CIM Membership
Number:
14645314
Unit Title:
Unit 1 – The Marketing Planning Process
Level/Award:
Professional Diploma in Marketing (OPDM16)
Accredited Study
Centre
CIM Academy
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Table of Contents
RATIONALE
3
Part ! – Marketing Audit
3
1.1 PESTEL Analysis
3
1.2 MARKET DATA
4
1.3 PORTERS 5 FORCES
4
1.4 COMPETITOR ANALYSIS
5
1.5 PERCEPTUAL MAPPING
5
1.6 WEBSITE DATA
6
1.7 GAP ANALYSIS
6
1.8 MCKINSEY’S 7 S
6
1.9.1 PORTERS GENERIC STRATEGIES
7
1.9.2 ANSOFF MATRIX
7
1.10 MARKETING MIX
8
1.11 SWOT ANALYSIS
8
PART II – CONTENTS OF MARKETING PLAN
9
2.1 MISSION STATEMENT
9
2.2 SUMMARY OF AUDIT
9
2.3 KEY ISSUES
10
2.4 MARKETING OBJECTIVES
10
2.5 MARKETING STRATEGIES
11
2.5.1 ANSOFF MATRIX
11
2.5.2 PORTERS GENERIC STRATEGIES
11
2.5.3 SEGMENTATION, TARGETING, POSITIONING
11
2.5.4 MULTIFACTOR MATRIX
12
2.6 MARKETING TACTICS – MARKETING MIX
13
2.7 1 YEAR ACTION PLAN
14
2.8 MEASUREMENT & CONTROL
15
PART III – EVALIATION REPORT
16
3.1 MARKETING PLANNING
16
3.2 MARKETING AUDIT
17
3.3 STRATEGY
18
3.4 ISSUES
19
REFERENCES
20
Rationale
Encoretel Ltd is a start up Internet Telephony Service Provider striving hard to make its mark as VoIP provider for small and medium businesses in UK. With the recent shift in the way businesses operate their communication systems, legacy lines are slowly dying and VoIP technology is picking. In such a scenario, with BT entering into the Business VoIP market, Encoretel Ltd has to boost its sales. The company has been in the market for the past two years and has secured a few customers but in the third year it has not been able to add much customers. This Marketing Plan is with the objective of increasing the revenue for Encoretel Ltd through the sale of VoIP based business telephony and other such service and gains entry into Small And Medium Enterprises (SME) sector.
Part 1 – Marketing Audit
1.1 PESTEL Analysis
According to Philip. R. Walsh, When a firm finds itself exposed to a change to the environment in which it operates, it must determine how the processes of change in the marketplace impact on that firm’s choice of strategies, its related resource deployment and the nature of its competitive advantage within that environment. This section deals with the PESTEL analysis of Encoretel’s current situation.
Change
Implication
Impact
Political
1
Some countries have state owned telecom companies monopolising the international gateway and international VoIP is seen as bypassing their gateways and threatening their revenues
Conference Calls to these countries would not work well. Hence there is a major limitation for implementation of Audio conferencing if the customer has branches in these companies.
Threat
Economic
1
Competition with other Telecom Companies that charge for termination a call on their network.
Call Rates cannot be kept steady depending on the increase or decrease of call termination rates. Revenue for Encoretel will completely depend on the usage pattern of the customers and where the call terminates.
Threat
2
Recent economic recession has made company revise its budgets and cut costs
With VoIP offering comparatively lesser costs and no extra infrastructure investments, VoIP will be the best solution for keeping up their communication and cutting costs.
Opportunity
3
SME’s also look outside their territory with clients and partners across the globe.
With Global Presence, SME’s would look at low cost options to connect with their clients and VoIP would be a perfect solution for them.
Opportunity
Societal
1
There has been a shift in the requirement of users. Everyone wants more mobility with the advent of smart phones and tablets.
Audio Conferencing is based on VoIP which in other words, is based on the Internet, hence available anywhere.
Opportunity
2
There is an increase in ‘Work from Home’ patterns.
Encoretel Audio Conferencing and other VoIP services can be used just as effectively using soft phones from anywhere. Since there is no desk phone dependability, one can make and take calls from home. It is just like moving with ones work desk wherever one goes.
Opportunity
Technology
1
VoIP adoption is on a steady, upward course as companies are replacing obsolete and aging analog phone systems
With a phased shifting plan, SME’s can very easily move to VoIP from the traditional telephony system without placing too much load on their budgets.
Opportunity
2
Rise in Cloud based technology
This will result in companies having to undertake operating expenditure as opposed to Capital expenditure, thus saving costs.
Opportunity
Environmental
3
Use of softphones or IP phones will increase the use of Electricity.
IP phones or soft phones as against traditional desk phones operate on electricity. This will increase the use of electricity and hence could attract the attention of pressure groups for conservation of Electricity.
Threat
Legal l
1
VoIP services cannot implement Caller Identification. This is a reason for the military or other legal institutions to ban VoIP services in some country for security.
Conferencing services and other VoIP based services will bot be able to operate in such countries.
Threat
Table 1.1.1 – PESTEL Analysis for the VoIP Industry
With changes in the technology requirements and work environment, opportunities for VoIP will keep cropping up. Although ban on VoIP exercised by certain countries may effect the business sales, overall Encoretel can make sure that it uses every opportunity to sell VoIP based services to Small and Medium Enterprises.
1.2 Market Data Fig 1.2.1 Top Ten Countries for number of VoIP subscribers Fig 1.2.2 SME Sector in UK
The chart in Fig. 1.2.1 shows the number of VoIP subscribers in the top 10 countries. From this figure one would see that UK as compared to US and Japan is not as matured a market for VoIP services. Hence this leaves a lot of scope for start - ups like Encoretel to explore and establish themselves.
The figure 1.2.2 gives us an idea of the SME sector in UK. The figures mentioned in this chart are in percentage and have been taken from the Business Population estimates published by the Department of Business Innovation & Skills for 2012. The organisations that can be classified as SME have been estimated at 4,787,650. This is the bulk of opportunity that Encoretel can supply to, in the future with the right Marketing Strategy. Mentioned below is a chart that will show the distribution of the SME sector depending on the total number of employees in the organisation.
