NUST Business School

Fall Semester BBA 2K7 Global Marketing Management

Assignment 3: Vodafone In Pakistan Submitted To: Ms. Ayesha Pervaiz Submitted by: Group 4 December 10th, 2010

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Contents
1 Introduction........................................................................................................................3 1.1 1.2 1.3 1.4 1.5 2 2.1 2.2 2.3 Research Methodology...............................................................................................3 Problem Defination.............................................................................................3 Pakistan Cellular Communication: History................................................................3 The Pakistani Market..................................................................................................4 Mobile Penetration......................................................................................................4 Additions in Customer Base.......................................................................................5 Major competitors.......................................................................................................6 Cellular Trend.............................................................................................................7 Financial Insight of Telecom Industry of Pakistan.....................................................8 Revenues of Mobile Phone Companies...............................................................8 Total Number of Cell Sites..................................................................................9 Revenues Per Cell Site:.......................................................................................9 Subscribers per Cell Site...................................................................................10 1.1.1

Pakistani Cellular Industry.................................................................................................5

2.3.1 2.3.2 2.3.3 2.3.4 2.4 2.5 2.6 3 3.1

Estimated Active Subscribers in Pakistan................................................................10 Battle For Supremacy (Market Share)......................................................................11 Market Analysis from Primary Data.........................................................................12 PEST Analysis..........................................................................................................12 Political Factors.................................................................................................13 Economical Factors...........................................................................................14 Social Factors....................................................................................................15 Technological Factors.......................................................................................16

Country Analysis..............................................................................................................12 3.1.1 3.1.2 3.1.3 3.1.4 3.2 3.3

Income Elasticity Measurement................................................................................16 Cost Benefit Analysis............................................................................................17

Industry Analysis.............................................................................................................18 2|Page

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SWOT Analysis........................................................................................................18 Strengths............................................................................................................18 Weaknesses........................................................................................................18 Opportunities.....................................................................................................19 Threats...............................................................................................................19

4.1.1 4.1.2 4.1.3 4.1.4 4.2 5 5.1 5.2 6 6.1

Porters Five Forces..................................................................................................19 SWOT Analysis Of Vodafone..................................................................................21 Vodafones Competitive Advantage.........................................................................21 Nature of Buying Decision.......................................................................................23 Buying Behaviour..............................................................................................23 Psychographics..................................................................................................23 Life Style & Personality:...................................................................................23 Demographics....................................................................................................24 Market Segmentation and Positioning...............................................................24 Segmentation Strategy.......................................................................................25 Which Market to Segment.................................................................................25

Company Analysis...........................................................................................................21

Consumer Analysis..........................................................................................................23 6.1.1 6.1.2 6.1.3 6.1.4 6.2 6.2.1 6.2.2 6.2.3 6.3 6.4 6.5 6.6

Market Segmentation & Targeting...........................................................................24

Demand Analysis......................................................................................................25 Pricing strategy:........................................................................................................27 Cluster Analysis........................................................................................................27 Stp Analysis.......................................................................................................27 Positioning.........................................................................................................28 Decision Grid.....................................................................................................28 Targetting..................................................................................................................28

6.5.1 6.6.1 6.6.2 7 8

Entrance Strategy.............................................................................................................29 Conclusion........................................................................................................................30

Appendix I...............................................................................................................................32 Appendix II..............................................................................................................................34 Appendix III............................................................................................................................36 3|Page

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Appendix III

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1 INTRODUCTION
Mobile communications form a huge part of the technological development that we have seen over the past decade. In a country, mobile sector has become a critical indicator of economic development. Mobile technology provides a unique opportunity for the developing countries where telephone diffusion has been very low. Specifically, due to its comparatively low investment requirements, mobile telecommunications allows these countries to take advantage of technology innovations to provide communications services in the areas with limited or no telephone network.

1.1 RESEARCH METHODOLOGY

The course of this study follows the pattern of a research paper. The sources used for obtaining data are both primary and secondary. A formal survey was carried out, the sample of which as well as the results are included in the appendices. 1.1.1 PROBLEM DEFINATION Should Vodafone come to Pakistan or not?

