The Club Chat product as indicated in the case study took advantage of both the youth’s need to be in contact with their peers at all times was based on the demographic variables of age and income. Making cheaper calls was an offering considering the youths’ traditionally scant disposition. The Cell C payoff line provided a choice based on an individual lifestyle needs and to enhance one’s particular lifestyle whether one was a student, businessperson, hawker or pensioner.
1.3 Explain how Cell C positions its brand in the minds of its target audience
According to Kotler and Keller (2009:276) a brand is a product or service that adds dimensions that differentiate it in some way from other products or services designed to satisfy the same need. Positioning is the act of designing the company’s offering and image to occupy a distinctive place in the minds of the target market (Kotler and Keller, 2009:308). A brand’s position is the set of perceptions, impressions, ideas and feelings that consumers have for the product compared with competing products. To capture its target audience Cell C used the advertising through television, radio, press and outdoor for band positioning. The sexy, husky voice of the advertisement’s narrator on radio became a brand property such that when consumers hear her voice, the brand is automatically summoned to mind. Cell C positioned its brand in the minds of its target audience using different communication mix and different positioning methods. The benefit positioning method
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emphasised the unique benefits that the organisation or product offering offers it customers
(Cant et al. 2006:143). The Easy Chat “Friends and Family” feature give customers an additional 10% discount on all calls to two predetermined numbers.
The advertisement campaign that they took advantage with the coincidence and rarity of the solar eclipse and their creativity ingenious of the sun eclipsing to reveal a “c” shape and the words “We thank Mother Nature for announcing our imminent arrival”. This visual concept was an opportunity for Cell C to position itself in the minds of consumers. The “Tell someone” campaign theme differentiated it from other operator to the extent that Cell C is unique in that one had to stop and tell someone. The television was used communicate the brand name, benefits, knowledge and awareness continuously to consumers. The press was informing consumer of the brand and promotional offerings.
“Cell C Direct is a one-stop which aims to provide a prompt, efficient service with free delivery to your door anywhere in South Africa”. It informed the consumers of the benefits of convenience shopping as well as solicits their purchasing decision making to the extent that they have services brought to the comfort of their own home.
Club Chat “The cell number that starts with 084-20 and ends with you getting more and paying less!” The User positioning method used by Cell C positioned this product with users in mind (Cant et al. 2006:143). “It’s not a prepaid forgot – to- recharge, running-out-of-credit, need-to-make-a-call-but – I-can’t-type situation. Nor is it a long-term-commitment, sign-your-life-away, we-got-you-‘til-you’re-grey kind of contract either. That sucks. Believe it or not, Club Chat is a one-month contract only. And that rocks.” This statement was used in conjunction with an advertisement to influence the product positioning.
The campaign execution “Just a number” was a differentiation strategy to have consumers questions their current network providers of their treatment towards them, whereas Cell C regards customers as someone special. Cell C’s attribute of the caring service in
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communication to differentiate itself from other network operators in the market was the caller recognition, at the customer call centre which answer with “How may I help you, Mr Mhize?” It was a brand positioning that made it outstand more effectively made the audience feel that they were not just another number but important and valued customers compared to other service providers.
Question 2: Once a company identifies its primary competitors, it must ascertain their strategies, objectives, strengths and weaknesses. Evaluate how Cell C analyses its competitors
Kotler and Armstrong (2009:552-558) define competitor analysis as process of identifying key competitors; assessing their objectives, strategies, strengths and weaknesses, reaction pattern and selecting which one to attack or avoid. McLoughlin and Aaker (2010:49) concur that understanding the of business competitors in a given industry and developing methods to distinguish it from them was very relevant and critical aspect which influences the development of the competitive strategy of the firm e.g. understand their competitive advantage or disadvantages associated to their competitors, creates understanding of the competitors past and present, organisational culture, cost structure and future strategies Cant et al. (2006:137) argue that it is important that the marketer understands the customer’s buying criteria and recognise the performance of each competitor on each of the evaluative criteria.
