International Marketing Strategy Report

Vodafone is an international telecommunications company which has its headquarters in the UK. It is the world’s second largest telecommunications company after China Mobile. The company has more than 40 partner networks in the world in many different countries. Europe forms the largest share of its market where it has made strategic network acquisitions. It has operations in Eastern Europe and by 2008 it has over 2.6, 2.3, 2.6, and 8.9 million customers in Czech Republic, Hungary, Poland and Romania respectively (Vodafone, 2008). The company has developed strong organizational capacity to build competitive Wi-Fi capacity to provide data services on 3G platforms. As the leading telecommunications company in Europe, Vodafone requires investing heavily in research and development to increase product development and diversification.

In 2005, Vodafone made plans to acquire several networks in Eastern European countries. This included ninety nine per cent of Mobifon SA and 100 per cent of Oskar Mobil in Romania and Czech Republic (Pringle, 2005). This move into Eastern Europe countries was promoted by the reported slowed growth in other markets such as in Western Europe. The acquisition of Mobifon was a strategic decision as it was the leading telecommunications provider in Romania in 2004 having almost 4 million customers at the time. Oskar in Czech Republic was the third largest provider in 2004 and it had almost 2 million customers. Both countries provided promising prospects as they had registered a 30 and 36 per cent growth in revenue by end of 2004. The fact that Romania at the time had only 47 per cent of its population owning cell phones presented a bigger opportunity for growth as compared to Czech Republic which had 90 per cent of its population having cell phones (Pringle, 2005).

Identify and evaluate the macro and micro and external environment influencers using SWOT, PEST and examine target strategies

Vodafone prioritizes societal interests in its product development to ensure that the products meet societal needs. For instance in Romania, Vodafone identified a way to provide goods and services including RF and health to persons with special needs. Vodafone also address issues related to waste management and use of energy as priority issues (Strategies to Sustainability, 2007).

SWOT

Vodafone group public limited company prides itself in the strength of having a competitive advantage in third generation upgrades (3G) of its networks. The company plans to further upgrade its 3G network to almost 44 Mbps by the time 2014 comes to a close. The continued upgrades are tailored to clinch the opportunity presented by the demand for data services. There is also an increase in demand for data services owing to the high penetration of multiple mobile devices. The Company is also competitive in its convergence experience which enables it to satisfy the rising demand for unified services.

One of the strongest opportunities for Vodafone is the fact there is increased up-take of its data service owing to the increased use of smartphones across European countries including Eastern Europe (Zacks Equity Research , 2013). The company is taking advantage of this opportunity through continued expansion into the Eastern Europe market.

Vodafone’s weakness is evidenced by its decision to reduce the prices for its services. It has made considerable cuts in its monthly calling plans and data offers on those calling plans in Czech Republic. This decision emanates from the fact that there has been stiff competition from rival companies and the need to remain competitive. The cuts have implications on profits. Vodafone in Czech Republic has also made cuts on job opportunities and this signals that the company is at risk of operating at a loss. Another weakness is that the company launched its operations in an already mobile service saturated market in Czech Republic. This displays the company’s overreliance on small markets.

One of the threats facing the company in Eastern Europe is the fact that the company is operating in a period where customers have low purchasing power owing to the weak economy. This is forcing many of its subscribers to move to rival providers that have cheaper rates (Zacks Equity Research , 2013). The saturation of the wireless market also presents a major threat to the company’s survival and there is need for more innovation and diversification of the products and services for survival.

PEST

European countries adopted a regulatory framework that works to promote competiveness in the single telecommunications market. This policy compels Vodafone to reduce wireless network termination rates. Other regulatory terms require the a 70 per cent reduction in the roaming rates as a way of implementing a euro tariff aimed at further reducing the charges of making calls within the European Union countries (Saplitsa, 2008).

The eastern European countries present a stable environment for Vodafone’s operations. This has been recently evidenced through the recent sale of the government owned radio spectrum for fourth generation high sped mobile data networks. Czech Republic’s Telefonica which is the telecoms regulator supports private company’s investment in the telecommunications industry. The sale provides an opportunity for Vodafone Czech republic to add value to its products as well as compete more effectively with her rival competitor Deutsche Telekoms’ T-Mobile in Czech Republic (Reuters, 2013).