1.2 PAKISTAN CELLULAR COMMUNICATION: HISTORY

Pakistans cellular industry started when two mobile telephone licenses were awarded to Paktel and Pakcom for the provision of mobile phone connections, in 1991. The technology used then was the much older AMPs, and offered much less privacy and functioning. With Mobilink, came the GSM technology in 1994, and most members switched to this network, and for quite some time, Mobilink remained the top share holder of the cellular service provider market until, Ufone, entered the market in 2001. After that, the market was further

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explored by foreign companies, Warid and Telenor in 2005, while Paktel was acquired by CMPak in 2008. The market shares of the respective companies as of November 2009 are given below

1.3 THE PAKISTANI MARKET

The Pakistani cell-phone service provider market is very saturated at the moment with fierce competition between the five service providers, which are offering extremely economic and quality packages to the price-sensitive consumer of today. During the recession, where the value of the Pakistani rupee is constantly falling, the cell-phone service providers have to keep in mind the purchasing power of the customers, along with fact, that in times such as these, the customers would rather save than spend. Pakistan mobile market hosts some of the worlds largest and most experienced telecom companies including Orascom, Telenor (Norway), Warid Telecom (Abu Dhabi Group), China Mobile and Etisalat, a UAE based company. These companies have heavily invested in Pakistan to lay down the infrastructure and take mobile services to every nook and corner of the country. With the encouragement of Government of Pakistan and best efforts by the regulator as well as the determined mobile operators, the sector has recovered from slow growth of past few months. Overall, the investment by foreign companies into the Pakistani mobile service sector has dropped by an astonishing 48%. Out of all the 5 mobile operators, only Ufone registered profit of Rs. 1.7 billion during 2008-09, and the rest of the companies recorded financial burden due to heavy running expenses including power expenses and rupee depreciations.

1.4 MOBILE PENETRATION

There is escalation in mobile penetration up to 57.4%, as the total mobile subscribers have reached to 94.3 million, with more than 90% of the

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country having mobile service access. The mobile penetration of different countries in the region is given on the side. The mobile services remained more popular in Sindh and Punjab with almost 66% and 62% mobile penetration respectively. The NWFP has total penetration of 37%, while in Balochistan, the penetration remains 31%. During the year, the penetration in Punjab, Sindh and NWFP increased by 6%, 6.4% and 37% respectively, whereas Balochistan suffered a negative growth of 16% due to poor security situation and relatively lower buying power of the people. The security situation in the NWFP too remained worst during the reported year, but it was expansion in networks by the telecom operators that significantly increased the penetration.

1.5

ADDITIONS IN CUSTOMER BASE

The Pakistani customer base grew by a whopping 6 million subscribers, both active and inactive. However, the leading mobile operator, Mobilink faced a setback and lost almost 3 million subscribers in 2008-09. The main contributor to this net increase was Telenor, which added about 2.8 million subscribers, while Zong and Warid added 2.4 million each during the last year. Ufone had a net addition of 1.9 million. However, during the past few years, Mobilink and Telenor had been adding more than 7 million subscribers as average to their networks.

2 PAKISTANI CELLULAR INDUSTRY

Pakistan is still an unsaturated market and with the falling cost of handsets there are plenty of new subscribers to go for. But eventually as in saturated markets, if mobile operators want to avoid simply competing on price, they will have to compete on superior service, innovative features and ease of use. The Pakistan market has 95 million subscribers as of June 2009.The growth slowed down in 2008 but has picked up again gradually. Now lets review some recent history of the cellular sector. In end year 2006 the total subscribers were 48.2 million. In June 2007 the total mobile users reached over 63 million. Based on numbers published at PTA website for 2007, the total number of subscribers was 76.6 million. In 2007 the average growth rate was about 2.5 7|Page

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million new subscribers each month. After second half of 2007 it seemed as if the growth had slowed down but overall it was fine. One remarkable achievement was by Zong which launched very successful campaigns towards 2007 end completed re-brand launch in April of 2008.

2.1 MAJOR COMPETITORS

At the top is Mobilink, the Pakistani unit of Egypt-based telecom company Orascom. It has been operating in Pakistan since 1994. Ufone, a wholly owned subsidiary of Pakistan Telecommunication Co. Ltd (PTCL), is now under the control of Etisalat group of UAE. Warid, owned by the Abu Dhabi group of the United Arab Emirates and sister of Wateen group is another cell phone service provider in the industry. Norways Telenor, a recent entrant with about a billion US dollar investment in Pakistan has been doing well, based on its recent earning report. Telenor stock is listed in the Oslo stock market (TEL) and in US. Zong, was the latest target of foreign acquisition. After it got acquired by China Mobile it was rebranded as Zong and launched one of the most successful and aggressive campaigns. According to Pakistan Telecommunication Authoritys data, the cellular industry continued to show subscriber growth in 2009, albeit slower than previous years, as users grew by 9 per cent to a record of 97.6 million. China mobile led the way, with subscribers growing 26 per cent from previous year, followed by Telenor (16 per cent) and Warid Telecom (11 per cent).

