Final Project Company:
Submitted to: Sir Arif Vaseer. Submitted by: (Group Members) Shafaat Ahmed. Majid Khan. M.Faraz Afzal. Course: Strategic Marketing.
Discipline: MBA(1.5)
Company Introduction
Telenor Pakistan
Telenor Pakistan is 100% owned by Telenor ASA of Norway and adds on to its operations in Asia together with Thailand, Malaysia and Bangladesh. Telenor Pakistan launched its operations in March 2005 as the single largest direct European investment in Pakistan, setting precedence for further foreign investments in the telecom sector. The company has crossed many milestones and grown in a number of directions, making Telenor Pakistan a leading telecom operator of the country. They are the fastest growing mobile network in the country, with coverage reaching deep into many of the remotest areas of Pakistan. In the most difficult terrains of the country, from the hilly northern areas to the sprawling deserts in the south, at times we are the only operator connecting the previously unconnected. They are keeping ahead by investing heavily in infrastructure expansion. The agreements, with a potential to result in USD750 million worth of orders from Telenor Pakistan, are some of the biggest of their kind in the industry. They are spread across Pakistan, creating 2,500 direct and 25,000-plus indirect employment opportunities. They have a network of 23 company-owned sales and service centers, more than 200 franchisees and some 100,000 retail outlets Telenor ASA is an international provider of high quality telecommunications, data and media communication services. It ranks as world’s 6th largest mobile operator above 170 million subscribers in its mobile
operations. Telenor Pakistan is 100% owned by Telenor ASA and adds on to its operations in Asia
together
with
Thailand,
Malaysia
and
Telenor has a subscriber base of 24 million as of July 2010 (PTA figures).
Bangladesh.
Industry Analysis
Telecom sector is playing a pivotal role in the economy of Pakistan in terms of providing employment, contribution to national exchequer through taxes and attracting foreign investment in the country. Pakistan's telecom sector remained the largest recipient of the FDI during the last few years capturing more than one fourth of total FDI. During the last 5 years, Pakistan attracted over US$ 19 billion FDI, of which 34% was in telecom sector. In the 2009, the telecom sector received over US$ 815 million FDI, which is 22% of the total FDI in Pakistan. (Source: State Bank of Pakistan) The telecommunication sector of Pakistan was awarded the status of industry in 2005 and since then it has been one of the fastest growing sectors of Pakistan. As the telecommunication sector involves many sub sectors such as Cellular services sector, Mobile phones, Internet service providers, Fixed Land lines and Broadband services. This report focuses on the cellular services. Pakistan is quite eminent from various factors such as the mobile density reaching 64.16 in, 2009-10 and the number of mobile subscribers reaching 100 million. (Source: Pakistan Telecommunication
Authority,
Telecom
Indicators
2010).
Although tremendous growth has taken place in the Pakistan telecom sector but most of it can be attributed to the cellular growth. Fixed line is still awaiting a takeoff. Similarly Value Added Services have grown but are still a drop in the bucket. Now that the competition has been introduced in the telecom sector some very positive impact has been observed on the growth of the sector in a short span of time. The annual report PTA for the year 2008-2009 has shown growth of 17% in revenue for the cellular industry overall reflecting that the industry is involved in a healthy competition and its strategy to increase customer base as well as revenues through value added services and call minutes has worked so far. .
Competitor Analysis
1. Who are existing and potential competitors?
Business Market Definition
Telenor Pakistan is a wholly-owned subsidiary of Telenor ASA. On 14 April 2004, Telenor was awarded a GSM license to build and operate a mobile network in Pakistan. On 15 March 2005, a full multimedia platform for commercial mobile services was launched under the name of Telenor Pakistan. Telenor has a subscriber base of 24 million as of July 2010 (PTA figures). As in 2010 the mobile penetration and number of inhabitants in Pakistan were 58%
and 170 million, respectively according to official estimates Customer’s types etc.
2. What strategic groups can be identified? Competition is fierce; obviously the competitive rivalry will be at the highest level. The very high level of competitive rivalry among the major players of the cell phone sector is clearly observable. A look at the advertisement campaigns of the rivals and you can see how intense the competition is. It looks like a battle for supremacy going on between the rivals. All means of attracting new and potential switching customers are being used by all the competitors to gain as much market share as they can. Exit barriers, industry growth, product differences, brand identity, and diversity of rivals are the main reasons of very high competitive rivalry in this case. As in July 2010, Telenor Pakistan had a market share of approximately 24%. In addition to Telenor Pakistan, there are five other mobile operators in Pakistan: Mobilink, Ufone, Warid, Zong .Based on PTA numbers as at July 2010, Mobilink was the largest mobile operator in Pakistan with a market share of approximately 32%, Ufone had a market share of approximately 20%, Warid had a market share of approximately 17%, and Zong had a market share of approximately 7%.
3. What are their sales, share and profits? Here’s a brief description of the top mobile companies in Pakistan.
At the top MOBILINK, the Pakistani unit of Egypt-based telecom company Orascom. It has been operating in Pakistan since 1994. They have 32 Million Subscribers at the end of September 2010.
UFONE, a wholly owned subsidiary of Pakistan Telecommunication Co. Ltd (PTCL), is now under the control of Etisalat group of UAE. They have 20 – 21 Million subscribers by the end of 2010. For those in Pakistan it is the one company where they can easily invest locally.
WARID, owned by the Abu Dhabi group of the United Arab Emirates and sister of Wateen group is number 4 with 17% market share by 2010 PTA Report.