Cell C first identified its close competitors as Vodacom and MTN. It assessed its rivals through benchmarking as it will first have to determine the objectives of its competitors then later on assessed the strengths and weaknesses the deciding whether to avoid or attack. After the assessment of the firm’s competitors, the firm will have to formulate the specific strategies that will give them the competitive advantage against its competitors. Cell C analysed its competitors by find out what they were doing, what they were planning, and their faulty gaps as their actions might affect its business. It identified the element of confusion surrounding the customers of MTN and Vodacom due to multiple packages to
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the extent that the customer did not really know what they wanted. This was a weakness that Cell C took as an advantage to improve its services by having fewer packaged that are simplified and easy to understand. Analysing the type of services offered to customers by networks providers made Cell C came up with some flexibility. MNT and Vodacom only had the minimum post-paid contract period for 24 months and of which Cell C changed the rules by offering the consumer the flexibility of 12 and 24 months contract.
It is just as important to identify your rival’s weaknesses so you can ensure your own business is not making the same mistakes. To analyse and evaluate this Cell C launched a campaign intended to get customers to question their current network operator by highlighting areas where they fell short and where Cell C aimed to be different. It was a good move for Cell C to find out how people rated its business compared to its rivals.
2.2 Discuss the specific strategies Cell C used to challenge and attack its competitors in order to gain market
Blythe (2006:348) states that retaining a position in the market, or carving out a new one requires firms to attack competitors or defend themselves from attack. According to Kotler and Keller (2009:348) firms that occupy second, third and lower ranks in an industry are often called runner-up (market challenger) or training firms (market follower). Market challengers have attacked market leaders in an aggressive bid to further market share.
Cell C as a market challenger had decided to attack and challenge MNT and Vodacom who were already market leaders. Cell C had several strategies to choose from such as frontal attack, flank attack, encirclement attack, bypass attack and guerrilla attack or a specific attack strategy e.g. lower-priced, discounted products, new or improved products or services, a wider variety of offerings and innovative distribution strategies (Kotler and Keller, 2009:348-350).
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In April 2002, Cell C came up with a flank attack using the segmental strategy towards its opponents with an innovative distribution strategy to serve an uncovered market needs (Kotler and Keller, 2009:349). Cell C Direct package is a service for anyone wishing to purchase a Cell contract package from the comfort of his/her own home with free delivery and money-back guarantee.
Cell C had identified the weaknesses of its competitors brought about by multiple packages to choose from which were confusing and complicating customer decision making. This underperformance was an advantage that it used to attack and challenge its opponents. It used the flank attack strategy by improving its products and launching a simplified, easy-to-follow suite product (Kotler and Armstrong, 2009:556). Cell C was granted the GSM 1800 license which was a great advantage over MTN and Vodacom that still operated 900 GSM networks which frequently experienced capacity problems. The new and improved product facilitated efficient service to Cell C’s subscribers by providing faster call switching and wireless opportunities. The flank attack can use a geographic strategy attack where the opponent is underperforming, serving uncovered market needs or segmental strategy in identifying where there are gaps and quickly filling them into strong segments (Kotler and Keller, 2009:349).
In September 2002, Vodacom and MNT announced a price increase. Cell C attacked and challenged them using a modified frontal attack strategy by deciding to maintain its current tariffs (Kotler and Keller, 2009:349). This strategy works better if the leader does not retaliate and the challenger has to convince the consumers that its product is equal to the leader. In order to be known into the market place, the company provides its target market with a competitive cost that corresponds to their high quality products and services. Apart from this Cell C used a pure frontal attack by working hard at rapidly increasing its distribution network through breaking the exclusive agreements Vodacom and MTN had with certain retail outlets such as Clicks that previously only sold MTN products. This attack was to match its opponents’ distribution network as an influence towards increasing its market share.
