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EE’s Marketing Report
Student Name: Vasiliki Evangelou
Word Count (excl References and Appendices): 4041 words
Table of Contents
1 Executive Summary...........................................................................................................4
2 Industry Overview.............................................................................................................5
3 Company Background .......................................................................................................6
4 External Environment Analysis.........................................................................................6
4.1 PESTLE Analysis ................................................................................................................ 6
4.1.1 Political factors............................................................................................................. 6
4.1.2 Economic factors..........................................................................................................6
4.1.3 Social-Cultural factors...................................................................................................7
4.1.4 Technological factors....................................................................................................7
4.1.5 Legal Factors................................................................................................................ 7
4.1.6 Ecological Environment.................................................................................................8
4.2 Competition Analysis – Porters’ Five Forces........................................................................8
4.2.1 Competition between mobile network operators – High risk............................................ 8
4.2.2 Threat of New Entry – Low Risk...................................................................................... 9
4.2.3 Bargaining Power of Buyers – Medium Risk....................................................................9
4.2.4 Bargaining Power of Suppliers – High Risk.................................................................... 10
4.2.5 Threat of Substitute Products or Services – Medium Risk............................................... 10
5 Internal Environment Analysis........................................................................................11
5.1 Financial performance .................................................................................................... 11
5.2 Value ChainAnalysis....................................................................................................... 11
5.3 Product Portfolio Analysis............................................................................................... 12
6 Segmentation–Targeting-Positioning.............................................................................13
7 SWOT Analysis.................................................................................................................16
7.1 Strengths ....................................................................................................................... 16
7.2 Weaknesses................................................................................................................... 16
7.3 Opportunities................................................................................................................. 16
7.4 Threats.......................................................................................................................... 17
8 Marketing Objectives and Proposed Strategies.............................................................17
Objective 1: Increase the number of satisfied customers by 20% in the next year........................... 17
Product/Services..................................................................................................................... 17
Promotion.............................................................................................................................. 18
Objective 2: Increase 4G subscribers by 30% in the next year........................................................ 19
Place...................................................................................................................................... 19
Price ...................................................................................................................................... 19
Promotion.............................................................................................................................. 20
9 Conclusion........................................................................................................................22
10 References.......................................................................................................................23
11 Appendices......................................................................................................................32
Appendix 1 – Detailed analysis of the competition between mobile network operators.................. 32
Appendix 2 – EE’s detailedinternal analysis.................................................................................. 35
The organizational structure.................................................................................................... 35
Staff morale and skills............................................................................................................. 36
Pricing Structure..................................................................................................................... 37
1 Executive Summary
This report was produced to evaluate the EE’s marketing environment, identify and
recommend suitable potential strategies by using thoroughly several models to assess and
examine the external and internal environment.
The examination of the external environment was carried out with the useof PESTLE, Porter’s
5 forces and an overview of current telecoms segmentation. In order to assess the internal
environment, EE’s current performance, value chain and product portfolio were reviewed.
The analysis revealed that despite having apparent strengths in 4G technology and market
position, EE still has some issues especially with its brand image, perceived value for money
proposition and customer satisfaction. Recommendations were made to improve on EE’s
customer service as part of a customer retention focus and continuingly increase the 4G
customer base as EE’s main growth driver.
2 Industry Overview
The mobile network provider market value was estimated at £15.8B in 2013 (Gee, 2014). The
market is expected to grow steadilywith a7% increasein 2018 (Figure 1) due to the increasing
number of mobile devices owned by consumers and the successfulrollout of the 4G networks.
Different from most of other technology markets, the mobile services market has been
relative resilient to the effect of the economic downturn. Ofcom (2014) attributes this
phenomenon to the consumer’s significant switch from pre-pay to post-pay services in the
past years, in which consumers are tied in with a mobile network provider for longer-term
through contracts.
Figure 1: Forecast retail value of sales of mobile network connections, 2008-18. SOURCE: Mintel,
2014.
3 Company Background
EE was the result of the collaboration of two major players in the Telecommunications
Industry, Orange and T-Mobile, in 2010. It was the first company to introduce the advanced
technology of 4G in the market. Within its four years it made an over £1.5bn investment and
it’s estimated to reach 98% coverage in the UK by the end of 2014 (Ofcom, 2014). EE is
considered to be the UK’s largestprovider with more than 700 stores (Holton, 2012) providing
services to approximately 27 million customers.
4 External Environment Analysis
The external environment can be analysed using PESTLE factors (political, economic, social,
technological, legal and environmental) (Mc Donald, 2007) and Porter’s five competitive
forces (Porter, 2008). This can lead to the contemporary/upcoming pliability of the service’s
providers (Willsher et al., 2013).
4.1 PESTLE Analysis
4.1.1 Political factors
The UK Government examines issues related with the sufficiency of national coverage
(Thomas, 2014), where areas far from urban centres face significant problems (Morris, 2014).