PAKTEL was the latest target of foreign acquisition. After it got acquired by China Mobile it was rebranded as Zong and launched one of the most successful and aggressive campaigns. Within a matter of few months, Zong has achieved a 7% market share by 2010.
(Source PTA Annual Report 2010)
4. What are the growth trends? Every one of the 5 cellular players has had some interesting particulars. The attention for Warid has not been in the good quality light. The Abu Dhabi Group-backed company has not maintained to get its affairs inside order and while optimism appears abound on its performances, the information have yet to give any credibility to the cause. After the 2009 report of an acquisition by Telenor, the 2010 story that remains alive because of date is an acquisition through another competitor. Even through another attempt to re-package its product selection and market using a new advertising movement, figures released by PTA for lively subscribers for Warid exhibits a drop when as opposed to last year. The best estimate nowadays places the company to take over 14 million subscribers by way of it keen on 2011. Zong, on the other hand, has done the opposed of Warid. Rapid expansion of coverage with a 50% increase inside cell places in the preceding two years, and a much targeted effort toward align its manufactured goods portfolio towards an exacting market section, has allowed the China Mobile piece to thrust up the subscriber numbers. It is estimated on the way to close the year at immediately around eight million subscribers. Even on the branding and promoting front, Zong has taken strides in the direction of a more professional approach and move toward, portraying a good quality understanding of the bazaar segment that they wish on the road to target with their offerings. Creation of worth in this challenging economic condition remains the type to success for now; Zong has maintained to draw this inedible quite reasonably.
Market\Submarket Analysis
1) How attractive is the market or industry and its submarkets? The mobile density has reached 64.08 in Financial Year 2009-10 showing growth of 3.5% since Financial Year 2008-09.
The number of mobile subscribers reaches 100 million
subscribers in September 2010. In terms of subscribers, plus putting sideways the dispute over the metrics used for the calculations, Mobilink has ended the year 2010 at No.1 with approximately 32 million subscribers this demonstrates a superior effort on account of a difficult couple of years for the company in the face of weighty competition. Telenor is at No.2 within the order of 24 million subscribers, supplementing the optimistic trend that the business has shown since its doorway to the bazaar over 5 years ago. Ufone has round out the top 3, and has finished at 20-21 million subscribers. The overall outcome for the industry has been improved than other sectors, with any great impact of the fiscal or financial pressures not quite booming in the results. The major proof of this fact is the PTA’s declaration in
September on the bridging of 100 million mobile customers in Pakistan. (Source: Pakistan Telecommunication Authority, Telecom Indicators 2010)
(Source: PTA Annual Report 2009-10)
(Source: PTA Annual Report 2009-10)
Market Potential Telecommunications has become one of the most important infrastructures that are very essential to the socio-economic well-being of any nation. The globalization of world economy has further amplified the importance of telecommunications to the economy. The telecommunication sector is one of the fastest-growing. Telecommunications is at a crossroads, local telephone companies threatened by wireless communication. Voice over IP challenges established structures of pricing and taxation. Market share of operators is considered an important tool to gauge the level of competition in any sector of the economy. During the year 2007-08, telenor has emerged as fastest growing operator who has improved its market share from 17% in 2006-07 to above 21% slightly higher than ufone who also has 21% market share. On the other hand the leading mobile operator mobilink is losing its significant market power place rapidly and its share has declined by about 5 percentage points and reached 36% in 2007-08 compare to 41% in 200607. CMPak is also growing very fast and it has added 2.9 million subscribers, which is an impressive number and one could hoped that in future it will grab more market share. Warid dropped its share in relation to previous reported period although the company had been gaining the subscribers i-e from 17% to 18%.
(Source: PTA Annual Report 2009-10)
2) What industry trends are significant to strategy?
Market Trends A market trend is a putative tendency of a financial market to move in a particular direction over time. These trends are classified as secular for long time frames, primary for medium time frames, and secondary lasting short times.
E-Banking: Banking transactions made over internet or mobile (known as E-Banking or Mobile Banking) are rapidly getting very common amongst businesses entities and masses in Pakistan. This was reflected in a recent report prepared by State Bank of Pakistan, which read that EBanking has grown as high as 32 percent growth last year this significant growth in ebanking is due to massive use of internet, especially high speed internet in Pakistan. Telenor mobile banking (easy paisa) done a business of Rs. 17 Billion through 10 Million transactions and it become the country’s biggest financial services netw ork. Along with come the factors
such as increasing number of free launce workers in the country who work for overseas companies tend to use E-Banking instead of paper banking. Furthermore, those who are living abroad are also increasingly interacting with their bank accounts back in Pakistan from internet. On the same note, We see that E-Banking is already given good feedback, along with total number of credit and debit card holders reach 6.7 million, there is a dire need of ECommerce infrastructure layout in the country, and that too in quick time.
Competition to Cooperation: No company is an island. At least that’s what today’s businesses are ar e discovering as more and
more of them join forces to save operating and advertising costs. The cooperation trend is sweeping through almost every industry, from communication to food to health care .the good news for corporations; corporation will lead to better competitive stance. it is another tool of compete more successfully. For example: Wateen and Telenor customers can pay there Wateen bills and utility bills
from easy paisa.
Education/Literacy:
The Literacy rate improved in Pakistan in last couple of years In 2009, literacy rate in Pakistan was 57%., some sources show slightly lower and others show slightly higher numbers, but all show numbers somewhere in 50s. This shows a tremendous increase of 40.7%. When it comes to women, their literacy rate in 2009 reached 45%. Women had overall increase of 36.8%.It shows that there is more trend of getting education among the people. So people are becoming more aware about the environment so business people should consider this trend that has ultimate effect on their businesses. For Example: If the literacy rate of a country is high then the people should be well aware
from the products offered by industries and they can enjoy the benefits of every product. More Trend towards Fast Food trend.
