Vodafone's Strategy

Task 4

1) How has your primary and secondary research informed you about Vodafone’s current position?
An example of primary research is actually exploring the needs of customers at vodafone which as a result, I did research such as the questionnaire that I issued, this is primary research which gave an idea of different aspects of what people want and their needs from vodafone this included areas such as: If they had ever used vodafone before and what they thought of vodafones quality of service etc. By using primary research such as the questionnaire abled to give an indication about Vodafone’s current position.
On the other hand, the secondary research that was included was the marketing strategies. The secondary research that I used was looking at the four P’s which is price, product, promotion and place whereby I researched into the four P’s for Vodafone and furthered my research by comparing Vodafones four P’s with other networks such as O2, Orange, T-mobile etc.

Marketing strategy is a key part of overall corporate strategy, which is concerned with developing plans for finding out what customers want and then efficiently meeting their requirements. Vodafone's marketing aim in the UK is to retain market leadership on revenue per customer, network quality and customer satisfaction.

Vodafone's strategy is customer focused and product led; the company is continually developing new products and services, which utilise the latest technological advances. However, as consumers become increasingly sophisticated users of modern mobile technology, they make new demands and seek added value through product improvements. Vodafone must feed this back into its product strategy.

To keep its leading edge, Vodafone is continually looking to add value to the services it provides and to the packages it offers to customers. Soon, within the UK, there will be few new customers available. So the challenge is to provide added value services and competitive charges to existing customers who are becoming more sophisticated and demanding.

2) How has Vodafone’s market share changed over recent years
Vodafone took over 40% of market share in service revenues in the first quarter of 2007 (January to March 2007). In the same period, the company won 133 thousand new customers, corresponding to 78% of all mobile telecommunications customers attracted various countries such as Portugal.
Vodafone's 2006 financial year (April 2006 to March 2007) was the third successive year of gains in national market share for the company. Since 2003, it has increased its market share of service revenues by 4.9 percentage points to 39.2% and its market share of customers by 4.6 percentage points to 36.3%.
Despite the reduction in interconnection charges, Vodafone Portugal's service revenue increased by 5.9% in the 2006 financial year compared with the previous year, to 1.246 billion euros. This made Vodafone the fastest growing operator in the Portuguese mobile market, in which growth did not exceed 1.6% in the same period. Vodafone Portugal’s total revenue in 2006 was 1.366 billion euros.
Vodafone Portugal won 475 thousand new customers in its 2006 financial year to achieve a market share of new customers of 42.5%, remaining the operator that won the most mobile service customers in Portugal in the last three years. At 31 March 2007, Vodafone had a base of 4.751 million registered customers in Portugal.
The Vodafone Group today announced the enlargement of its worldwide base to 206.4 million customers (proportional). The Group achieved a total turnover of 31.1 billion pounds sterling in the year ended on 31 March 2007. At that date, the Vodafone Group had a presence in 63 countries including an equity interest in 25 countries and partner networks in 38 countries.

3) Is Vodafone living up to its corporate strategy?

Vodafone Group's current target is to become one of the world's top five brands. To achieve this, it is expanding its global presence through dual branding exercises with the 30 other companies around the world in which Vodafone Group holds interests.
This involves using the locally recognised brand and the Vodafone name, i.e. Libertel Vodafone. Once the Vodafone name becomes widely recognised in these markets, the Vodafone brand will become the sole brand. This initiative forms part of an ongoing programme to build the Vodafone brand globally.

Vodafone's current business strategy is to grow through geographic expansion, acquisition of new customers, retention of existing customers and increasing usage through innovations in technology.
This is proving a very successful strategy, as is evident from Vodafone's UK success. Vodafone opened the UK's first cellular network on 1 January 1985. It has been the market leader since 1986; its UK networks carry over 100 million calls each week. Vodafone currently has the largest share of the UK cellular market.
It is anticipated that by 2005 there will be over one billion mobile phone users throughout the world, using a wide range of phones including 'third generation' and Wireless Application Protocol (WAP) enabled phones. Nearly two-thirds of these mobile phones will be WAP enabled and with rapid increases in processing power, third generation mobile phone users will be able to:
· Find out cinema programme schedules and seat availability
· Book the tickets
· Study the best route and where to park
· Access the Internet
· Hold videoconferences while on the move.

