Vodafones' Marketing Mix

Essay by erricaUniversity, Master'sC-, February 2010

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In this essay, I am going to analyse the theory of marketing and how this fits with Vodafone, one of the biggest mobile telecommunication network company in Stock Exchange value enterprises. Specifically, I am going to consider whether Vodafone applies the theory of marketing, especially the pricing, products, promotion, place and the customer behaviour. Vodafone's headquarter is in the United Kingdom and has expanded in Europe, USA and Far East. The number of employees is above 64.000 and the customers exceed 130 million.

To begin with, pricing is one of the most important elements of marketing mix. It depends on the policy of the price that every company is required to follow in order to set its own marketing. In addition, in 2006 Vodafone used a strategy to decrease the expenses and incomes in Europe (Vodafone 2009). In 2009, Vodafone cuts costs from Spain because the profits were too low due to recession.

Also, cuts cost from Turkey by sacked the management team, frozen salaries, axed 500 jobs and cuts roaming charges in duration of summer (Nick Clark 2009). However, this is not the best way to seduce customer. By frozen salaries and minimizes the number of jobs, it could save money but it cannot stop roaming services especially in Turkey, which is a very popular country for summer destination. Nevertheless, this seems to be a disadvantage for Vodafone because another company will offer that service to the public. Additionally, this is a very easy way for other competitors to win space in Turkey market. Another way of keeping its customers is by trying cutting from operation costs. However, the costs cutting is not only planned for Europe and emerging markets but and in the UK market too (Nick Clark 2009). Moreover, for the UK market, Vodafone is preparing to double its cost-cutting drive to £2bn as it battles against the economic slump and fierce competition and looks to hit the acquisition trail in 2012.

During the last years, the company penetrates dynamically in emerging markets. In February 2007, Vodafone has expanded in India and it holds the number one growth market. It paid £11.1 billion in cash to control 67% stake in 'Hutchion Essar', which is India's biggest mobile phone company. Consequently, Vodafone did not stop there. It also corporate with the second-biggest wireless operator called 'Reliance Communications'(Nandini Lakshman & Brian Bremner 2007). Ever since, Vodafone has not the monopoly in India market. India's Reliance Communications slashing tariffs and AT&T saying it will allow Skype on to its mobile network (Bryce Elder & Neil Hume 2009).

Furthermore, Vodafone has a very powerful statement. This is a third generation services. Internet broadband and i-phone are two of them. Therefore, Vodafone made an agreement with Apple, manufacturing company, to sell i-phone in ten of its markets around the globe. According to a statement released by Vodafone, its customers in Australia, Czech Republic, Egypt, Greece, Italy, India, Portugal, New Zealand, South Africa and Turkey, would be able to purchase i-phone for use on Vodafone network (Swati Prasad 2008). Therefore, this agreement was one of the best Vodafone made. In addition, i-phone was a new product to the world market and no other company had it, thus, this attracted many new customers. Of course, this increased the company's profit and there was monopoly. Even though the prise was a bit high, it had a good quality and this attracted the customers.

Although Vodafone's prices for customers are not the cheapest ones, the company still aims to have a good quality of its products. Reception is almost everywhere and internet access is very easy. There are many competitive companies such us O2, Orange, T-mobile, which for some products their prices are lower comparing to Vodafone. Nowadays, it seems that customers believe that products with high prices have also a better quality. This is because of their wide knowledge as well as the available information that is offered to them, they prefer not only products with low prises but also products that have high qualities (Krzystof Kubacki 2009). However, there is an advantage for pricing; it changes occasionally not only for the customers needs but also for companies.

In this part, I am going to deal with Vodafone's advertizing, sales promotion, personal selling, public relations and direct marketing that are all essential in the promotional mix process as this is very important in the field of marketing (Jobber David 2007). Firstly, advertising is the most important element when companies promote their products to the public. In addition, what Vodafone does is that it uses famous people such as David Beckham and Michael Schumacher as well as popular events such as football, English cricket, and Champion league for the advertisements when promoting its products. More precisely, such advertisements were taken place in everyday life situations, for example such famous people were presented in supermarkets, office etc. By using this style of advertisements-famous people seen in everyday life events-consumers were congruent with what they were watching and thus they were attracted by this. These advertisements are also referring to many different groups of people. For example, little boys tend to identify themselves with such famous people presented in these advertisements and for older people who watch or are present in such popular events, football, English cricket etc. As a result, this seems to attract people from various ages while children relate famous people as being symbols of Vodafone as well as older people associate their favorite events with Vodafone advertisements. Vodafone also sponsored Manchester United football team in which Beckham was playing as well as Ferrari as Schumacher's team. Although, on one hand, this might seem as an advantage for Vodafone to become well known to this kind of sport fans because they can see everywhere-in billboards, cars- Vodafone's brand name. On the other hand, that was not a good choice for Vodafone as it tries to advertise the company name almost everywhere but the charges were too high and this was a disadvantage for the company's profit.

