This report explores environmental evaluation and marketing strategies analysis of Vodafone. Referring to situational analysis, the SWOT analysis shows several important insights, such as fierce competition, high penetration rate, low differentiation and innovation. After defining two marketing goals, this study discusses marketing strategies of Vodafone from the perspective of marketing mix. Furthermore, there are two significant recommendations for Vodafone including social media and relationship marketing.
Table of Content
This study will explain environmental evaluation and marketing strategies analysis of Vodafone. Firstly, this study will provide the situational analysis from the implementation of the SWOT analysis. Furthermore, segmentation targeting and positioning facilitates Vodafone to understand different needs of target markets. Secondly, the marketing objectives and goals will be defined and explained. Then, this study will introduce marketing mix to discuss marketing strategies. Finally, the recommendations will be given.
2.0 Situational Analysis
This chapter will propose the situational analysis to evaluate the environment of Vodafone. The SWOT analysis including strengths and weaknesses of organisational environment and opportunities and threats of external environment aims to provide the comprehensive understandings of internal and external organisational environment. In the following, this chapter will employ the SWOT analysis to analyse and evaluate the internal and external environment of Vodafone.
There are several aspects of Vodafone strengths including brand recognition, emerging markets, solid foundation in major countries, strategic alliances and new service development. For instance, along with the economic recession severely influences the prospect of developed countries, such as European countries, UK, and North America, emerging markets increasingly contribute to the sustainable development of Vodafone. In terms of Table 1, during the period between 2009 and 2011, the annual growth of service revenue in emerging markets is more than 6%. However, there is comparatively slow growth of service revenue in Europe. Most telecom and internet service providers, like Vodafone, increasingly recognised that the exploitation and development of the global market, particularly emerging markets, considerably influence the sustainable development of telecommunications service providing companies partly because of the market saturation of domestic countries.
Table 1: Key Revenue Performance Indicators
Service revenue growth
Data revenue growth
Emerging markets service revenue growth
Europe enterprise service revenue growth
Fixed line revenue growth
Notes: (*) means that organic growth which presents performance on a comparable basis.
Source: Vodafone (2011a, p.13)
Furthermore, Vodafone has competitive abilities to develop new telecom service, such as 3G and data service. As Table 1 shown, compared with traditional service revenue growth, the data revenue growth is higher than traditional service revenue. Beside the higher growth of emerging markets and data revenue, the strong brand recognition and strategic alliances of Vodafone contributes to the sustainable development of Vodafone.
Several aspects of weaknesses, including uncertainty of revenue growth in data service and Euro market, gradually influence the development of Vodafone. For instance, there is a distinctive pattern of telecom service in emerging markets and developed countries. According to Figure 1, this figure implies that there are two significant results on mobile subscribers and penetration rates across regions. Firstly, the developing countries, especially rest of Asia, have over 800 million mobile subscribers, which is considered as the most potential mobile service consumption market. Secondly, compared with developed countries, rest of Asia and world has comparatively low mobile penetration. Hence, Vodafone, known as a pioneer of the global telecommunication service market exploitation and development, concerns its global market exploration.
Figure 1: Total Mobile Subscribers and Penetration Rates by Region as of Mid-2007
Source: UMTS Forum (2008, p.6)
Referring to Opportunities of Vodafone, the growth of emerging market and data service and telecom solution for corporates are described as two important opportunities. Firstly, as the previous analysed, the higher degree of mobile penetration in mature markets. Nevertheless, there is a growing space for Vodafone in emerging markets. Hence, emerging markets and relevant areas may gradually benefit the long-term development of Vodafone, since there are more opportunities. Secondly, Vodafone has its own business department for serving corporate client. Compared with consumer market, corporate client has their unique needs on communication and data service. For Vodafone, it not only is an opportunity, but also is considered as a challenge.
There are several obvious threats facing Vodafone, such as high penetration rate in mature market, and powerful competitors. Firstly, as Figure 1 shown, compared with developing countries, mature markets, such as Europe and North America, have comparatively high penetration rate. In other words, the marketing environment in mature markets is more fierce competition than emerging markets. Secondly, in the UK mobile service market, there are three considerable competitors facing Vodafone, including Everything Everywhere (Orange and T-Mobile), O2 and Three. Everything Everywhere has more than 27.6 million subscribers (Everything Everywhere, 2011), which is separately more than each competitors. This competitor not only has the dominated position in the UK mobile service market, but also has the remarkable performance on international cooperation to explore global market. For example, it cooperating with Everything Everywhere in the UK market serves the Chinese tourists and residents during the tourism period (Everything Everywhere, 2012). The following competitor is O2 that has over 22.2 million subscribers. For O2, it has the remarkable abilities to formulate and implement its well-defined marketing strategies. For instance, it provides the free Wi-Fi service suitable for consumers in McDonald’s store (O2, 2012). These competitors exert their powerful influence on the competitive situation of Vodafone.
