Vodafone is the world's largest mobile telecommunications community, employing over 65,000 staff and with over 130 million customers. The business operates in 26 countries worldwide. Vodafone is a public limited company with listings on the London and New York stock exchanges.
Global recognition of the Vodafone brand is growing as the company rolls out its identity into new markets. However, it retains local names and imagery in markets where this is essential to maintaining the trust of customers.
To help promote its image worldwide, Vodafone uses leading sports stars from high profile global sports, including David Beckham and Michael Schumacher. This Case Study concentrates on how such promotion can help to keep a leading brand at the forefront of public awareness.
TASK 1 CONCEPT AND PROCESS OF MARKETING
1.1 definitions of marketing
Nowadays successful companies all have one thing in common. They focus strongly on the customer and therefore in their marketing. These companies share a dedication to sensing, serving and satisfying the needs of customers in well-defined target markets. They are aware that if they take care of their customers, profit and Market share will follow. Marketing is all about satisfying the needs of customers hence the reason why customers are the key point of a marketing system. Total Quality Management is extremely ambitious and similar to Marketing as it is never fully attainable, but should always be seen as an aim.
The simplest definition of marketing is “Marketing is the delivery of customer satisfaction at a profit. The goal of Marketing is to attract new customers by promising superior value, and to keep current customers by delivering satisfaction”
There several other definitions for Marketing and even though each seem different, they all have the same meaning.
“The all-embracing function that links the business with customer needs and wants in order to get the right product to the right place at the right time”
“The achievement of corporate goals through meeting and exceeding customer needs better than the competition”
“Marketing may be defined as a set of human activities directed at facilitating and consummating exchanges”
1.2 characteristics of market orientation
The concept of marketing orientation was developed in the late 1960s and early 1970s at Harvard University and a few forward thinking companies. The concept of marketing orientation was a replacement for the sales orientation that was significant between the mid 1950s and the early 1970s, and also the production orientation that dominated till the mid 1950s.
A marketing oriented organisation will typically show the following characteristics:
Plans and strategies are devised so that the customers and their requirements are given absolute priority.
Extensive use of marketing research
Broad product lines
Emphasis on a product's benefits to customers rather than on product attributes
Use of product innovation techniques
The offering of ancillary services like credit availability, delivery, installation, and warranty
The use of all components shows a strong marketing orientation and using less implies to a weaker orientation.
1.3 elements of marketing concept
The marketing concept is the core to the company and is in the form of a circular function. Its function is to determine the needs and wants of the target markets to deliver satisfactions more effectively and efficiently than competitors do. The selling and the marketing concept are frequently confused. Whereas the selling concept takes an inside-out perspective, the marketing concept takes an outside-in perspective. It begins with a good defined market and focuses on customers' needs. The trick is to produce what people want to buy and not sell what we like making. Furthermore, the company needs to organise and coordinate the company so that the customer is put first. In order to find out what the customer needs, the company must carry out a market research. This will help to supply satisfaction for the customer needs.
4 Elements of marketing concept are:
ü Customer orientation: is the set of beliefs insalesthat says thatcustomerneeds and satisfaction are the priority of an organization. It focuses on dynamic interactions between the organization and customers as well as competitors in the market and its internalstakeholders. It involves a continuous improvement in business processes. It is "the business seen from the point of view of its final result, that is, from the customer's point of view." (Peter F. Drucker
ü Production orientation: dominated business thought from the beginning of capitalism to the mid 1950s, and some argue it still exists in some industries. Business concerned itself primarily with production, manufacturing, and efficiency issues.
"Supply creates its own demand". To put it another way, "if somebody makes a product, somebody else will want to buy it".
ü Product orientation: an approach to business that centers its activities on continually improving and refining its products, assuming that customers simply want the best possible quality for their money.
ü Sales orientation: an approach to business that centres its activities on selling whatever it can produce, assuming that customers are inherently reluctant to purchase.
