A critical investigation of the marketing mix of Vodafone.
A critical
investigation
of the
marketing mix
of
Vodafone
By Mark Wood
Contents
Title Page
2 Contents Page
3 Aims
4 Acknowledgements
5 Introduction
7 Methodology
5 Analysis
8 Conclusion and Recommendations
22 Bibliography
Aims
* To investigate and analyse the marketing mix of Vodafone.
* To evaluate the effectiveness of the marketing mix of Vodafone meeting it's marketing objectives.
* To make recommendations, if any, to Vodafone on how it's marketing mix could be improved.
Acknowledgements
There have been a lot of people who have contributed to my coursework whom I would like to thank in this section. First of all, I would like to thank my sister who had given me the idea to choose Vodafone as the subject of my coursework when I seemed clueless on what business to do my coursework on . Secondly I would like to thank the 25 people who took out their time in order to participant in my questionnaire. I also like to thank the staff in the Vodafone store in Bow Street, Lisburn who gave me some additional information on Vodafone. Lastly, I would to thank my business studies teacher Mark Higgins who has also contributed to the success of this investigation.
Introduction
The reason I have chosen this title for my coursework is that the marketing mix was one of my best topic and the one I most enjoyed in my AS level Business Studies course. It is also because I have an interest in researching the 3 additional P's.
I have chosen Vodafone as my business for which I will do my project on. This is due to the fact that doing research on a mobile phone company who not only started in the UK but have also ended up as the largest mobile phone retailer and one of the largest companies in Europe. It would also give me the best results and the most enjoyment in researching the company. Another factor to my choice is their location and ability to get information about them via a website and the Vodafone store in Lisburn, Co Antrim, which is the town where I live. This allows me to participate in field research.
Vodafone is a multi-national company, which made the UK's first ever mobile phone call on the 1st of January 1985. This call was to mark the launch of the mobile industry and to transform the communications world. In their first 15 years they have become the largest company in Europe by market capitalisation and the largest telecommunications company of its kind globally. They also have a customer base of over 93 million and interests in network operators across 28 countries. 1 in every 100 people in the world own a Vodafone mobile phone, which is a tremendous feat for any mobile phone firm and surely a benchmark for others to aim for. Vodafone also serve 12 million UK customers and deals with 50 million calls per day and 10 million text messages per day.
They have roaming agreements with more foreign network operators than any other UK network, so the customer is more likely to be able to roam onto Vodafone when they come to the UK. They have also been recently reported as having the highest level of customer satisfaction, of all UK networks as well as extensive network coverage in the UK whereby they cover 99% of the UK population.
Their vision is based on continuing to understand the multiple benefits of mobile communications and aims to continue to deliver these through focused customer services and commitments to remaining at the front of service developments.
Vodafone also continue to massively invest at a rate of £10 million per week into building a network which allows the customer to make more calls from more places and remain assured that the quality and reliability of their service is as high as ever.
Vodafone also take steps in committing to environmental policies that are designed to minimise the impact of the network in both rural and urban areas, i.e., with network base towers being erected. They are also concerned with other environmental issues such as using technology that is not known to be harmful to people or the environment, minimising the use of harmful CFCs and endeavouring only to purchase environmentally friendly products.
Vodafone has a high-profile sponsorship program, supporting large and small organisations throughout the world. This illustrious list includes sponsorship of Manchester United, Benetton Formula 1 Racing Team, Ferrari Formula 1 Racing Team, English Test Cricket and the Vodafone Derby horserace.
I will look at the marketing mix of Vodafone due to having an interest in Vodafone's marketing affairs, especially at its high cost promotional end. I will investigate the marketing mix of Vodafone and evaluate its effect on customers, who are ultimately the most important player to the success of Vodafone.
The marketing mix consists of the 7 P's. Vodafone are more so concerned with the 3 additional P's of marketing and well as the standard 4 P's as they are marketing a service.
Product: Vodafone must make sure that their product is meeting the needs of its customers. The importance of the product may be shown in a product life cycle. This means looking at a number of features of the product. This includes quality assurance, branding, the appearance of the product and a question mark over the financial viability of the product.