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Kotler and Keller (2099:349) define encirclement attack as an attempt to capture a wide slide of the enemy’s territory through a blitz. This strategy relates more to a challenger who commands superior resources and sure of success. The bypass attack is the most indirect assault strategy where the challenger attacks easier markets to broaden the firms’ resource base and guerrilla attack consist of waging small, intermittent attacks such as selective price cuts, intense promotional blitzes and occasional legal action (Kotler and Keller, 2009:350). Specific attack strategy e.g. lower-priced, discounted products, new or improved products or services, a wider variety of offerings and innovative distribution strategies can be used based on any marketing program. The strategy of offering discounted products was used such on specific target markets such as 20% discount on all international calls for the corporate market, discount rates to regularly dialled numbers and additional 10% discount on all calls to two numbers.
Question 3: It is evident from the case study that Cell C relies heavily on the promotion mix to create awareness. Critically analyze Cell C’s promotional mix strategies.
Promotional mix according to Longeneck et al. (2006:320) describes the blend of non-personal, personal and special forms of communication techniques used in a promotional campaign. Marketing communications, according to Kotler and Keller (2009:510-512) are means by which firms attempt to inform, persuade and remind consumers about the products and brands that they sell using advertising, sales promotion, events and experiences, public relations and publicity, direct marketing, word-of-mouth marketing, interactive marketing and personal selling.
Cell C Direct is a service for anyone wishing to buy a contract package from the comfort of their own home with free delivery to your door anywhere in South Africa. The Direct Marketing Association of United States defines direct marketing as an “interactive marketing systems used by one or more media of advertising to gain a measurable response or transaction at any place” (du Plessis, Bothma, Jordaan and van Heerden, 2005:351).
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It can be through telephone, direct mail or online marketing directed at highly targeted consumers in an effort to build one-on-one customer relationship. Their way of communicating with customers e.g. answering the callers by their names made them feel valued and important influencing a loyal relationship. Advertising is any non-personal form of mass communication about a product or a service paid for by an identified sponsor through mass media such as newspapers, television, radio, magazines, billboards and websites (du Plessis et al., 2005:36).
As the product is directly aimed at the youth market Cell C had to use pervasive advertising as it allows a message to be repeated many times considering the markets’ traditionally scant disposition. As the television was the most influential medium, Cell C carried most of is advertisements consistently towards creating brand awareness and knowledge. The radio was a medium used to communication product innovations such as the prepaid package, Easy Chat and the generic brand benefits. To reinforce brand awareness it used the outdoor advertising from the airport, to townships using billboards or posters, to branding on trains and taxis. Print media e.g. newspapers or magazines was used as informational sources for customers such as price comparison, promotional offers and specials.
Sales promotion was used to draw a stronger and quicker buyer response such as discounts towards the business user for international calls and as an incentive to have subscriber using their cells more often. It can also stimulate product loyalty among the customer which can boost the sales of the product or service. Having a good brand image influences customer liking of the product which leads to continuous patronage and fostering a good relationship between the company and consumer. Marketing information through media and advertising also play essential roles in this phenomenon being responsible for giving out information to the public. However, too much information chokes the consumer instead of helping them.
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Question 4: Consider the state: “Cell C hopes to achieve a sustainable 25% market share by 2009”. You do believe that the target is attainable? Justify using evidence from the Case study as well as secondary research.
The growth of a company is imperative, therefore there is need to adopt a strategy to improve its competitive position. Cell C as a service provider that has just entered a market were there are already leaders that are constantly competing for market share, consumer acceptance, as well as technological leadership. These competitive and consumer forces determine the status of the company’s growth as a whole. With regards to the statement that “Cell C hopes to achieve a sustainable 25% market share by 2009” may seem not to be attainable considering a market that was nearing saturation.
As indicated from the case study Cell C launched it business in mid-November 2001 after having gone through legal action. This was a draw back to start with considering that some resources have been lost as well as time. The entry time of Cell C was a quite crucial and demanding as it was trying to catch up with the market leaders who already stable and nearing market saturation. As of August 2002, the market share for Vodacom was 54%, MTN 40% and the remainder of 6% belonged to Cell C. Though it had managed to secure 800 000 subscriber mark it was no match against the two giants.