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In absolute terms, Telenor came on top with new 3.1 million subscribers, followed by Mobilink 2.3 million and Warid 2 million. Overall, mobile phone operators fared well in 2009, with total addition of 7.7 million subscribers pushing tele-density to 59.6 per cent. As far as the market share is concerned, Mobilink was on top with 32 per cent while Telenor closed in the gap with 23 per cent. Warid and Ufone followed with market share of 19.3 per cent and 19 per cent respectively. Interestingly, China Mobile enhanced its share to 7.1 per cent, 22 months after its launch. Wireless local loop (WLL) sector continued to add to its customers with users jumping by 15 per cent while broadband subscribers reached 587,000 in November 2009.

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2.2 CELLULAR TREND

In June 2010, the total subscriber base stood at around 800k less the 100 million mark with Mobilink leading the market followed by Telenor. Ufone and Warid took the third and fourth place respectively with only a little difference between their market share. Zong was last with a market share of around 6.7 million. Towards the end of July 2010, the Pakistan Mobile Industry crossed the landmark of 100 million subscribers.

2.3 FINANCIAL INSIGHT OF TELECOM INDUSTRY OF PAKISTAN

Overall business environment of Pakistan remained negative during FY 200809. High inflationary pressures and reduction in buying power of consumer has directly impacted all industries including telecom. On other hand factors like energy crises, currency devaluation, liquidity crises coupled with increase in borrowing cost, industry price war has adversely affected the net worth of the companies. Based on PTA reported numbers telecom growth for FY 200809 was 17% (FY 200708: 37%). CAGR (Compound Annual Growth Rate) for last four years stands at 33% CAGR. It signifies that overall industrys growth has slowed down.

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NUST Business School 2.3.1 REVENUES OF MOBILE PHONE COMPANIES

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Following Figure indicates that during FY 200809 Ufone market share significantly improved from 15% in 200708 to 19%, while revenue share for other companies remained somewhat stable other than Mobilink.

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NUST Business School 2.3.2 TOTAL NUMBER OF CELL SITES

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2.3.3

REVENUES PER CELL SITE:

At the end of day, return on assets is the key driver for the profitability of business (assuming same cost structure for industry as we do not have access to companys financials). Industry has performed very well in last 34 years, regarding the roll out of network, country wide and its usage. Next challenge for all players is efficient network utilization.

Average industry revenue/cell site has reduced mainly because of industry price war, rollout in rural areas (low ARPU generating) & increasing coverage sites. In terms of Revenue/Cell site Mobilink is the market leader followed by Ufone & Telenor. Coming years are going to be challenging for companies to improve the performance. We could have better stats for revenues per cell site with Infrastructure sharing enabled. Cellular Companies must realize the demand and should work in hands on network and infrastructure sharing. 12 | P a g e

NUST Business School 2.3.4 SUBSCRIBERS PER CELL SITE

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2.4 ESTIMATED ACTIVE SUBSCRIBERS IN PAKISTAN

Following stats are derived from yearly revenues divided by 12 (months) divided by ARPU. We have kept ARPU constant at Rs. 275, for all the operators to predict active subscribers in the country. (As per PTA, Rs. 275 was industry wide ARPU for the said year) Estimated Active Subscribers

Despite of the current macroeconomic challenges, Pakistan has lot of potential. Over 160 million population with around 3040% population less than 15 years of age, improving literacy rate, urbanization trends, etc are key opportunities for telecom business. On economic front, slight improvement in economic condition of the country (i.e. buying power/increase in share of wallet) will substantially improve the profitability because of huge subscriber base.

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Operators and regulator should also explore the possibilities and expedite the process of infrastructure sharing. On macro level this will have a positive impact on trade deficit (by reducing imports), current account deficit (for instance installation of 1 cell site in a region instead of 1 cell site by each operator will reduce fuel consumption in absence of electricity).

2.5 BATTLE FOR SUPREMACY (MARKET SHARE)

One sign of the growth burst of the sector in Pakistan and its self-confidence are the media ads of the various companies. As they fight for market share, that battle is being conducted over the airwaves and newsprint. It is hard not to notice the mobile phone advertising campaigns in Pakistan. The mobile phone and services advertisements are in the media, on billboards and everywhere else imaginable. The quality and aggressiveness of the advertising campaigns indicates the level of effort to gain market share. It shows a fierce battle for supremacy going on between the players of the cell phone sector in Pakistan. The market segments mobile companies are targeting include: Tech-savvy youth Business users (due to the their higher average revenue per user) First-time subscribers in remote and rural areas Previously ignored segments, for instance housewives and women

The ads are vibrant and colorful, conveying a sense of excitement and empowerment. However, the pretty picture these ads paint is separated from the real world where poor cellular service has led PTA to announce that punitive action will be taken if problems persist.