Furthermore, research related with the coverage incidents showed that although the overall
customer satisfaction is 76%, this index presents spatial variation, diminishing at 67% in rural
areas (Ofcom, 2014). Consequently the UK Government and Ofcom have been in
collaboration in order to invest approximately £150m on providers for ameliorating the
network coverage in non-urban areas (Morris, 2014).
4.1.2 Economic factors
Within 2008-2009, the UK Economy came across a period of decline (Grahame, 2010) and as
a consequence, householders affected by the government’s action plan, involving VAT
augmentation to 20% and national benefits’ reductions (Timms, 2010). This led customers
feel chary about their expenses (Euromonitor International, 2012). Although the economy
started to recover in 2013 (Inman & Traynor, 2013), it is an ongoing process and consumers
will take time to feel secure in spending again (BBC News, 2014). In addition, after European
Union’s demand of £1,7bn payment on 1st December (BBC News, 2014b), UK producers will
face a considerable struggle with inflation in the next years (Allen, 2014).
4.1.3 Social-Cultural factors
Each customer segment has different purchase behaviours within telecoms market.
According to Euromonitor International survey (2013) there was a noticeable augmentation
in the proportion of teens that use smartphones from 61% to 81% between 2011-2013. This
age group combines at the same time several ways of communication, using social networks,
streaming websites (Lee, 2013), texting free messages or making free calls by using different
types of applications (Kleinman, 2013) and sharing opinions and media files (Euromonitor
International, 2010).
According to ONS, in the period 04/2013-06/2014, about 550,00 EU/International citizines
ebtered the UK, for work, studies or other purposes (ONS, 2014). This target group has
accordingly different communication needs and aspects.
4.1.4 Technological factors
Telecoms are influenced by technology and their goal is the network’s coverage
enhancement, by delivering exceptional data/network services (Telecoms, 2014). LTE-
advanced 4G Network was launched in order to cover the above needs, and brought new
capabilities to the customers (Department for Culture, Media & Sport, 2012), at a reduced
cost (Curtis, 2013).
4.1.5 Legal Factors
Ofcom reinforces the base for companies in providing their products and services through
healthy/competitive approaches (Barnett, 2010). The regulator determined that consumers
have the ability of terminating their contracts without penalties,under specificcircumstances
of price’s increase without any notification within a month’s period (BBC News, 2013).
Additionally, the roaming rates have periodically degraded (Osborne, 2014) and it is predicted
that until 2015 will be removed (Garside, 2014).
4.1.6 Ecological Environment
According to Ofcom, there are noticable environmental factors and constraints to be taken
into consideration in telecomms. These can be classified to the production and usage of the
handsets, the development of the relevant infrastructure and their impact on flora and fauna
(Ofcom, 2009).
4.2 Competition Analysis – Porters’ Five Forces
4.2.1 Competition between mobile network operators – High risk
Figure 2 shows the market share of the main operators in UK in 2013. EE accounted for 31%
as the market leader, following by O2 (23%), Vodafone (16%) and Three (9%).
Figure 2: Mobile Network Provider Consumers Use December 2013. SOURCE: Mintel, 2014.
A detailed analysis of the telecoms market competition can be found in Appendix 1. In
conclusion, the analysis indicates that the competition within the telecoms market is very
intense. The market is saturated and players in the market all have strong competitive
advantage in different areas. Although EE was ranked first in the network quality criteria
including coverage and speed, it performs poorly in terms of customer service which
significantly impact its customer satisfaction. This is a danger point which can make EE’s
market leader position vulnerable.
4.2.2 Threat of New Entry – Low Risk
The telecoms industry is significantly attractive because it is one of the most profitable
markets (Malinić & Milićević, 2013). However, the capital requirements to enter the market
are very intensive. As an illustration, Vodafone, Three, EE, O2 and BT had spent £2.3 billion
on acquiring 4G spectrum alone in 2013 (Ofcom, 2013). Hence, entrants have to pay at least
£700,000 to win the contract which is difficult for tight capital company to enter the market.
Figure 3: Winning Bidders for the Auction of Radio Spectrum. SOURCE: Ofcom, 2014.
In addition, the main four players (EE, O2, Vodafone and EE) already are established in the
market with strong loyal customer bases and attractive product differentiation. For example,
while other providers are releasing standard network EE’s 4G is already advanced to double
speed with LTE Advanced and 4G roaming. Hence, it would be highly unlikely that a new
operator will enter the market while there are already a number of small operators who are
striving to compete with the Big Four already.
4.2.3 Bargaining Power of Buyers – Medium Risk
The competition within the telecoms market is more intensified considering the fact that
customers have the right to change their network providers in order to obtain the best offer,
having negative impact on mobile network operators (Lyons, 2010). As a result, companies
have to introduce new services and products to attract mobile users, thus raising customers’
loyalty (Gillison et al., 2014). However, number portability is not easy to be changed as
customers have the responsibility to inform their providers of contract cancellation in
advance, which might cause them inconvenience. For this reason, the bargaining power per
customer is lowered.
