Strategy for Mobile Services Providers - Vodafone versus Orange - Essay Example

?COMPARATIVE ANALYSIS OF INTEGRATED MARKETING COMMUNICATIONS MIX STRATEGY FOR MOBILE SERVICES PROVIDERS: VODAFONE VERSUS ORANGE Contents Contents 2 Comparative analysis 3 1. Introduction 3 3. Critical Analysis: Vodafone 6 4. Critical analysis: Orange 9 5. Recommendations 12 6. Conclusion 13 Reference list 13 Comparative analysis 1. Introduction UK mobile phone sector has become highly competitive forcing the competitors to form strategic relationships with other entities with the purpose of attracting new customers. The mobile phone service providers are also diversifying their products and services in order to take advantage of the digital market. One of the key players is Vodafone, which has embraced innovative marketing strategies with the objective of increasing its market share. Another key mobile service provider is Orange, which still depends highly on traditional forms of advertising to maintain the market leadership. This paper compares some of the marketing strategies that the two companies have been using. The company further suggests ways in which Orange can improve its market strategies in order to compete effectively with Vodafone, Hutchinson, and O2 and other competitors. To achieve this objective this report first examines the profile of the companies. A comparative analysis is then conducted, and at the end a few recommendations are offered. 2. Company profiles 2.1 Vodafone Vodafone is the largest telecommunications company, and its headquarters are located at Newbury, England. The company was formed in 1982 but has since established itself as a world-wide brand. The company is a joint venture between Racial Electronics and Milicom and the Hambros technology. In the UK, the aim of the company is to maintain market leadership by developing new products and services. However, in the recent past, the company has been facing huge competition from the new products in the market targeting the young population. To compete effectively, the company is continually updating the range of phones and services. In addition, the company is constantly, communicating with its customers about the benefits of the available products. To improve the visibility of its brand, the company has formed a commercial alliance with the Manchester United club (Heuer 2010, p.56). In Europe, the company has expanded its influence through acquisition of partner networks. Just to illustrate, on December 3rd, 2002, the company entered into the Estonian market by signing a Partner Network Agreement with Radiolinja (Grant 2010, p.89). Likewise, on 16th February 2004, the company entered into Luxembourg’s market by signing a Partner Network Agreement with LuxGSM (Grant 2010). Vodafone is a renowned brand in major Asia-Pacific countries such as New Zealand, Hong Kong, Indonesia, Malaysia, Sri Lanka, and India. In the Middle East, Vodafone has initiated partner network agreements with major companies such as Vodacom in South Africa, Telecom in Egypt, and MTC group in Kuwait. Vodafone entered into the American market in 1999 by merging with Air Touch Communications to form Vodafone Airtouch PLC. However, its desire to become a household name in the American market has been hampered by the strained relationship with Verizon. On 15th December, 2005, the company increased in the Americas by signing a cooperation agreement with America Movil of Mexico and Digicel Group of Caribbean. Vodafone entered the Indian market by acquiring Hutch, at the time, the second largest GSM brand in the Indian telecom market. Vodafone India is a member of the Vodafone group, and it started its operations in 1994. Since its formation, the group has attracted a huge consumer base, and covers 16 telecom circles in India. The company offers prepaid and post-paid cellular phones and also provides voices and data services. As of 1st March, 2011, the company had over 200 million customers. 2.2 Orange It is one of the leading providers of telecom services in the UK and other countries across Asia and Africa. Orange offers a range of products and services, including digital TV and IPTV services, mobile voice and data services, fixed-line and high-speed broadband connections, direct-to-home telecom solutions and internal long-distance services. In 2009, the company merged with the T-Mobile to become the largest mobile operator in the UK with a market share of 37%. Other competitors include Vodafone with a 24% market share, Hutchinson with 8% market share, and O2 with 27% market share (Bray 2010). Orange provides its customers with diverse mobile phone packages: Dolphin, Canary, Raccoon and Panther. The company sells its products and services through physical outlets located all over the world and also through indirect sales channels and concession stores. Besides the UK, Orange is the largest mobile operator in France with a market share of 42%. In Spain, Orange is the third largest mobile operator with a customer base of 11 million subscribers. The company is the leading mobile operator in the following countries: Egypt, Ivory Coast, Madagascar, Mauritius, Mali, Moldova, Poland, Romania, and Slovakia. The company has a sizable market share in the following countries: Tunisia, Kenya, Switzerland, Portugal, Jordan, Cameroon, Belgium and Armenia. Maintaining its presence in several countries ensures the company gets