Fast food influences our lives as well as our culture since the last few decades. Especially it affects the most on younger generation like high school students and teenagers. The relationship between fast food culture and teenagers is inseparable. In Pakistan there is fast growing trend of fast food or hostelling so there is more competition as well as more opportunities in this industry. For example: Ufone and Warid are giving information about the new deals of different
restaurants like McDonalds and KFC. They offer free deals for their customers so they can enjoy benefits of the fast food. Customer oriented policy:
The capture and analysis of customer information about product/service use, needs, wants, desires and behavior is mission-critical to the enterprise. Companies in today’s environment always try to think according to customer perception and try to develop their product and services according to the requirement and want of the customer. For example: ZONG has offered a new customer oriented package in the market “M9”. In
this package customer can design their own mobile usage plan
.
3) What are the alternative distribution channels and their relative strength? From middle mass to extreme:
Manufacturers, hospitals, shopping malls and magazines all are profiteers of the shift from the mass middle to extreme. In both business and society, the nations moving away from middle size, middle quality, and middle price. MAKRO METRO is the example of this in Pakistan From technological complexity to technological Transparency:
Tomorrow’s technology will be so efficient that we won’t even notice it’s there. This is the trend toward transparency invisible technology that’s so simple to use it’s taken for granted
spurning confusing gadgetry, consumers want products that use technology effortlessly. Advancement in technology:
Increase in products better services advance channels to access customers etc are positive signs of improved and advance technology.
Trend of twitter Characteristics
1. 2. 3. 4. 5.
A place where companies build brands Do research Send information to customers Conduct e-commerce Create communities for users
How twitter will affect telecom industry
According to LinkedIn Research network/ Harris Poll that evaluates advertisers' impressions of Twitter, just under half of advertisers (45 percent) say that Twitter is in its infancy and its use will grow exponentially over the next few years. This differs from the consumer audience's impression: over two-thirds (69 percent) say they don't know enough about Twitter to have an opinion. Other survey results reveal that, among those who have an opinion regarding Twitter, advertisers and consumers have moderate opinions about Twitter's effectiveness for promoting products and ideas. Of advertisers surveyed, only 8 percent say Twitter is very effective for promoting products and ideas, while 50 percent believe it's somewhat effective. Consumer figures are similar: Advertisers (%) Adults (%) 8 8 Very effective 42 Somewhat effective 50 24 31 Not that effective 8 19 Not at all effective Note: Percentages might not add up to 100 due to rounding. Source: Harris Interactive Poll, 2009 (Source: Harris Interactive Poll, 2009)
Now, the telecom sector can use twitter advertisement to promote their new Packages, Rates, information of the company and can have opinion of the customer on that ad by giving the option of tweet in it. By this they can have all sort of information that customer are willing to have in their service. This will be the fastest ways for having information from the customer for implementing new strategies in the company by providing the CUSTOMER BASED PRODUCT to the customer. Twitter is still in early stage of developing but plenty of large corporations like Starbucks (SBUX) are already using it as a marketing tool. Twitter will probably evolve into both a community of individuals and a community of companies that provide goods and services for those individuals
.
24/7 Wall St. has come up with 10 ways in which Twitter will permanently change American business within the next two to three years, based on an examination of Twitter's model, the way that corporations and small businesses are currently using the service and some of the logical extensions of how companies will use Twitter in the future. (Source: Future of Twitter Article) Micro blogging platform Twitter has 32 million users, an increase from about 2 million a year ago, according to research mentioned in the Wall Street Journal. Some Internet measurement services show that figures increasing 50% to 100% month over month. The company could certainly have 50 million visitors by the end of the year. (Source: Future of Twitter Article) As the twitter develops in future with more and more users it will help the businesses to gather information from the customer for useful ways.
4) What are the current and future key success factors? PEST Analysis of Pakistan Telecom Sector:
PEST analysis looks at the external business environment and is an appropriate strategic tool for understanding the big picture of the environment in which business operates, enabling the company to take advantage of the opportunities and minimize the threats faced by business activities. It measures the market potential and situation, particularly indicating growth or decline, and thereby market attractiveness, business potential, and suitability of access – market potential and’fit’in other words. Its four perspectives gives a logical structure in order
to ensure that the market can see a longer horizon of time, and be able to clarify strategic opportunities and threats that the organizations faces.
Political Factors:
The government plays an important role in the operation, manufacturing products and services in term of regulations. Following are some of the factors
Due to the unpredictable political and governmental changes rules and regulation are changed quite frequently. Currently government has increased the taxes in the telecommunication sector that will also a harder in the smooth operation of telecom operation.
Before WTO implementation for deregulation of different sectors of the economy. Pakistan government had taken the step to regulate the telecom sector by the authority of PTA. There are two types of Regulators held by PTA; the first is called the Economy Wide Competition Regulator as the Monopoly Control Authority. Also the political governmental rules cannot be completely applicable in this sector due to the regulation authority of PTA.
Now a day’s Pakistani environment is instable due to political clashes among political parties. Inside country war and drown attacks in north frontier areas. This political instability has led to uncertain environment in the country, which is a threat for any business including all the companies of the Pakistani Telecom Sector.
