This is a solution of competitive advantage in mobile telecommunication in which discuss the theory and concept.
Competitive Advantage in mobile Telecommunication Assignment
PROPOSAL: – “competitive advantage in mobile telecommunication industry”
PART 1 (LITERATURE REVIEW)
Literature review has reviled various strategies used by different service provider like Vodafone’ orange’ virgin’O2 etc which are coming up with various innovative ideas to lure customers and most importantly to increase the arpu ( average revenue per user) of existing customers to a much higher level.
There are various theories and models used to frame and develop these strategies.
The first theory which is used by various service providers is doing Michael porter’s five forces analysis and determine strategies by that. These five forces which are analysed are:-
- The threat of entry of new competitors in existing market.
- Threat of substitute product or services.
- Bargaining power of customers
- Bargaining power of suppliers
- Intensity of competitive rivalry
Among all the five forces there are different levels of intensity of threats like
The threat of entry of new competitors was suddenly increased to moderate to high as regulatory bodies have recently allowed various new competitors in the UK market. And these new entrants are giving a hard competition to existing players for the share of market.
Threat of substitute products is also moderate to high because of other alternative services like internet calling’ Audio and video data exchange on internet and social networking sites’ these substitutes are giving a tough competition to telecommunication industry.
Bargaining power of consumers is also high because of 40 different service providers consumers have multiple alternative and number portability service give them freedom to change their service provider without changing the number. This is also giving telecommunication industry a serious threat and power in hand of consumers to decide their service provider. This is also making mobile service a commodity rather than a brand.
Bargaining power of suppliers is low to moderate only as suppliers don’t have much role in this industry and supplies usually are in form of infrastructure’ electricity’ equipments and towers which are mostly a commodity in market. So power of suppliers is not very high in this area unless they get organized and deal with the industry as a union or organization.
Intensity of competitive rivalry is very high in this industry. There are a lot of service providers and market is getting saturated so rivalry is very intense in nature. Companies are coming up with talk plans and other value added service in competition of each other and doing everything they can in answer of each other’s consumer plans and strategies.
Other theories which are used majorly in developing a strategy in this industry are
Core competency theory :-
According to this theory there are certain companies who are trying to develop their core competencies and focusing entirely on developing that competency. This development of core competency will give them sustainable competitive organizations over their competitors. There are companies like Vodafone which now the biggest data service provider company in focus which is focusing majorly on data services and developing this as its core competency.
Cost leadership approach
Certain companies are focusing on cost leadership also. These companies provide the best value possible to its customers and keep the call rates and data download rates as low as possible. These kinds of companies also have their competitive advantage as they target the bottom of the pyramid in consumer segment. These companies have to work continuously and keep the cost to a minimum if they want to have a sustainable development in this approach. Examples of companies which are following this strategy are least cost telecom pvt ltd.
Market differentiation theory: –
In this kind of approach the cost is not reduced but a differentiation is provided in the services which are being offered. There are certain value added services or an excellent customer care ‘a very unique talk plan or combination offers are the kind of things which are generally used in this kind of approach. The example of this kind of service provider is Virgin mobile in UK .
Blue ocean strategy: –
This is a very unique and comparatively recent theory of strategy. According to this theory the player will try to change the whole competitive scenario by providing an all together new kind of service or targeting a previously UN thought of target with a proposition which no other company is providing currently. This theory will give the company a chance to swim in Blue Ocean from the red ocean. The red ocean is the kind of scenario where competition is intense and rivalry is higher.
Companies are approaching the consumers using by following some broad strategies.
These strategies can be broadly classified into three categories:-
- Bundling of services :- in this strategy mobile service providers are bundling there various services into a neat package to attract customers’ give them more value for money’ retain existing customer and getting more revenue out of each customer. By using this method the companies are providing so many services bundled together like voice calls’ data calls’ text service’ data download’ internet surfing’ etc. Providing these many services increases the bar so high for customers to exit that the churn rates go down and average revenue per user goes up.
- Predictive analysis: – this was another way to get the competitive edge over others. Companies used to take services of advance software’s primary researches and behavioral study to predict the response of customers. These predictions help them in managing an excellent customer relationship.
- Outreach: – this is the kind of program which will interact with its customers on a regular basis. Earlier outreach or out bound calling using call centres to acquire new customers but recent studies has shown that acquiring a new customer is 6 times more expensive than to retain a existing one. So now out bound calling is done to maintain customers relationship with existing .