1.4 benefits and cost
The principal benefit of marketing is that it enables companies to maximize their potential and reach the right customers at the right time. Furthermore it provides customer satisfaction. The reason behind for this is the competition nowadays and the oversupply of product. Customers' expectations are getting bigger and bigger and are now much better off financially and also very complex. Marketing also helps to provide the desired quality and customer care.
Business Disadvantages in marketing
* identifies weaknesses in your business skills
* leads to faulty marketing decisions based on improperly analyzed data
* creates unrealistic financial projections if information is interpreted incorrectly
* identifies weaknesses in your overall business plan
TASK 2 CONCEPTS OF SEGMENTATION TARGETING AND POSITIONING
2.1 MACRO and MICRO FACTORS INFLUENCING MARKETING DECISIONS
Companies must constantly watch and adapt to the changing marketing environment in order to seek opportunities and to fend off threats. The marketing environment comprises all the forces that directly and indirectly influence the organisations capability to do business. The company's marketing environment can be divided into the microenvironment and the macro environment. The microenvironment influences the organisation directly and consists of the forces that are close to the company which affect its ability to serve its customer. It includes the company itself with its departments and management levels, suppliers that deal directly or indirectly, Marketing intermediaries, Customers, Competitors and the Public. The macro environment includes all factors that can influence an organisation, but that are out of their direct control. It includes demographic environment, economic environment, natural environment, technological environment, political environment and cultural environment.
The microenvironment involves the companies internal environment – its departments and management levels. All other company groups must be taken into consideration from the marketing management.
Suppliers play an important role in the companies success and in their overall customer value delivery system. They provide all the resources that the company needs to produce its goods and services. The supplier developments can tremendously affect marketing. Supply shortages or delays, labour strikes and other incidences can damage customer satisfaction and this would lead to loss of sales. Apart from this increasing supply costs can lead to price rises which can have an affect on the companies sales volume.
Marketing intermediaries are companies that help the organisation to promote, sell and distribute the produced goods to the final buyers. This includes resellers, distribution firms, marketing agencies and financial intermediaries. Resellers are companies or individuals which buy goods/services to resell them on at profit. Distribution firms comprise of warehouses and transportation firms that stock and deliver the goods. Marketing agencies are marketing research firms, advertising firms, media firms and other service provider that help the company to target and promote their products to the right markets.
Customer markets need to be observed closely. This includes consumer markets, business markets, reseller markets, institutional markets, government markets and international markets. Consumer markets include individuals and households. They buy goods and services for personal use. Whereas business markets, buy goods and services for further processing or for use in their own production. On the other hand resellers buy goods and services to resell it on profit. Institutional markets include schools, hospitals and prisons.
The marketing concept says that in order to be successful a company must provide higher customer value and satisfaction than their competitors. It is important for any organisation to identify and adjust its strategies, taking into account its competitors and their activities in order to survive. Competitor analysis is a common feature present in strategy plans and even the biggest of companies need to continually be aware of what their rivals are producing and what kind of marketing activities they are using.
A public is any group that has an interest or has an impact on the companies' ability to achieve its goals.
Demography is the observation of human populations in terms of density, location, size, sex, age, occupation and other statistics. It is important that any business is aware of demography as it involves people who importantly make up the market. For example according to National Statistics the UK has an ageing population. This is the result of a decline in the mortality rate and in past, fertility rates. This has led to a declining proportion of people aged under 16 within the population, and an increasing proportion of people aged 65 and over.
The state of the local and global economy has had a big influence on any organisation. The economic environment factor affects consumer buying power and spending patterns. Key measures of the economy are - inflation rates, interest rates, income levels, GDP, exchange rates and consumer spending patterns.
The natural environment provides natural resources that are needed as inputs by marketers or that are affected by marketing activities. Concerns for the environment have increased vastly over the years and with it the increase in demand for businesses to take greater care and responsibility for it. Organisations must consider their marketing strategy in relation to these issues. Environmental issues could consist of shortages of raw materials, increased cost of energy, increased air pollution (leading to global warming) and damage to landscapes and wildlife. Being environmentally friendly business projects a good image and boosts reputation, which is extremely beneficial for businesses.
