Strategic Marketing Vodaphone

STRATEGIC MARKETING 1

Strategic Marketing: Vodaphone

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STRATEGIC MARKETING 1

Contents

Introduction ..................................................................................................................................... 3

Macro-Environmental Analysis (PESTEL) of the Market. ............................................................ 3

Main Market Entry Modes .............................................................................................................. 5

Market Segmentation and Targeting ............................................................................................. 10

Porter’s generic strategy ............................................................................................................... 12

Conclusion .................................................................................................................................... 12

References ..................................................................................................................................... 14

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Introduction

Vodaphone is a company that has established itself in UK and Europe as well. The company has

been the leader in mobile network provision in the region and has formed partnerships with

many mobile phone manufacturing companies to enhance their customer experience. The

company also has a good capital base, and it would be ideal for the company to venture in

Africa. Among the most dynamic countries in the mobile phone network is Kenya. The country

has been interesting in reference to the growth of the internet use as well as internet penetration

rate. This make me choose the country as a location for investment as leading companies in the

country have been making abnormal profits and progress. This has been perpetrated by the

invention of mobile money "M-Mpesa"; the technology was first invented in the country and has

given the mobile phone industry a new look. The paper will seek to evaluate and make a report

on how Vodaphone will penetrate in the Kenyan market and become a leading brand. The

company has to use strategic marketing techniques to get a sizeable market share (Kotabe, M.

and Helsen, K., 2014, 98).

Macro-Environmental Analysis (PESTEL) of the Market.

Political

Kenya is one of the countries in Africa which has been enjoying political

stability following its growing democracy. There has been a successful

succession of power. The government has also been offering a positive

entrance to new investors. A good example of multinationals which have

come and invested successfully in Kenya is PWC, Delloit, among others.

Economic

Kenya is located in the horn of Africa and thus acts the point of entry for

central and eastern Africa. This makes the country the best location for

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investment for investors in Africa. The country is also the strongest

economy in eastern and central Africa; the country also holds a couple of

headquarters thus acts as a focal point for investors. Kenya has also been

experiencing steady growth of over 6% annually. Cost of labour is also

low thus the company will have quality labour at a reasonable rate.

Social

The Kenyan culture is quite pleasing to investors. Residents are very

flexible to change. There is a population of about 0.5 Million Indians in

different investments around various cities in the country. Penetrating in

new markets is always challenging, as there is a sense of belonging and

relationship between existing firms and new companies. This means that

Vodaphone will have a hard time convincing customers to drop their

current mobile network company and shift to the new company.

Technological

Kenya has recorded to be the leading in ICT industry growth Africa. This

means that in the next few years, the country will be the leading ICT hub

in Africa. Mobile network industry is wholly dependant on the growth on

the ICT sector. There is also a trend in the growth of the use of the

internet; it has got 85% internet penetration rate making it the best rate in

Africa. This means the company can convert some of these clients, as the

country proves to be quite ideal for investment (Kotabe, M. and Helsen,

K., 2014, 98). The company will face competition from companies such

as Jamii Telcom which is new in the market, and it is offering eye-

catching internet packages. Safaricom will also pose a challenge as it has

already created roots in the market. However, the industry is quite

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dynamic and will welcome any new investors.

Environmental

The country is located in a calm environment. The environment is quite

ideal for investment with mobile network users and internet users ready to

engulf any new service provider offering more competitive rates than

Safaricom which the market leader.

Legal

There are flexible legal procedures in starting a new venture in Kenya.

The government is quite welcoming, and that is why it has been working

for years to welcome new investors in the country. The market is open as

it will benefit the country by offering.

Main Market Entry Modes

There are three main existing strategies in a market strategy that are to be included in this report.

However, I can start with explaining the meaning of this concept of a market entry strategy

which is applied to mean a controlled style of out bringing and distributing services and goods to

a new market that is targeted and has been discovered (Ang, S.H., Benischke, M.H. and Doh,

J.P., 2015, 76). Also, it can be described as an act of exporting or importing goods and services

to establish and manage the contract in a foreign nation. The three categories are the strategic

alliances, mergers and acquisition, and the foreign direct investments.