3.0 Differential Advantage/Competitive Edge
This chapter will discuss the differential advantage/competitive edge of Vodafone, including solid foundation of innovation, innovative abilities for improve corporate client performance, and support of strategic alliances and cooperation. Firstly, Vodafone has its solid foundation in the telecom industry. In terms of the amount of the subscribers experiencing the telecommunication service, Vodafone is the second largest mobile telecommunications firm. Currently, Vodafone operates its telecommunications service in over 30 countries, such as UK, Australia, New Zealand, Germany, Italy, and Ireland, and, cooperating with domestic partners to provide telecommunication services in more than 40 countries, including Denmark, Singapore, Thailand, Russia, Finland and Ukraine (Vodafone, 2012a). In terms of Vodafone (2012c), the vision is to “be the world’s mobile communication leader-enriching customers’ lives, helping individuals, businesses and communities be more connected in a mobile world.”
Secondly, in the corporate client market, Vodafone has its competitive advantages. For instance, Vodafone innovatively provides the TomTom with traffic data service and machine to machine communication solution (Vodafone, 2010). It not only makes traditional telecom service applied to business communication solutions, but also expands its market from consumer market to business client. Thirdly, the strong strategic alliances and cooperation of Vodafone facilitate Vodafone explore international market. For example, in 2011, Vodafone and Conexus created the relationship of strategic alliance for expanding the Asian market (Vodafone, 2011f). In fact, since strategic alliance has considerable abilities to understand local consumer behaviours, business environment and government regulation, these abilities helps Vodafone to effectively formulate and implement marketing strategies in foreign markets.
4.0 Segmentation Targeting & Positioning
Market segmentation is described as a market with the similar needs and behaviour of consumers. It is considered as a process of an organisation recognising its competitive advantages for serving market segmentation. After implementing strategy of market segmentation, Kotler & Keller (2006) argued that target market is based on the understanding of specific needs, qualities and behaviours of market segmentation. In another hand, the determination of market segmentation may specific target market not available to competitors. The targeting and positioning is dedicated to understand what target market wants and how to provide suitable service satisfying their needs.
Currently, Vodafone has two major target market including consumer market and corporate market. Referring to consumer market, for instance, young generation consumers, such as university and college students, are more concerned with mobile data service including mobile chat, quizzes, phone games, ticket purchase and others. For this specific target market, Vodafone may provide more discount for young generation consumers to make them become loyal consumers, which consequently benefits the long-term development of Vodafone. For corporate market, Vodafone incline to provide the customised service for specific corporate client, since different corporate clients have their specific needs.
4.0 Marketing Objectives and Goals
The marketing objectives and goals contain two detailed orientations including marketing sales performance and marketing communication. Firstly, referring to marketing sales performance, there are several detailed predictors for Vodafone to determine the marketing sales performance in the following five years. In the next five years, the service revenue growth in emerging market should be kept at 20%, and in mature markets at 2%. Furthermore, new services, such as 3G and data service, should experience a considerable development, which should annually increase by 3%. Referring to cost of marketing activities, Vodafone should make more efforts to improve the performance of marketing activities.
Secondly, marketing communication not only involves corporate communication and marketing communications, but also concerns branding and the improvement of brand image in the mind of consumers (Pelsmacker, Geuens & Bergh, 2010). Hence, evaluating the performance of integrated marketing communication is considered as another important marketing goal for Vodafone. For instance, it may hire professional service consultants to assess the performance of Vodafone’s IMC from various perspectives, such as consumers’ attention rate, and frequencies of advertising. Moreover, the feedback from consumers and partners will be used for improve the future performance of IMC.
5.0 Marketing Strategies and Programmes
The analysis and evaluation on marketing strategies of Vodafone from the perspective of marketing mix. In terms of Kotler, Armstrong, Saunders & Wong (2001), marketing mix is described as an effective marketing analytic tool for determining and marketing products. Therefore, this section will use marketing mix to analyse and evaluate the marketing strategies of Vodafone.