The economic condition in Eastern Europe is favourable because of the policies that necessitate free movement of goods and services across the region. The region also provides a lucrative business potential because the region registers consistent growth in its gross domestic product. More importantly the service sector plays a significant role in GDP growth as it contributes over fifty per cent of the GDP. Czech Republic, Hungary, Romania and Poland have also registered an increase in their development index. These factors indicate a fairly steady economy which is important for Vodafone’s growth.

Statistics indicate that the number of younger people is reducing at a higher rate in Europe than in other parts of the world. This is a social issue that may have implications for Vodafone’s future operations. This is because with a low birth rate, the youthful target market is significantly lower and Vodafone must develop products that address the issue. This statistics implies that Vodafone requires to closely monitoring the demographics of the eastern European population when targeting different products to different market segments. This will ensure that the older people also get age friendly service amidst rampant technological advancement (Saplitsa, 2008).

Other social factors that Vodafone requires taking consideration in product development include the fact that many of the citizens have an increased need for technology driven interactions through social networking internet sites. There is also increased digitalization, higher numbers of literate people and more people are knowledgeable on the general information technology services. These social factors present promising growth prospects for Vodafone as the people have increased need for technology services and they have the capacity to utilize them in their daily social and work related interactions. Heavy reliance on technology and communication even for people working at home as well as for advocates of paperless working environments also boost Vodafone’s survival.

Research and development is an important contributor of technological advancements. Eastern European countries commit minimal resources toward state funded research and development and this trend require changing. This will improve the region’s technology and create better chances for growth of the telecommunications industry and lower the cost of production and value addition processes (Saplitsa, 2008). Vodafone requires seeking alliances with major partners in the technology industry to develop new products that address the markets’ needs.

Explain the Vodafone’s product, price, promotion, distribution strategies, and its approach to positioning in the market place and analyse segmentation and brand

Vodafone products in Eastern European countries’ markets include data and voice services. The data services offer the best performance including high definition video and high internet speed that guaranteed immediate access to the internet which is forecasted to get assume fourth generation status in 2014. The voice services offer quality voice and the leading voice coverage for its customers. The fixed line services offer NGN access and good DSL. Customers are able to access integrated billing for their unified services and the converged bundles (Vodafone, 2013).

Owing to stiff competition Vodafone has lowered its rates for voice and data services in Czech Republic to effectively compete with the rival player namely T-Mobile and Telefonica. It doubled its data offer to the customers with the 621 K? monthly calling plan which allows them to access up to 1.2 GB. This is compared with the rival companies 1.5 GB and 1.0 GB for T-Mobiles 749K? and Telefonica’s 749K? monthly calling plans. This indicates that Vodafone offers the lowest rate in Czech Republic and this works to attract an increase in ARPU. Vodafone uses this pricing strategy to encourage people to migrate from other providers to its network to take advantage of the offer prices (Wireless Federation , 2013). Vodafone also launched a single payment plan for roaming services that cater for texts, internet and calls for mobile devices for persons that travel within Europe at daily payments of €3 or €4 per day. Eastern Europe countries such as Hungary, Czech Republic and Romania benefit from the most competitive rates. It allows Europeans to only incur only a small extra fee when making calls abroad because the pricing is almost the same as one incurred for home calls. Customers are also able to access 25 MB at €2 per day. (EurActiv Press Release, 2012)

Vodafone undertakes brand promotion activities on the digital space and live events. Vodafone has undertaken promotion strategies that encourage customer engagement. One such strategy was recently launched in almost 30 countries including eastern European countries. It involves giving customers an opportunity to use its technology and connectivity to share experiences with others. It is dubbed Vodafone Firsts and it is part of its sponsorship strategy which will allow its customers to view first global, local and personal events. The first event to be showcased will be the New Year‘s eve fireworks in London. This promotional strategy creates excitement and allows customers to achieve their ambitions and connect with others (Campbell, 2013). The digital marketing also plays a role in the distribution of the company’s data services.

