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A global investment is a difficult mission that requires the assessment of different aspects of potential opportunities in different countries. Moreover, needs serious examination and analysis of success and failure probability. The purpose of this paper is to study the strategy of Etisalat, the United Arab Emirates (UAE) telecommunication company in the Saudi Arabia market as Mobily. Moreover, description, cause and effect of that strategy will be discussed at understand Saudi’s economy and to identify the total investment in the mobile sector. In addition, an attempt to examine the performance of Mobliy and the obstacles it faced was made. A specially, the difficulty it faced when it started the business in the Saudi market while trying to catch a part of mobile phone market share, managing its business and communicating with its mother company in the UAE. To overcome these obstacles, Mobily created new services for personal and companies to add value for its subscribers to achieve its strategy target. To explain its success in Saudi’s market, some business information will be discussed evaluating its strategy.
Etisalat’s strategy is anchored in expanding in international markets and being able to be one of the top-10 telecom’s service suppliers in the world. To execute this strategy, Etisalat attempts actually to create the retail of mobile devices around some states in Africa, Asia and the Middle East as Saudi Arabia and Egypt because these countries have shown an increase in GDP, GDP growth, GDP per head, great increase in population, unemployment and inflation rate Human development index, and Etisalat try to present telecom services and solutions which add value to consumers and facilitates perfect deal with technology.
In 2004, the only mobile operator was Saudi Telecom Company (STC). At the same time, the mobile penetration rate just was 40%,and there were only 9.2 million customers. When tihad Etisalat (Mobily) entered Saudi market in 2005, broke the monopoly. The liberalization of the Saudi Arabian telecommunication sector caused the penetration rate to rise to 109% in 2007, to assure of 50% for customers growth. In 2008, Zain, a third mobile competitor, entered the Saudi market. The influence of Zain’s entry still remains unsure in terms of how much of the company’s success will be due to new customers and how much will be from attracting existing customers.
Mobily paid for USD 3.46 billion to take the second mobile license in KSA in 2005. Mobily launched its operations in May 2005 and ending the same year with 2.3 million consumers, constituting 16% of KSA mobile market. The company was initiated the first video mail service in the local market and initiated the launch of 3.5G services in Saudi Arabia in June 2006. Furthermore, Mobily was successful in covering most of Saudi Arabia’s land with the GSM coverage 97% of populated areas. It was also the first mobile Saudi operator to initiate value-added services such as location-based services (LBS), MMS (picture messaging), GPRS/GPRSEDGE roaming, global roaming for prepaid customers, and other services for their subscribers. Mobily was the first Saudi wireless service provider to launch in-flight calls abroad through Aero Mobile who a specialized aviation mobile operator. Moreover, mobily was the first to introduce Blackberry and the iPhone services in the local market.
Mobily is successful attainment its long term vision: to change from a pure mobile operator to a multi-functional telecom operator in KSA. Mobily was granted approval by CITC (Communication and Information Technology Commission) to attained 96% of Zajil International Telecom and 99.9% of Bayanat Al Oula which has a WIMAX license, two data service suppliers in KSA in 2008. Mobily is managing the cost of existing operations when its purchase of a 66.6% stake from the Saudi National Fiber Network (SNFN) which substitutes the use of STC’s international gateway network. The incomes of the SAR2 billion capital increases are used for funding or upgrading. (http://www.mobily.com.sa)
Mobily has noticed on January 2010 that Saudi Arabia increasing rapidly in telecommunication operator will present 400,000 SAR a gift to 10 victors who wander on its network while visiting to Saudi Arabia. Mobily is in confident contract with many operators in the globe. So the customer will sense at residence wherever they go. It guarantee their abroad customer who they used abroad that they can still use voices calls, internet connection, video calls, and MMS with exclusive price. Mobily has built a strong connection with Etisalat of UAE for procurement of resource. This connection might be significant for presenting one of the best plan networks in the world. The revenue of Mobily Company Q2 2010 recorded as 3,972 million showing an increase of 24% over the same quarter last year. Mobily’s chairman, ENG. Abdulaziz Alsaghyir mention that the increase of our Q2 revenue is due to the growth in broadband revenues and creating a centre of attention more post-paid consumer, in addition, Mobily has approved its strategy for five year time know as GED planning for expansion, differentiation to supply combined telecom services constructed about fixed and mobile broadband technologies.