From this fig 1.2.3, we can say that albeit a large customer base, almost 75% of these are companies with just proprietor. Such companies may or may not warm up to the idea of using VoIP services for their business, but what Encoretel can try and sell to these companies are small services like International DDI numbers that can give them Global presence while they operate locally. Mot often such companies would prefer getting a broadband connection and a fixed line phone from providers like BT, TalkTalk Business, Virgin etc. Fig 1.2.3 SME distribution in UK
1.3 Porters 5 Forces
As a marketer, one should examine three sets of industry forces to gauge the competitive attractiveness of the industry: (1) how easily com- petitors can enter or leave the market; (2) how much power buyers and suppliers have; and (3) whether substitutes are available for the company’s products and the resulting effect on industry rivalry. This section analysis the porters 5 Forces that affect Encoretels Business.
Industry Rivalry
Threat from New Entrants
Threat of Substitutes
The investment to enter as an end-to-end service provider is high and very high level of expertise is required. Hence rivalry will not increase very much but existing is what has to be tackled.
Existing VoIP service providers play the volume game. The charges are lower for larger volumes. For a start-up like Encoretel, initially the volumes might not be so large and hence they might not be able to match up to the pricing strategy of competition.
Entry as resellers is very easy since there is no investment or infrastructure required.
High possibility for Internet Service Providers (ISP) to turn into Internet Telephony Service Providers (ITSP) since data infrastructure forms the background of VoIP services
Like FaceTime (Apple Inc), other such mobile phone developers or mobile service operators can enter into VoIP considering that they already have infrastructure and they can have a good chance of forward integration.
For small businesses a BT broadband connection and fixed line or the likes will serve their purpose.
Services like Skype, which are free of cost for the basic variant, will suffice for small organisations. This may not give them the opportunity for professional branding but communication will not be a problem
Power of Suppliers
Power of Buyers
Broadband providers have a lot of say since VoIP cannot function without of internet connectivity. The quality of their service is critical for the quality of VoIP service.
Large suppliers serving many companies in multiple industries have high bargaining power owing to the volumes they generate.
For Start ups the initial call volumes are not much and hence termination partners have an upper hand in terms of costs. Smaller call volumes result on larger termination costs.
Undifferentiated equipment from most vendors but bargaining power in terms of network technical support.
Hard phone providers are many but good suppliers for network equipment and other telecom infrastructure are very few and hence they have a high bargaining power when it comes to supplying for niche VoIP services.
SME sector is very price sensitive and will most often go for a free service that a paid dedicated VoIP service.
SME buyers would often select vendors that offer lowest termination costs and lower rates for DDI numbers
Substitutes like local phone, Skype are available for free or minimal costs that most of the SME Sector (refer to the 75% of SME in UK as shown in fig. 1.2.3 of the Market Data Section)
Table 1.3.1: Porters 5 Forces Analysis for VoIP Industry
Although Encoretel has to face tough competition in in terms of pricing it can look forward to growing business through a channel partner network. The threat of migration will always be there given the ease in portability. Hence it would be imperative that the services are kept impeccable and excellent after sales support is provided.
1.4 Competitor Analysis
Company Name
Products
Channels
USP
Cisco
Collaboration Services, Conferencing Services, Unified Communication Services, Call Center Tool, Network Equipment, VoIP Hardware
Online
Channel Partners
Direct Sales
Established Brand
End to End Solution
Strong Partner Network
Strong Technical Support
Level 3
Collaboration Services, Conferencing Services, Unified Communication Services, Data Services, Network, Infrastructure, VoIP Hardware
Reselling for Microsoft & Cisco
Direct Sales
Channel Partners / Resellers
Merger with Global Crossing
Strong Network Infrastructure
Existing Customer base from Global Crossing
Shoretel
Business VoIP Telephony, Collaboration Services, Conferencing Solutions, Call Center Solutions, VoIP Hardware
Direct Sales
Channel Partners / Resellers
Strong Technical Support
Technical Expertise
Extensive Documentation
Good Leads management Process
Coms
Business VoIP Telephony, Data Services, VoIP Hardware, Reselling for Cisco & Ezuce
Direct Sales
Channel Partners / Resellers
Strong Partner Network
Table 1.4.1 – Competitor Analysis
1.5 Perceptual Mapping
The industry perception of competition is implicit in the majority of discussions of marketing strategy. Here, an industry is seen to consist of firms offering a product or class of products or services that are close substitutes for one another; a close substitute in these circumstances is seen to be a product for which there is a high cross-elasticity of demand. As mentioned in Porters 5 Forces section, the quality of products doesn’t vary between competitors; hence the perceptual mapping is done with comparing the price and partner network of the companies.
Fig 1.5.1 – Perceptual mapping of Encoretel Vs Competition
1.6 Website Data
Google Ranking
2/10
Weakness
Website visits
120 per month on an average
Weakness
New Visits
68.75%
Strength
Unique Visits
81%
Strength
Leads Per Month
5
Weakness
Fig 1.6.1 – Current website visit and leads generated for a month (Please note that the figures are an average for the last 6 months)
1.7 Gap Analysis
The chart below represents the sales and revenue figures for Encoretel per month and the expected monthly revenue. Services provided by Encoretel are sold once but generate revenue every month. The revenue generated now is due to sales acquisitions done last year. Unfortunately, the number of customers added this calendar year has not been up to the mark and hence the gap in the existing revenue and the expected revenue.
Chart 1.7.1 Sales revenue Gap
Since Resellers are the main channel of sales for Encoretel, not having added more to th existing list has made a lot of difference. This is a weakness for Encoretel. Secondly, the lead generation is not great.
1.8 Mckinsey’s 7 S
The model is most often used as a tool to assess and monitor changes in the internal situation of an organization.
The model is based on the theory that, for an organization to perform well, seven elements need to be aligned and mutually reinforcing. This section analysis the 7 S’s for Encoretel.