Price: The pricing policy that the business chooses will reflect the market it is aiming at. Prices may be set to attract customers or they may be set to profit maximise. They may even be prepared to make short-term losses in order to capture a large market share. Vodafone may use such pricing policies as cost based pricing (prices are based upon costs), market orientated pricing (prices are based upon the analysis of the market) and competition based pricing (prices are largely based on what competitors are charging for their good).
Promotion: Vodafone would use promotional techniques in order to give them a competitive edge. This could be done through above the line promotion (promotion through an independent media), which would include television advertisements, newspaper advertisements, radio and posters advertisements, to below the line promotion (promotion where the firm have a degree of control over the methods they use), e.g., personal selling, direct mailing, trade fairs and product endorsements.
Place: This refers to where the good is sold and what distribution methods are used in order to get the good to the consumer. This can be done from ...
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Promotion: Vodafone would use promotional techniques in order to give them a competitive edge. This could be done through above the line promotion (promotion through an independent media), which would include television advertisements, newspaper advertisements, radio and posters advertisements, to below the line promotion (promotion where the firm have a degree of control over the methods they use), e.g., personal selling, direct mailing, trade fairs and product endorsements.
Place: This refers to where the good is sold and what distribution methods are used in order to get the good to the consumer. This can be done from Vodafone straight to the consumer (this may be done on the Internet, increasing Vodafone's revenue as a result), through Vodafone stores or from Vodafone to a retailer, such as The Link, to the consumer.
People: This helps with customer satisfaction and also refers to all people, whether it be people employed by the firm whose job it is to sell the good to consumers or whether it be people who are potential customers to Vodafone, whose needs are focused on by Vodafone.
Process: This explains the way in which the good is sold. Such examples would be purchasing goods in person over the counter by credit card, cash, cheques or direct debit, via the telephone or over the Internet.
Physical Environment: Even though the good is intangible, the customer can still feel that the physical environment of the store. This can be through the outlay of the store and memorabilia such as umbrellas and Manchester United football shirts in the case of Vodafone.
Methodology
In a measured way, I will use various techniques of market research in order to get the best possible results for my coursework.
I will use a range of desk and field research. Desk research involves the collection of secondary data, i.e., information that already exists. The advantage of using secondary data is that the data has already been collected and is available at little or no cost. Having said this, the data may not be what I want as it has been collected for another purpose and therefore may need to be adapted to be viable for this project.
Field research involves the collection of primary data, which is information that does not exist and has to be collected. The advantage of this is that I will be the only person with access to it and it will be carried out for the purpose of this coursework. However, it can be time consuming and expensive to carry out.
I will use a mixture of both desk and field research. I will use the Internet in order to find out information about the company Vodafone. Although I must have a PC and Internet access, this is an invaluable source of desk research. Compared to other methods of research, using the Internet enables me to collect the information I need without the need of contacting Vodafone. Therefore, I have chosen this method.
Sales figures could also be used in order to further enhance my investigation. If these were broken up into market segments, they would be very beneficial to me. However, Vodafone are unlikely to publish these to me and may not answer to my inquiry. This is why I decided to reject this method.
Government publication may have helped in my investigation such as Social Trends and the Census of Population. This may have told me about the trends in the whole market. However, I felt that this would be irrelevant to the aims of my investigation and rejected this method of research.
Business Studies textbooks could help me find out more about the marketing mix and market research. This information is right at my fingertips even though a lot of it cannot be used in this investigation. However, I have decided to choose this method as the data from it is excellent.
I will also use questionnaires, using both closed and open questions in order to get a better response from the participants. I will issue a sample of 25 questionnaires to Vodafone customers outside the Vodafone store in Lisburn. I decided on this as I felt I would get a good response through this and that the participants would be able to have any questions explained to them face to face. A questionairre will also be issued to the store manager of Vodafone in Lisburn via an interview. This has the advantages of the public questionnaire, though the management may not respond to my request of an interview. My final questionnaire will be sent via e-mail to the marketing department of Vodafone UK. This will be exactly the same as the questions asked to the store manager in Lisburn, though with E-mail, the person can answer my questionnaire from anywhere in the world and I will be getting answer from Vodafone staff who deal with staff on a national basis, rather than the local basis of the store manager in Lisburn.