a steady flow of revenues. To further increase its presence, the company continues to forms strategic partnerships with other companies operating in various sectors of economy. For instance, in 2001, Orange acquired a 49% stake in Dailymotion, a French-based company and an 11% stake in Deezer (Meurling and Richard 2011, p. 61). Such acquisitions allow the company to provide services such as high-quality paid streaming music service and multi-screen video services to its subscribers. In the face of the stiff competition, the company has adopted a number of objectives. Firstly, the company has initiated digressive marketing campaigns with the aim of maximizing revenues and margins. At the moment, the company on the rural demand and according to Gerrard (2011, pp.51), this strategy is viable given that the rural areas constitute a third of global overall wireless subscriber base. In addition, the penetration in the rural areas is still low at 25%. Secondly, the company hopes to maximize revenue with the minimum geographical location. Thirdly, the company has developed multiple telecommunications services to provide buyers with “one-stop-solution.” Fourthly; the company is diversifying its products and services to include data transmission solutions. This strategy according to Broadsky is viable due to the ongoing price competitions (2010, p.54). In any case, the data service market gives the company an extended edge to earn extra revenue. Fifthly, Orange is focused on customer satisfaction by providing them with quality products and services. At the same time, the company is leveraging the strength of its strategic and financial partners. Finally, the company is improving on its human-resource capabilities in order to obtain operational efficiencies. 3. Critical Analysis: Vodafone 3.1 Vodafone’s marketing mix The mobile service provider targets middle-income groups and users residing in rural areas. Vodafone believes that these two segments provide the company with an opportunity to achieve growth. While focusing on these two segments, Vodafone’s marketing strategy also targets youngsters living in metropolitan areas, and businessmen. The company uses low-price strategies in order to serve many customers as possible. Its products are delivered through many outlets and service centers. At the same time, the company provides a variety of products, in order to meet customers’ needs. In addition, in order to meet customers' needs 3.2 Vadofone’s zoozoo ads Vodafone has strong presence in the global market and is renowned for using innovative advertisements. Just to illustrate, after entering the Indian market, in 2009, Vodafone created a series of 30 advertisements, which were aired during the second season of Indian Premier League. Each of these advertisements was used to promote a particular aspect of Vodafone’s products and services. The zoozoo refers to the animations and were greatly applied in the popularization of the Vodafone’s brand in India. These animated characters have egg-shaped heads and round bellies and extremely thin limbs. The Zoozoo ad campaign was launched during the Indian premier league, and it is estimated that the campaign captured the attention of two billion viewers. Remember, the Indian community, have great love for cricket and it during such occasions that the Zoozoo advertisements were aired. In particular, the ads were aired during the match breaks, and people loved them. During the first 10 days of the advertisement in the Indian Premier league, the zoozoo campaign already amassed 89 million followers. While encouraging buzz marketing, the zoo campaign also increased the brand value of Vodafone’s products. Some of the themes that were used during the zoozoo campaigns include, stock alerts, background music, magic box, exam results, international roaming, beauty tips, IPL commentary, phone backup, Bhakti Saagar, dating tips and cricket alerts. In total, there were 25 different ads that were used during the IPL season. The zoozoo ads were placed in the social media platforms such as Facebook, Twitter, YouTube, and Orkut. Remember, social media tools have given marketers an opportunity to deal with millions of customers in a way that was unimaginable. The new communication channels present a lot of opportunities to both the organizations and the customers. Some of the common categories of these new forms of communication include blogs, content communities, forums and bulletin boards and content aggregators. Such social networking tools facilitate asynchronous low-cost communication between the consumers and the community. Through such social media platforms, the customers are not only become aware of the brand, but are also able to make actual purchases. Social working media tools could also help the company to learn about the customers’ needs and brand communities. Indeed, the zoozoo campaign actually really enhanced the idea of ‘brand community’ not only in India but the rest of the world. The participants in these brand communities would talk about the Vodafone’s products hence perpetuating the history and the culture of the brand. Through these brand communities, the management would also get feedback about how they can improve their current offerings. The use of social media platforms in promoting Vodafone’s ads is supported y various studies. One such study conducted Souden (2011, pp.88) indicates that emotions