7-HAJJ EFFECT ON PROFITABILITY
It is expected that around 3 million person visit Saudi Arabia during the Hajj pilgrimage season, which is reflected in Mobily’s fourth quarter earnings. Mobily achieved highest quarterly earnings during the fourth quarter.
Mobily Quarterly Earnings
Mobily has finished building its own capacity infrastructure to support itself. On the other hand, when Zain started their business, has rented transmission capacity from both Mobily and STC. This produced an additional flow of income for Mobily and STC depending on Zain’s usage capacity. (http://www.gulfbase.com)
9-Effect of macro-environmental and micro-environmental on Mobily’s marketing mix
There are many reasons to the macro-environment that will influence the choices of the managers of any establishment. New laws, tax changes, trade barriers, demographic change and government policy changes are all instances of macro change. To help analyse these reasons or factors managers can categorise them using the PESTEL model. (http://www.oup.com)
Kotler (1998) claims that PEST analysis is a helpful strategic tool for distinguishing market growth or reduction, business position, potential and direction for operations.
In analyzing the macro-environment, it is essential to understand the factors that might in turn affect a number of critical variables that are likely to affect the company’s demand and supply levels (Kotter and Schlesinger, 1991; Johnson and Scholes, 1993).
9.1 Why Saudi Arabia
9.3The supplier environment
This consists of other business firms or individuals who provide the marketing firm with raw materials, product constituents, services or, in the case of retailing firms, possibly the finished goods themselves. Firms, whether they be retailers or manufacturers, will often depend on numerous suppliers. The buyer/supplier relationship is one of mutual economic interdependence, both parties relying on the other for their commercial well-being. Although both parties are seeking stability and security from their relationship, factors in the supplier environment are subject to change, such as industrial disputes which will affect delivery of materials to the buying company, or a sudden increase in raw material prices which forces suppliers to raise their prices. Whatever the product or service being purchased by the marketing firm, unexpected developments in the supplier environment can have an immediate and potentially serious effect on the firm’s commercial operations. Because of this, marketing management, by means of the marketing intelligence component of its marketing information system, should continually monitor changes and potential changes in the supplier environment and have contingency plans ready to deal with potentially adverse developments.
9.4 The distributive environment
Mobily’s management is placed on marketing intermediaries as agents and distributors to make sure that their products arrive at the final consumer. To Mobily’s management, it may seem that the conservative method of distribution in telecommunication is relatively static. For the reason that transforms in the distributive environment happen quietly, and there is a risk of marketing companies failing to aware about the commercial change
9.5 The competitive environment
The company must be aware about the potential threat of other companies marketing similar and substitute product whether they are of domestic or foreign origin. In telecommunication sector in KSA have just three players a potential competitive threat. Whatever the type, size and composition of telecommunication sector, Mobily’s marketing management has a full understanding of competitive forces. However, Mobily Known with this knowledge, which will have a greater opportunity to compete effectively.
The marketing mix
Mobily used some approaches to price a product as the price charged for products and services is set unnaturally down in consideration of gain market share. Once this is attained, the price is increased. In addition, charge a reasonable price when has a strong competitive advantage. On the same time, Mobily attentive about competitors. However, most of their prices it is fair and satisfied for most of the customers.
Mobily’s distribution strategy is driven by three main channels which:
Direct sales: The direct sale channel includes Mobily’s 24 flagship stores and 155 fully branded stores. The flagship stores are completely owned and employed entirely with Mobily personnel, while the fully branded outlets manage as franchises.