The mobile phone market is constantly moving forward; the pace of change and development is accelerating. Consumers' desire for better products is intensifying.
To move the market forward, Vodafone is continually developing new services, which, until they are there, are often beyond the average customer's imagination.

Vodafone is well placed to benefit from these developments. As a global telecommunications company, Vodafone benefits from the advantages of operating across a range of markets which enables them to benefit from huge cost savings resulting from dealing with single suppliers worldwide for example.
The aim of this report is to research into the Vodafone group and their entry into the Indian Market. The research was carried out of Vodafone’s history, their existing market strategy, the internal environment of the company and external environment of their home market.

Also it has been explained what Vodafone international strategy is and why there is such interest in the emerging market.

4) Explain the Boston and Ansoff matrices and SLEPT analysis.

· Cash cows are units with high market share in a slow-growing industry. These units typically generate cash in excess of the amount of cash needed to maintain the business. They are regarded as staid and boring, in a "mature" market, and every corporation would be thrilled to own as many as possible. They are to be "milked" continuously with as little investment as possible, since such investment would be wasted in an industry with low growth.
· Dogs, or more charitably called pets, are units with low market share in a mature, slow-growing industry. These units typically "break even", generating barely enough cash to maintain the business's market share. Though owning a break-even unit provides the social benefit of providing jobs and possible synergies that assist other business units, from an accounting point of view such a unit is worthless, not generating cash for the company. They depress a profitable company's return on assets ratio, used by many investors to judge how well a company is being managed. Dogs, it is thought, should be sold off.
· Question marks (also known as problem child) are growing rapidly and thus consume large amounts of cash, but because they have low market shares they do not generate much cash. The result is a large net cash consumption. A question mark has the potential to gain market share and become a star, and eventually a cash cow when the market growth slows. If the question mark does not succeed in becoming the market leader, then after perhaps years of cash consumption it will degenerate into a dog when the market growth declines. Question marks must be analyzed carefully in order to determine whether they are worth the investment required to grow market share.
· Stars are units with a high market share in a fast-growing industry. The hope is that stars become the next cash cows. Sustaining the business unit's market leadership may require extra cash, but this is worthwhile if that's what it takes for the unit to remain a leader. When growth slows, stars become cash cows if they have been able to maintain their category leadership, or they move from brief stardom to dogdom.
As a particular industry matures and its growth slows, all business units become either cash cows or dogs. The natural cycle for most business units is that they start as question marks, then turn into stars. Eventually the market stops growing thus the business unit becomes a cash cow. At the end of the cycle the cash cow turns into a dog.
The overall goal of this ranking was to help corporate analysts decide which of their business units to fund, and how much; and which units to sell. Managers were supposed to gain perspective from this analysis that allowed them to plan with confidence to use money generated by the cash cows to fund the stars and, possibly, the question marks.

The Ansoff Growth matrix is a tool that helps businesses decide their product and market growth strategy.
Ansoff’s product/market growth matrix suggests that a business’ attempts to grow depend on whether it markets new or existing products in new or existing markets.

The output from the Ansoff product/market matrix is a series of suggested growth strategies that set the direction for the business strategy. These are described below:

Market penetration
Market penetration is the name given to a growth strategy where the business focuses on selling existing products into existing markets.
Market penetration seeks to achieve four main objectives:
• Maintain or increase the market share of current products this can be achieved by a combination of competitive pricing strategies, advertising, sales promotion and perhaps more resources dedicated to personal selling
• Secure dominance of growth markets
• Restructure a mature market by driving out competitors; this would require a much more aggressive promotional campaign, supported by a pricing strategy designed to make the market unattractive for competitors
• Increase usage by existing customers for example by introducing loyalty schemes
A market penetration marketing strategy is very much about “business as usual”. The business is focusing on markets and products it knows well. It is likely to have good information on competitors and on customer needs. It is unlikely, therefore, that this strategy will require much investment in new market research.

Market development
Market development is the name given to a growth strategy where the business seeks to sell its existing products into new markets.
There are many possible ways of approaching this strategy, including:
• New geographical markets; for example exporting the product to a new country
• New product dimensions or packaging: for example
• New distribution channels
• Different pricing policies to attract different customers or create new market segments
Product development
Product development is the name given to a growth strategy where a business aims to introduce new products into existing markets. This strategy may require the development of new competencies and requires the business to develop modified products, which can appeal to existing markets.
Diversification
Diversification is the name given to the growth strategy where a business markets new products in new markets.
This is an inherently more risk strategy because the business is moving into markets in which it has little or no experience.
For a business to adopt a diversification strategy, therefore, it must have a clear idea about what it expects to gain from the strategy and an honest assessment of the risks.