Strategy
Systems
Skills & Staffing
1. Building a strong Channel Partner network that will bring in more clients and end users for Encoretel.
2. Reselling for established brands like Cisco and Level 3.
3. Being an end – to-end supplier for all VoIP based Business Telephony services.
4. In spite of all these strategies the sales revenue has a negative gap of over 250% between expected yearly revenue and current sales revenue. (refer chart 1.7.1)
1. Marketing reports in terms of lead generation and website visits from Google Analytics.
2. Sales planning done but no monthly reports generated to follow on progress.
3. Contribution and profitability by product line not generated.
1. Strong Technical Skills
2. Staffing required for field sales, as this is a weak section for Encoretel.
3. Technical support to be established locally. Currently operating from India and only phone support available.
Style
Structure
Shared Values
1. Technical details given more importance that commercial.
2. Lack of budget for marketing and sales.
1. Distributed teams with technical head in UK while development and technical support are in India.
2. Marketing in UK.
3. Sales team not strong enough.
1. Technical Expertise is the core strength of Encoretel.
2. Technical support and Delivery is of maximum importance.
3. Channel Partners are the backbone of the sales structure.
4. All support in terms of training and `marketing ill be provided to Channel Partners.
Table 1.8.1 – Mckinsey’s 7S – Analysis of strategy, system and resource alignment
From the above table, we can conclude that even though Encoretel has a very strong technical background and a great infrastructure, it has to be more focused on Marketing and Sales. There is a vast gap between the planned or expected sales and current sales revenue. Thus the plan has to be re-developed and analysed. Marketing plans have to be developed and budgets apportioned according to expected return on investment.
1.9.1 Porters Generic Strategy
Porters generic strategy helps marketing understand the company’s positioning as against the customers.
Competitive Advantage – Low Cost
Competitive Scope – Narrow - FOCUSED COST LEADERSHIP
Competitive Advantage – Perceived Uniqueness
Competitive Scope – Narrow – FOCUSED DIFFERENTIATION
Encoretel claims to be cheaper than legacy line communication systems.
SME market, which is the focus for Encoretel, is very price sensitive.
This is the current strategy implemented by Encoretel.
It has multiple vendors and choses the lowest routing cost to ensure that it can provide low prices to customers.
It provided hosted services that bring down Capital Expenditure.
As mentioned in the PESTEL analysis, services/products provided by Encoretel are not unique. They are the same as any other competitor can provide.
Features and benefits remain the same.
The target market would be SME’s in UK that intent to move away from the legacy lines system
Competitive Advantage –Low Cost
Competitive Scope – Wide – COST LEADERSHIP
Competitive Advantage – Perceived Uniqueness
Competitive Scope – Wide - DIFFERENTIATION
Large organisations are not very price sensitive. They would look more for quality and brand image.
They will also be more interested in a long term investment and excellent communication infrastructure.
Encoretel does not have the capacity to provide services to such organisation, nor does it have the market value (brand value).
Market scope for Encoretel is very narrow owing t the company size and brand value.
Also uniqueness in service cannot be established in this business as every other service provider would more or less provide the same features and benefits.
Table 1.9.1 Porters Generic Strategy
1.9.2 Ansoff Matrix
Marketing needs to identify, evaluate and select market opportunities and establish strategies for capturing them. One useful tool for this is the Ansoff Grid.
Market Penetration – Existing Products in Existing Markets
Product Development – New products in Existing Market
UK still has just 3.85 million subscribers as compared to 32.09 million subscribers in US. Thus the UK market definitely has scope for Market penetration.
There is no scope for product development since Encoretel services are more or less similar to what its competitors provide.
Market Development – Existing Products in New Markets
Diversification – New products in New markets
Although SME segment cannot be considered as new markets, yet there is a lot to explore in this segment. The requirements are more
Encoretel is a UK based startup and it is too early to explore this strategy. Although in due course it could diversify.
Table 1.9.2 Ansoff Matrix
From the above tables, Encoretel has adopted the Market penetration strategy along with Focused Cost Leadership. With the cost advantage the price sensitive SME segment can be give exactly what they need to set up a great VoIP communication system and they can move away from the traditional legacy line systems.
1.10 Marketing Mix
The marketing mix defines Encoretel’s existing overall mission and objectives. Guided by the marketing strategy, the company designs marketing mix made up of factors under its control as shown below.
Product
Encoretel offers end-to-end Business VoIP services for the SME sector.
This ranges from Conferencing solutions to hosted services.
These services are meant to replace traditional telephone systems and legacy line.
It also provides a Customer management System for Channel partners for them to order amend services that they offer to their clients. This also helps with adding or removing features to a service and billing.
Encoretel also resells a couple of conferencing products provided by competitors like Cisco and Level 3.
Place
These services are currently offered in UK mostly concentrating in London, Leatherhead, Northampton and Cobham.
The specific concentration in location is because of the channel partner network in these regions.
Price
Pricing is on par with any other competitor.
Pricing depends heavily on the amount of traffic one gets from customers. The higher the traffic the lower the termination rates. This has been mentioned in The PESTEL analysis.
Pricing is cheaper as compared to traditional telephony owing to the
Promotion
The only promotions as of now that run is the website.
Adwords has been planned considering the current sales revenue.
Also marketing campaigns intended to entice Internet Service Providers is under way.
In this ISP’s who want to become resellers for Encoretel will be provided a basic Joomla based website with content, marketing collaterals and technical training to set them up in business.
Process
Leads Generation and Leads management process have been in place.
Support ticket management is done trough a portal using emails and other notifications.
Marketing process is yet to be approved.
Server Monitoring and other tech process are perfect.
People
Development Team in India
Sales mainly handled through partner management portal. Less field sales staff
People are more technology driven than market driven.
Physical evidence
Office Space
Marketing collaterals (brochures, visiting cards, letterhead)
Server space
TABLE FOR 1.10.1 – Marketing Mix
1.11 SWOT Analysis for Encoretel
The purpose of a SWOT analysis is to match key strengths with promising opportunities and see how strengths can guard against weaknesses and threats in supporting marketing strategies and programmes. This section uses the findings from the audit to determine the strengths, weakness, opportunities and threat for Encoretel.
Strength
Weakness
81% new visits on the website and a lot of unique visits.
Very strong technical skills and technology infrastructure.
Good Technical support and service delivery infrastructure.
Encoretel is concentrating on the SME sector instead of the whole market understand market requirement perfectly well.
Encoretel offers end-to-end Business VoIP services for the SME sector
It provides a Customer management System for Channel partners for them to order amend services that they offer to their clients.
Excellent server monitoring processes.
Encoretel does not have a very strong partner network.
Very few leads coming to the website owing to low number of visits.
More than 200% in sales revenue gap.
Sales staffing inadequate.
Lack of budget for Marketing and sales.
Channel Partner concentration only in certain areas resulting in limited sales
No control on pricing owing to low traffic.
People more technology driven than market driven.
Opportunity
Threat
Economic recession that is forcing companies to rives budgets and look for low cost options like VoIP for communications.