Furthermore, for me it seems like Vodafone's advertisements are very "crowded" and that makes it more vivid and easy for the audience to remember. By doing so, the company tries to give a direct message to the consumers. Company's recent slogan is "power to you" which gives the consumers the feeling of having the opportunity to decide whether Vodafone's products fit to their needs (James Ashton 2009). Moreover, the popular types of music as well as the madder brand that Vodafone's advertisements use are easily recognizable. As far as it concerns the settings that Vodafone uses, such as buses, train, bus station, universities, and airports, they are all parts of the consumer's everyday life. For me this is essential because it gives the feeling of closeness to the consumers. Therefore, even though I believe that Vodafone advertisements catch the consumers' attention more easily, I also support the fact that this tactic decreases the company's profit.

Apart from the direct advertising, there is also the element of sales promotion. For instance, in Australia, Vodafone already, offers inserted advertising on bills to its subscribers, which is significant because 600,000 customers ask for and receive an itemised paper bill every month. In addition (Xen Mendelsohn 2009), Vodafone is promoted not only directly but also through other popular products like Coca Cola. Particularly, Vodafone products were included in Coca Cola products free, as a promotion of the company (Alarcon 2009).

According to the personal selling promotion, Vodafone's staff presents the new products in each of the company's stores. There is the stuff, which helps consumers to decide what they want and persuade them to buy a specific product. The staff seems to be trained to meet the consumers' needs and fulfill the customers' desires by talking to them in a good manner and giving them what precisely they want. By this way, I think consumers feel accepted and understood and this may lead them to purchase the product. For example, if customers ask for a mobile phone, the staff probably will try to sell them also a charger or another mobile accessory.

Another tool of promotion is direct marketing which includes the use of electronic media such as Internet. Some websites are very popular and through these sites, Vodafone expands its promotions. Namely, 'my space', which is a communicative site, is one of them. How this works is by a corporation between Vodafone and 'my space' for an approximate duration of 8 months. When using such websites the company promotes its music-related products and services (McEleny 2009). Another way is GPS and 3G networks promotion via an online fantasy racing game (Farber 2009). That promotion style is the newest. Taking into consideration the previous years, the number of internet users has been dramatically increased from various age groups (Jones, S.& Research Assistant, & Fox, S.& Associate Director, Pew Internet, & American Life Project. 2009).

Moving on to the company's products, Vodafone has a wide variety of products whose aim is to meet the consumers' needs. One of the most popular Vodafone's products is called "Vodafone live", which gives the ability to customers to download different programs, such us ring tones, pictures, games, images, video clips and video calls. A new product that the company has recently introduced is "Vodafone 360" which exploits fully the revenue potential of wireless internet by unveiling a new set of web-based services for mobile phones (Andrew Parker 2009). Through this service, Vodafone includes music, maps and the opportunity for customers to download games (Andrew Parker 2009). With the creation of this product, one of the aims is to grow a good relationship between the company and the customers to increase the customers' loyalty towards the company. The second aim is to find ways that are more profitable to the company. More precisely, by using this service, the cost is higher than making just one call or sending a message (Andrew Parker 2009). For this reason, customers should pay more in order to have access to wireless internet. However, except for the internet access products, Vodafone has different plans of communication as well as is making different attributions and benefits for different types of consumers. For example, free texts, business plan, pay monthly, fee weekend, unlimited calls, are only some of the plans, which fulfill almost all customers' needs (Vodafone 2009).