The technological environment involves forces that create new techniques, new products and new market opportunities. Technological issues include IT, Changing Work practices and Ecommerce, etc. The internet is making it increasingly easy for potential customers to assess information out of office hours. Many businesses have now taken to trading ‘online' as well as by phone or in person. Accessing information or registering for online services means less operational costs are incurred, as less staff may be needed. This of course means that time and money must initially be put into setting up and then maintaining an online website/shop, but for most businesses, in the long run this may be of great financial benefit.
SLEPT analysis is one of these tools and which looks at changes in five areas:
ü Social - trends in society
ü Legal - legal restrictions and considerations
ü Economic - the health of the economy, inflation, etc
ü Political - government policy
ü Technological - developments in computing, etc.
The following sections provide some examples of each factor, which are relevant to Vodafone.
Society is concerned about under 18s being at risk. Parents may have concerns about their children being contacted (using mobile phones) by pedophiles 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.
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. 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.
The state of the economy, for example levels of growth can impact companies. Companies' activities also contribute to the overall economy. Companies should remain true to their ethical values. If they do not, customers may question the company's beliefs.
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.
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.
The advent of 3rd generation (3G) mobile phone technology is bringing with it a richer mix of content and providing more services. This further raise the issue of ethics as Vodafone (and other suppliers) can now offer a wide variety of content to mobile phones with this new technology.
Organisations are aware that they cannot appeal to all customers nor can they appeal to all buyers in the same way. Buyers are too different in their needs and buying practices. Segmentation is about differentiating between mass marketing where everyone can be treated the same, and the supposition that each person needs a special marketing effort.
“I don't know the key to success but the key to failure is trying to please everyone”
Segmentation on consumer markets
There are various ways to segment a market. The company has to combine different segmentation in order to find the best way to view the market structure.
ü Geographic segmentation; in the geographic segmentation the market is divided into geographical units such as regions, country sizes, city sizes, neighborhoods and density climates.
ü Demographic segmentation; in the demographic segmentation the market is divided into group based demographic variables such as age, gender, family
ü Socio-economic segmentation; this approach divides the market into income, occupation and social class. It affects the people's purchasing power and habits.
ü Psychographic segmentation; this approach divides the market into different groups based on social class, lifestyle
ü Behavioral segmentation; this approach divides the market into groups based on knowledge, attitude, use or response to product.
2.3 Choice of targeting strategy
Next, the seller has to target the best market segments. Companies are rarely capable of supplying or selling to an entire market (every segment); this being the case, they will look to target the specific segments which they are comfortable with supplying. The organisation will be able to concentrate on supplying a product to segments that will find it beneficial and whom will be willing to buy such a product. By targeting specific markets, this will eliminate waste of resources such as time, money and effort in trying to infiltrate markets that do not find the product of relevance. First of all, the company needs to observe each segment size and growth, structural attractiveness and compatibility with the companies' resources and aims. Secondly it needs to decide the marketing type.
There are various types.
* Mass marketing
* Niche marketing
* Selective marketing
2.4 How buyer behavior affects marketing activities
A company must continually identify consumers' needs and develop products and services to fit them in order to survive. It is not significant enough to find out what a customer requires but also why it is required. Consumers are constantly open to new experiences and different influences and these changes have influence on what, how and why consumers purchase.
Consumer behaviour is a complex area and there is no easy way for a company to research buyer behavior, find out who is the decision maker in the buying process, how they buy, what motives them to buy a specific product and where and when do they buy it from.
“Research is cheap if you want to stay in business, expensive if you don't.” Anon
TASK 3 IDENTIFY AND ANALYSE EXTENDED MARKETING MIX
3.1 how product choices developed to sustain competitive advantage.
