Marketing Strategy of Vodafone

MarketingMarketing StrategyStrategy ofof VodafoneVodafone

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Table of Contents

1.1 Introduction to Vodafone...... 3 1.2 Line of Products by Vodafone...... 3 1.3 Analysis of Vodafone’s Macro environment...... 4 1.3.1 Political Factors...... 4 1.3.2 Economic Factors...... 6 1.3.3 Social Factors...... 6 1.3.4 Technological Factors...... 7 1.3.5 Environmental Factors...... 7 1.3.6 Legal Factors...... 7 1.4 Vodafone’s top competitors...... 8 2.1 Marketing Mix elements of Vodafone in the UK...... 10 2.1.1 Marketing analysis of elements...... 10 3.1 Recommendations for Vodafone...... 12 3.1.1 Technological Aspects...... 12 3.1.2 Value added services...... 12 3.1.3 Better public relations...... 13 3.1.4 Reduction of costs...... 13 3.1.4 New line of products...... 13 4.0 Conclusion...... 14 References...... 14

2 3 1.1 Introduction to Vodafone

Vodafone the king of telecommunication kingdom has over 404 million customers in 30 countries around the world. It headquartered in London and stands alone with the command of interconnecting people wherever they want. With the joint venture by Jan Stenbeck of Racal Strategic Radio Limited and Millicom, the emergence of Vodafone took place in 1982. Gradually, its first office was opened in Newsbury on 1st January 1985. European countries for Vodafone network includes the UK, Turkey, Romania, Spain, North Cyprus, Malta, Netherlands, Italy, Ireland, Greece, Hungry, Germany, Albania, Sweden, Switzerland, Russia, Denmark, Austria, Belgium, Bulgaria and Czech Republic. Annual report of 2012 for Vodafone depicts annual revenue of £ 32.2 Billion (Vodafone annual report, 2013).

Nationally, Vodafone has over 19 million customers with Guy Laurance as its CEO. It was the first ever cellular service introduced in the UK and currently has 365 stores offering their services. It is the pioneer mobile company to offer commercial 3G services in 2001. As of 2012, it covers 37% share of mobile market revenue. Services and products introduced by Vodafone includes Vodafone live!, Amobee Media Systems Vodafone Connect to Friends, Vodafone Freedom Packs, Vodafone at Home, Vodafone Eurotraveller, Vodafone 710 and Vodafone Mobile Connect USB Modem (Vodafone annual report, 2013).

1.2 Line of Products by Vodafone

A wide range of products and services are offered by Vodafone to its customers for achieving competitive advantage over other products.

Table 1: Services and products offered by Vodafone (Vodafone annual report, 2013)

Services by Vodafone Products by Vodafone GPRS (Mobile Office, Voice, Vodafone Live!) Monthly payments 3G services Pay as you go Easy payments Top ups Text to speech softwares Fixed line broadband (cordless, wired) Vodafone Live Blackberry business plan Downloads 3G data cards News and updates Trained staff crew Entertainment (wallpapers, ringtones, games

4 applications)

1.3 Analysis of Vodafone’s Macro environment

P (Political) E (Economic) S (Sociological) T (Technological) L (Legal) E (Environment) model revolves around gathering and portraying information about external and internal factors that have a strong impact on business. It is considered to be a statistical tool to inspect the macro-environment’s collision with the organization. Formulated by the CEOs, its implementation is carried out by the senior management (Helfert, 2004).

1.3.1 Political Factors

Besides UK, Vodafone is spreaded across half of the globe; North America, Europe, Asia. Vodafone has gained massive revenue from the global market as well as main markets of Europe. Hence, a globalised environment for Vodafone has shown a positive impact on political and legislative factors (Cliffe, Simon J and Judy, 2005). .

Following figure shows the revenue in £ Million:

Fig. 1: The revenue for 2011/12 can be taken in £Million (Vodafone annual report, 2013)

As of June 2013, Vodafone has over 19 million customers which generate 25% of share revenue in the UK market.