The place is another important factor that a company must consider in order to make goods and services available in the quantities and locations that customers want (McCarthy 1996). In addition, Vodafone has shops in 27 different countries and especially, in the United Kingdom there are more than 300 (Kerry Capell). In due to the competition among other similar companies, Vodafone's stores should have something special to attract consumers and make them choose that specific shop than others. That is why the company conducted research, and the results led to the configuration of a new design in shops of Vodafone (Vodafone.gr 2009). These shops are characterized by modern aesthetics, environment and ergonomic way of presentation of appliances and accessory of mobiles. In the new Vodafone shops, the employees are under continuous training in order to be informed and offered the best services. Moreover, the staff should understand the customers' needs and help them to find exactly what they want. In addition, they need to be friendly and kind in order to make consumers feel familiar and win their trust. In this way, company wins the loyalty of the customers to continue buying their products. Moreover, they have the choice to try the products before buying them.

During the last month, Vodafone has created online application stores, in which customers have the ability to download programs into their mobile phones. In addition, a specific shop makes its products available online so as for the consumers to purchase them anytime they need (Kerry Capell 2009). Consequently, over 30% of the customers joined Vodafone's on line store. Such a place for the company to make available its facilities seems an effective way not only for customers but also for the company, as it does not have to pay extra staff. By this way, it saves more money and gets profit only from the online purchases.

Lastly, Vodafone also uses intermediaries companies, which means that they sell products on behalf of Vodafone. More precisely, Tesco is one of these companies and specifically plans to sell Vodafone's I-phone product before Christmas (Richard Wray 2009). This is a good promotion for the company because Tesco is a very popular super market in the United Kingdom and many people make their purchases from there. Nevertheless, this is not the only company. O2 and Orange will sell the I-phone too before Vodafone does. However, this is not a good case because Christmas is a period of the year when companies make the highest sells, and according to this, it seems that Vodafone will be left out of this. Another Intermediate company is 'Carphone Warehouse' (Richard Wray 2009). However, three years ago, Vodafone abandoned this company and decided to corporate with another company called 'Phones4U'. Nonetheless, that dealing between the two did not make profitable increase that Vodafone expected to because Carphone Warehouse has 820 stores in United Kingdom. Thus, Carphone Warehouse is much more expanded than Phones4u. The consumers who chose that specific company have many choices for mobile networks and the stores are more accessible to them.

In conclusion, after considering the theory of marketing mix and more precisely the model '4 P', which include pricing, promotion, product and place elements that are required for a company to follow so as to set its own marketing. As far as it concerns the pricing, Vodafone firstly tried to expand throughout different European countries by keeping its prices according to other competitive companies and secondly by emerging markets such as in India. From my point of view, it was a risky choice to expand by keeping such prices because of the high operating expenses that emerged. For this reason, Vodafone decided to make costs-cut in order to balance again in Europe market and I find this as the most effective step that it could do. However, I agree with the company's option to expand in emerging countries because of the monopoly that exists.

According to Vodafone's promotions, my opinion is that there has been a series of smart movements when promoting its products through various advertisements. This has been made by using its vivid brand following by familiar music, the selection of some famous people as well as the topic of each advertisement that is directly linked with people's everyday life settings such as football field, office setting etc. I think that although such advertisements were successfully presented to the public, the expenses for doing so were too high and this was a disadvantage for the company's profit. In addition, in many cases company did not consider a possible recession that might occur. As far as it concern Internet promotion, my opinion is that the company should find more ways to penetrate in internet promotion as it is an easy way of promoting products and the cost is low.

Making the shops more attractive, I find it such a smart move because it turns the consumers' attention. Another movement that Vodafone made and I find helpful is the creation of the online shops. However, even if this is an effective way for companies to use as well as a way to attract the consumers, it seems that Vodafone's entry to the growing market was the last one comparing with other competitive companies and this made the company to lose many customers who preferred other competitive companies like O2. Further, when cooperating with other intermediary companies, Vodafone's profits are increased. For me this is also effective because there are more places in which Vodafone can sell its products. From my view, the idea of creating an online shop makes a consumer's life easier as they can purchase products at their own time and be sending to them directly to their places.

Finally, as far as it concerns the company's products, a vast number of programs are demonstrated and offered to the public so as to have the opportunity to select which program best fits to the consumer's needs. Such programs are free texts messages or minutes, broadband internet access and many others. For me this is again useful while Vodafone tries at its best to cover most of the consumers' needs and as it seems its products are beneficial if we take into consideration the massive number of its consumers. Nevertheless, I believe that Vodafone created more needs to the consumers than they already have like the broadband internet access. Taking into account the previous years, people did not have the need to have access everywhere.

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