Additionally, free registration and lack of monthly subscription have enabled the firm to convince possible customers to subscribe to the network.
4 Capabilities and Competencies
Consistent with Armstrong and Kotler (2009) strategic capabilities of a company that contribute to its long term survival consist of resources and competencies that are deployed effectively. In the case of Vodafone, the firm holds strong resources with regard to tangible and intangible resources. The company has extremely strong financial resources with more than one hundred million pounds annually. This enables them to invest in research and development and expanding their portfolio through mergers and acquisition, thus increasing their market share. Vodafone has been able to secure vast investments via asset re-organisation which has further increased their profits. The firm’s formal planning as well as reporting structure, systems of coordination and control is strong. This is evident from its successful mergers and acquisitions, low cost base and high innovation.
In addition, Vodafone operates a big percentage of mobile telecommunication network base stations as well as own a range of licences for numerous mobile telecommunication markets. The organisation has created the next generation wireless standard, UMTS, which enables data and voice on the same wireless standard. This demonstrates the firm’s innovativeness and strengthens its resource base as well as the role they play in the sector.
The human resource of Vodafone is strong plus they have an impressive employer reputation. In 2010, the firm won the ‘Best Customer Care Award’ in Greece (Eurostat pocketbook, 2010). This in addition improves its brand image both as a network operator and as an employer. In 2010, the global employee base of Vodafone was 85000 comprising of more than 26 nationalities in their top management. Further, the firm possesses a strong corporate culture incorporated with open communication channels that have enabled the firm to clinch 76-percent score on employee engagement (Keynote, 2009).
From the analysis of the capabilities and competencies of Vodafone, its resources relate to their competitive advantage since its strong research and development, own brand products and inimitabilities enable...