1.1 MARKET ANALYSIS FROM PRIMARY DATA

Based on the data gathered from the market, it has been noticed that consumers place more value in quality than quantity. Quality is the main concern opf those buying a particular mobile connection, and most customers are not ready to settle for anything less than that. As a response to our first question, 27% of the respondents said tghat they place most value in call connectivity and 27 % responded that they would value voice clarity more than other attributes. Also to the question , where they were asked which chracteristics they identify with most , to which they responded that they see themselves most as quality sensitive (40%) 14 | P a g e

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Ufone is the most preferred service provider for a major chunk of customers, who buy it due to the number of packages, reach, and connectivity. The functions used most by consumers are SMS (44%) with calls following up close with (27%). Customers do not change service providers very frequently, provided they are satisfied with the service.

2 COUNTRY ANALYSIS
2.1 PEST ANALYSIS

2.1.1

POLITICAL FACTORS

The government plays an important role in the operation and manufacturing products and services in terms of regulations. Following are some of the factors; Due to the unpredictable political and governmental changes rules and regulation are changed quite frequently. Currently government has increased the taxes in the telecommunication sector that will also a harder in the smooth operation of telecom operation. Before WTO implementation for deregulation of different sectors of the economy. Pakistan government taken the step to regulate the telecom sector by the authority of PTA. There are two types of Regulators held by PTA; the first is called the Economy Wide Competition Regulator 15 | P a g e

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As the Monopoly Control Authority. Also the political governmental rules cannot be completely applicable in this sector due to the regulation authority of PTA. Now a days Pakistani environment is instable due to political clashes among political parties. Inside country war and drown attacks in north frontier areas. This political instability has led to uncertain environment in the country, which is a threat for any business including all the companies of the Pakistani Telecom Sector. Environment of telecom is investor friendly and have great potential to gain profit. The mobile phone Tele-density which had reached to 58.70 by the end of February 2010. In Pakistan, the total number of subscribers which had touched an all-time high figure of 96,231,229 in February 2010. Due to huge budget deficit and low growth of economy government has increased the taxes in telecom sector. Pre-paid customers were charged 10 per cent withholding tax on every new load, which was deducted in advance. The customers were also paying 15 per cent sales tax on every call. However, the 18 present governments increased the sales tax from 15 per cent to 21 per cent for mobile users by declaring the mobile phone a luxury item. 1.1.1 ECONOMICAL FACTORS

Economic conditions are influenced by political and government policy, being a major influence affecting these can affect the telecom companys strategies. Overall economic conditions are not very sound .The country risk of Pakistan goes to 3 which is alarming situation for Pakistan. Telecom industry continued to attract foreign direct investment (FDI) to expand the infrastructure and maintenance of their networks. However the volume of FDI also continued to decline with the maturity of market over the time. Foreign direct investment consists of the amount remitted from abroad and the reinvestment of profits earned by the companies which were supposed to be repatriated by the foreign firms. During the quarter ending December 2009, 16 | P a g e

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telecom sector attracted US $ 142.7 million FDI which was 26.4% of the total FDI in the country during this period while in previous quarter FDI in telecom sector was reported US$ 39 million that was about 8% of the total FDI in the country. During the last one year, sector has attracted about 37% of total FDI in Pakistan which is a commendable. Due to inflation the cost of doing business is also gone higher. Inflation remains the biggest threat to the economy, jumping to 7.9% in 2006 to 23.3% in first quartile of 2009. This increasing ratio will hurt the buying power of the consumers that will overall reduce the demand for the products. Pakistan has a growing upper class with relatively high per capita incomes. In late2006, the Central Board of Revenue estimated that there were almost 2.8 million income-tax payers in the country with 45 % people are living on 2 $ per day. The unemployment rate is going up and up with the increase of level of poverty that is reducing the buying power of the people that is threat for mobile brand. Inflation is being controlled by state bank and under strict eyes but unemployment rate is going up & up with the increase of level of poverty. Economic instability is worsening day by day as liquidity crunch is prevailing in the world. 1.1.1 SOCIAL FACTORS