Vodafone’s brand consolidates its position in the Eastern Europe market. The company is a leader among European telecommunications companies and as at 2011 it accounted for 15.7 per cent of the market share (Market line, 2012). It has made considerable investments in its brand through advertising and sponsorship of world class sporting events (MarketLine, 2012).The strong brand has enabled the company to enter into the Eastern Europe market and cover a wide customer segment. Its high speed technology is aimed at the youthful and tech savvy population. It also serves the corporate clients segments as many organizations are increasingly using the internet to increase visibility through digital marketing. The unified telephone services are tailored to provide quality voice to corporates and homeowners alike. Essentially, Vodafone’s products in Eastern Europe address the youth, older people as well as the corporate organizations.

Vodafone’s decisions at the corporate level and identify crucial factors for the company in the international market expansion. Evaluate entry strategies and market selection.

Ansoff matrix

The Ansoff matrix is fundamental in assessing Vodafone’s products and services suitability for its market. Vodafone concentrates its efforts in selling converged voice services as well as data services in the eastern European market. The company ensures that consumers access quality voice services and high speed internet services. It is consistently improving the quality of data services because it realizes that the voice market in the region is approaching maturity with particular saturation of the wireless market. The company is strategically investing in its data services to allow more customer satisfaction through immediate internet which is enhanced through upgrades on the third generation platform as well as the planned fourth generation upgrade scheduled for 2014. The company has also invested in quality voice services and it allows customers to access integrated billing for the unified phone service.

Vodafone also engages market development activities which are aimed at increasing the target customer’s awareness about its products and services. The company has realized that the internet presents promising opportunities for expansive and cost effective marketing. It has launched a marketing strategy that will allow customers to realize their ambitions through Vodafone’s digital platform. The platform is the first avenue through which international events will be showcased in Europe and the first international event to be showcased shall be the celebration of the new year in London. Individuals shall also get an opportunity to create and show case achievement of their exciting events. Local events shall also have a place in the digital brand promotion platform. This is an effective way to engage customers and potential customers in its promotional activities as well as an excellent opportunity to attract attention to important personal development activities for their customers. The digital sponsorship platform is a drift from the conventional sponsorship of sporting events and groups which will have an impact on a more expansive audience in a globally relevant fashion.

In terms of product development, Vodafone is ahead of the competitors because it already has the best integrated voice service. This leaves the company to invest in innovation and value addition of the data services in a way that responds to the societal needs of the eastern Europe populace. It is important that the company embodies corporate responsibility in its product development to consistently improve their socioeconomic standards. The company may develop services that allow children to use mobile devices to assist them come up with innovations and development ideas that improve quality of education. This is because education is an important element in developing minds towards future technology innovations through research and development. People require developing research and development capacities from the early years of life to continually improve living standards.

Diversification is another important element of boosting Vodafone’s marketing strategy. This is because customers are increasingly on the look-out for devices and services that simplify tasks leading to considerable time savings. Research and development is an important element in Vodafone’s operations in Eastern Europe because it will trigger new products and value addition into the already existing services. For instance, diversifying data services to curb the rising prevalence of lifestyle diseases through free browsing for health promotion material would work to increase the number of its customers because it would establish service stickiness.

In assessing Vodafone’s decision to pursue new markets in the Eastern Europe region it is important to make careful considerations about the barriers to entry into the telecommunications industry. Vodafone’s’ wide network coverage in other parts of Europe simplifies entry to the industry because it makes acquisitions and partners with companies that have wide network coverage. This provides an advantage to the company in terms of pricing because it can afford to offer its services at lower prices because of its wide network coverage. The company develops the acquired networks and is not burdened with the extra costs of advertising and promotional strategies to create awareness about the service in new locations. The fact that Vodafone’s acquires already established infrastructure makes it easier for the company to quickly launch its services to an already existing customer base. It is also beneficial because the company makes the most out of the positive reputation of the company from which it acquires the infrastructure as well as its own internationally recognized strong brand. This is double visibility and customer confidence benefits for the existing and the potential customers.

Recommendations that contribute to Vodafone’s competitive advantage evaluating international competitors within the market and their particular strategies.