Environment of telecom is investor friendly and have great potential to gain profit. Pakistan is quite eminent from various factors such as the mobile density reaching 64.16 in, 2009-10 and the number of mobile subscribers reaching 100 million.
Due to huge budget deficit and low growth of economy government has increased the taxes in telecom sector. Pre-paid customers were charged 10 per cent withholding tax on every new load, which was deducted in advance. The customers were also paying 16 per cent sales tax on every call. However, the 18 percent governments increased the sales tax from 16 per cent to 21 per cent for mobile users by declaring the mobile phone a luxury item.
Economic Factors:
Marketers should consider long term and short term state of a trading market. Inflation is controlling by state bank and under strict eyes but unemployment rate is going up and up with the increase of level of poverty. Despite slow down in economy, telecom sector continued to grow positively in terms of subscription, revenue and tele-density.
Tele density of the country jumped to 64% in 2009-10 showing a growth of over the previous year. During the year 2008-09 the sector's financial health could not be improved in accordance with the expectations owing to heavy taxes and falling exchange rates, which placed unprecedented burden on the operators' import bills. Despite these difficulties, the sectors revenue grew by 19% in 2008-09 which pose confidence in Government and regulators' policies. (Source : PTA Annual Report 2008-2009)
Owing to economic slowdown, saturation in the market and global financial crisis, the total investment in the telecom sector during 2008-09 reduced by nearly 47%. During the current year, a total of US$ 1.6 billion worth of investment has been made by all the operators, of which the cellular mobile share is about 75%. The WLL has marginally increased investment from US$ 52.8 million in 2007-08 to US$ 82.11 million in 2008-09.
Socio-Cultural Factors:
The socio cultural environment summarizes demand and tastes, which vary with fashion and Disposable income, provide opportunities and threats to telecom companies. As Pakistan is an Islamic country and people are very strict in case of Islam anything against the philosophy of Islam on either print or electronic media are treated as against Pakistan. Most of the people dislike anything extra-ordinary or 19 something which sabotage their culture or subculture. Pakistani society is largely multilingual and multicultural.
The Pakistani people are more social and want to remain in contact with other people. This will influence the demand for the product.
Increasing globalization has amplified the influence of "Western culture" in Pakistan. The lifestyle of Pakistani people is changing rapidly. People are more conscious about status pat most all people purchase multimedia mobile phones. And also there is trend for Black berry sets by youth which will help in enhancing their product and services.
The total population of Pakistan is approximately 169,248,500. The population is increasing rapidly which increase the number of cellular usage and help in projecting high profits.
In metropolitan cities women are doing work along with their other responsibilities but other than metropolitan cities it is difficult for women to convince their parents and spouses for work.
Technological Factors:
Advances in technology can have a major impact on business success. Technological change impacts socio cultural attitudes as well as on economy.
Companies have technology with which they can compete in the Pakistan and now companies are investing in their infrastructure to not only expand coverage but also to upgrade their existing systems.
The current focus in cellular industry is coverage and establishing franchises which has a positive effect on the telecom industry.
Introduction of CDMA technology in the Mobile SIMS which is also an opportunity for the mobile companies.
The latest technology of 3G mobile communications has been earmarked and PTA will soon be inviting applications for 3G spectrum auction. This technology will increase operating capacity and revenues by using HSPA technology.
Companies have technology with which they can compete in the Pakistan and now companies are investing in their infrastructure to not only expand but also to upgrade their existing structure.
Porter’s five forces model
The model identifies five key structural features that determine the strength of competitive forces within the industry. The telecommunication sector of Pakistan is rapidly changing customer expectations are high and fast evolving, and product life cycles are short in terms of new packages and services. Threat of new Entrants Determinants
Defining Question
Assess the power of Buyers Circle one of the following. 1 = low, 5 = high, or N/A if it doesn’t apply to your industry.
Economies of Scale and
Does successful entry require that
experience
companies have significant economies of
5
scale or experience Brand Identity
Do new companies need to spend heavily
5
on brand identification?
Product Differentiation
Do new entrants need to differentiate by
4
spending heavily on advertising, customer services or product differences to overcome existing customer loyalty? Switching Costs
Does the buyer have to pay to switch from
2
one supplier product to another?
Capital Required
Does the new company need to invest large
5
financial resources?
Access to Distribution
Does the new comer have access to distribution channel channel for product or services?
4
Cost advantage
Established companies have cost
4
advantages over new rivals.
Government policies
Government policies can help to preserve
4
or limit competition.
Expected Retaliation
If industry leaders retaliate more for new
5
entrants then threat for new entrants will be high.
It is not easy to enter in this sector because it requires huge investments. As setup cost are in billions of dollars so threat of a new entry is very low. Market is saturated there are already huge competition among existing competitors so threat of new entry is low. De-regulation of the telecom sector brought about a sudden drop in tariffs as the intense. Competition from the new entrants it encourage the new investor to invest in this sector. Threat of new entry is low. Bargaining Power of suppliers:
Determinants
Defining Question
Assess the power of Buyers Circle one of the following. 1 = low, 5 = high, or N/A if it doesn’t apply to your
industry. Concentration
Are your supplier are fragmented or
2
highly concentrated?
Presences of
Are there any substitutes for your
Substitute inputs
supplier products?
Product
Is the supplier’s product or service
Differentiation
commodity?
1
2
Switching Cost
How costly is it for you to switch
2
from suppliers product?
Importance Relative
Is your industry an important
to Customer
customer the supplier group?
Forward Integration
Can the supplier produce the product
4
1
you make?
Impact on Quality/ Performance
Is your supplier product essential to
4
the quality or performance of your business?