The socio cultural environment summarizes demand and tastes, which vary with fashion and disposable income, provide opportunities and threats to telecom companies. As Pakistan is an Islamic country and people are very strict in case of Islam anything against the philosophy of Islam on either print or electronic media are treated as against Pakistan. Most of the people dislike anything extra-ordinary or 19 something 17 | P a g e

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which sabotage their culture or subculture. Pakistani society is largely multilingual and multicultural. The Pakistani people are more social and want to remain in contact with other people. They celebrate lot of festivals like Jashn-e-Baharan, Eid Celebrations and other cultural festivals. On these festivals they make calls to relative and one of the key issues is sending SMS regarding the event. This will influence the demand for the product. Increasing globalization has amplified the influence of "Western culture" in Pakistan. The life style of Pakistani people is changing rapidly. People are more conscious about status pat most all people purchase multimedia mobile phones. And also there is trend for Black berry sets by youth which will help in enhancing their product and services. The total population of Pakistan is approximately 169,248,500. The population is increasing rapidly which increase the number of cellular usage and help in projecting high profits. Most of the people dislike anything extra-ordinary or something which sabotage their culture or subculture. Companies who are targeting upper-end of market mostly published and aired their advertisement in English language. In metropolitan cities women are doing work along with their other responsibilities but other than metropolitan cities it is difficult for women to convince their parents and spouses for work.

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NUST Business School 1.1.1 TECHNOLOGICAL FACTORS

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Advances in technology can have a major impact on business success. Technological Change impacts socio cultural attitudes as well as on economy. Companies have technology with which they can compete in the Pakistan and now companies are investing in their infrastructure to not only expand coverage but also to upgrade their existing systems. The current focus in cellular industry is coverage and establishing franchises which has a positive effect on the telecom industry. Introduction of CDMA technology in the Mobile SIMS which is also an opportunity for the mobile companies. The latest technology of 3G mobile communications has been earmarked and PTA will soon be inviting applications for 3G spectrum auction. This technology will increase operating capacity and revenues by using HSPA technology. Companies have technology with which they can compete in the Pakistan and now companies are investing in their infrastructure to not only expand but also to upgrade their existing structure.

1.1 INCOME ELASTICITY MEASUREMENT

The demand of Vodafone will be income elastic because Vodafone in Pakistan will be launched as a premium brand. So this means that it will provide a higher quality service and charge premium prices for the service. In Pakistan if we observe the consumption pattern of the consumers we can notice that there are huge changes in the consumption pattern when income changes, when income increases so does the consumption of the consumer increases with it. So it is clear that the more the elastic the demand is the more helpful it will be for Vodafone as it will make a good customer base for the company.

1.2 COST BENEFIT ANALYSIS

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If Vodafone decides to enter Pakistan there will be a lot of costs that it will have to confront. First of all Vodafone will have to spend a lot to create or use the telecom basic infrastructure. Specially to enter a very saturated market of Pakistan it will have to make its place by penetrating in through its initial capital. Then the company would also have to buy a range of telecoms equipments from different vendors, create its outlet and offices all over the country. One problem will be that initially it will incur high costs while in the Pakistani telecom market there is a severe price war going on. Another major cost that roots from the problem that I have mentioned before that is to enter the market Vodafone will have to put a lot of indirect capital/cash in the Pakistani governments pocket, only then can it enter the saturated market, as a major part of corruption is present in the government sector of Pakistan. One of the major benefits that Vodafone will have is that the company is well established in the global market so a large part of the Pakistani population is aware of the brand so it wont be difficult to market the product. Secondly Vodafone has created a series of Vodafone ads with the ZULU characters which have became famous and a new concept in this world, so people love this brand in this sense and a huge mind share has already been captured by the company. Vodafone is a well established global brand and another major benefit that Vodafone has is that it is finically very sound as we can see the fact that Vodafone generated a profit of $
6,756 million in 2008. So this means that Vodafone will enter the Pakistani market in a

financially sound position. Another major aspect of benefits is that the total population of Pakistan is very huge (180 million people), and the population increases by 5% every year. Another interesting fact is that up till now 90 million sim cards have been sold in Pakistan, this is a huge benefit for Vodafone.

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2 INDUSTRY ANALYSIS
Pakistans Cellular Sector of telecommunication industry is of high velocity, technology of the sector is rapidly changing, customer expectations are high and fast evolving, and product life cycles are short in terms of new packages and services.