Strategic alliances mode

This is a tool of business arrangement whereby the few or several organizations cooperate to

meet their desired mutual advantages (Kotabe, M. and Helsen, K., 2014, 98). The main reasons

why these alliances happen is to share knowledge, expenses, expertise and mainly get the access

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to new regions of customers. It may also help gain an advantage in competition. Similarly, the

emergence of alliances can change real competitors into partners struggling to achieve a similar

objective. The adaption of this means of market entry has increased rapidly over decades

especially for the firms that are making their operations international. Before creating alliances,

firms should choose partners with compatible leadership styles, look at the product and services

of the partner, and potential risks of an alliance should be considered.

Characteristics of strategic alliances

The first characteristic of strategic alliances is the joint venture.It is not a must that all strategic

alliances be in the form of a joint venture. However, a joint venture is achieved when two or

many organizations come together to create a new firm that is not attached to any of the original

owners. Joint venture with the subsidiary is the most known. To elaborate on this, two firms

form a third independent firm with it new regulations such as the Motor Corp in America has

created this type of venture with Japan owned Beijing Automotive resulting to a firm called the

Beijing Jeep.

The second is the non-joint ventures.This type of alliance that is not based on joint venture is

created due to few purposes and is considered narrow in its activities. This type of venture is

mostly short-term hence regarded to be less established. Examples are the British airport, and the

United airport created a strategic alliance with the aim of selling their services to the North

American and the Europe states (Kotabe, M. and Helsen, K., 2014, 98).

The last characteristics are linkages that are not strategic alliances.In general, not all linkages

between the international and the national firms are strategic alliances. This includes the foreign

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direct investment agreements, licensing, exporting and importing(Laufs, K. and Schwens, C.,

2014, 167).

Benefits of strategic alliances

The globalization of firms’ operations is promoted by the internet, better transport systems, and

improved telecommunications leading to the development of strategic alliances. The objectives

of creating strategic alliances solely rely on the targets and requirements of the firms involved

and on the policies of nations in which they are carrying out operations (Kotabe, M. and Helsen,

K., 2014, 66) One of the key benefits is to gain access to the market. The domestic entities can

provide knowledge of markets, customer needs, channels of distribution, and retailers. This has

been successful and witnessed in West Europe in the food manufacturing entities. Also, many

nations state that a given sum of ownership remains locally. For instance, in Mexico where the

law state that foreigners cannot locate their firms there without a joint venture. The other benefit

is the advantage of sharing losses and expenses. The involved entities can share risks equally. To

give an example is the film producers joined the camera producers, later they parted and both

firms gained through the sharing expenses and minimizing the dangers that would come forth if

both created new products.

Also, strategic alliances have benefits in that they have effects of shared expertise and

knowledge. A firm that has allied can acquire knowledge and expertise that results in improved

brands and skills. For example, Motorola formed alliances with many firms with the aim of

developing a worldwide satellite communications network. This new network-enabled other

firms to improve and create a global network for communication(Ang, S.H., Benischke, M.H.

and Doh, J.P., 2015, 75). The last benefit is acquiring a competitive advantage. A strategic

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alliance can promote an entity to access competition advantage in the market. This is through

existing good brand image that has been held previously by one partner.

Strategic Mergers and Acquisitions market entry modes.

Mergers can be described as the situation where two firms come together where only one firm

survives, and the other is eliminated from existence as it is joined with the other firm. However,

in the acquisition, a single entity gets the control over the other entity which is only issued at the

agreement of both parties (Ang, S.H., Benischke, M.H. and Doh, J.P., 2015, 43). In general,

mergers and acquisitions are key market entry strategies that mainly occur in international

business.

Benefits of mergers and acquisition in the strategic market entry

Mergers and acquisitions have some benefits to the merged parties which include; new

technology is achieved when the two entities merger and use one name of the original entities,

then it means that the previous technology and expertise can also be merged to come up with

more improved technology. The second benefits are reduced levels of competitions as the two

previous competitors have now merged with a similar aim of controlling the market. When the

two companies’ merger then it means the competitors are decreasing hence the competition is not

stiff as before the merger. The last but not the least benefit is the provision of rapid access to

distribution channels and markets. This means that the local firm has already established a ready

market and proper distribution channels hence when a merge is performed there will be no

resources spent in locating the markets and distribution networks(Laufs, K. and Schwens, C.,

2014, 234).