that are associated with social media can be used to enhance direct marketing. The success of the zoozoo campaign can be gauged on the following basis. Firstly, the Zoozoos dominated the social networking sites and were downloaded frequently as wallpapers, ringtones videos and pictures. During the first 3 weeks of the campaign, the videos garnered 3 million hits and numerous downloads on YouTube. Secondly, following the airing of the zoozoo campaign, a 30% increase in data revenue and 205% in other services revenue, were reported (Tarrant 2012). Thirdly, following the zoozoo campaign, the customer based increased by 3.8% while the revenue increased by 23% (Tarrant 2012). Besides these advantages, the adverts revolutionized the conventional ways of advertising such as use of celebrities. Following the success of the zoozoo advert, Vodafone intends to launch zoozoo toys, zoozoomugs, keychains and t-shirts. 3.3 ‘Power to you’ advert Just like, the zoozoo campaign, this advert seems to encourage the customers to perform self-care transactions such as activating, and deactivating services, without the need for them to contact the Vodafone operator. The ad creates a perception that Vodafone is committed to the provision of quality customer care services and better opportunities. This positioning has helped the company to penetrate the Indian market. To increase the visibility of its brand, the company provides sponsorships to various teams and events. For instance, in 2008, the company was the title sponsor of the Annual Socio-cultural Festival, the Annual Techno-management festival, the Albania national team, McLaren F1 team, UEFA Champions league and the Indian Premier League. 4. Critical analysis: Orange 4.1 Orange Cinema Series package Unlike Vadofone which depends highly on innovative means of advertisement, Orange Mobile uses cinemas to popularize its offerings. Only this year, the company renewed its agreement with the US cable network HBO, aimed at providing the subscribers with entertainment services. At the same time, the company has launched a number of pay TV-platforms but this strategy has failed to effectively market the Orange brand. While Cinema Series packages could still be effective in promoting the company’s brand, maybe it is the time that Orange adopted other strategies such as using market stories. The company could also consider using less-expensive marketing strategies such as the use of social media platforms. This strategy is a powerful marketing tool as it can effectively be used in expanding the customer base. Maybe the company should emulate Vodafone which in 2007, struck a deal with MySpace to allow, its customers access their profiles from Vodafone cell phones. Two years later, Vodafone introduced Vodafone 360 a service that allows customers to access contacts, status updates and messaging services from their mobile phones. 4.2 Orange Gold spots The Orange Company’s ads feature in most cinemas across the UK. To popularize its brand, the company also uses celebrity endorsement. For instance, following the merger between Orange and T-Mobile, Kevin Bacon featured in the company’s TV adverts. Other prominent celebrities who have featured in the company’s adverts include Rob Lowe, Spike Lee, Danny Glover and Ewan McGregor. To ensure its brands are perceived to be credible, the company chooses the celebrities based on the following features: attractiveness, expertise and trustworthiness. This strategy is in line with a study conducted by Byles (2010) to examine the impact of celebrity credibility on consumer-based equity of the endorsed brand. The data was collected at a shopping center in a metropolitan Australian city and analyzed using structural equation modeling. The findings of this study indicate that endorser credibility has an impact on brand credibility and consumer-based brand equity. It is for this reason that most companies would not tolerate the idea of using celebrities who have bad image in its marketing ads. According to Byles (2010, p.65), the choice of the celebrities is also influenced by consumers’ inference concerning whether the endorser really likes the product or not. For this reason, companies are required to select endorsers who are well matched with products and the need to fulfill this requirement can best be explained by the attribution theory. The influence of endorsers’ credibility on the reputation of a particular brand can further be explored using a study conducted by Rappaport (2012, p.23). In this study, Rappaport (2012) suggests that celebrity endorsement could be considered as a brand alliance, whereby meaning and values can be transferred from on partner to the other. This study examined the collaboration between Sainsbury’s Supermarkets and celebrity chef Jamie Oliver. At the end, the study Rappaport (2012, p.25) concluded that celebrity endorsement should be treated as an alliance of equals. 