2.1 SWOT ANALYSIS

2.1.1

STRENGTHS

Exponential growth. Skilled Human Resource at low-cost. Access to Infrastructure optical network and satellite links. Favorable policies (to some extent) and regulator. Strong international brand names. 1.1.1 WEAKNESSES

Quality of Service. Low revenue per user (ARPU). Customer retention. No clear strategic direction. Poor organizational structure. 21 | P a g e

NUST Business School No research and development programs. Employee skill inconsistency. Very low employee morale. 1.1.1 OPPORTUNITIES

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Huge market size. Local handset manufacturing. Making technology accessible to all (e.g. broadband). Adopt latest technologies. Removal of international trade barriers. Adopting MVNO. 1.1.1 THREATS

Recession in economy. Inconsistent and ad-hoc decisions from regulatory authorities. Political Instability, Security issues. Adverse shifts in trade policies of government

1.1 PORTERS FIVE FORCES

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Bargaining power of customers: The bargaining power of customers in this case is very high because of the low switching cost in the industry. There are attractive substitutes available to the buyer even in the form of keeping the same cell phone number but changing the service provider. It makes very difficult for the market players to retain their customers. Brand loyalty can only be created through superior marketing campaigns and service. Bargaining power of suppliers: This is a type of industry where, at least in present times, the bargaining power of suppliers is at the low level because of the nature of inputs for the business. Moreover, with the deregulated and friendly environment given by the government of Pakistan, the industry has become more competitive and quality services driven. Threat of substitute products: Although the cell phone subscribers are more than 95 million now, still the threat of substitute products is high for the industry. Buyer inclination to substitute and price-performance trade off are the most important to consider in determining the threat of substitutes. Actually, just the subscription of cell phone service is not enough for a company to get optimal profits but the real challenges is that how many existing customers are using the service regularly for incoming as well as outgoing calls. The quality of service is the parameter for a customer to be loyal with the subscription otherwise 23 | P a g e

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fixed line and wireless fixed lines are the better substitutes, as been experienced in festive times. Threat of new entrants: It is not easy to enter in this capital intensive sector of the telecommunication industry. So, the threat of new entrants is low. Though the growth and potential of the sector look very attractive, still it is very difficult to take risk for a new investor because the penetration in the market would be very difficult. Competitive rivalry: When the competition is fierce, obviously the competitive rivalry will be at the highest level. The very high level of competitive rivalry among the major players of the cell phone sector is clearly observable. Just look at the advertisement campaigns of the rivals and you can see how intense the competition is. It looks like a battle for supremacy going on between the rivals. All means of attracting new and potential switching customers are being used by all the competitors to gain as much market share as they can. Exit barriers, industry growth, product differences, brand identity, and diversity of rivals are the main reasons of very high competitive rivalry in this case.

2 COMPANY ANALYSIS
2.1 SWOT ANALYSIS OF VODAFONE
Strength Leadership position Weaknesses Opportunities Threats Increased Competetion

Centralised control Expanding market low flexibility boundaries

High geographical reach Global brand strength

High customer churn Growth through 3G rates Strategic alliances

Market saturation in Europe Emergence of Low Cost Brands

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2.2 VODAFONES COMPETITIVE ADVANTAGE

Vodafone has competitive advantage because of the following reasons:1) VAS (value added service) - Number of schemes they have. Especially the add on plans. This is separate from the main plan. It is a major source of revenue for the company. They have plans like Chota Recharge, etc which gives them an edge over other. 2) Viral Marketing/Buzz Marketing - Vodafone has given birth to the Zuzu: a special character created specifically to convey a value added service (VAS) offering in each of the newly released commercials. Vodafone has come with creative advertising campaign for its various plans. This strategy has captured the imagination of millions. 3) Core Competency Vodafone as a brand has always focussed on its core competent area. In India they have the highest market share after Reliance. 4) Technological Advantage Vodafone has installed SAP technology. SAP is delivering mobile capabilities such as mobile asset management, mobile sales for handhelds, mobile service for handhelds, mobile time, mobile travel, mobile BI, mobile warehouse management, and mobile direct store delivery. These capabilities of SAP Mobile Business establish new ways to interact with enterprise systems and empower new user communities to participate in collaborative business processes, resulting in increased customer satisfaction, profitability, and competitive advantage. 5) Market development Vodafone has sought FIPB (Foreign Investment Promotional Board) for two licences and it aims to become a full-fledged communication services provider in the country. It can now provide Internet services and many more services. M2M solutions are now set to expand further helping Vodafone to gain a competitive edge.