Observing the Vodafone store will also allow me to see what the physical environment it is like. It also gives me the reliability to my coursework that I require. Even though it may leave some questions unanswered, observation will allow me to survey a number of individuals in a short space of time
For my public sample, I will be choosing a completely random sample, though this random sample will be situation outside the Vodafone store in Lisburn. This makes sure that bias is not introduced in my sample and that the sample is picked quickly and easily. Having said this though, a sample of 25 may not be very representative of the 12 million UK Vodafone customers!
Methods I didn't use include the use of television, radio and newspapers, which I found a limited source as Vodafone where rarely in the news.
A telephone interview allows interviews to be held over the telephone, but I found this a limited research resource as the success rate is poor and it is only possible to ask short questions. Therefore, I decided not to choose this option.
Postal surveys allow questionnaires to be sent out by post. This has a very low success rate as people regard it as 'junk mail'. Therefore, I decided not to choose this option.
Analysis
In doing my questionnaire, the questions related to my original three aims of the coursework. The quality of data I have received from textbooks and the Internet (particularly the Vodafone website) has been excellent, as they have both contributed greatly to my coursework research. The only drawback to using the Vodafone website was that it may have been biased in order to emphasise worldwide sales, environmental policies and the quality of their customer service.
The quality of data I received from Vodafone customers through the use of my questionnaire was very good as this enabled me to complete my aims. I had used a sample of 25 for this survey. However, a letter posted to the store manager of Vodafone in Lisburn has not led to a reply for my request of an interview. The same problem has also occurred for me when E-mailing the Vodafone marketing department in order for them to answer my questionnaire. This leads me to believe that the customer service of Vodafone isn't of the high standard that it expresses and therefore, the quality of data fails to be as high as I had hoped.
Observation of the staff and the way customers are dealt with also gave me an insight to Vodafone's view on people, which, again, helps me achieve my overall aims.
Overall, I am pleased with the data that I had received even though I had little experience with the method of the field research I participated in despite having a lot of experienced with the types of desk research I had gathered.
The results from the questionnaire show a number of large trends.
. What age group are you in? 0-15 3
16-25 17
25-40 3
41-60 2
61+ 0
More than two thirds of Vodafone users that I surveyed were between the ages of 16 and 25. This is due to the trend in young adults having mobile phones and this trend may be likely to continue if the survey was done on a bigger scale. This survey may also suggest to Vodafone who they can market towards, i.e., their main market segment. The diagram (above) shows just how big the proportion of total survey that is to Vodafone.
2. What payment method do you use for your phone?
Pay As You Go 10
Monthly Contract 15
International Calls Package 0
Fifteen people pay for their bills through a monthly contract whereas ten pay their bills on a Pay-As-You-Go basis. However, no one was on an International calls package. This may be due to the location of my survey. E.g., in an international city like London, more people would be on an international calls deal than in a town like Lisburn, where my survey took place. This could lead Vodafone into promoting international call deals in order to attract people from the Lisburn area into subscribing.
3. What is your view on the range of packages that you can choose? 1 (1) 2 (2) 3 (7) 4 (10) 5 (5)
Grade 1 1
Grade 2 2
Grade 3 7
Grade 4 10
Grade 5 5
People were more or less happy with the choice of service that Vodafone had to offer, with just 12% of the questionnaire giving a Grade 1 or 2 for this question. So the variety of the product is not a large problem for Vodafone due to the vast majority of customers being satisfied with their service.
4. Do you return to Vodafone products? Yes 23 No 2
Yes 23
No 2
4. What attracted you/made you comeback to Vodafone?
General comments: Good customer service, good prices, and friends having Vodafone mobile phones
23 of the 25 people surveyed said that they would return to Vodafone products. The general comments from customers was that this was because of the good customer service, its competitive prices and its deal with cheap rates when phoning other Vodafone mobile phones. It may have been more beneficial to find out why Vodafone hadn't attracted competitors away from their tariffs, though some points that were not mentioned in Q14 could give some indication into why this is true such as promotion.
2. Do Vodafone's promotional methods attract you to their products? Yes 12 No 13
Yes 12
No 13
Just over half of the survey said that promotion had not attracted them to Vodafone. This may have to be considered by Vodafone when promoting in the future. They may also have to rethink whether their large promotional budget is worth the investment.