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As a result of this mergers and acquisition, many Indian entities have adopted this strategy to

help acquire a base hold in the new countries markets. Strategic mergers and acquisitions are

meant to solve entity problems. Similarly, the aim of the acquirer is to get new product channel,

improve the facilities, acquire new market, get expertise, and grab intellectual advantages. The

outcomes of this strategic mergers and acquisition are improved value for both the organizations

in the deal. In simple term, it is a win-win situation.

Strategic Foreign Direct Investment as market entry mode

This is a type of strategic entry into the foreign country which can be described to mean direct

ownership of entities and firms in the new countries markets. In general, the new firms with the

aim of investing moves its resources such as technology, capital, and expertise to the markets

target for easy operations (Laufs, K. and Schwens, C., 2014, 39). Development of a new firm in

the new market is the major mode applied in the direct foreign investment. When a firm has the

full ownership of the facility, then there is a high chance of planning operations, controlling

competitive environment, and understanding the customers’ needs.

However, as a senior marketing consultant, I can recommend the Vodaphone network to adopt

the strategic mergers and acquisition mode compared to the other two. The Vodaphone company

can make a merger with the Airtel network in Kenya and get rid of its name to acquire the Airtel

name. In this case, the Vodaphone network company will have some advantages as result of the

merger. Some of the advantages include rampant access to supply networks and markets and

lowers the rate of competitions as the introduction of another network company would thrive

competition. Also, the merger and acquisition method would bring about new and more

developed technology into the new entity Airtel. This is with the aim of providing a competitive

advantage with Safaricom.

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Market Segmentation and Targeting

Market segmentation and targeting critically are major methods for firms to cater to their

targeted groups.In this case, as a Vodaphone consultant, I will critically examine it potential

target market using the idea of market segmentation. Market segmentation, when applied by the

Vodaphone Company, makes it simple to individualize their campaigns, and target what is

important. The Vodaphone network company also can arrange clients to focus a certain group in

a cost-effective manner. In general, the market segmentation is a way of sub-dividing the able

clients into various groups and levels on bases of various traits(Cross, J.C., Belich, T.J. and

Rudelius, W., 2015, 76). The members who belong to formed groups have common traits and

always contain few or many aspects similar to them. I recommend the Vodaphone company to

apply this means to develop a culture of mix marketing for each segment and maintain them as

required. Also through applying the market segmentation strategy and targeting, the Vodaphone

company is likely to become more conversed since it needs firms to divide the market,

implement more improved services and develop better communication programs according to the

requirement of the division.

The basis of market segmentation and targeting

The segmentation is the division of customers into small groups in accordance with laid basis.

The bases are critically analyzed ranging from age, gender, attitude, interest, and values (Venter,

P., Wright, A. and Dibb, S., 2015, 25). To begin with is the bases of gender. The Vodaphone

firm should apply the gender techniques to meet the target of the potential market. Gender comes

with requirements, interest and the needs of females and males may sometimes have a great. The

Vodaphone expertise should focus on implementing varied marketing and communications

means that meets the wants of both genders. The other base of segmentation is the age range.

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The Vodaphone company being a networking company should critically be able to target

potential age groups who are most likely to use their services. This target age groups may be

attracted through the change of charging rates that will always keep away customers. The

management of the company should come up with services and offers that meet the youth’s

needs. This because the youths are the readiest users of the network in the century.

The income of the customers is also a key concern the Vodaphone company should embrace to

meet the target market. This because the income is always the determinant of the buying ability

of the target market. For this reason, the Vodaphone company should take this aspect seriously

and choose whether to advertise their services as needs or luxuries. However, firms always

divide the market into various types regarding income. This include; the high-income earners,

middle-income earners, and the low-income earners. Moreover, the segment may change about

service use and the area of business.