With the increasing saturation of the wireless market, Vodafone requires making more investments in the fixed line market particularly targeting corporate clients. The company required to converge it wireless and fixed line solutions to also take advantage of the developing high speed technology. It is also necessary for the company to focus on data services because that is the area with the highest prospects for growth. This is backed by research that indicates that data services will register a growth of one hundred and forty two billion US dollars between 2011 and 2016 as compared to a decline of twenty seven billion US dollars within an equivalent period (Vodafone, 2013). Data services will take advantage of the emerging market created by higher use of smartphones and tablets.

Overall, Vodafone’s marketing strategy must focus on availing exciting new products and services that utilize data services. The Eastern Europe market has a high demand for new products that simplify everyday business and lifestyle activities. The company’s global position as a leader in telecommunications allow customers to be almost effortlessly drawn to its products and thus the company must take advantage of product development strategy to fully consolidate its market share in those countries. Competition from rivals is stiff because they are gradually acquiring infrastructure of Vodafone’s calibre. This indicates that Vodafone must engage in continuous innovation and diversification to effectively compete in the market.

References

Campbell, M., 2013, December 9. Vodafone Group launches new ‘Firsts’ marketing strategy. Retrieved December 10, 2013, from Mobile Magazine: http://www.mobiletoday.co.uk/News/27548/Vodafone_Group_launches_new_Firsts_marketing_strategy.aspx

EurActiv Press Release., 2012, June 29. European Roaming Breakthrough Vodafone Offers Simple Worry Free Integrated Plan. Retrieved December 10, 2013, from EurActiv Press Release: http://pr.euractiv.com/pr/european-roaming-breakthrough-vodafone-offers-simple-worry-free-integrated-plan-92495

Market line., 2012, August. Wireless Telecommunication Services in Europe. Retrieved December 10, 2013, from Marketine: http://ehis.ebscohost.com/eds/pdfviewer/pdfviewer?sid=6e370b7f-dc38-4426-9283-93369b06ff7d%40sessionmgr111&vid=1&hid=107

MarketLine., 2012. Vodafone: Becoming a valuable and recognizable brand. MarketLine, 1-18.

Pringle, D., 2005, March 15. Vodafone to Buy Cell Operator In Eastern Europe for $3.5 Billion. Retrieved December 10, 2013, from Wall Street Journal: http://online.wsj.com/news/articles/SB111089460221779821

Reuters., 2013, November 19. Telefonica Czech Republic as, Deutsche Telekom AG’s T-Mobile Czech Republic and Vodafone Group Plc’ Vodafone Czech Republic Win Auction of Radio Spectrum for 4G Mobile Data Networks. Retrieved December 10, 2013, from Reuters: http://in.reuters.com/finance/stocks/VOD.L/key-developments/article/2873129

Saplitsa, I., 2008, June. Business Analysis and Valuation of Vodafone Group. Retrieved December 10, 2013, from NORGES HANDELSHØYSKOLE: http://brage.bibsys.no/nhh/bitstream/URN:NBN:no-bibsys_brage_23342/1/Saplitsa%202008.pdf

Strategies to Sustainability., 2007. Vodafone- Sustainability Integration Case Study. Retrieved December 10, 2013, from Strategies to Sustainability: http://www.stratos-sts.com/wp-content/uploads/2013/04/2007_07_Case-Study-Vodafone.pdf

Vodafone., 2008, June. One Strategy: Corporate Responsibility Review. Retrieved December 10, 2013, from Vodafone: http://globalsustain.org/files/eurocharity_66_20090531180808.pdf

Vodafone. , 2013, November 12. Half Year Results and Strategy Update. Retrieved December 10, 2013, from Vodafone: http://www.vodafone.com/content/dam/vodafone/investors/financial_results_feeds/half_year_30september2013/p_halfyear2013.pdf

Vodafone., 2013. Year in Review. Retrieved December 10, 2012, from Vodafone: http://www.vodafone.com/content/annualreport/annual_report12/strategy/strategy.html

Wireless Federation ., 2013, May 3. Price War in the Czech Mobile Market at teh Upper End. Retrieved December 10, 2013, from Wireless Federation : http://wirelessfederation.com/news/tag/czech-republic/

Zacks Equity Research ., 2013, October 14. Vodafone Remains Nuetral . Retrieved December 10, 2013, from Zacks Equity Research : http://www.zacks.com/stock/news/111596/Vodafone-Remains-Neutral