4.3 Sponsorship deals Just like Vodafone, Orange sponsors key sporting events to popularize its brands. In the past, the company has sponsored Ligue 1 football club, and other teams all over the word. Sports sponsorship is an important marketing tool that is use globally by companies to reach a wide audience. In this arrangement, the sponsor provides financial resources in exchange for rights and associations. This arrangement ultimately helps the sponsor to stay in contact with a particular segment of its client base. This strategy works well in the UK where Orange has entered into finance soccer events and entities. Through this strategy, the company can promote its logos and products. By choosing carefully the events to sponsor, the company can effectively transmit the values of those events to their products. This is what Orange hoped to achieve when it partnered with UEFA to sponsor UEFA Euro 2012 and when is sponsored the French Rugby Federation in 2001. Although sports sponsorship can be a great marketing tool, it could prove disastrous due to a number of reasons. For instance, taking brand image transfer into consideration, scandals or under-performance a team may negatively impact on the reputation of the sponsoring entity. 4.4 Advertising slogans Just like Vodafone, Orange has been using catchy advertising slogans to attract the attention of its customers. Between 1998 and 2006, the company used the slogan “The future’s bright, the future’s Orange.’ This slogan was later changed to become “Together we can do more’ and ‘today change with Orange.’ Although these slogans have played a huge role in creating a consumer demand for the company’s products, but their effectiveness is less compared to those of Vodafone. With this in mind, there is need for the company to develop advertising slogans that are short and concise. May be the company could learn from Nike’s slogan “Just do it” slogan, which has fewer words and as such is easier for the consumers to remember. The importance of using less-worded and catchy slogans has become even more important in the face growing number of advertisements. To beat the current competition in the UK, Orange needs to undercut other brands by creating memorable quotes. 5. Recommendations i) Orange mobile should consider using animations to promote all the Value-Added Services. It is expected that such animations will draw the attention of the audience and hence attain similar benefits just like Vodafone did in the Indian market. Using animated characters rather than celebrities in the advertisement is likely to costs less in production costs. Using animated characters rather than celebrities is also likely to generate massive appeal among the audience. More importantly, to increase the visibility of the brand, the company should consider making more sponsorship deals with the English Premier League. ii) The Orange Company should utilize the positive effect of viral marketing. To achieve this objective the company should consider using creative and clever marketing and by avoiding relying heavily on the traditional forms of advertisements such as celebrity endorsements. At the same time, the company should focus creating strong brand communities using the available social media platforms. Such as a move will help company to compete effectively with Vodafone and other close competitors. iii) Recent studies indicate that mobile phone users are frequenting social networking sites and so to take advantage of this shift, Orange needs to form partnerships with open social networking providers. Maybe the company could emulate the Vodafone’s 360 services which allow customers to access personalized information through phones. Through such contacts, Orange could be able to popularize their brand and inform the customers about their new offers. Vodafone’s has also acquired Zyb, a social networking site, giving its customers access to rich information which they can access through their mobile phones. 6. Conclusion A new ecosystem is emerging in the mobile telephony sector, and this new trend requires the service providers to adopt new strategies to reach the digital audience. One of the ways in which Orange can increase market dominance is by embracing innovative marketing strategies such as the use of precise advertising slogans. Orange could learn a lot from Vodafone’s zoozoo campaign, which focuses on simplicity and minimalism to create a viral following from its customers. At the same time, the company should avoid depending highly on celebrity endorsements and other traditional form of advertisings. Finally, Orange should consider, integrating its platforms with social networking sites in order to penetrate the digital market. Reference list Bray, J., 2010. Innovation and the Communications Revolution from the Victorian Pioneers to Broadband Internet. London: Institution of Electrical Engineers. Broadsky, I., 2010. Wireless: The Revolution in Personal Telecommunications. Norwood, MA: Artech Byles, D. C., 2010. Vodafone Air Touch: The Acquisition of Mannesmann. Unitied States: Virginia Commonwealth University Garrard, G., 2011. A. Cellular Communications: World-wide Market Development. Norwood, MA: Artech House, Inc. Grant, R. M., 2010. Contempoary Strategy Analysis.Barelona. Spain: Thomson Digital. Heuer, D. M., 2010. Strategy, Structure, Systems. Selinsgrove, PA, United States Meurling, J., and Richard, J., 2011. The Mobile Phone Book: The Invention of the Mobile Telephone Industry. London: Communications Week International Rappaport, T. S., 2012. Wireless Communications: Principles and Practice, Second Edition. Upper Saddle River, NJ: Prentice Hall Souden, D., 2011. Voices over the Horizon: Tales from Cable and Wireless. London: Granta Editions, Tarrant, D. R., 2012. Marconi's Miracle: The Wireless Bridging of the Atlantic. St. John's, Newfoundland, Canada: Flanker Press Read More