The bargaining power of suppliers is very low in Pakistan because of the nature of inputs required. Switching cost is very low because almost every cellular company providing same rates with the same quality so a customer will easy switched to another connection. The primary suppliers to the long-distance telecommunications industry would include fiber optics providers, hardware suppliers and employees. The suppliers possess minimal leverage. Many of the hardware and fiber optics providers have been integrated either through acquisitions, alliances or cooperatives. The labor force is unionized and there are periodic labor disruptions within the organizations. Many of the jobs available do not require "extraordinary" skills and therefore most of their labor force may be easily acquired or replaced. The Bargaining power of suppliers in telecom industry is very low.
Bargaining Power of buyers Determinants
Defining Question
Assess the power of Buyers Circle one of the following. 1 = low, 5 = high, or N/A if it doesn’t apply to your iindustry. ndustry.
Concentration
Buyer is fragmented because to industry
3
covers all Demographic segments.
Product Cost versus
Does your product buyer’s purchase
Total Purchases
represent a significant fraction of the
4
buyer’s cost? If If so, buyer bargaining bargaining
power is typically high. Product
Product is standard or undifferentiated
Differentiation
bargaining power is high.
Switching Costs
If buyer faces few switching cost there
4
5
bargaining power is high.
Profits
Profits within the industry for buyers are
5
if high then buyer’s power is high.
Backward
Can they make what you make
Integration
themselves?
Impact on Quality
Is the product you offer important to the
Performance
Buyers Information Infor mation
1
4
quality of the buyer’s product or
services? Does the buyer have complete information on the product he may purchase?
5
Telecommunications industry consumers possess significant leverage. Perhaps their most threatening capability is the ability to switch to an alternative provider at little or no cost. If a long-distance company is too "pricey" they will quickly loose clients, market share and revenue. The bargaining power of buyers is very high because cost of switching from one company to other is very low. Buyers are extremely well informed as to prices offered by alternative providers. Marketing for long-distance service is intense. Frequent telemarketing, TV advertising, celebrity endorsements, billboards, radio and bulk mail inform consumers of the various long-distance rates and services that are available. There are many attractive substitutes provided by the companies so that buyers have power to change their network whenever they want. The bargaining power of buyers is very high Threat of substitute products/services
Determinants
Defining Question
Assess the power of Buyers Circle one of the following. 1 = low, 5 = high, or N/A if it doesn’t apply to your
industry. Price performance
Does the substitute offer a better
3
price performance?
Switching Cost
Is it costly for buyer to switch to the substitute product?
2
Consumers have the option to e-mail, utilize wireless communication (cellular phones and 2way radio), switch to an alternative provider in the form of dial-around numbers or phone cards, and use postal service. In 2010 the numbers of mobile subscribers have reached to 100 million according to the PTA reports. Buyer inclination to substitute and price-performance trade off are the most important to consider in determining the threat of substitutes. Governments have also given wireless local loop licenses to different companies like PTCL wireless local loop, world call Wateen etc they are also planning to offer many services. The cost of switching to an alternative provider, if any, is relatively low and often times insignificant. Threat of substitute is high. Industry competitors
Determinants
Defining Question
Assess the power of Buyers Circle one of the following. 1 = low, 5 = high, or N/A if it doesn’t apply to your
industry. Industry growth
How slowly or quickly is the industry
5
growing? Intense fight among rivals for market share Fixed Cost
Does your business have a high fixed
5
cost?
Product
Is your product commodity? The
Differentiation
closer the product is to being a
3
commodity the higher intensity of rivalry. Switching Costs
How costly is it for your buyer to switch between providers?
2
Intermittent
How frequently is there a problem of
Overcapacity
excess capacity in your industry?
Brand Identity
Is branding critical for your Rival’s
3
4
success? Brand identification by buyer reduces the threat of rivals. Concentration and
Are there a large number of firms of
balance
equal size and power, all chasing after
5
the same customer?
This describes the intensity of competition between existing firms in an industry. Highly competitive industries generally earn low returns because the cost of competition is high. A highly competitive market might result from: The telecommunications industry is a very competitive environment. The major competitors are extremely large in terms of assets, product distribution and brand name recognition like in Pakistan Mobilink have maximum market share that is 32% (PTA source). Few strong competitors are successfully acquiring consumers from Mobilnk market. There is no cost to switch to an alternative, therefore the primary incentive for acquiring and retaining clients is to offer the lowest price. Telenor is on 2nd number in the market share having 24% Ufone is almost 20% and Zong having 7%. and Warid having 17%.Competition is fierce within this industry and the providers’ primary efforts are focused on minimizing cost in order to offer the lowest priced service.