Today, Vodafone has three major business categories including business solutions, personal solutions and branded phones & devices (Vodafone, 2012b). The service for business solutions contains integrated communications, mobile solutions, productivity services, voice and messaging, roaming for your business and machine to machine solutions, which aims to provide the efficient communication environment for business and corporate clients. In regard to personal solutions, Vodafone desires to facilitate individual consumers communicate with family and friends through several channels, such as mobile, email, chat, and internet. Furthermore, Vodafone offers the retailing service of branded phones & devices. Since there is an extremely similar mobile service among different telecom companies, Vodafone should concern more services beyond communication, such as apps & downloads for individual consumers to experience the benefits and funs from smartphone. For corporate client, the technical support and customised service may contribute to successfully attract and maintain corporate client.
From the traditional view, since there is a few telecommunications service providers in a country, this liberalised market particularly facilitates these providers become oligopolies (Cambini & Valletti, 2003). These oligopolies have the competitive influence in the pricing decision in comparison with consumers. Along with the application of the internet-based technologies offers more choices for consumers, such as internet chat, consumers increasingly shape their own influence in this market. Nevertheless, Vodafone and its competitors provide the similar service package and prices for consumers. For Vodafone, there are two important price plans containing pay monthly and pay as you go. The plan of pay monthly includes several dimensions for consumer to choose their proper plan, such as plan type, contract length, plan type and monthly cost (Vodafone, 2012d). Hence, the mobile service providers play a critical role in the game of pricing.
Promotion, known as integrated marketing communications, plays an important role in the creation and delivery of the persuasive information for consumers and the establishment and enhancement of the interactive relationship between Vodafone and its customers. There are several strategies of integrated marketing communications developed by Vodafone, such as social media, advertising and internet-based platform. Vodafone, like most firms concerning their brand image and their interactive relationship with consumers, focuses on the application of social media. For example, Vodafone adopts Facebook, Twitter, and Yahoo to implement the interactive communication with target consumers. Furthermore, Vodafone establishes the internet-based platform to improve the engagement of consumers in mobile service and communications. For instance, several forums, including Apple forum, BlackBerry forum, HTC forum and others (Vodafone, 2012e), make each specific target market engage in these forums to exchange feedback and experience on these products and relevant services.
Place is described as the distribution networking facilitating Vodafone effectively deliver services and products for consumers. In fact, the effective distribution networking can help firms to shape their competitive advantages. Currently, there are two major distribution channels developed by Vodafone, including online store and real store. Firstly, Vodafone launched the online store to offer several aspects of mobile products and services, such as mobile phones, accessories, apps & downloads and mobile services. The online store can save consumers’ time and money. Secondly, Vodafone, like O2 and Everything Everywhere, operates real stores to improve customer experience.
This chapter will propose two recommendations for Vodafone to achieve its sustainable development in the long run, including social media, and customer relationship and relationship marketing. The first recommendation on the application of social media concerns the implementation of integrated marketing communications. The second recommendation on relationship marketing contains four aspects to implement relationship marketing, such as service quality, price perception, brand image and value offers. In the following, this chapter will described relevant theories on social media and integrated marketing communications and relationship marketing and propose several detailed practices for Vodafone.
6.1 Social Media
Vodafone adopted social media including Facebook, Twitter and Yahoo to enhance the interactive communication with target consumers. From the theoretical perspective, social media is defined as “activities, practices, and behaviours among communities of people who gather online to share information, knowledge, and opinions using conversational media” (Safko & Brake, 2009, p. 6). Furthermore, these two researchers recognised that companies should integrate social media into their process of formulating and implementing marketing strategies. For consumers, social media plays a critical role in personal communication. Individuals enable to create and send their own understandings on Vodafone products and service, including good and bad feedback. However, compared with the traditional communications channels, such as advertising, sponsorship and public relations, Vodafone cannot control the contagion of user-generated information on the negative evaluation on Vodafone mobile services. Hence, it is difficult for Vodafone to manage social media.
However, social media provides one of the most important measures, such as word of mouth. From the consumer perspective, the user-generated word of mouth may be more reliable and trusted in comparison with the Vodafone-generated information. For instance, Hanna (2008) stressed that more and more concerns review the online feedback on products or service experience from other consumers, which may exert its influence on their purchasing decision making. Based on the internet platform, individual consumers can share their experience and communicate with each other to become an influential opinion group. Vodafone should concern the development of these similar groups and engage in these groups to obtain their experience and information on products or service. The feedback and experience from consumers can help Vodafone to develop more effective marketing strategies.