New products are the lifeblood of a company. New product development is quite risky and many new products can fail. Good companies sustain growth and maintain profitability over long term by the successful development of new products or services. Companies must develop new products or services because of the rapid changes in customer tastes, technology and competition
A product with many different features provides customers with opportunities to chat, play games, send and receive pictures, change ring tones, receive information about travel and sporting events, obtain billing information - and soon view video clips and send video messages.
Vodafone live! provides on-the-move information services.
Risks and returns in new-product development
New product development is quite risky as the following reasons show.
New product development is very expensive. For instance Sony spend €1.7bn to develop the semiconductor for the play station 2.
New product development requires a lot of time.
Unexpected delays can give rise to problems.
New products continue to fail at a disturbing rate.
The product life cycle is the course of a products sales and profit over its lifetime. It includes five stages: Product development, Introduction (launch), Growth, Maturity and Decline.
“What's in a name? That which we call a rose by any other name would smell as sweet.” William Shakespeare
3.2 how distribution is arranged within the organisation to provide customer convenience
Companies hardly ever work alone when it comes to bringing value to customers. Mostly there are single links in a larger supply chain or distribution channel. However many products are sold directly to the consumer. This is known as direct selling. The producer – wholesaler channel is used by smaller companies, which make a limited product range. The advantage for the company is that the wholesaler bears the risk of not selling the goods, so the company has a guaranteed market. Furthermore the wholesaler stores the goods, so the companies' stockholding costs are reduced. The wholesaler also promotes the product itself, so the company saves on promotion costs. On the other hand the company loses control over promotion and contact with the final consumer.
Advantages and Disadvantages of Intermediaries
Intermediaries can be a good way of selling a product as they may have better selling skills and customer databases. The cost of selling the product directly may be too expensive for a small business and if the organisation does not have the time or resources to do so it may be beneficial to go through an intermediary. Another advantage is, if a company such as working in the travel industry does not have an established brand or reputation then they could find it useful to go through an established company to use their advertising, promotions and selling experience.
The disadvantage of using an intermediary could be that perhaps costs would be too high and there may not be enough profit left to survive. You may also distance your company from the public and thus be out of touch with consumer demands, although many companies just use customer feedback evaluations to get around this. The company needs to frequently communicate with the intermediaries and also adequate training on the products must be given. The risk is that if the intermediaries have poor customer service and are adopting a poor image, it may be damaging for a business to be associated with such a company.
Vodafone UK operates over 300 of its own stores.
It also sells through independent retailers e.g. Carphone Warehouse.
Customers are able to see and handle products they are considering buying.
People are on hand to ensure customers' needs are matched with the right product and to explain the different options available.
3.3 how price reflects the objectives and the market condition
“Anybody can cut prices, but it takes brains to make a better article” Philip Armour
Price cutting is an easy way to attract customers quickly, but a poor route to long-term market success. The reason for this is that giving a 10 percent price cut to a customer can mean taking a 50 percent cut in profits. Nowadays companies face a fierce and fast changing pricing environment. Reducing prices can signal to customers that the price is more important than the brand. Companies must sell the value not the price.
Price is the only element in the marketing mix that produces revenue whereas all other elements signify costs. Furthermore it is also one of the most flexible elements. Product features and channel commitments cannot be changed as easily as the price. Pricing a product is quite tricky.
Factors to consider when setting a price
A companies pricing decision are influenced by internal company factors and by external environmental factors.
Marketing mix strategy
Organisation for pricing
Nature of the market and demand
Other environmental factors such as economy, government and resellers
General pricing approaches
The company needs to be aware that pricing strategies for existing product and new products are like chalk and cheese.
Cost plus pricing – adding a target profit margin on the estimated average total cost.
Value based pricing – setting the price based on buyers perceptions of products value than on the cost
Competitive pricing – setting the price based on following competitor prices than on company costs or demand
Price discrimination - different prices are charged to different buyers for the same product. However it's not always a bad thing. It can also lead to fairer treatment as those with a higher income could pay a higher price and those with a lower income could pay a low price.
