Economic Factors
The mobile phones industry is also affected by economical factors nationally and globally. If the UK economy is in a boom, this will have an positive affect on consumer confidence and behaviour encouraging more sales of mobile phones. Economic factors affect the purchasing power of a potential buyer of mobile phones. The mobile phone is a complementary good that has a joint demand with mobile operators. The mobile network plays an important role in determining the consumer gets from a mobile phone. For instance, when Digital Cellular System was launched in the UK in 1998 by Orange and One-2-One, those Network Operators put significant economic resources into establishing high quality, terminal conformance platforms. The aim was to ensure that there was a suitable type approval route and that the terminals would satisfy the customers’ expectations. Hence, it benefits not only the customers of mobile operators, but also those who use mobile phones.
In United Kingdom, most consumers already own basic mobile phones, and sales are driven by upgrades to flashier handset models with features such as colour screens, cameras and games. This is why, an analyst from the Gartner website reports, “The global market is now clearly split into two mature markets. There is the replacement market in regions such as Western Europe and North America that is driving sales, and emerging markets such as Africa, parts of Eastern Europe and China, where new sales are fuelling customer demand." Thus, market analysts should consider these economic factors when bringing out new mobile phones in the UK Market. There has been a way mobile network operators have promoted to sell new mobile phone in UK. For instance, offer replacement schemes to encourage sales of mobile phones. This is done by buying old used phones and with an additional payment customers are able to get a latest brand new phone on the market. Other approach considered by mobile operators to boost mobile phone sales is to subsidise mobile phones on yearly contracts. In the UK, it is the mobile operators such as, (Vodafone, BT, Orange, T-mobile), that plays a vital role in advertising mobile phones products for promoting their own contracts. However, this has led to a fall in ‘Pay As You Go’, where customers used to buy mobile phones at full cost, and then pay money to mobile operators as and when they use the phone.
Technological Factors
The changes in technology play a vital role in the mobile phones industry. The mobile phone, itself is a production of a technological advancement. Thus, firms in the industry, in order to gain a competitive edge over other firms have to continuously investment in research and development and develop technology that will be operational on mobile phones. For instance, High bandwidth with potentials for video conferencing on phone is a third generation advanced on mobile phones. In UK, mobile operators such as ‘3’ have facilitated the technology and Vodafone has also bought the licence for operating the 3G phones from the government. Market analysts would say that this has opened a new dimensional market for customers now and this would make mobile phones companies develop new phones based on the 3G technology to promote future sales.
Mobile phone users are becoming increasingly aware of quality and expect a product that is reliable during use. GSM has been an unqualified success because it works, offers definite advantages over first generation and is at a price where everyone can access the technology. One problem that has been apparent over recent years in UK, is the high market exposure given to new features and technologies, which are not well proven and tested before launch. WAP was a prime example of this. A great deal of effort has been injected into WAP to make sure the early teething problems have been overcome, in order to change the public prospective of WAP.
Social Impact
The UK economy achieving sustained economic growth and increasing employment levels have had a positive impact on the social behaviour of consumers. Mobile phone, once viewed as a luxury good, is nowadays seen as a prerequisite. It has become as a fashionable necessity in UK and a survey carried out by OFTEL showed that more than 2/3 of UK households run active mobile phones. This social trend from consumers has boosted the mobile industry and as a result, many retail shops have opened on high streets (or in the form of internet buying), has led to a continuous increase in consumer spending of UK citizens. This has resulted in creating more jobs within the mobile industry and thus improving UK employment figures. The UK mobile users have passed the 50 million figures in March 2003, which is a sign of increasing mobile market for UK consumers. The use of text messaging is on the rise in UK which has emerged as a new social trend, particularly in the group age of 16-25.
Micro-Environmental Factors
It is also needed to take into consideration ‘Micro Environmental Factors’, those internal factors close to the industry that have a direct impact on the strategic planning for mobile phone companies.
Competitors
The UK mobile phone industry structure is made up of a number of competitors. Hence, all the firms within the industry have to be aware of their competitors and their policies, so that they can react quickly to changing market strategies of other firms in the industry. However, all firms would try to build customer loyalty by providing better customer service. For example, Nokia mobiles are very popular (about 35% market share) among consumers because of its Easy-to-Use feature which customers appreciate. This is the reason why, companies like Samsung and Sony Ericsson are competing to gain a market share through their innovative designs and new applications, such as, camera built on a phone. Companies operating in the industry have to be efficient to keep their costs low so they can pass this on to customers in form of low or competitive prices.
Marketing Intermediaries
Marketing intermediaries help promote, sell, and distribute to final buyers. This includes sellers, physical distribution firms, financial service intermediaries and marketing services agencies. All of these firms are needed by the mobile industry to gel together and help promoting, selling and distributing goods to its final buyers. For instance, financial intermediaries are able to finance transactions of consumers wanting to buy mobile phones from high street shops on easy instalments. Hence, it is also important, that financial intuitions charge lower rate of interest on monthly payments, which plays in important role in determining the demand for mobile phones. Similarly, the physical distribution firms that would include warehouse and transportation firms if work efficiently, can provide retailers mobile stock in time which in effect is also an advantage to mobile firms.
Customers
A firm within mobile industry will survive on the basis of meeting the needs, wants and providing benefits for their customers. Failure to do so will result in a failed business strategy. Thus, it is important for mobile industries to study and identify the consumer markets, business markets, institutional markets and their needs. For example, the business market users would require WAP services; or rather the 3G technology can also play an important part in the dealings of business. However, consumers markets would consist of households that may find Video Camera feature within mobile phones very appealing.
The Company
It is important for the success of the industry that every company’s internal environment works smoothly and all the departments within a company coordinate effectively. All the departments including from top management to others, such as finance, research and development, purchasing, manufacturing and accounting have an impact when making decision about marketing. Marketing managers are supposed to work closely with all the departments to carry the marketing plan for the company. Thus, if they all work in harmony, then they are able to provide superior consumer value and satisfaction.
Suppliers
The suppliers of the mobile industry have a considerable influence as they consist of those firms which supply resources needed by the company and its competitors to make mobile phones. That is, all the IT technicians, specialists, machinery providers have a considerable influence by supplying the industry all the components of the goods in time. Further, continuous supplies of components have to planned and guaranteed for the mobile phones makers to supply customers in time. However, rising supply costs may force mobile price increases that can harm the company’s sales volume.
Conclusion
In combination with a PEST-Analysis, which reveals for changes that has been occurring within the UK mobile industry through external impact, the Micro environmental factors can reveal insights about the potential future attractiveness of the mobile industry. After the analysis of current and potential future state of the five competitive forces, managers can search for options to influence these forces in the mobile industry’s interest. The corporate strategy developed by the managers for the specific needs of companies would shape the mobile industry such that it becomes more competitive, however working together to make the industry more attractive and hence achieve higher profits.
Bibliography
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Kotler, P.(2002) Principles Of Marketing. 3rd European Edition
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Lancaster, G. (2002) Marketing Environment. 1st Edition
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Habeberg, A. (1995) Business: Marketing. 2nd Edition
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Stone, B. (2001) Direct Marketing Methods. 4th Edition
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Kotler, P.(2002) Principles Of Marketing. 3rd European Edition
Kotler, P.(2002) Principles Of Marketing. 3rd European Edition