Customer Analysis
1. Who are the major segments? The number of mobile subscribers reaches 100 million mark with mobile penetration of 60.4%.In the following 100 million subscribers 15% to 20% are GPRS/EDGE users that are the 15 to 20 million people who have access to internet on their devices. Pakistani broadband internet subscribers crossed one million mark in the country by totaling 1.052 million broadband subscribers in October 2010, up from 994,911 subscribers in September 2010, according to the recent most data by Pakistan Telecommunication Authority (PTA).The remaining chunk is the users of cellular services. They are using cell phone services of calling and texting. There are many packages available for the SMS and Calling
Company Analysis Telenor
Telenor Pakistan is a wholly-owned subsidiary of Telenor ASA. On 14 April 2004, Telenor was awarded a GSM license to build and operate a mobile network in Pakistan. On 15 March 2005, a full multimedia platform for commercial mobile services was launched under the name of Telenor Pakistan. Telenor has a subscriber base of 24 million as of July 2010(PTA figures). Telenor started its mobile-banking services with 2,500 outlets in October 2009. After a year or so there are now a total of 12,000 mobile-banking points, outnumbering the total number of bank branches and post offices in the country. Telenor Easy paisa promises empowerment and convenience to the masses in carrying out financial transactions whether they live in the urban area or rural communities of Pakistan. In 15 months Telenor easy paisa transferred Rs. 17 Billion against 10 million transactions. Telenor Pakistan has won the High Tax Payer Award of Excellence from Pakistan Customs for the year 2010-11. This is third time Telenor has won highest tax payer award. Telenor Pakistan has pledged Rs. 100 Million in funding and telecommunication services, towards relief and rehabilitation of flood affected. The amount will be used to facilitate immediate relief efforts and longer term rehabilitation initiatives by Pakistan Red Crescent Society. Telenor Mission “
Telenor is a customer focused business mobile service operator/telecommunications
Company that seeks competitive advantage in quality and valued added service in both prepaid and postpaid categories through state of the art technology. Telenor relies on building trusting relationships with customers, owners, employees and society in general”
To achieve their mission statements objectives they have segmented their market on the basis of different dimensions such as their djuice package is for the youth and Telenor talkshawk is very low rate calling package. So they are customer focused mobile service operator. But in terms customer relationships their customers are not fully served. Their customer care center performances are not up to the mark.
Vision
vision is simple: We're here to help “We exist to help our customers get the full benefit of communications services in their daily
lives.”
The key to achieving this vision is a mindset where every one of us works together: Making it easy to buy and use our services. Delivering on our promises being respectful of differences Inspiring people to find new ways.
4-Ps
Product
Telenor provide products of two types •
Prepaid
Telenor prepay product is segmented for the youngster. They are segmented on the basis of their age and status. They can recharge through cards and Easy load whenever they feel comfortable. Telenor offering Djuice and Talkshawk packages for their prepaid customer they can select one of these services according to their needs.
•
Postpaid
Telenor postpaid is designed for the business class and executives, who require making Calls within the country or internationally for business purposes. Business executives enjoy the benefits and value added services connected with Telenor postpaid services. Telenor is offering packages in Persona for their business class customers. They have many packages according to their needs.
Price
•
As Telenor is targeting many customers so according to the customer demand and prices offered by the competitors Telenor have different packages in their pricing.
•
For Prepaid customers they have two major packages Djuice and Talkshawk. Different tariff rates are offered for the need of different targeted customers. Customer can choose their package according to their need.
•
For Postpaid customers Telenor have Persona package. In this package they provide different rates as followed by the line rent that is fixed. Customers can enjoy free minutes and SMS in different packages and select one of the packages according to their need.
Promotion
•
For the promotion of the product, print media, electronic media, billboards, broachers and leaflets has been utilized for the awareness of various customers. Time to time Telenor Telenor promote its products/services schemes to their users and general public via using various types of promotion channels. Through promotion customers get awareness of the product and can choose best one for fulfill their requirement in Mobile Telecommunication.
•
Print Media
Telenor is using print media for the advertisement of new packages that are changing day by day due to heavy competition in the market.
•
Electronic Media
Television is the major source for the advertising on the electronic media. Huge amount is being applied on the advertisement through television. Aggressive advertisement is running the market so that is why huge money is applied for television ads.
•
Billboards
As per the market need and introducing new package to the customer before the competitors billboards are also hired for the advertisement purposes.
Placement
•
Market share of Telenor becomes 24% from 17% following the year 2007 to 2010. Its total cell size is also increasing from 3471. Telenor is the network operator which operates with a network more than 356 Franchises and company owned customer services centre along with the distribution network of 143600 outlets nationwide. Telenor is covering 5442key destinations. Telenor is the ultimate means to stay connected wherever business takes customers allowing seamless roaming through the network providing the best nationwide coverage.
Up gradation through easy paisa
Telenor upgrade its function the easy paisa shops it is better than the others customers can easy pay their bills through Telenor easy paisa shops. And also can transfer their fix amount of money from city to city in matter of a minute. Telenor starts its work with Tameer bank.
Internal and External Analysis:
1) What are the company’s internal strengths and weaknesses and external opportunities? Strengths and Weaknesses of Telenor
Strengths
Telenor’s Mobile Banking services (Easy Paisa) biggest financial services Network of
Pakistan. Telenor mobile banking (easy paisa) done a business of Rs. 17 Billion through 10 Million transactions.
First one to bring the concept of "Mobile TV" in Pakistan.
Customized packages available for every market segment e.g. Djuice for price conscious class, smart calls for routine users, telenor persona for upper middle and elite class.
State of art technology e.g. they are up with the latest networking underground fiber optical network.
Widest network coverage.
The first ones to provide free roaming facility during hajj program.
Weaknesses
Pakistan has no institute that provides formal education in this field regarding networking and other core technical competencies so they are required to have a major chunk of their employees trained from foreign institutions.
Poor call center performance. Customer service center is not up to the commitment and most of the customers' calls are not served.
Comparatively high prices in Telenor persona (postpaid) as compared to Warid and Ufone.
Poor visual quality of Telenor mobile TV, as there is a buffering problem and stills are received instead of the proper videos Franchise distribution system is not up to the mark. This is the problem with almost every telecom company in Pakistan. Lack quality in record keeping at franchises and other distribution networks.