With shift in work force requirement and need for mobility VoIP has lots of opportunities to grow. Also VoIP is the ideal solution for home office.
Rise in cloud based technology aids adoption of VoIP
UK as compared to US and Japan is not as matured a market for VoIP services. Hence this leaves a lot of scope for start - ups like Encoretel to explore and establish them.
The organisations that can be classified as SME have been estimated at 4,787,650. This is the bulk of opportunity that Encoretel can supply to, in the future with the right Marketing Strategy.
For end-to-end solutions in VoIP it is very high. The investment is high and very high level of expertise is required.
Price sensitive SME sector
Reselling for established
State owned telecom companies monopolizing the international gateway and international VoIP
Competition with other Telecom Companies that charge for termination a call on their network
Caller identification can be avoided with VoIP due to which there could be legal restrictions on the adoption of VoIP in some countries.
75% of 4,787,650 organisations in the UK that have been classified as SME are just the proprietor. Such companies may not want to adopt VoIP. They would rather adopt a BT line and broadband package.
For a start-up like Encoretel, initially the volumes might not be so large and hence they might not be able to match up to the pricing strategy of competition.
A possibility for ISP’s to turn into ITSP’s.
Services like Skype, which are free of cost for the basic variant, will suffice for small organisations.
Like FaceTime (Apple Inc), other such mobile phone developers or mobile service operators can enter into VoIP.
Quality of VoIP services depends on Broadband connectivity
Part 2 – Contents of Marketing Plan
2.1 Mission Statement
Klemm et al asserts that the mission formulation process could be used to generate new ideas and promote shared expectations among all levels of employees. Campbell states that missions are valuable for getting senior managers to work out a common view and as a sort of company flag to rally around. It should guide behavior like the Ten Commandments, defining values and behavior standards. Further, he stated that senior management behavior validates or invalidates the values in the statement.
The Encoretel Mission Statement is guided by the following values
1. Urge to provide the best technology for VoIP Communication
2. Connect multiple locations to function as one with VoIP communication network
3. Providing not just VoIP but Unified Communication and end to end communication solution
4. Provide to customers a service that is dependable, scalable and always available
5. Give excellent service delivery
6. Provide world class customer support for the service
As stated above, these would function as the defining values and behavior standards for all the employees at Encoretel
Encoretel Mission Statement
Provide secure, reliable, and affordable Unified Communication Solutions with the best customer service, to connect multiple customer locations and make them function as one
2.2 Summary of Audit
2.2.1 External Audit
The major threat that the company faces is the legal enforcement on VoIP either by government bodies or by the major players in these countries. (Refer table 1.1.1 – PESTEL analysis). The table also shows some security implications due to which certain countries can ban VoIP. But on the brighter side, with the growth in smart phones and also the requirement of mobility, VoIP has a lot of With pricing, the down side is that the call rates cannot be kept steady depending on the increase or decrease of call termination rates On the other side VoIP, as compared to legacy lines, offers lesser costs and no extra infrastructure investments. For the price sensitive SME market, this would be a welcome break. SME buyers would often select vendors that offer lowest termination costs and lower rates for DDI numbers. The service dependability of VoIP is based on the availability of Internet. Thus if Encoretel has to guarantee the availability of VoIP services, it must have full control on the data infrastructure as well. With audio conferencing service and other VoIP services, even start – ups will have equal opportunity for running their businesses globally.
Research shows that UK market is still not as matured as US or Japan. In fact in the second quarter of 2012, it only ranks tenth in the list of subscribers for VoIP. ( refer to fig 1.2.1). Thus, there is still a lot of exploring that companies in UK can do in terms of VoIP communications and a large window of opportunity for Encoretel. The organisations that can be classified as SME have been estimated at 4,787,650 (fig 1.2.2). This is the bulk of opportunity that Encoretel can supply to, in the future with the right Marketing Strategy. Although a large customer base, almost 75% of these are companies are just the proprietors. Such companies may or may not warm up to the idea of using VoIP services for their business, but what Encoretel can try and sell to these companies are small services like International DDI numbers that can give them Global presence while they operate locally.
Entry barriers are very high since the investment is high and very high level of expertise is required. But entering as a reseller is very easy, especially for ISP’s. (Refer table 1.3.1 – Porters 5 Forces). Start ups have to beat large competition brands like Microsoft & Cisco which re extremely well established in the industry. Entry as resellers is very easy since there is no investment or infrastructure required. Like FaceTime (Apple Inc), other such mobile phone developers or mobile service operators can enter into VoIP considering that they already have infrastructure and they can have a good chance of forward integration.
Large suppliers serving many companies in multiple industries have high bargaining power owing to the volumes they generate. Vendors cannot bargain in terms of product/service differences. (Refer table 1.3.1 – Porters 5 Forces). The major differentiating factors for competitors are brand names, infrastructure presence (Level 3), strong channel network and strong technical support. (Refer table 1.4.1 – Competitor analysis). This reflects in the perceptual mapping ( Fig 1.5.1)
2.2.2 Internal Audit
The Google ranking for the Encoretel website is not very high. The result is that the website visit patterns are not very impressive. Although, the unique visits and repeat visits show a good percentage, only because the numbers are not very high, the leads generated from the website are not very high as well. It has been mentioned that this is the only source of lead generation apart from Channel Partners. (refer table 1.6.1 – Website Data & table 1.10.1 – Marketing Mix). Since Resellers are the main channel of sales for Encoretel, not having added more to th existing list has made a lot of difference. This is a weakness for Encoretel. Secondly, the lead generation is not great. The only method for lead generation is the website and that gives just 5 leads per month (refer fig 1.6.1), of which not all convert into a sale.
Encoretel has very strong technical process and skilled developers, but lacks strong sales skills. The employees are also more technology oriented and need to gain commercial expertise. (refer table 1.8.1 – Mcinseys’s 7 s). Encoretel has adopted the Market penetration strategy along with Focused Cost Leadership. With the cost advantage the price sensitive SME segment can be give exactly what they need to set up a great VoIP communication system and they can move away from the traditional legacy line systems. (refer table 1.9.1 - Porters generic strategy & table 1.9.2 – Ansoff Matrix.)
2.3 Key Issues
A few key issues have been identified based on the Marketing audit as mentioned in section 1.