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6) Cost Advantage - Obtaining these licences has reduced capital spending by over 60%, operating costs by 40% and staff numbers from 3,200 to 1,700. Overall, the company has refocused and become clear about its direction, strategy, values and brand. They have the ability to execute; empowered by strong local and global channel partners and systems integrators. The company's revenues in India stood at 2.68 billion pound, while from the entire Asia-Pacific region revenues were at 5.81 billion pound for the fiscal 2009. 7) Continuous Improvement Vodafone as a brand keeps on improving and coming up with new plans. It adjusts according to market need. Brings up innovative plans which give them a competitive advantage. 8)

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1 CONSUMER ANALYSIS
1.1 NATURE OF BUYING DECISION
1.1.1 BUYING BEHAVIOUR

Buying behaviour for Vodafone will be complex with high involvement regarding these two major factors; Price Quality of service

The buyer or the consumer will pass through learning process. He will develop beliefs & attitudes towards the product then he will make a decision to purchase product. 1.1.1 PSYCHOGRAPHICS

While segmenting the market on psychographic basis we will consider ; social class life cycle & personality.

1.1.1.1 Social Class The offering of golden number chance is for upper class in which they can also get number of their own choice & for middle or lower middle class normal numbers will be offered. 1.1.2 LIFE STYLE & PERSONALITY:

Life style is the persons pattern of living in the world as expressed in activities, interest and opinions. In the mean time if we talk about the mobile services people owns different styles of its usage. Some of the people loves talking, some loves to chit chat, youngsters like to have prepaid services, Business Executives used to have postpaid package. Beside these factors some people use their credit frequently & some are big savers, and etc. So focusing on these factor Vodafone needs to develop their packages according to above motioned psychographic factors. 1.1.3 DEMOGRAPHICS

Communication in this fast growing world is necessity for everyone & focusing on this aspect our product will be free from the boundaries or bounds of demography. There will be no age Page | 27

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difference for those who want to remain in touch with others, no gender, no limitations on the basis of income as our prices will under reach of every person, what so ever are occupation, education & nationality.

1.2 MARKET SEGMENTATION & TARGETING

Currently the population of Pakistan is over 155million, if we exclude 20% of the poor population and 30% children (below the age of 10 years). We get a potential target market of about 87 million. So far cellular mobile companies have grabbed 34.5 million subscribers which is only 39% of the potential target market. About 59% of the potential population is living in rural areas. Mobile operators will focus on grabbing the inaccessible areas and increasing their penetration by expanding their networks In future, it is expected that post paid segment will grow at a faster pace than prepaid segment converting a portion of the prepaid segment to postpaid. For e.g. Post paid packages aimed at the youth and students 1.2.1 MARKET SEGMENTATION AND POSITIONING

Segmentation is the process of dividing the total market for a good or service into several smaller, internally homogenous groups. Since Vodafone is a customer oriented and quality driven company, it segments its market on the basis of various different dimensions.

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1.2.2

SEGMENTATION STRATEGY

Vodafone is using multiple segmentation strategy and developing separate marketing program for each segment because different customers are looking for different benefits from different services they purchase. Estimating the market potential of each segment includes asking how many prospects with how much purchase power there is for each particular want. 1.2.3 WHICH MARKET TO SEGMENT

Regarding Pakistan, different markets are segmented on the basis of: 1. Geographic 2. Demographic 3. Psychographic 4. Behavioural

1.3 DEMAND ANALYSIS

The mobile handset market has become very exciting. Market segmentation in high end, middle end and low end handsets is resulting in choice and affordability to all types of customers. Increase in the number of subscribers for postpaid packages is mainly because operators have launched services like gprs/edge, mms, blackberry corporate mobile email solution, mobile banking, ringback tones and several other content based options.

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1.4 PRICING STRATEGY:

Price plays a strategic role in success of product of company. And now a day price is sensitive issue for all companies. Because now customer is very much price conscious. Thats why company keeps in mind all sensitive strategic price before determining the price of product. And there is very much competition in business world especially in telecom sector. Mobile players are segmenting their customers and announcing packages accordingly to meet their needs. Recently examples include Jazz Octane and Djuice focused on the youth segment, talkshawk for financially constraint and students, Ladies First by Mobilink for the female segment. Due to telecom deregulation in Balochistan, the teledensity increased by 5.6% to 10.47% in 2006 showing growth of 87%. When we saw price strategies of Vodafone then it looks very much sensitive and complex. Because of the following considerations; Ability of customer to pay for product Cost of products Page | 31

NUST Business School Marketing cost Ethical issues Competitor cost

Global Marketing Management

1.1 CLUSTER ANALYSIS

Segmenting, positioning and targeting (STP) analysis is a statistical tool commonly used in doing cluster analysis. 1.1.1 STP ANALYSIS

Segemntation: Income Age Service usage Nature of customer (institutional/solo) Life of the service Geographic conditions

1.1 TARGETTING
Vodafone is adopting a multi segment approach. They are offering a series of differentiated products to their respective markets. They are providing facilities for circle users, home calling cards for the family who work abroad, cheap sms facilities for youth, minimum recharge for small users.