5 With the emergence of European Regulatory Framework of the communications and consolidation of the sector most European countries implemented this framework to improve market values. Vodafone adopted in 2002 proving that it is highly aimed at regulating the business activities with industry specific law and regulation for telecommunication services. To fabricate the network system country wide, licence is required from the government for land utilisation. Hence permission is taken from the governing authorities. In addition, health issues are the basic concern including the result from phone masts nearness to public areas including schools and usage of mobile phones by children. The above mentioned factor can also be a political factor. Most importantly, rules and regulation needs to be followed which includes the acquiring the mobile phones licences.

The European Commission evaluates the extent of universal service provision in Europe. It forces the provision of a fixed connection which permits access to simple data services. It has decided to invest £7.5 billion for digital services and broadband infrastructure projects in 2014. As far as consumer protection is concerned, the European Commission planned out European Roaming Regulation in 2006. In 2012, a new roaming regulation was replaced by the existing one for introducing new retail cap for roaming which was 29 eurocents per minute and will be applied till 2014. Retail data is set at 20 eurocents per megabyte, outbound retail voice calls at 19 eurocents per minute and retail texts at 6 eurocents per text. The Commission also recommends retaining the wholesale price caps for voice, text and data roaming services. This will decrease annually until July 2014 and the new roaming regulation will gradually expire in 2022. For ensuring proper regulation of rules, National regulating bodies are present in Europe, especially in the UK. They make sure that mobile termination rates are followed countrywide. Moreover, European Parliament and Council agreed upon implementing RSPP or Radio Spectrum Policy Programme which includes providing 800 MHz and release of 2.6 GHz for mobile use (Eaton and Duncan, 2002).

1.3.2 Economic Factors

Economic factors directly upshot profit and price rates, covering the unemployment level, licence issuance, inflation and interest rates, costs, growth rate, availability of credit, fiscal policies and stock market trends. The enlisted features result in the negative or positive performance of the company. 17% of the Vodafone customers belong to Europe including the

6 UK. Overall mobile services revenue for Europe in 2012 was 25% for data and 75% for voice and SMS. This is expected to fluctuate in 2015 with an increase to 33% and 67% for data and voice plus SMS respectively (Vodafone annual report, 2013).

Currently, there are serious economic concerns for Vodafone for obtaining licences for services. High amount of price is paid for 3G licenses. However, Vodafone pays the amounts in order to provide people with high-quality network coverage. Presently, smart phones are highly used so Vodafone is constantly trying to upgrade the network which includes the theoretical speeds of 14.4 Mbps covering 98% of 3G network which is sufficient for customers to stream live videos. For reducing the cost for geological sites Vodafone has deployed over 70% of new radio sites. In return this levels down the expenditures for renting. Calling costs have been decreased due to the increase in demand of the product. For 2014 fiscal year £12.8 billion profit has been expected with the growth of Vodafone industry in the UK (Eaton and Duncan, 2002).

1.3.3 Social Factors

With the gradual pace of time, consumer or buying trends are on the merge with respect to health consciousness, lifestyle and education level which influence business. It also includes the cultural vastness. Vodafone aims for global maximisation for its products and services which in return improve the financial efficiency. It is intended to standardise its offerings globally including the UK which will benefit the technical and commercial functionalities. As a global pioneer in telecommunication business Vodafone plays its role in satisfying the socio-economic trends. 4.2% increment in the economic productivity in the market was observed in 2012 due to mobile penetration. Thus the efforts for broadening networks give rise to substantial socio- economic benefits (Vodafone annual report, 2012).

1.3.4 Technological Factors

The multi-environment variant, technology is the brick-laying feature of Vodafone’s success. With advancements in telecommunication sector, Vodafone has given benefit to customers, for instance, utilization of Bluetooth, Wireless, 3G and WAP has made the communication gap shorter. Almost 91% of Europe is covered by Vodafone which is likely to increase to 95% by

7 2015. 4G technology will be introduced in the UK on 29th August, 2013 after a major investment of £ 900 million for expanding the horizon of networks (Vodafone annual report, 2013).

1.3.5 Environmental Factors

Presently, Vodafone is facing threats against environmental issues such as diverse climate change. Hence Eco-friendly technology has been mainly introduced by every company including Vodafone. It has adopted the policy of using recycled papers for marketing and recommends its customers for minimum usage of mobile phones for health related issues. Using M2M solutions allows keeping an eye on data centres with less energy consumptions and low level of carbon in the environment. Consequently, it has given up to 25% savings in the European market including the UK.