OVERVIEW OF LITERATURE:-
By reviewing all the literature it has been cleared that 3g services’ bundling of service’ understanding the needs of the customer’ providing them value for money and retaining them by giving them value added services and keeping the exit bars high are the various strategies used by different service providers to keep the customer churn low and retain customers. I believe personally that targeting more specific niche market with combined handsets and service contracts like easy phone for age old people and invalid peoples’ phones especially made for school going kids and small children’s can be the next thing in market and company who is going to move faster in these niche markets with untapped potential .
PART 2 (DISSERTATION DESIGN)
- INTRODUCTION: – the study is designed to understand various competitive advantage and competitive edge strategies mobile telecommunication companies are using to gain sustainable advantages over other companies especially in UK and European market. All over the European and UK market mobile companies are struggling to gain advantage in this highly competitive and rapidly stagnating market. There are more than 40 operators currently providing services in UK market but major service provider are Vodafone’ orange’ O2 etc. This market is looking at new development with 3g services which is providing high speed internet downloading’ movie and video streaming’ live streaming and unlimited music kind of facilities and because of these development the strategies of mobile service provider is needing new ways to gain advantage over competitors which could be in form of better connectivity’ better tariff plan’ excellent customer service etc.
- AIM OF THE STUDY:-
The study is aimed to explore the competitive strategies that are being used by mobile operators to gain competitive advantage over other service providers.
- OBJECTIVE OF THE STUDY:-
- To study the competitive strategies used by different mobile operators
- To find out and study the model used for making these competitive strategies
- To explore if the competitive strategies used are sustainable or not.
- REASON FOR CHOOSING THIS TOPIC:–
The reason why this particular topic was chosen for research because of the latest development in mobile service provider markets in UK. There has been a lot of new entrants in the market which has raised the severity of competition and latest technological advancement like 3g services’ MMS’ changing status of SMS from a augmented service to a complimentary service and overall mobile market being transforming towards commoditization has forced all companies to come up with new and innovative ideas to gain the competitive advantage. Companies are using different combination offers and other services to lure the customers. All these development has made this particular market a very interesting topic to study and explore the basic theories’ concepts and models acting behind these developments and there practical applications.
- RESEARCH METHODOLOGY:-
The research will be a secondary research in nature. The data will be collected through various online journals’ articles’ books and web sources available on the topic. There will be a thorough analysis and from the available literature we will try to find out the concept and theories behind these changing strategies and how they are affecting the overall dynamics of market. The data will be collected through accessing various journals available on the topic online. Various e resources like qdocuments’ national library resource centre’ emerging markets’ IMI etc. will be used for the data collection purpose. In off line resources various journals published in marketing journals’ books available on the topic as well as various dissertations will be referred and concepts provided in them will be discussed and reviewed. A latest case study will also be used to do the literature. The case study will be providing us with a deeper insight on the topic.
- DATA ANALYSIS: – the data collected by secondary research will be reviewed and analysed. The basic concepts and latest developments will be extracted and a discussion will be done to get insight and understand the logic behind every change. A trend analysis can also be done by reviewing data from past years and comparing them with current data to get an idea of the latest trends and developments in the field. The case study will also be discussed in depth to get to the nitty-gritty of the situation.
- JUSTIFICATION FOR RESEARCH METHOD: – the reason behind choosing secondary data is because a primary research on this topic would be too long in time to get a valid result and respondents will be too subjective about their opinion over a particular mobile service provider or a particular tariff plan and this will include lot of brassiness in the research. It would be also difficult to re validate the results or data collected while in secondary research the data is already verified and validated by its author. This research will be able to provide a comprehensive data on the topic to us studies or reports. Another point is that this study is a comparative study and can be done effectively using secondary data only.
- TIME FRAME: – The report is divided into various parts and each part is time bound. The report presenting deadline is 27th July 2011. It is majorly divided into three parts:-
- INFERENCES AND DISCUSSION: in this part of the report we will be discussion the concepts understood in literature review and secondary data mining. These concepts will be compared with the current strategies and we will try to get as much understanding about the new strategies adopted by mobile operator companies. After discussion we will be extracting the inference we got from that discussion and putting forward them.
- CONCLUSIONS AND RECOMMENDATION
Based on the inferences derived from the literature review and discussion we will conclude the report with our findings and link them with current market trends. If any recommendations can be made based on our findings we will be making those recommendations in report.
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- R. Kothari, (2005) Research Methodology Methods and Techniques, New Age International Pvt. Ltd, New Delhi, pp. 14-23