5. Is the Vodafone store well located? Yes 20 No 5
Yes 20
No 5
80% of the survey thought that the shop was well located (Vodafone store in Lisburn). This came as no surprise as it is located on Bow Street, one of the busiest streets for shopping in Lisburn. There is no car parking at the store, though there are car parks less than 100 yards away at Bow Street Mall and Antrim Street.
5. What is your opinion of the outlay of the Vodafone shop?
General comments: Clean, spacious, of a high standard, not as good as the outlay of rival's Orange's store in Lisburn
The general view on the outlay of the store showed that it was a reasonably good store. This shows that physical environment is very good in the Vodafone stores. I can also justify this through my observations at the store. As you walk in, the atmosphere is settled. The staff seem to approach the customers and don't let the customers browse if they wish do to so. There are 'dummy' mobile phones around the perimeter of the store, which itself is not very sizable so crowding can be a problem at busy periods such as Christmas. Easy listening music is also played in an attempt to add to the ambience of the store. Overall, in my opinion, the physical environment that Vodafone create has some room for improvement.
6. Do you know about the website? Yes 23 No 2
If not, go to Q11.
Yes 23
No 2
7. Have you used the website? Yes 11 No 12
If not, go to Q11
Yes 11
No 12
8. If so, how many times? 0-5 9 6-10 1 11+ 1
0-5 times 9
6-10 times 1
1+ times 1
9. Do you use the website to keep up to date on special offers? Yes 1 No 10
Yes 1
No 10
0. Do you buy their goods online? Yes 0 No 11
Yes 0
No 11
Only eleven of the twenty-five people surveyed have used the Vodafone website at least once. Of these eleven, just one person surveyed uses the site to look for special offers while no one has used it to buy anything. The website could be better promoted by Vodafone to its customers or even have their website address advertised on their already large promotional line up. This would promote the website as well as the company for no added costs.
1. In your view, how well are the products priced?
1 (0) 2 (6) 3 (7) 4 (10) 5 (1)
Grade 1 0
Grade 2 6
Grade 3 7
Grade 4 10
Grade 5 1
In the view of the customers, most found Vodafone's prices acceptable or very good. However, six people gave Vodafone a Grade 2 on their view of Vodafone prices. Vodafone could look at different pricing strategies to cater for these people. However, since no one was connected to the international calls package, the validity of these results has been affected in an adverse way.
6. What is the staff service like?
(3) 2 (12) 3 (9) 4 (1) 5 (0)
Grade 1 3
Grade 2 12
Grade 3 9
Grade 4 1
Grade 5 0
Fifteen out of the twenty-five people (60%) found the staff unsatisfactory and give them a Grade 1 or 2. Only one person gave the staff service a Grade 4 and no one gave them a Grade 5. The pie chart (above) shows the proportion of this at a glance. This is strange, as Vodafone has always praised itself on a high quality service though having said this; I have spotted through observation that the staff service is not excellent. The staff seem to try and force the customer into awkward positions, leading to another Vodafone mobile being sold. A solution to this could be to re-train staff or to get the staff to look at the situation from the customer's view.
There was only one of my questions that I found irrelevant.
3. How many Vodafone products have you purchased?
One 23 More than one 2
This asked a similar question to question 4 and also ended up with the same outcome and therefore, I found little point in analysing this question.
Overall, my results have found some interesting trends and have brought up a lot of discussion points in the different aspects of the marketing mix. They also show the effect of the marketing mix on Vodafone and its customers. They will also give me the basis for which I will make my evaluation on in the next section.
Conclusion and Recommendations
In order to complete this, I must look back at my original title and aims:
A critical investigation of the marketing mix of Vodafone
Aim 1 To investigate and analyse the effects of the marketing mix of Vodafone.
Aim 2 To draw conclusions on the effect of the marketing mix on Vodafone.
Aim 3 To make recommendations to Vodafone on how the marketing mix could be improved.
In this section I will look at each of the 7 P's, confirm what effect it has on Vodafone and recommend how that method can be improved in order to complete my original aims that I stated at the beginning of my investigation.
Effect of Product on Vodafone
Vodafone's product ranges from Pay-As-You-Go to monthly contract to international calls packages. I found in my research that the monthly contract option was the most popular. I also found that Vodafone serves over 12 million UK customers, which makes it the largest mobile phone retailer in the UK. This could be suggesting that the quality of the phone company is excellent. This is also suggested in my survey where there seemed a high percentage of customers happy with the range of Vodafone products on offer.