Indirect sales: The Firm depend deeply on its distribution partners to attain wide range distribution at a rapid pace. Mobily has a sign primary distribution contract with seven major distributors, each of which special effects sales through 149 fully branded, 288 co-branded and 4,000 secondary distributor outlets.
Co-branded: The Company has channelled sales through ATM and the Internet for top-up of prepaid cards. So as to focus VIP sector successfully, the Company has begun a separate section of Corporate and VIP Sales.
Mobily has been achieving the three levels of product which are the Core product, the Actual product, and finally the augmented product. In addition, another marketing tool for evaluating products as The Product Life Cycle (PLC) which based upon the biological life cycle, and The Customer Life Cycle (CLC) which focuses upon the production of and delivery of lifetime value to the consumers.( http://marketingteacher.com)
Three Levels of a Product
Mobily Connect: Connect Al Zaeem, Connect Turbo Router, Connect Turbo, Connect Mini WIFI, Ferrari Connect, Connect Foot Ball, Connect Long Tail, Mini Wi-Fi.
Postpaid : Mobily Minute buntes , Blue Wave Mada, Najma,Deeraty, Raqi, Fallah Mobily Khatty and Khatty Plus.
Prepaid: 7ala, Anees, 7ala Plus, Wafeer, Mabuhay Kababayan, Blue Wave, Visitors Line ‘Rihal’, fallah, I phone line.
Smart phones :I phone 3Gs, Iphone 4 , BlackBerry Bold 9700, BlackBerry Bold 9000 , BlackBerry Curve 8900 , BlackBerry Curve 8250, , BlackBerry Curve8800 ,Nokia N8,Samaung Galaxy Tab, Liquid E Ferrari .
Broadband at home, Mobile internet, Internet Roaming(can only be used outside the kingdom of Saudi Arabia). (http://www.mobily.com.sa)
Mobily is using the promotions mix to deliver a unique campaign as :
Personal Selling. (Mobily tend to be well trainee for their sales workers in the approaches and techniques of personal selling to meet high margin in sales).
Trade Fairs and Exhibitions.
Advertising.( Mobily paid for communication to develop attitudes and create awareness for people. Furthermore, Mobily use the advertising in media such as newspapers (local, free, trade), magazines and journals, television (local, national, satellite), outdoor advertising (such as posters).
Sponsorship (Mobily bought for SR 200 million over the five years to associate their brand with Al-Hilal which is one the leading and well-known football clubs, not only in Saudi Arabia but in the Middle East and Asia).( http://saudijeans.org)
The improvement and concentrate on innovative products and value-added services.
The experiences shift and indirectly supported from the mother company “Etisalat UAE”.
Mobily have been using an aggressive marketing strategy that enabled it to obtain a 30% market share in less than two years of operation.
To decline the cost of operation and improve data revenues flow, Mobily is improving a new Saudi fibre optic network.
Mobily has been improving the company brand and reputation, to attract the corporate sector in KSA.
Saudi government avoids currency risks.
quickly responded to a new competitor Zain by creating roaming agreements with about 100 operators in 56 countries.
Well improved mobile network coverage with 3G services.
low in the increasing postpaid customers in Mobily’s subscribers
Continuing need for high spending for improve the network servers.
High focus of prepaid subscribers, about 90% of customers signalling lower average revenue for parson.
STC is ranked first in broadband overall
Due to rising oil prices in the world lead to build a strong economy and high GDP per person in a region.
A strong population growth, 69% of the population is under the age of 30.
Partnership with parent operator for entering new telecom markets.
Increase market share in mobile broadband.
Saudi government attempts to capture foreign direct investment in the telecommunications business through improvements in information technology sectors.
Purchase of companies in the value chain.
Intense competition due to the entrance of MTC lately, as the third mobile player, is leading to decreases in average revenue.
Due to easier for customers to transfer from one operator to another that lead to increased competition between operators.
Low demand response to new services.
Decline in margins as a result of price wars.
Failure of public to adapt to changing technology.
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