Tendering – used by local authorities in the public sector. Pricing bids for jobs are submitted in sealed envelopes.
Pricing strategies for new products
Vodafone wants to make its services accessible to as many people as possible: from the young, through apprentices and high powered business executives, to the more mature users.
It offers various pricing structures to suit different customer groups.
Monthly price plans are available as well as prepay options. Phone users can top up their phone on line.
Vodafone UK gives NECTAR reward points for every £1 spent on calls, text messages, picture messages and ring tones.
3.4 HOW PROMOTIONAL ACTIVITIES INTEGRATED TO ACHIVE OBJECTIVES
Promotion is about communicating with current and prospective customers. In general communication is important in building and maintaining any kind of relationship. Therefore it is significant for a company to build customer relationships.
The four main promotion activities are as followed
Advertising – is the most popular form of promotion and often the most expensive. Advertising is done through the use of mass communications such as television, radio, newspapers, sponsorship, etc. This activity is a long term brand binder
Personal Selling – are personal presentations by the companies' sales department. The main purpose is building customer relationships and making sales. This activity is important for B2B marketing and is also used in retail.
Sales promotion – can be done with help of short term incentives such as free gifts and money off. This helps to encourage the purchase of a product or service. This activity is usually designed for a quick fix.
Public relations – good relations are built with the companies' public by gaining good publicity, building up a good image and handling rumours, stories and events. Examples for this are press releases.
Direct marketing – direct connections with consumers. This helps to obtain an immediate response and to develop lasting customer relationships. This can be done via telephone, mail, Internet and other tools.
Vodafone works with icons such as David Beckham to communicate its brand values.
Above the line
Advertising on TV, on billboards, in magazines and in other media outlets reaches large audiences and spreads the brand image and the message very effectively. This is known as above the line promotion.
Below the line
Stores have special offers, promotions and point of sale posters to attract those inside the stores to buy.
Vodafone's stores, its products and its staff all project the brand image.
Vodafone actively develops good public relations by sending press releases to national newspapers and magazines to explain new products and ideas.
3.5 extended marketing mix
The extra Ps have been added because today marketing is far more customer oriented than ever before, and because the service sector of the economy has come to control economic activity in various countries. These 3 extra Ps are mostly relevant to this new extended service mix.
People - every person coming into contact with customers can have an impact on overall satisfaction whether as part of a supporting service to a product or being involved in the whole service. People are mostly important because in the customer's eyes they are a part of the whole service.
Process – These are the processes involved in providing a service and the investigation of the behaviour of people, which can be important to customer satisfaction.
Physical evidence - Unlike a product, a service cannot be experienced before it is delivered, which makes it intangible. Therefore this means that potential customers could take greater risk when deciding whether to use a service. In order to reduce the feeling of risk, so improving the chance for success, it is often very important to offer potential customers the chance to see what a service would be like. This is done by providing physical evidence, such as case studies, testimonials or demonstrations.
TASK 4 APPLY THE EXTENDED MARKETING MIX TO DIFFERENT MARKETING SEGMENTS AND CONTEXT
4.1 MARKETING MIX FOR 2 DIFFERENT SEGMENTS IN CONSUMER MARKET
Various age groups of which there will be Couples and couples with Groups bookings (possibly friends and family). First choice targets the whole UK.
First choice uses a mix of socio-economic and psychographic segmentation. The wedding holidays may attract customers with a lower income and the wish of a different wedding which reflects their lifestyle and personality characteristics.
Product differentiation is used via special wedding destinations.
Prices depending on wedding destination and location but starting from £325. So quite low for a wedding when compared with a wedding back home.
Competitive pricing. The price is based on competitor prices
Product is sold by travel agents with monitoring of brochure shelf space, evaluation feedback from customers. Constant liaising with agents is done to ensure holidays are being recommended. The product is also sold through First choices' online website and through telesales.
Direct marketing via their website (E-brochure)
Public relations via newspapers
Sales promotion via gifts (free canvas) and in some hotels weddings and renewal of vows ceremonies are free plus the wedding coordinator is free.