1.3.6 Legal Factors

Every now and then government implies laws relating to employment, copyrights, consumer protection, and property. Cultural and legal requirements are fulfilled by the employment policies of the UK as it intends to develop high employer-employee relation (Helfert, 2004). The Sale of Goods Act 1974 strongly illustrates that a product must achieve its target and fulfils its purpose. For instance a mobile phone must work properly. Vodafone strictly advice and promotes all the traffic laws including “No mobile phones during driving”. This was introduced back in 2003. During early 2013, a survey was conducted which showed 89% agreement upon fair treatment of Vodafone employees despite of gender, age and religious background (Vodafone annual report, 2013).

1.4 Vodafone’s top competitors

The UK telecom industry is expanding day by day that gives rise to competition and rivalry. Besides all the factors Vodafone has maintained its position in the list. Other services include T- Mobile, EE, Telefonica O2, 3 and Orange. Here is a brief overview for top competitors in UK in Table 2 (Vodafone annual report, 2013):

Factor Vodafone UK Orange 3 Origin United Kingdom France Hong Kong

8 (Headquatered) Customers 260 million 170 million 10 million Coverage

Handsets Apple i Phone 4 8 GB, Sony Xperia, Samsung Samsung Galaxy S4, (most Samsung Galaxy Galaxy mini, Apple i Sony Xperia, Samsung preferred) Express S4 4G, Sony Phone 4 8 GB Galaxy mini, Apple i Xperia SP 4G, HTC Phone 4S 16 GB, One 4G, Samsung BlackBerry Q10, HTC Galaxy S III 4G 8S, Nokia 925 Lumia Value Best cheapest deals, Unreasonably expensive Not focused upon SIM passport package, deals, high roaming only deals lowest cost for 500 MB charges data 4G services To be launched on 29th Already operating under To stand in auction in August, 2013 for £26 EE September, 2013 per month

Although Vodafone covers the largest area for its network and has the highest number of customers it needs to develop a cost leadership strategy as niche market is ignored and people can turn to cost-efficient networks. These networks can also offer more services for low cost or packages. By becoming the minimum cost producer Vodafone can compete and can earn higher levels of profits. Best packages for mobiles are offered by Vodafone which comes along with the cost of the mobile and free SMS or minutes. In addition mobile sets are according to the newest technology in the industry which augments their position in terms of technology. After Orange it is the second company to introduce 4G in its network which can also bump up its industrial position.

9 2.1 Marketing Mix elements of Vodafone in the UK P RL IOA CMD OUE TC IT O N S

Fig 2: Marketing mix of Vodafone (Data taken from Vodafone annual report, 2013)

2.1.1 Marketing analysis of elements

To provide right thing at the right time is the slogan carried for all products and brands. A mixture of concepts is followed in order to devise strategies that can make a brand popular. Vodafone also follows the same strategies for providing the best and within reach services (Helfert, 2004).

10 Super stores have Vodafone promotions to the on-spot customers and also provide them with discounts. Vodafone’s stores have well trained staff that acquire the need of the customer first and provide them with products accordingly. Press releases including advertisements provide the people with clear cut messages and promote good public relations. Vodafone Explore and Vodafone Essentials are the magazines that provide the information about products in market (Doyle and Phillip, 2006).

Advertisements on bus stops and billboards are eye catching and seek the attention of every passing by person. Thus, promoting brand image in a positive way. For attracting every segment of the market, Vodafone has David Becham as its brand ambassador. People all over the UK are fanatic for football; hence, this has leaded the attraction of every part of the society. Most famous slogan includes “Send it like Becham”. Hence, public relation of the product to the customers’ needs maintenance. Ferrari and Manchester United club outstanding way of dealing public relations. At the present time people are eager and keen to know about the whereabouts of sports events. Therefore, smart phones can help them to stay up to date with news. Vodafone endow customers with every kinds of news coverage, lending a hand in exceptional public relations (Harker and Gary, 2009).