1. No lead generation tactics – As seen in table 1.6.1, the website is currently the only lead generating platform for Encoretel. Owing to the low website visit pattern and low Google ranking, the number of leads coming in every month is less and the ones qualifying into a sale are even lesser. This is one of the reasons for the 200% and over gap in sales as seen in fig 1.7.1.
2. No control on pricing - As pointed out in table 1.3.1 – Porters 5 Forces, pricing depends on what the vendors charge, and vendor’s charges depend on volume or traffic. Since Encoretel cannot guarantee very high traffic, the pricing offered by vendors is also not very profitable. Again, the termination charges are very volatile. Although Encoretel has to offer a fixed termination cost to its customers, the pricing keeps changing from the vendors and a result the margins for Encoretel. The only solution to this issue is to increase sales and ensure high volumes.
3. Low sales staffing – From table 1.8.1 – Mckinsey’s 7S, the concentration on technical processes is far more than on commercial processes. Also since the lead generation is not very strong, the management has not felt the need to increase the sales staff at Encoretel. This is a classic chicken and egg case where more sales staff will ensure more fieldwork and more sales, but without seeing the sales coming in the staff will not increase.
4. Poor Channel Partner Network – As seen in table 1.11 – SWOT Analysis, Encoretel has not many channel partners and very concentrated sales only in the region where Channel network exists. From the competitor analysis in table 1.4.1 and perceptual mapping, it is evident that a good channel partner network is one of the most important strengths of competition. This again connects to the earlier points mentioned where poor sales, poor lead generation and a poor channel network are all interconnected.
5. Lack of Budget for Marketing – This is again interconnected to the above-mentioned issues. When leads generate and sales happen, marketing budget automatically increases. Thus its important to work on these issues first. Again, with the right marketing the above issues can be sorted and that requires a budget. Thus the marketing plan that will be put in action must have very specific ROI based objectives to justify the money spent.
2.4 Marketing Objectives
The marketing objectives for Encoretel are based on the issues mentioned in section 2.3. These objectives are meant to set the issues right and also ensure that there is growth in business and also reduce the gap in sales revenue. To aid to marketing objectives, a few customer care objectives have also been set. This will ensure that Encoretel will be in constant touch with its customers and channel partners and make the brand stronger.
Objective
Year 1 target
Year 2 Target
Year 3 Target
Website Visits
500/month
1500/month
2500/month
Adding channel Partners to the existing network of 50 partners
100
175
250
Lead Generation from all sources (including channel)
50/month
150/month
250/month
Customers to be contacted each month for feedback on service provided
80% of all sale for the month
80% of all sale for the month
80% of all sale for the month
Channel partners to be contacted each month for feedback
10% of the existing network
10% of the existing network
10% of the existing network
Table 2.4.1 – Marketing Objectives
2.5 Marketing Strategies
2.5.1 Ansoff Matrix
Market Penetration – Existing Products in Existing Markets
Product Development – New products in Existing Market
UK still has just 3.85 million subscribers as compared to 32.09 million subscribers in US.
Thus the UK market definitely has scope for Market penetration.
There is no scope for product development since Encoretel services are more or less similar to what its competitors provide.
Market Development – Existing Products in New Markets
Diversification – New products in New markets
Although SME segment cannot be considered as new markets, yet there is a lot to explore in this segment. The requirements are
more
Encoretel is a UK based startup and it is too early to explore this strategy. Although in due course it could diversify.
There will not be change in this strategy. As seen in section 1.2 of Marketing Audit, there is a very large scope for market penetration. Also, considering the number of organisations classified as SME in UK. This will be the right strategy for Encoretel. Once business is established in UK, Encoretel can look at setting up in other EU nations. Another aspect that can be considered is that, though Encoretel will be serving the primary organisations in UK, the branch offices in other countries will also come under the service wing.
2.5.2 Porters Generic Strategies
Competitive Advantage – Low Cost
Competitive Scope – Narrow - FOCUSED COST LEADERSHIP
Competitive Advantage – Perceived Uniqueness
Competitive Scope – Narrow – FOCUSED DIFFERENTIATION
Encoretel claims to be cheaper than legacy line communication systems.
SME market, which is the focus for Encoretel, is very price sensitive.
This is the current strategy implemented by Encoretel.
It has multiple vendors and choses the lowest routing cost to ensure that it can provide low prices to customers.
It provided hosted services that bring down Capital Expenditure.
As mentioned in the PESTEL analysis, services/products provided by Encoretel are not unique. They are the same as any other competitor can provide.
Features and benefits remain the same.
The target market would be SME’s in UK that intent to move away from the legacy lines system
Competitive Advantage –Low Cost
Competitive Scope – Wide – COST LEADERSHIP
Competitive Advantage – Perceived Uniqueness
Competitive Scope – Wide - DIFFERENTIATION
Large organisations are not very price sensitive. They would look more for quality and brand image.
They will also be more interested in a long term investment and excellent communication infrastructure.
Encoretel does not have the capacity to provide services to such organisation, nor does it have the market value (brand value).
Market scope for Encoretel is very narrow owing t the company size and brand value.
Also uniqueness in service cannot be established in this business as every other service provider would more or less provide the same features and benefits.
Focused Cost Leadership will be the strategy adopted by Encoretel. There will not be any change in this since this strategy perfectly suits the market situation and the sector for which Encoretel will be providing service.
2.5.3 Segmentation, Target & Positioning
Encoretel will be targeting two types of customers viz. 1. The end users, and 2. The Partners. Hence, Segmentation, Targeting and positioning will be done separately for each of these customer types
1. The End User
The End User for Encoretel
Segment
Small and Medium Enterprises
Size
50 or more users
Product Application
Audio Conferencing, Cloud Hosted VoIP system, DID Numbers, Call Center Application integrated with VoIP
Industry
Call Centers or any other Industry in the SME segment
Usage
At Least 10 DID numbers and 25 extensions generating VoIP traffic daily
Customers of Customers
International customers because of which the target company needs to have a global presence using VoIP
Attitude to Suppliers
Not very fussed about brands but need good service and price conscious
Choice of Benefits
Hosted application that avoids any fixed cost
Low cost routing of calls
International DID numbers
Call conferencing that’s easy to set up
Affordable pricing
Table 2.5.3a – Segmentation and Target description for End Users
2. The Channel Partner
The End User for Encoretel
Segment
Small and Medium Enterprises
Size
5 or more users with at least 1 sales engineer and 1 technical support person. Is not in the VoIP business but selling the same will be profitable.