Cell C was experiencing difficulty in luring the corporate market considering it being the most profitable because it was already mature and business users did not want to risk changing business phone number. This was a great entry barrier. Vodacom and MTN had already adopted quite different strategies in order to survive compared to Cell C that was still trying to gain market share. Vodacom had adopted a quantity strategy and MTN had adopted a quality strategy and also seeking growth on the African continent. While these two giants had strategized accordingly Cell C had adopted to challenge and attack market leaders. The future of mobile telephone market face an uncertain future and investors were anticipating severe decreases in profitability. The decline in average revenue per user is an indication sign e.g. in June 2002, MTN reported 9% decline because the post-paid contract
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had reached maturity and by late 2002, Cell C post-paid was below industry average. Sustainability is a framework for responding to the emerging competitive threats and maintaining competitive advantage (Collins and Montgomery, 1995). This was proving to be difficult for Cell C e.g. per second billing in that it needed to constantly innovate and advertise which required enormous revenues unlike for Vodacom and MTN.
Consumers rank brands in their minds and if it is not number one, then to be successful it somehow must relate itself to the number one brand. A campaign that pretends that the market leader does not exist is likely to fail (Ries and Trout, 1981). For example, Avis tried unsuccessfully for years to win customers pretending that the number one Hertz did not exist. Finally, it began using the line, "Avis in only No. 2 in rent-a-cars, so why go with us? We try harder." After launching the campaign, Avis quickly became profitable. Whether Avis actually tried harder was not particularly relevant to their success. Rather, consumers finally were able to relate Avis to Hertz, which was number one in their minds.
Another example is that of the soft-drink 7-Up, which No. 3 behind Coke and Pepsi. By relating itself to Coke and Pepsi as the "Uncola", 7-Up was able to establish itself in the mind of the consumer as a desirable alternative to the standard colas. When there is a clear market leader in the mind of the consumer it can be nearly impossible to displace the leader, especially in the short-term.
Cell C made a mistake in trying to challenge market leaders that had already stabilized, in a market nearing maturing and that were already changing initial strategies so as to survive. Unless it changes it’s positioning and merges with another firm maybe there could be a potential for achieving the desired 25% market share by 2009.
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Question 5: The key to any service delivery firm is customer satisfaction. With regards to this, discuss how the SERQUAL model can be used by Cell C to evaluate its service delivery
The primary goal of Cell C is to sustain superior performance to ensure consistent growth. One method that can ensure superior and differentiate its service delivery from its competitors will be the quality of its relationship with its customers. According to Kotler (2001:7) relationship marketing aims at building long term mutually satisfying relations with key partners such as customers, suppliers and distributors in order to retain their long term preference and business. Wood (2000:15) supports this definition and maintains that the main idea behind relationship marketing is to build relationships with customers in order to retain them instead of concentrating efforts on recruiting new ones. Therefore, customer satisfaction according to Hill and Alexander (2006:2) is a measure of how your organisation’s total product performs in relation to a set of customer requirements.
Parasuraman Zeithaml, and Berry in 1988 developed the SERVQUAL model, the methodology that defines five dimensions of service quality (reliability; assurance; tangibility, empathy and responsiveness). Customer expectations maybe defined as desires and wants of consumers i.e. what they feel a service provider should offer rather than would offer. According to Cant et al. (2006:308) the SERVQUAL scale was developed to measure gaps between customers’ expectations of service performance and their assessment of the actual performance. The SERVQUAL model involves the Gap Analysis (Kotler and Keller, 2009:399) which helps to identify the causes of unsuccessful service quality delivery. The approach starts from the level of quality experience by customers is critically determined by gap between their expectations of service and their perceptions of what they actually receive from a specific service provider. Definition of service quality, therefore focus on meeting customers’ needs and requirements, and how well the service delivered matches the customers’ expectations of it (Parasuraman et al. 1988).