Competitor Analysis
A brief description of the Competitors of Telenor Pakistan: At First MOBILINK, the Pakistani unit of Egypt-based telecom company Orascom. It has been operating in Pakistan since 1994. They have 32 Million Subscribers at the end of September 2010. UFONE, a wholly owned subsidiary of Pakistan Telecommunication Co. Ltd (PTCL), is now under the control of Etisalat group of UAE. They have 20 – 21 Million subscribers by the end of 2010. For those in Pakistan it is the one company where they can easily invest locally. WARID, owned by the Abu Dhabi group of the United Arab Emirates and sister of Wateen group is number 4 with 17% market share by 2010 PTA Report. PAKTEL was the latest target of foreign acquisition. After it got acquired by China Mobile it was rebranded as Zong and launched one of the most successful and aggressive campaigns. Within a matter of few months, Zong has achieved a 7% market share by 2010.
CPM IFE
Weight
Rating
Weighted Score
Exponential Growth
0.4
4
1.6
Strong international Brand image
0.4
3
1.2
Access to infrastructure
0.2
2
0.4
Strengths
Weaknesses
Low revenue per user (ARPU) Customer retention No research and development programs
1
3.2
Weight
Rating
Weighted Score
0.45
4
1.8
0.3
5
1.5
0.25
1
0.25
1
3.55
6.75
EFE
Opportunities Opportunit ies
Huge market size Data services has shown an upward trend
Making technology accessible to all (e.g. broadband)
Threats
Recession in economy Inconsistent and adhoc decisions from regulatory authorities. Adverse shifts in trade policies of government
Weight
Rating
Weighted Score
0.35
1
0.35
0.4
3
1.2
0.25
4
1
1
2.55
Weight
Rating
Weighted Score
0.3
2
0.6
0.4
3
1.2
0.3
1
0.3
1
2.1
4.65
Weight
Rating
Weighted Score
Mobilink (They have Largest coverage and market share in the industry)
0.25
1
0.25
Ufone (They have Cheap Sms Packages and largest SMS generator in Pakistan)
0.35
3
1.05
4
0.8
Competitors Strengths
Warid (Their Post-paid packages are better than of Telenor)
0.2
Zong(Data services are very cheap and growing their market share with new packages such as M9.
0.2 1
2.1
SWOT ANALYSIS OF TELECOM INDUSTRY Strengths
Weaknesses
Exponential growth. Skilled Human Resource at low-cost. Access to Infrastructure – optical network and satellite links. Favourable policies (to some extent) and regulator. Strong international brand names
Opportunities
Huge market size.
Quality of Service. Low revenue per user (ARPU). Customer retention. No clear strategic direction. Poor organizational structure. No research and development programs. Employee skill inconsistency. Very low employee morale Threats
Recession in economy.
Data services has shown an upward trend
Local handset manufacturing. Making technology accessible to all (e.g. broadband). Adopt latest technologies. Removal of international trade barriers.
Inconsistent and adhoc decisions from regulatory authorities. Adverse shifts in trade policies of government.
2. What are their motivation and unmeet needs? Market Segmentation and positioning
Segmentation is the process of dividing the total market for a good or service into several smaller, internally homogenous groups. Since Telenor is a customer oriented and quality driven company, it segments its market on the basis of various different dimensions.
Market dominated by low-end, low-ARPU customers (largely Untapped)
Relatively large emerging middle class segment (Basic in Telenor Terminology)
Strong youth culture with needs similar to other markets.
Private postpaid almost non-existent.
Small but profitable (high ARPU) Corporate/SME segment.
Women a largely untapped segment.
Market Segmentation & Product Positioning Analysis
Market Segment Youth/ students Women Financially Constraint Corporate/ SME
Today 25%
Future 4 years Estimate 27%
10% 40%
20% 23%
25%
30%
Existing Products Djuice, Talkshawk TalkShawk TalkShawk, Telenor eleno r Azadi Post Paid Packages
Profitability % 29% 21% 20% 30%
Segmentation Strategy
Telenor is using multiple segmentation strategy and developing separate marketing program for each segment because different customers are looking for different benefits from different services they purchase. Estimating the market potential of each segment includes asking how many prospects with how much purchase power there is for each particular want.
Market to Segment
Regarding Pakistan different markets are segmented by Telenor on the basis of: 1. Geographic 2. Demographic 3. Psychographic 4. Behavioral Geographic (Area wise)
In Pakistan Telenor is segmenting the whole country region wise. There are different regions in Pakistan. Telenor is providing service especially in Northern Areas and in rural areas of Sindh, Balochistan and Punjab where others are not providing services. Demographic (Life style) Age:
Telenor knows that needs and wants of customers changes as they go through life. So, with change in age Telenor introduces different services. The main segmented market is the young people of age 15-30. Pre paid-mostly Students, youngsters and middle class Post paid-Business Class, Industrialists Pre paid: Talkshawk
Talkshawk Her Second
for 15-22 yrs
Talkshawk 30 Second
for 20-27 yrs
Talkshawk Her Minute
From 25- onward
Djuice
Djuice
From 15-24
Djuice Jaagtay raho
from 18-24
Post paid: Persona
This Post paid service targets the Business Class mainly. There are four different plans which vary with the amount of monthly line rent. Persona
From 32-55
Income:
Telenor also segments the customers on the basis of income level. Different packages are there for people of different income level Pre paid: Talkshawk
Talkshawk per Second Talkshawk 30 Second Talkshawk per Minute
for Students For Students and Job people (low income) For Job people
Djuice
Djuice
For SMS lovers Students
Djuice Jaagtay raho
For SMS lovers & who like to talk them in night
Psycho graphically (Personality)
Psychographic segmentation goes beyond demographic. Telenor doing segmentation on the basis of customers mind set. Telenor is segmenting the customers as they are giving different packages for different personality. There are seven packages of Telenor on the basis of different call & sms rates.