Vodafone has adopted sponsorships packages from Formula 1 and Ferrari which gives away updates on their mobiles for Formula 1 season. People can know about positions of drivers, lap speeds and drivers points table for the race. Hence, Vodafone Live! has proven its role in providing images and graphics. In addition to this, special service is present that shows results from the test track of Ferrari. Grand Prix Quiz Trivia Game can help the consumer to win prizes from Ferrari after answering some questions (Vodafone annual report, 2013).

Chatting, sending and receiving voice messages, pictures and videos, obtaining data for travelling and sports, changing of ringtones, chatting and billing services are the main features followed by all Vodafone products. Hence, they are considered to be one of the paramount products in the market as they take in all features.

SIM only and SIM cards deals offer both kinds of payment modes including Pay as you go and monthly-based. Hence, prices are well maintained according to the need of the customers. On the spot topping-up of phone can also be done by the customers. Phone packages and bundle offers

11 are also available. However for maintain its position Vodafone must concentrate on pricing policies (Vodafone annual report, 2013).

3.1 Recommendations for Vodafone

A positive strategy requires the creation of sustainable shareholders while considering all threats and opportunities. Three aspects are well thought-out for every firm or business including cash flow, expected growth rate and discounts that are offered to the customers which depict the risk of the investment and financing. With these aspects an organisation can enhance its market value. Moreover, it can reduce the cost of capital, produce cash flows from already existing assets or elongate the high growth rate phase for boosting up its position (Doyle and Phillip, 2006).

Presently Vodafone is facing highly competitive financial market. Newly developed and already existing mobile companies are on the merge to conquest UK’s telecommunication industry. As a return, these factors are putting a pressure upon Vodafone’s position and profitability. There are number of steps that need to be followed for tough performance.

3.1.1 Technological Aspects

With the technological advancements on the rise people are becoming conscious and sophisticated. Every person has the aim of remaining up-to-date. Hence, Vodafone’s strategy should focus upon consumer and latest technology in the market. New services should provided by Vodafone along with the launch of latest gadgets as products to meet the demands (Vodafone annual report, 2013).

3.1.2 Value added services

As Vodafone covers people from all background and society, it should offer value added services. As a result people from all age groups can make use of the services. The challenge remains for Vodafone to provide competitive charges to not only new customers but also to the already existing ones, as they might have a chance of changing their mobile services to fulfil their demands. Younger group of people have to really think and ponder about every aspect of financial constraints before purchasing any product. For selecting the product that satisfies all the

12 aspects, including money and services, Vodafone should take steps to include special value added services for youth (Harker and Gary, 2009).

3.1.3 Better public relations

Building relationships with common public by the organisations is a tough task. Vodafone has maintained its number in developing customer-company relation. However, there is room for improvement for establishing the relationship. While searching for the right product people go through every material available for it including catalogues, internet surfing, videos and feedbacks. Marketing objectives should be carried out which includes making available every piece of information of the product to the consumer, not only magazines but also other resources (Helfert, 2004).

3.1.4 Reduction of costs

For maintaining their image charges and rates should be cut off. This can facilitate people from all backgrounds. Vodafone can join up with some of the mobile services in order to provide a better and cost efficient service to people. This can capitalize on generating benefits for Vodafone. The telecommunication industry has been highly penetrated by new mobile services. Hence, the aim should be to augment the customer value by offering reduced rates. Minute bundles and additional points can be offered to allow longer talk time with optimal price (Helfert, 2004).

3.1.4 New line of products

Vodafone can gain more popularity if new range of products can be launched that covers all features of technology. People are prone to the world of technology day by day; hence, updating the line of products can really increase the sales and in return revenue.

On the other hand, people who are unaware of the new technology should also be accommodated. Tutoring such people can help Vodafone in covering all classes of people. As a return they can learn about the newest technology in market and can further buy any Vodafone’s products.

13 4.0 Conclusion

In comparison with power, energy, oil and gas industries telecommunication industry is the most recent. In UK Vodafone has grown with blink of an eye and has expanded its horizons globally. This rapid and vast growth is always challenging for the companies to uphold their positions. Similar is the case with Vodafone as its needs to follow the ethics of marketing to deliver the customers the right thing at the right time with the development of new products in cost efficient manner. With highest number of customers and largest yearly revenue earning, following the accurate actions could add up their performance in the competitive industry.

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