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The SERVQUAL model proposes five dimensions from which customers evaluate service quality; these are reliability, responsiveness, assurance, empathy and tangibles (Kotler and Keller, 2009:400). The dimension of tangibles assesses the appearance of physical facilities, equipment, personnel and communication materials e.g. aspects of service quality comprise all that the client can see, touch, hear, and smell when the services are delivered. The GSM 1800 licence acquired by Cell C which provides scope for faster call switching and wireless opportunities makes it an advantage to have its clients on stabilised network compared to MTN and Vodacom which still operate 900 GSM network that frequently experience capacity problems due to the overload. With regards to customers’ perceptions considering other network providers being able to have a stable network is an expectation met and a service fulfilled. Firms should consider facilities design and promote a positive employee image to current and prospective clients.
Reliability measures the ability to perform the promised service dependably and accurately. This is with regards to the distribution mechanism of the Cell C Direct, a service for anyone wishing to purchase a contract package from the comfort of their homes. The ability of the employees to take orders over the phone and to keep track of correct delivery records is good enough for the client to judge the company’s quality of service with regards to timorously delivery of service. Providing correct and current information as well as updating internal systems to reflect the encounter relate to the reliability dimension. In the case study, it is indicated that Cell C offers the cheapest call rates all around, even to the extent choosing to maintain its tariffs when its rivals, MTN and Vodacom announced a price increase. The reliability dimension relates to the aspect of being a dependable service provider in that it does not increase prices when other service providers announce increases.
Responsiveness represents the willingness to help customers and provide prompt service accordingly. It is important to make customers feel the immediacy of the management or the service employee in responding to what the customers need to know. Cell C managed this service delivery by rapidly increasing its distribution network by securing the
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exclusivity agreements Vodacom and MTN had with certain retail outlets such as Clicks as availability and convenience are important aspects in consumers’ purchase decisions. As stated in the case study Cell C changed the rules of the game by offering the consumer the flexibility of 12 and 24 contract which was not offered by other service providers. Apart from this, it has five simple, easy-to-follow suite products compared to MTN has 10 and Vodacom has 12 which caused a lot of confusion to their clients. This represented the willingness to help customers and provide prompt flexible services. The customer’s assurance dimension assesses the knowledge and courtesy of employees and their ability to inspire trust and confidence. Communication and understanding customer interaction is difficult and depends on the service employee’s skills. Therefore the expectations are largely met by the service provider’s call centre public image. As indicated in the case study, Cell C believes it’s important to provide good service to its customers hence installed a world-class customer call centre with highly impressive call recognition features where by the operator answers with: “How may I help you, Mr Mhize?”, which covers the aspect of individualising the customer by name and not number. As there is no physical facilities and materials related to the service (tangibles) emphasis is placed on assuring the customer of the systems security and credibility (assurance) and the ability to deliver the service reliably.
Empathy dimension refers to the ability of the firm to provide care and individualized attention to its customers i.e. the management or the service employee must see things from the vantage point of the client. Cell C payoff line “for yourself” i.e. a tool which enhances one’s particular lifestyle through the provision of lifestyle-enhancing cellular services based on simplicity, choice and value. The empathy dimension relates to the ability to provide individualised package choice based on consumers’ individual lifestyle needs and offer value by structuring the packages in the most competitive way. It also had a product aimed at the youth, the Club Chat which takes advantage of both the youth’s need to be in contact with their peers at all times and their traditionally scant disposition. It shows consideration and caring of the individual youths.
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The success of integrating quality in a company’s customer services depends heavily on the management. While some company management send their employees to training, some managerial factors would have to be used as well the values and skills of the employees on the other hand, must be prioritized as well. They must be given enough empowerment to contribute effectively towards customer satisfaction. Most people equate customer service with personal interaction, while few of them realize the complexity of business systems involve in it. Without these helpful systems, the smile or the warm greeting service employees provide will lead to minimal results.
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