Product Application
Has an existing customer base and would like to cross sell or up sell VoIP services.
Industry
Internet Service Providers, Data infrastructure providers, System integrators, Business broadband providers
Customers of Customers
SME with at least 50 users. They can be very aptly described to be same as the End User segment for Encoretel as shown in table 2.5.3a above.
Attitude to Suppliers
Ready to resell high-end brands but also need some white labeled products to resell.
Choice of Benefits
Help with service delivery and second level support
Marketing support for services provided
Website maintenance
Excellent Training on Services and Products
Customer Management and Billing tools
Great channel partner pricing and discounts.
Good quality services and strong infrastructure
Table 2.5.3b – Segmentation and Target description for Channel Partners
Since the sales team at Encoretel us not very strong, concentration will be more on increasing the existing channel partners network which will lead to increase in end-customers.
2.5.4 Multifactor Matrix
Chart 2.5.4 – Multifactor Matrix for Encoretel legends explained as follows A – Audio Conferencing, B – Hosted PBX, C – Termination, D – IP Phones
The above chart shows that product A, B and C, which are Audio Conferencing, Hosted PBX and Termination, are the most attractive to Encoretel and they should be continued and grown. They are worthy of further investment. Product D – IP phones, is a necessity. This line of product is not very profitable as margins are every low, yet, when a customer buys Hosted PBX, they would also want IP phones and hence this line has to be continued. Hence, Encoretel will not stock these but will order from a supplier as and when required.
2.6 Marketing Tactics
2.6.1 Marketing Mix for End Customers
Product
Encoretel offers end-to-end Business VoIP services for the SME sector.
Encoretel Products / Services
Audio Conferencing
Hosted PBX
Termination
DID numbers
SIP Trunks
Encoretel will also resell
Level 3 Audio Conferencing
Cisco Web Conferencing
Broadband services
IP phones
Place
These services are currently offered in UK mostly
The services will be available for purchase
Through a Channel Partner Network
Encoretel Sales Network
Online through the website
Price
Pricing is on par with any other competitor.
Encoretel Pricing will become cheaper for customers offering higher traffic.
Promotion
Website
Channel Promotions through monthly gifts / souvenirs
End user promotions through email marketing
Linked In for Social Media Promotion
Unified Communication trade show in London for the next three years
Process
Lead Generation
Customer Service
Support
Marketing
Promotion Effectiveness Measurement
Service Delivery
Server Management
People
- Sales
- Development team
- Marketing & Customer Care
- Channel Partners
- Support
- Service Delivery
Physical evidence
Office Space
Marketing collaterals (brochures, visiting cards, letterhead)
Server space
Table 2.6.1 – Marketing Mix for End Customers
2.6.2 Marketing Mix for Channel Partners
Product
Encoretel offers end-to-end Business VoIP services for the SME sector.
Encoretel Products / Services
Audio Conferencing
Hosted PBX
Termination
DID numbers
SIP Trunks
Specific for Channel Partners
Customer Management Portal
White Labeled Products
Marketing Material
Website Management
Place
These services are currently offered in UK
Encoretel Sales Network
Online through the website
Price
Pricing is on par with any other competitor.
Standard Partner Pricing
Promotion
Website
Channel Promotions through monthly gifts / souvenirs
Monthly Partner price promotions through email marketing
Linked In for Social Media Promotion
Seminars for ISP communities and the likes.
Unified Communication trade show in London for the next three years
Process
Channel Management
Customer Service
Support
Marketing
Promotion Effectiveness Measurement
Service Delivery
Server Management
People
- Sales
- Development team
- Marketing & Customer Care
- Support
- Service Delivery
Physical evidence
Office Space
Marketing collaterals (brochures, visiting cards, letterhead)
Server space
Table 2.6.2 – Marketing Mix for Channel Partners
2.7 One year action Plan
Activity
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Website Revamp
Revamping the content
Design stage 1
Website Completion
SEO
Social Media
Ad words
Blogs (weekly)
LinkedIn Page Creation
Subscription to ISP Communities
Subscription to SI Communities
Connection with System Administrators (at lease 10 every month)
Email Marketing
Leads Communication (Monthly)
Channel Partner Sales Promotion (Monthly)
Customer News letter (Monthly)
Channel Partner News letter (Monthly)
Seminar/webinar
Seminar for ISP Communities
Webinar for End Users
Channel Partner Souvenirs
Monthly Channel Partner Souvenir
Trade Show
Call Centre & Customer Management Expo
Unified Communication Expo
Table 2.7.1 – Marketing Action Plan for one year
2.8 Measurement
Heading
Report Matter
Duration
Website
Google Analytics Detailed Report on website visits against promotions done every month which includes email marketing campaigns, seminars, webinars, trade show participation and blogs
Monthly
Leads Management
Ad words report on leads and ROI
Monthly
Customer Care report on Leads management that includes a detailed report on leads generated, Source, Current Status, number of open leads, number of leads the convert to opportunity, number of opportunities closed as won, number of lost opportunities, time taken for closure.
Monthly
ROI report for lead closures
Monthly
Email Marketing
Detailed report on number of opened emails and click through report for leads email campaign
Monthly
Detailed report on number of opened emails and click through report for customer promotion email campaign
Monthly
Detailed report on number of opened emails and click through report for Channel Partner promotion email campaign
Monthly
Detailed report on number of opened emails and click through report for customer newsletter email campaign
Monthly
Detailed report on number of opened emails and click through report for channel partner newsletter email campaign
Monthly
Blog
Analytics report on blog visits and most read articles every month
Monthly
Sales Report
Planned vs actual
Monthly
Sales vs promotion for the month
Monthly
Channel Partners added and ROI
Monthly
Customer Care
Customer Satisfaction report for service quality and service delivery
Monthly
Channel Partner Satisfaction Report for service quality and delivery
Monthly
Marketing
Marketing Budget spent vs ROI
Monthly
Table 2.8.1 – Strategic and Tactical measurement plan for marketing activities
Part 3 – Evaluation Report
3.1 Marketing Planning Process
As mentioned in ‘Marketing Planning’ by Marian Burk Wood, Marketing planning is the structured process that links the mission, organisational strategy and business strategy to marketing decisions and actions as we:
Research and analyse the marketing situation, markets and customers
Develop marketing direction, objectives, strategies and programmes for the targeted customer segments
Determine how to support marketing strategies through customer service and internal marketing
Implement, evaluate and control marketing programmes to achieve the desired objectives.