However, Vodafone's services are similar to their competitors so I conclude that the product may not have as big a factor on a mobile phone company such as Vodafone to the likes of a business in the retail industry.
I would recommend Vodafone to keep their current investment of £10 million per week in order to improve the quality that they show in order to keep one step ahead of competitors.
Effect of Price on Vodafone
Vodafone seems to set prices similar to competitors as they are in an imperfect market. This means that firms are less willing to participate in price wars and are more willing to price fix. In the survey, I found that the majority of customers were satisfied with the prices that Vodafone have set. I conclude that Vodafone are not effect by price as much as other firms in different markets mainly due to Vodafone's massive market share and already large profit margins and their oligopolistic market position. My recommendation to Vodafone keep the price similar to what they are now due to their ability to price fix and their healthy profit margins. In my view, there is little point in Vodafone starting a different pricing technique such as destroyer or psychological pricing as they simply wouldn't make Vodafone much better off than before due to the market they are in.
Effect of Promotion on Vodafone
Vodafone have spent a lot of money on big name sponsorships such as Manchester United FC, Ferrari F1 Racing Team and the Vodafone Derby horse race. However, judging by the survey, over half of the people were not attracted to Vodafone by advertising. This leads me to conclude that Vodafone have other ways to reaching customers such as word of mouth. Therefore, I recommend to Vodafone that they should reduce spending on promotion and big name advertising, as they have not attracted extra customers this way according to my survey.
Effect of Place on Vodafone
According to the survey, 80% of the people found that the Vodafone store was well located. Having said this, the survey was only used in Lisburn so I can't vouch for the rest of the UK on saying that the people were generally happy with the location of the store. I conclude that Vodafone has thoroughly thought out where to locate in towns like Lisburn, allowing for easy access from the main town centre. I recommend that Vodafone keep up their efforts on good location for the public in order to give themselves a non-price competitive advantage over the other mobile phone retailers.
Effect of Process on Vodafone
Vodafone talk to the customers about the projected time a customer would spent on the phone or what time they would use the phone or international calls in order to find the best deal for the customer. This can be either a hindrance or help for the customer, especially if they feel that too many questions are being asked. In conclusion, Vodafone will see the selling process as important as they will want the customer to get their good as fast as possible and what the customer requires. As my observation showed, some customers felted that they were being pressurised by staff when wanting to purchase a Vodafone mobile phone, which led to the process not being an enjoyable one for the customer. My recommendations would be that staff should deal with customers better in order to let the customer get the good they want without hassle. A more efficient way of buying goods on the Vodafone website would also allow the buying process to speed up as customers aim to purchase Vodafone services online.
Effect of People on Vodafone
Vodafone would be displeased by the results of my survey on the opinion of staff as only one person graded them above average out of twenty-five. Vodafone have always praised them on the assumption that their customer service was second to none though the survey suggests otherwise. My conclusion is that Vodafone takes the look at people in the marketing mix very seriously and therefore will need to improve its staff service to keep a good image. I would recommend retraining staff in order to deal with customer needs better, having the staff put themselves in the customer's position to have a better view of what the customer wants and talking to the customers on the same level, i.e., not using technical jargon to the customer but at the same time not patronising them either.
Effect of the Physical Environment on Vodafone
From the consumer comments, I found that a lot of people saw the outlay of the Vodafone store as clean, spacious and tidy. However, some of the survey found that the Orange store, also in Lisburn, was better than the Vodafone store in the same town. As my conclusion, I believe that Vodafone find the psychical environment very important due to first impressions and the ease to see goods from the customer's point of view. As a recommendation, I would suggest to Vodafone that they look at the differences between their psychical environment and Orange's and see what can be improved in Vodafone's in order to gain a better image in this department of the marketing mix.
Vodafone have considered all 7 P's in the marketing mix, though some more so than others. Little needs to be changed for Vodafone as they are already the largest mobile telecommunications company in the world. Despite finding a lot of small faults in Vodafone's marketing mix, I still think that they succeed in their marketing plans as they have shown in recent years and with continued effort by Vodafone, they should keep this dominant position in the market for years to come.
Bibliography
* Vodafone.com- Official Vodafone website
* Business Studies (Causeway Press Ltd)- Business Studies Textbook
Mark Wood