SLEPT Analysis
Before creating business plans or when evaluating existing ones it is important to 'scan' the external environment. This takes the form of a SLEPT analysis, i.e. an investigation of the Social, Legal, Economic, Political, and Technological influences on a business. In addition it is also important to be aware of the actions of your competitors. These forces are continually in a state of change.

Social factors relate to pattern of behaviour, tastes, and lifestyles. A major component of this is a change in consumer behaviour resulting from changes in fashions and styles. The age structure of the population also alters over time. An understanding of social change gives business a better feel for the future market situation.
Laws are continually being updated in a wide range of areas, e.g. consumer protection legislation, environmental legislation, health & safety and employment law, etc.

Businesses need to take a pro-active approach and be ahead of these changes, rather than hurriedly making alterations to products and processes in a reactive way.
All industries are influenced by SLEPT factors. For example, some of the SLEPT factors affecting the airline industry in recent years include:

Social: increased popularity of foreign travel leading to a boom in demand for air travel. However, this has been adversely affected by international terrorism.

Legal: there are increasingly tight rules about the materials that need to go into aircraft construction in order to make them safer and more resistant to fire hazards. This has had the impact of raising costs.

Economic: lower interest rates have meant that people have more disposable income to spend on luxuries like long distance air travel.

Political: the development of freedom of movement and trade in the European Union has led to greater levels of competition on European routes coupled with increased movement of people.

Technological: modern aircraft are safer and more economic to run than in the past making possible cheap air travel.

5) Apply Boston, Ansoff and SLEPT to Vodafone’s current position and to your new marketing plan for Vodafone.

Managers can use a number of different tools to understand the environment within Vodafone. This understanding is important because it helps managers to make better decisions.

SLEPT analysis is one of these tools and which looks at changes in five areas:

Social - trends in society
Legal - legal restrictions and considerations
Economic - the health of the economy, inflation, etc
Political - government policy
Technological - developments in computing, etc.

The following sections provide some examples of each factor, which are relevant to Vodafone.

Social factors
Society is concerned about under 18s being at risk. Parents may have concerns about their children being contacted (using mobile phones) by paedophiles or other adults. Society is also concerned about adult content being available via mobile phones to under 18s. Adult content includes gambling, violent games, erotic material etc. Further issues related to 'social' include the rise of mobile phone theft.

Legal factors
Some laws regulate all businesses e.g. The Sale of Goods Act 1974 stating all products must be fit for the purpose they are intended. A mobile phone must therefore work. Certain laws are created to regulate particular industries. Examples include the ban on using holding a phone while driving introduced in 2003.

Independent industry regulatory body:
OFCOM - the Office of Communications. OFCOM is the independent body for regulating the communication industry - www.ofcom.org.uk.
Vodafone goes beyond government regulation, working with its competitors in self-regulation. However to retain its leading position in the industry Vodafone believes it must exceed both legal regulations and industry self-regulation.

Economic factors
The state of the economy, for example levels of growth can impact vodafone. Vodafone activities also contribute to the overall economy. Vodafone should remain true to their ethical values. If they do not, customers may questions Vodafone’s beliefs.

Political factors
Government policy indicates that it wants the mobile phone industry to create self-regulating controls in relation to content. The government also shares public concern about unwanted contact and content.

Technological factors
The mobile phone industry has seen a great deal of technological change and will continue to do so. Mobile phones were originally used for telephone conversations. Text messaging became available and usage has increased dramatically. However, most of the texts were between people who already knew each other and had swapped contact numbers. In other words the users were happy to communicate with each other.
As technology developed, it has become possible to swap information between mobiles and other devices via Bluetooth technology. This can be used inappropriately to send anonymous and unwanted texts. This practice is known as Bluejacking and can be distressing particularly if the recipient is a child or young person.

The advent of 3rd generation (3G) mobile phone technology is bringing with it a richer mix of content and providing more services. This further raises the issue of ethics as Vodafone can now offer a wide variety of content to mobile phones with this new technology. Naturally, 3G will help Vodafone to increase their sales revenues. However, Vodafone recognises that it brings additional responsibility. This includes the need to protect young people from inappropriate contact, including violent games, gambling and erotic material.

Boston matrix