Using this process, we can examine any number of suitable opportunities for satisfying customers and moving the organisation closer to its goals, as well as various potential threats to successful performance. After systematically considering the different possibilities and outcomes, the organisation will agree on one course of action and record it in the marketing plan. The marketing plan is not simply an account of what you as a marketer hope to accomplish in the coming year. Given the changes that inevitably occur in the marketing environment, we plan must allow for measuring progress toward the objectives and for making adjustments if actual results vary from projections.
Kotler stresses that rather than trying to stimulate purchases one at a time, marketers should use relationship marketing to build ongoing connections with customers (and other key stakeholders). When we use relationship marketing, we start from the premise that if we look beyond the immediate transaction to build trust with customers and meet their long-term needs, they are more likely to remain loyal. Cultivating long-term relationships with profitable customers in particular will help a company reach its financial objectives and defend against competition. This is exactly the approach that Encoretel has adopted. With regular communications going out to customers in the form of offers and newsletters, Encoretel has made an attempt to build a relationship with its end users. Also with the monthly souvenirs for channel partner, it is not only increasing its mindshare and branding but also making an effort towards long-term relationship building with its channel network.
The marketing planning process has helped Encoretel to not only understand the current market trends and its competition but internally as well. As pointed out in section 1.10 – Marketing Mix, the management has realized that it is not just enough to be technically strong but also one has to be market driven in order to make commercial progress. Encoretel has managed to realize its internal short falls, tackling which is of utmost importance. Once the internal ghosts are driven out, the external issues can be handled better. Hence specific importance has been place on processes like leads management, customer service and Channel partner management now. Earlier there were just exhaustive processes for server management and maintenance. With the planning process Encoretel also realized that the price war in the market could only be won with large calls traffic. Hence the emphasis on leads generation and leads management on the marketing plan. Market potential has been thoroughly understood and the plan has been drawn keeping in mind all the possible channels of leads generation and a process that ensures that conversation of ‘Lead’ status to ‘Closed Won’ status. With clarity on the Target customers, it will be easy for Encoretel to talk to the right kind of people on forums like LinkedIn and Blog. The content of the marketing collaterals, website and blogs can target the current issues that specifically the target market faces with its current telecommunication system. This will not only grab attention of the right kind of people but also make the task of leads conversion easy. It will ensure more qualified leads coming in and lesser wastage of time.
Sticking to the processes drawn, and continuous measurement of objectives as suggested in section 2.8 will surely achieve the objectives of leads generation, channel partner creation, sales and customer satisfaction. With continuous contact with channel partners, a strong relationship will be maintained which will result in increase in the bottom line of Encoretel. Through channels like blog and webinars, the technical proficiency of Encoretel will also come out clearly leading to increased trust of customers and prospects. The SEO and Ad words campaign is also aimed at lead generation a part of the online initiative. Participation in tradeshows is a lead generation initiative as part of the offline or below the line marketing activity. These initiatives will surely generate revenue through added sales and thus make sure that marketing has the required budgets in the following years to undertake above the line projects like print ads and video promotions.
3.2 Marketing Audit
According to a blog article (Interactive and Social) by Lisa Robbins, Accountability exists in all professions. Physicians are accountable for their diagnoses, receptionists are accountable for the messages they route, and marketers are held accountable for the strategies they propose and the methods they choose to implement them. A good first step in keeping up with what’s expected of us and staying in touch with the primary goals of what it is we’re trying to accomplish is performing a marketing audit.
Marketing audits allow us to discover problems and ask questions as to what goals we were trying to accomplish in the first place. Because marketing audits are so important to increasing ROI and maximizing revenue, it pays to begin with a thorough look at how our the organisation goes about marketing its products, goods, or services. Five main reasons why a marketing audit isn’t just a good idea, it’s a necessary one are as follows:
Marketing audit reintroduce you to your product or service.
Marketing audits remind you of the initial campaign goals so you can adapt and succeed.
Marketing audits allow you assess what’s worked, and what hasn’t.
Marketing audits uncover inefficiencies that you didn’t know existed.
Marketing audits recharge your campaign and spark life into new strategy and direction.
Also as stated in the Principles of Marketing by Philip Kotler and Gary Armstrong, a company’s marketing environment consists of factors and forces outside marketing that affect the marketing management’s ability to build and maintain successful relationships with target customers. More than any other group in the company, marketers must be environmental trend trackers and opportunity seekers. Thus knowing the environment will ensure that the objectives are clear and methods to achieve the objectives can also be examined closely to suit the current situation and requirement.
Issues faced in data collection during the Audit
1. Competitor Analysis: The biggest issue faced during the data collection processes was, knowing the current market share of competitors. This data is not easily available online and investing in a market research agency for getting the data ourselves was not approved by the management. The whole thing has been a wild judgment depending on the brand perception and also some inputs from the field sales staff. Also there is no evident or strong data for the channel partner strength or pricing of competition. This is again based on the inputs of the field sales staff at Encoretel. Thus, audit sections like competitor analysis and perceptual mapping is completely based on personal judgment of field sales staff.
2. Sales and Margins: The management has hidden the figures for the margins made from each service in the Encoretel offering. Without having this idea it was difficult for Marketing to realize which product or service is the most profitable for the organisation. Hence audits like revenue and sales analysis is depending completely on the revenue generated and not profit made. There could be a possibility that the service generating most revenue could be the least profitable and vice versa. This could later on lead to a faulty sales plan and profit objective for the company. Hence, no profit objectives have been included on the report.
3. Market Data: Many paid reports like the Gartner report are available to understand the VoIP market in UK, yet the cost of obtaining these are high and not approved by the company management. Thus, although a market data audit section has been included, this could be a little out of context and not very specific. Again, spending on marketing research for obtaining this data was also not an option. The data mentioned in the report have been taken from the most possibly recent sources and tried to be context of the report.
4. Size of the organisation: Encoretel is a startup with very little experience as compared to the existing market. Thus the information available is also equally limited and so are the resources. A company like Cisco would have all information on its fingertips, where as for Encoretel, information has to be dug out. Already small as the size is, smaller is the marketing and sales team. Due to this resource allocation for data collection was also not possible. The management is more technically oriented and co-operation of the management is a project like this needs repeated attempts of talking and convincing.