Agents must be correctly trained and well motivated in order to promote successfully the products.
All processes that affect the customer are continuously checked to spare the customer trouble.
Physical evidence is given via previous customer feedbacks.
All age groups who are interested in healthier lifestyles.
Demographic (age) and Psychographic (lifestyle) segmentation.
Kellogg's concentrates on changing the product through new variants.
Kellogg's is a super brand therefore can charge a premium because of the strength of the brand and product quality.
All supermarkets where most purchases are made.
Kellogg's uses above the line promotion like TV advertising as well as below the line promotion like on-pack promotions and sampling.
4.2 DIFFERENCE BETWEEN MARKETING PRODUCT AND SERVICES TO ORGANISATION RATHER THAN CONSUMER.
The business market consist of all the companies that buy goods and services to use in the production of other products and services that are sold, rented or supplied to others. It also includes retailing and wholesaling which is responsible for reselling products on at a profit to others. Companies that sell to businesses need to understand the difference between consumers and business consumers. The business marketer deals with fewer but larger buyers than consumer market does. Business markets are more geographically concentrated. Business buyers are much better trained and professional than consumer buyers. Overall, business purchases are more complex and formal than consumer purchases. When a company markets its products to other businesses, the most important thing is to maintain a good relationship. In Business to business (B2B) a commitment of time and good customer service is necessary. Customer service starts with the customers first contact with the company. In general for a B2B company the procedure of a sale activity is no longer than that for individual consumers. Many individual customers tend to look more for the best price with a certainty of good customer service. Also for example if a consumer wants to purchase a product then they will just go into the next shop to buy it without much more thought. On the other hand in the B2B world the procedure of making a sale needs more one to one communication, with exact details of the product or service. In the manufacturing, fabrication and engineering sector an extensive communication and even after sales contact is required. When a B2B company can provide a quality product/service then the customer will be willing to pay a higher price, provided there is perceived value. This value can be for example good customer service, on-time delivery and superb quality.
4.3 HOW AND WHY INTERNATIONAL MARKETING DIFFER FROM DOMESTIC MARKETING.
International trade is booming. Since 1969, the number of multinational corporations in the world's 14 richest countries has more than tripled. These companies control one-third of all private sector assets and have a world sales of $6 trillion.
Companies do not pay a lot of attention to international trade as the home market is big and is also much safer. However the business is continually changing. Companies cannot afford to close their eyes to the international markets. Countries rely on each others goods and services. Apart from this global firms are expanding aggressively. Reasons to trade internationally are growth and economies of scale.
Marketing approaches for international markets
In general there are three types of approaches. These are quoted below.
Polycentrism – Companies set up subsidiaries with their individual objectives and marketing policies. In every market different mixes are used in order to satisfy the customer needs.
Ethnocentrism – Overseas operations are not of crucial importance. There is no real attention to various customer needs. Example for this is Wal Mart.
Geocentrism – Standardization takes place wherever possible and adaptation just when needed. An example of this is Mc Donald's.
Considerable risk for companies who plan to trade internationally
There are various risks for companies when entering the international market.
Changes in currency prices – requires careful planning and research
Competing with other nations domestic producers
Requires research about trade barriers such as tariffs and quotas
Problems with marketing and distribution structures
Research about consumer behaviour, culture and customs is required
Patterns of demand will be determined by lifestyle, incomes, use of credit and religion. For example exporting alcohol in Islamic countries is out of place
Security associated with guarantee of payments
Political risks. Example BP's recent problems in Russia
Development of international markets is a much more difficult area than development of domestic markets. International marketing involves the following points.
Continually evaluating developments in the international market
Checking the companies overseas performance by market, parts of the world, parts of the market and region
Evaluating how strengths and opportunities have been developed, as well as how threats have been decreased and weaknesses corrected
Decisions relating overseas marketing objectives must be co-ordinated and costs budgeted
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