For the implication of social media for Vodafone, Vodafone should play an active role in the communication with target market under the circumstance of social media. For instance, Vodafone not only uses Twitter to send the information on products and services, but also employs YouTube to deliver the video on the practices of corporate social responsibility, such as social work for local communities. In particular, Vodafone should concern the contagion of the negative information and feedback and effective respond to these feedbacks. Furthermore, the resolution of the negative feedback not only may adjusts the negative attitude of consumers toward Vodafone and its mobile services, but also may recover consumer confidence and contribute to customer loyalty.
6.2 Customer Relationship and Relationship Marketing
In terms of Tseng (2007), relationship marketing is described as the contemporary mainstream of marketing thoughts concerned with the establishment and maintenance of the strong relationship between firms and consumers. In this essence, the formulation and implementation of marketing strategies should be based on the comprehensive understanding on the changing needs of consumers. Compared with the traditional marketing thoughts, relationship marketing is more concerned with the long-term customer relationship, which consequently benefits both consumers and firms in the long run. Therefore, Vodafone should concern the building and maintenance of the strong relationship with consumers. In this section, there are several tactics contributing to the implementation of relationship marketing, such as service quality, price perception, value offered (Bansel, Taylor & James, 2005) and brand image (Peng & Wang, 2006). In the following, this section will explain the application of these four tactics for Vodafone.
Firstly, service quality distinctive from the quality of physical products contains several characteristics, such as intangible and produced and consumed simultaneously (Gronroos, 2000). Since service quality can be perceived by each consumer, each consumer may have different perception on the similar service quality. Hence, the trusted relationship between the frontline service employees and consumers plays a critical role in the enhancement of the perceived service quality. If consumer can perceive the superior service quality through the communication with the frontline service employees, the satisfied consumers can become the loyal consumers dedicated to the long-term mutual relationship with firms. Hence, Vodafone should concern the improvement and development of the frontline service employees to enhance the perceived service quality. Furthermore, there are various measures to improve the perceived service quality, such as service design and development and improvement of store environment.
Secondly, price perception is more sensitive for consumers, since it considerably affects the final decision on purchasing behaviours. If consumers perceive the price beyond their expected, the higher price perception may exert its negative influence on their purchasing decision (Peng & Wang, 2006). In terms of Cheng et al. (2008), there are two important dimensions determining the price perception, including reasonableness of price and comparison from competitors. For Vodafone, it should improve service quality to make consumers perceive the reasonableness of this price, but also concerns the fluctuation of prices developed by the competitors. Based on the fluctuation of prices developed by the competitors, Vodafone should evaluate the competitive situation and service of the competitors and make the reasonable decision to cope with the potential price war.
Thirdly, referring to brand, Gronroos (2000) described brand as “not first built and then perceived by the customers. Instead, every step in the branding process, every brand massages, is separately perceived by customers and together add up to a brand image, which is formed in customers’ minds” (p.287). Hence, the building of brand image not only aims to marketing physical products and services through the predicted role of brand image, but also is involved in the sustainable development of a firm. For Vodafone, it is necessary for Vodafone to build and enhance the brand image of Vodafone. There are several detailed measures for Vodafone, including marketing communications and corporate social responsibility. The marketing communications measures contain advertising, sponsorship, and social media to enhance the brand image in the mind of consumers. In particular, the implementation of corporate social responsibility will significantly contribute to the building and enhancement of brand image of Vodafone, since most consumers believe that the practices and behaviours of corporate social responsibility can influence brand image in their mind and purchasing decision.
Fourthly, value offers is that consumers will evaluate the value and cost of products and services. If consumers believe that they obtain value beyond the cost of products and services, they incline to purchase this product or service and produce customer satisfaction. According to Ravald & Gronroos (1996), service providers should create and deliver the superior value for consumers through the enhancement of value offers, which consequently contributes to the improvement of customer satisfaction and customer loyalty. For Vodafone, it should concern the creation and delivery of value offers.
This report discusses three major issues of Vodafone including environmental evaluation, marketing strategies and recommendations. Referring to the SWOT analysis, there are several important insights, such as fierce competition, high penetration rate, low differentiation and innovation. After defining marketing objectives, marketing mix will be used for explaining marketing strategies of Vodafone.
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