3.3 Strategy
From the Audit, Encoretel realized that to increase sales, it has two options
1. Strengthen its own leads generation and sales
2. Strengthen its partner network.
The same thing is pointed out very clearly in the perceptual map section of the Marketing audit. (Refer section 1.5). Here again we see that Encoretel stands far behind in queue with competition because of a weak channel partner network. Hence, in the strategy section, Encoretel has adopted a two-pronged approach towards Segmentation, Targeting and positioning.
Firstly, Encoretel had to target its marketing strategy towards the end users. These would be organisations that Encoretel sold to directly and whose employees were the end users of the Encoretel services. It was important to understand this target segment because most of the Encoretel communication would be in context to end user benefits. Thus the website content, blogs and all other marketing collateral content will be written keeping in mind the needs of this target segment and benefits of the services will be depicted to suit this target audience too.
The second target segment consists of the channel partners. These are organisations that would purchase services from Encoretel to resell the same to its customers. This target has to be handled differently. Firstly, they have to be shown how the services given by Encoretel will benefit their customers. Secondly, they have to be shown how partnering with Encoretel will be of advantage to them. With add on services like website management, training and marketing help, Encoretel will give complete support to its partners. The end user target segment mentioned above will also be the target segment for the Channel Partners.
For the End User segment, Encoretel will position itself as an end – to – end service provider for all the telecommunication related services. An organisation can choose to buy just the conferencing service or select to have a phased movement from its existing legacy line system. Keeping its existing phone numbers, which will be ported, to Encoretel, the client can just deploy SIP trunks to connect to the cloud. Similarly, for channel partners, Encoretel will position itself as the end – to – end supplier. Even for companies that have no idea about the services will be able to sell the service with confidence. That is the kind of support that Encoretel will offer with website creation and training etc. Encoretel will train its channel partners not only with sales information but also technical support so that the first level of support tickets can be handled at the channel partner end and only the second level support will have to be handled at Encoretel level.
With the existing sales and revenue at Encoretel, it will be difficult to increase and maintain the staff for sales and support immediately. This two - pronged approach will take away the pressure from Encoretel to increase sales staff but also make sure that the objective of increased leads generation and sales will be taken care of by the channel partner network. Initially the existing sales staff can work on increasing the channel partner network. The leads generation strategy as mentioned in the one - year activity plan (section 2.7) will ensure that Encoretel will also receive leads for end user and channel partners. Initially end user leads received by Encoretel can also be passed on to Channel Partners for them to be qualified and converted. Encoretel can give complete support in the sales process for partners who have less confidence. Thus with the right target, Positioning for each target has been achieved quite favorably and the marketing activities plan decided to support achievement of its objectives.
3.4 Issues
Issue 1 - Inadequate understanding and support from senior management
The senior management at Encoretel are pro – technology. As pointed out in the weakness section of the SWOT analysis, there is lack of commercial knowledge. When it comes to approvals on marketing budgets etc. there is a chance that the budget could get diverted to technology projects. Again, getting inputs for content or blogs from management is also very difficult. They would rather spend time on technology projects than give their inputs on the online marketing initiatives.
Remedy
To overcome this, marketing plan for the next one year includes activities that involve very minimal marketing budgets like blogs, LinkedIn and Email marketing. The only activity that could cost a little more is participation in trade shows. There have been about 2 – 3 shows that marketing plans to invest, but the success in the first one will be deciding factor for the management to approve participation in the others. For this, the leads generation and leads management processes must be tightly followed. Also, including some key partners in the events will ensure budget sharing and responsibility sharing in the process of leads management.
Issue 2: Blinkered view of the external marketing environment
The current market information is only based on what the field sales informs marketing. Owing to lack of budgets to conduct a market research this information could be skewered and a very person view of sales and marketing. This could result in a wrong understanding and decision of objectives and hence wrong marketing activities.
Remedy
The remedy for this lies in constant monitoring of the results of marketing activities. Hence monthly reports will be generated to know the sales gap and other objective measurements. Secondly, customer service will make an effort to get feedback from existing customers and channel partners on service quality and other market details and share the report with the management every month.
Issue 3: Planning activity fades out
Marketing also gets involved in a lot of pre sales activity and vendor management. Due to this marketing activity sometimes takes a back seat. Management also stresses more on vendor management and other such processes and there is pressure on Marketing to complete these activities.
Remedy
Marketing will submit a plan for job distribution and work assignment where a major part of vendor management will be part of operations and sales. Thus marketing will be able to stick to its plan. A task management system will be implement where every activity of Marketing and its progress will be recorded a;ing with the number of hours spent. This will make it crystal clear to the management that marketing activities is planned and is enough to cover the working hours in a day with complete justification.
Issue 4: Lack of knowledge and marketing skills
Marketing is essentially a one-man army at Encoretel. Support in terms of back – up, HTML design work etc. is not available. The management has not approved any recruitment so far. Any design work done so far has been a one - time investment through an agency in India and hence re-branding activities cannot be undertaken. In the current marketing activities, HTML help will be required for the website and email marketing. This could cause a glitch.
Remedy
The task management system can be of help to convince the management for increase in marketing staff. The website is being developed on a content management system called Joomla where the template is a readymade one and just needs application. The rest of the coding work can be done with the help of the technology team. Marketing can very easily upload the content. The email template will also be made using online software. These will be standard templates that cannot be changed except the logo part and the heading. Although we will not be able to create sections in the mailer with various links to the website, this could be a good beginning.
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List of References
Dealing with the uncertainties of environmental change by adding scenario planning to the strategy reformulation equation - Philip R. Walsh (Emerald Journals)
Market Scope for Unified Communications for the SMB Market, Western Europe – Gartner (2010)
Research Report Published by Point Topic, London on VoIP Statistics – 2012 (Q2)
Business Population Estimates for the UK and regions 2012 – Department of Business innovation and skills
Marketing Planning: Wood, M.B. (2004)
The Marketing Audit Handbook: Wilson, A. (2002)
Strategic Marketing: Planning and control: Drummon, G. Ensor, J. and Ashford, R. (2007)
Principles of Marketing – Fourteenth Edition – Philip Kotler & Gary Armstrong
Management decision 40/5 [2002] 448 – 445
Marketing Intelligence & Planning 20/2 [2002] 120 – 126 – Emerald Journals
Blog article - Interactive and Social - Lisa Robbins