Vodaphone company should also apply the concepts of place as the basis for targeting the

potential clients. This because the place where the potential market is located influences the

purchasing of the Vodaphone company. The lifestyle of the of customers is another concept that

affects potential target market (Cross, J.C., Belich, T.J. and Rudelius, W., 2015, 35). These

lifestyles are such as hobbies, religion, culture, and marital status which will always affect the

consumers to purchase the Vodaphone services. Hence the Vodaphone Company should divide

its customers so that it plan the way forward in meeting various people lifestyle.

Also, the Vodaphone company should use the concept of types of segmentation to evaluate their

potential target market. These types of segmentation include the geographic segmentation which

mainly can help the Vodaphone company to meet the needs of different customers living in

various areas. For example, the company can build a satellite that will help boost their

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network.Another is the demographic segmentation which the Vodaphone company can apply in

its operations of examining potential customers (Dibb, S. and Simkin, L., 2016, 76). This is

much related to basis for segmentation as it will help the company to create a new offer that will

attract more clients.

Porter’s generic strategy

This is a strategy that explains how a firm achieves competitive advantage along with its target

market (Ouma, G. and Oloko, M 2015, 54). There exist three porter’s generic strategies such as

the lower cost, differentiated and focus. A firm may wish to use one of the two types of

competitive benefits through lowering costs as compared to its competitor. Also, it may

differentiate itself using features trusted by clients to demand an increase in costs. However, an

entity can decide to apply one of two scopes whereby it can choose to focus giving its services to

pointed regions of the market, or using the industry-wide scope to give it services to all available

market regions (Tansey, P., Spillane, J.P. and Meng, X., 2014, 23).

As a senior marketing consultant of the Vodaphone company, I will recommend the company to

apply the lowering cost strategy. If the Vodaphone company can lower its prices to a low level as

compared to Safaricom, it can attract plenty customers and users. Safaricom, though it is the

leading network provider in the market, it has very high charges. Due to this reason, the merged

Vodaphonecompany can lower it cost so that the customers can get another alternative way of

overcoming Safaricom high charges.

Conclusion

From the above, it is evident that a lot has to be done to ensure that Vodaphone can penetrate

into the Kenyan market. The company has to be creative and innovating in service delivery.

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Mobile phone internet services are highly dependant on technology; this means that the company

has to adopt highly adaptive tools to penetrate and make an impact. The report educates us on

different factors in strategic marketing. In any new venture, investors have to understand the

market to ensure the fully there are no faults in delivering a judgment on whether to invest on

not. Investors should also learn to understand market dynamics to avoid losses and wrong

decisions. 

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References

Dibb, S. and Simkin, L., 2016. Market segmentation and segment strategy. Marketing theory: A

student text, Sage, Los Angeles, pp.251-279.

Cross, J.C., Belich, T.J. and Rudelius, W., 2015. How marketing managers use market

segmentation: An exploratory study. In Proceedings of the 1990 Academy of Marketing

Science (AMS) Annual Conference (pp. 531-536). Springer, Cham.

Venter, P., Wright, A. and Dibb, S., 2015. Performing market segmentation: a performative

perspective. Journal of Marketing Management, 31(1-2), pp.62-83.

Ang, S.H., Benischke, M.H. and Doh, J.P., 2015. The interactions of institutions on foreign

market entry mode. Strategic Management Journal, 36(10), pp.1536-1553.

Laufs, K. and Schwens, C., 2014. Foreign market entry mode choice of small and medium-sized

enterprises: A systematic review and future research agenda. International Business

Review, 23(6), pp.1109-1126.

Kotabe, M. and Helsen, K., 2014. Global marketing management.

Tansey, P., Spillane, J.P. and Meng, X., 2014. Linking response strategies adopted by

construction firms during the 2007 economic recession to Porter’s generic

strategies. Construction management and economics, 32(7-8), pp.705-724.

Ouma, G. and Oloko, M., 2015. The relationship between Porter's generic strategies and

competitive advantage. International Journal of Economics, Commerce,and

Management, III, 6, pp.1058-1092.

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