Behavioral
Telenor is segmenting the customers according to their behavior, mind set and thinking. Different people have different behavior; different mindset different thinking Telenor is segmenting behaviorally by offering different package in pre paid and different plans in post paid. Singers are liked by people the singing culture is being promoted in our country so they hire singers for their promotions to hit customer’s mind.
Objectives.
INCREASE ROI INCREASE MARKET SHARE BUILD MORE BRAND IMAGE MAXIMIZE PROFIT INCREASE REVENUE PER USER
Target Market
As we are going to launch 3G technology in the market for by using early in Strategy so mainly our Target market is existing users of internet or broadband. During the past two years rapid growth had been seen in the internet usage in Pakistan. There are 15 to 20 million people who are using GPRS/Internet on their mobile devices. It also includes the users of Blackberry which is already offered by the Telenor and other competitors. Therefore most of the users already have 3G enabled handsets. Pakistani Internet Service Providers crossed one million mark for broadband internet subscribers in the country by totaling 1.052 million broadband subscribers in October 2010, up from 994,911 subscribers in September 2010, according to the recent most data provided by Pakistan Telecommunication Authority (PTA) 3G technologies will bring the fastest wireless internet technology in the country which delivers improved and faster data to support a suit of multimedia and rich cellular call applications. Positioning
It will be positioned for everyone using internet and mobile internet. They can make video call and other rich cellular call applications on their mobile phones. The 3G USB is a portable device which will provide fast speed internet on the go so we will position it by “3G for Life”. 3G mobile services will not affect general consumers because most of the hand sets are 3G enabled and the consumer did not need to purchase new handsets.
Strategy Development
What is their strategy development process and steps?
Marketing Strategies
To deliver Increased Profitable Growth To strengthen our performance culture across the globe To make a strong competitive advantage. To provide a superior Customer Experience To ensure best practice benchmarking across the group To improve our performance management.
Price Strategy As we are going to be first in the market so we can use the high prices because cost of 3G technology is high and we have to overcome that cost in the introduction phase of product life cycle. Promotional strategy
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•
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For the promotion of the product, print media, electronic media, billboards, broachers and leaflets has been utilized for the awareness of various customers. Time to time Telenor Telenor promote its products/services schemes to their users and general public via using various types of promotion channels. Through promotion customers get awareness of the product and can choose best one for fulfill their requirement in Mobile Telecommunication. Print Media Telenor is using print media for the advertisement of new packages that are changing day by day due to heavy competition in the market. Electronic Media Television is the major source for the advertising on the electronic media. Huge amount is being applied on the advertisement through television. Aggressive advertisement is running the market so that is why huge money is applied for television ads. Billboards As per the market need and introducing new package to the customer before the competitors billboards are also hired for the advertisement purposes. Social Networking Websites As now a day’s trend of social networking websites had becoming more and more popular so they are the best way to target the youth and giving them latest information about the packages and services.
Recommendations
They should launch new mobile phones on contract They should launch APPLE and BLACK BERRY with connection packages as it is happening all over the world. It will increase their market share Services will be improved by this new technology They should introduce a new plan that makes their services not to be jammed at occasions like EID etc. Also took some responsibility for some social work They should also promote their wireless internet USB’s. so people should be aware of their value added services They should hire skilled and knowledgeable employees at their franchises.
References
Accessed Growth Trends in Telecom Sector from the URL:http://www.pta.gov.pk/index.php?option=com_content&task=view&id=706&scid=150 URL:http://www.pta.gov.pk/index.php?option=com_content&task=view&id=706&scid=150 &Itemid=1 Accessed Telecom Indicators from the URL:http://www.pta.gov.pk/index.php?option=com_content&task=view&id=1413&Itemid= URL:http://www.pta.gov.pk/index.php?option=com_content&task=view&id=1413&Itemid= 687 Accessed Annual Report2008-2009 from URL:http://www.pta.gov.pk/index.php?option=com_content&task=view&id=361&Itemid=5 URL:http://www.pta.gov.pk/index.php?option=com_content&task=view&id=361&Itemid=5 90 Accessed Telecom Sector Showing Positive Trends – PTA Annual Report 2008-09 From the URL http://telecomnewspk.com/2010/01/telecom-sector-showing-positive-trendpta-annual-report-2008-09/ Accessed Source Future of twitter from URL:http://www.time.com/time/business/article/0,8599,1901196,00.html#ixzz12XknVPUQ URL:http://www.time.com/time/business/article/0,8599,1901196,00.html#ixzz12XknVPUQ
Accessed Source: Harris Interactive Poll, 2009 URL:http://www.clickz.com/clickz/column/1703011/more-twitter-advertising-opportunities URL:http://www.clickz.com/clickz/column/1703011/more-twitter-advertising-opportunities
http://www.paktelecom.net/pakistan-telecom-news/ptcl/market-potential-of-mobileoperators-versus-wireless-operators-in-pakistan/
http://telecompk.net/2009/08/20/swot-analysis-pakistan-telecom-industry/ http://propakistani.pk/2011/01/21/easypaisa-transferred-rs-17-billion-10-million-transactions/
http://www.telenor.com.pk/about/history.php http://propakistani.pk/2010/08/06/mobile-internet-users-increasing-tremendously-in-pakistan/