1.1.1

POSITIONING

Where you go, the network follows you is the positioning statement of Vodafone. They try to be ahead of the competition by being in contact and in reach to their customers. For them their boss is their customer and they tend to be efficient and effective in providing maximum customer satisfaction. They try to connect to customers in vibrant, vivacious and exciting way. 1.1.2 DECISION GRID

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2 ENTRANCE STRATEGY
According to the recent figures issued by PTA, mobile subscribers in Pakistan crossed the 100 million mark in September 2010.This highlights that almost 60% of the nation now uses a mobile. These are very encouraging for Vodafone because Pakistan is a country that is considered to have over 30% of its population living below the poverty line but still has such high mobile penetration. Since more than half of the population is a mobile user, Pakistan would be a great market for Vodafone in terms of prospective consumers. There are currently 5 telecom companies working in Pakistan. In the initial phases of the telecom industry, there wasnt much competition. However, today the market has become saturated and Pakistani telecommunication industry is at its peak of competitiveness. The companies, rather than competing on new customers, are now competing on existing customers and are in price war. They focus more on diversity of packages available in order to cater to the needs of a wide market. The market in a couple of years would be mature so its wise to take over an existing company. We have planned that Vodafone would acquire Warid Telecom. This is an ideal avenue because Vodafone can gain Warids existing subscriber base and also the ownership of expensive infrastructure and network facilities. Warids market share has been decreasing over the years, which means that the company has

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been losing its customers to its competitors. Vodafone can take over warid and capitalize on warids existing customer base. According to PTA, as at 31 March 2010, Warid has a market share of approximately 17%. Which fell compared to last years figures. About 9% of Warids revenues are generated by VAS, according to Farooqui CEO of Warid Telecom. The top earner is SMS followed by GPRS and data services, he says. Video downloads and ring back tones are very popular here as well.This shows that Vodafone which already is known for its value added services globally can further capitalize on this and can attract the customers who changed their network and also those who use other networks. As mentioned previously, the Pakistani telecom market is saturated and companies are now competing based on prices and value added services provided to customers. Since Vodafone is popular for its value added services, it can use this to its advantage in order to establish itself in the Pakistani market. There are high costs associated with entry into telecom sector. Most important is the license by PTA and infrastructure development costs. To overcome the costs of infrastructure development we plan to acquire one of the existing companies.

3 CONCLUSION
Vodafone would make a good decision by accessing the Pakistani market, which has a very large number of active mobile users, and also a large number of future prospects. But then Pakistan also has a very competitive market, and vodafone would have to tread its path carefully to avoid becoming yet another failure.

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References:
http://www.oppapers.com/subjects/stp-analysis-page1.html http://www.scribd.com/doc/36134898/MArketing-Plan-Waqas http://www.google.com/ http://www.authorstream.com/Presentation/Razi40-390208-final-report-ptclpresentation-education-ppt-powerpoint/ http://www.slideshare.net/surabhi786/vodafone-essar-marketing-analysis http://studenttheses.cbs.dk/bitstream/handle/10417/574/nabeel_ahmad.pdf?sequence=1

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Business Research Methods

APPENDIX I
Research Questionnaire BBA-2k7 Global Marketing 1) What attributes do you prefer while purchasing a mobile phone connection? a. Economic Pricing b. Call Connectivity c. Voice Clarity d. Package Variety 1) What characteristic would you identify yourself with? a. Brand loyalty b. Brand Consciousness c. Price Sensitive d. Quality Sensitive 1) Given a choice of brands, currently existing in Pakistan, which mobile service provider would you choose? a. Ufone b. Mobilink c. Warid d. Telenor e. Zong 1) What functions of your service provider do you use the most? a. Call b. SMS c. MMS d. Mobile Internet 36 | P a g e

NUST Business School e. Online Gaming f. Downloads

Business Research Methods

1) How many cell-phone connections have you changed over the past two years? a. 1 b. 2 c. 3 d. 4 e. 5

APPENDIX II

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Business Research Methods

APPENDIX III

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Business Research Methods

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