4.2.4 Bargaining Power of Suppliers – High Risk
Although EE is the market leader in 4G market, it has to face an intense competition from its
rivals. To compete its puissant rivals, EE has chosen Huawei ICT as a technological partner to
support its fastestmobile network---LTE-A (EE&ME, 2013), Furthermore, EE has just upgraded
its 4G network to double speed but the coverage of this new service is limited in some
locations. Hence, EE made a decision to work with NSN to support its biggest LTE network,
continue to expand its 4G coverage (Swantee, 2014). In 4G market, being the technology
leader is not easy. EE needs to maintain its outstanding performance at a high level which
relies on the high-quality technology from its suppliers. In conclusion, the bargaining power
of EE’s suppliers is strong and EE needs to maintain a good relationship with the suppliers to
remain its competitive advantage and customer’s loyalty
4.2.5 Threat of Substitute Products or Services – Medium Risk
Mobile network operators are no longer the sole providers of message and voice
communication services, losing the exclusivity to internet telephony services such as Skype
and Viber, and message applications like Whatsapp and Imessage (Gee, 2014). According to
Vincent (2013), Skype achieved an impressive 280 millions monthly active users and the
number is 250 millions for Whatsapp in 2013, imposing largethreat on to telecoms companies
who have historically used high mark-ups on SMS and MMS messaging prices as a cash cow.
Indeed, both total outgoing call minutes and SMS messages sent in 2013 slightly declined
compared with the previous years (Gee, 2014). BBC News (2014) estimated that the telecoms
industry is losing around $100m (£59m) a day to Skype alone. The only advantage that the
mobile network operators have over thesenew platforms is interoperability. For the moment,
until the data-driven services willingly choose to interact and cooperate with one another,
network operators remain the most cohesive and simple way for consumers to talk to each
other based on a single identifier (the phone number).
5 Internal Environment Analysis
A more detailed internal analysis of EE in Appendix 2. Overall, EE has an efficient
organisational structure and high staff morale especially through opportunities for staff to
take part in social volunteering activities.
5.1 Financial performance
2013 2012
Revenue £6.5B £6.7B
Total net assets £9,733m £10,317m
Net cash provided by
Operating activities
£1,201m £1,051m
Net cash used in Investing
activities
£1,215m £629m
Financing activities -£409m £134m
Figure 4: EE’s 2013 Financial Performance. SOURCE: EE Annual Report, 2013
In 2013, EE’s revenue was £6.5 billion, decreasing an alarming 2.6% compared with 2012.
However, decreasein profit does not always indicate the overall performance of the company
because it might be associated with inventories, capital equipment etc. (McDonald & Wilson,
2011). Table 1 shows that the cash invested increased to about 1.2 billion in 2013, such as
invest to 2G and 4G equipment and backhaul (EE Annual Report, 2013).
5.2 Value Chain Analysis
As the biggest digital communications company, EE expanded its selling approach into an
omni-channel trading environment, where from high-street retailstores to online stores. Now
EE has more than 700 retail stores, and one official site EE.CO.UK.
Figure 5: EE’s value chain analysis. Based on model developed by Porter (1985).
5.3 Product Portfolio Analysis
The Boston Box classifies a firm’s products according to their cash usage and their cash
generation using market growth and relative market share to categorize them in the form of
a box (McDonald & Wilson, 2011).
Figure 6: EE’s Product Portfolio Analysis using BCG Matrix
EE 4G products can be positioned as the Star in EE’s product portfolio. 4G gained 816,000 new
customers for EE in the 4th quarter of 2013, indicating a rapid market growth. For the market
share, the total number of EE’s 4G subscribers is 4.2 million which occupies 46% of total 4G
market (EE Annual report, 2013). Thus, the positive number on market growth and market
share indicated that 4G products account for a stars situation. As a result, EE needs to keep a
sufficient cash flow to invest and support 4G technology. For example, it costs £1.5 billion
investment for 4G in 2013 alone (EE Annual report, 2013).
On the other hand, the 3G market is becoming saturated and has very low growth rate
compared with the 4G market (Gee, 2014). Considering EE is the market leader of this slow-
growing market, 3G products are positioned as Cash Cow for EE. This means EE can stably
earn huge amount of revenue from the 3G products without the need of huge investment
into it. Therefore, the 3G market needs to be milked continuously with as little investment as
possible to generate enough cash for EE to invest in its future growth strategy.
6 Segmentation–Targeting-Positioning
The following analysis looks at EE’s current STP strategies and identifies potential areas for
improvement.
First of all, segmentation is the process of dividing the market into segments according to
their affinity or similar characteristics to analyse the buying behaviour of these groups and
adjust the communications for each group accordingly (Jansen, 2007). A consumer market is
most often segmented by demographic variables such as income level, age, socio economic
status etc (McDonald & Ian, 2004). However, Bayer (2010) suggests that behavioural
segmentation approach is more suitable for telecoms companies. Sub-segments can be
characterised by attributes such as their retention likelihood, their ‘stickiness’ (use of
different Value Added Services), their promotion score (response to marketing offers) and
their average value.
After the market is grouped into different segments, EE needs to choose one or a few
segments to target their communications and offers at. This is especially important for a new
brand like EE to find a mutual profitable customer group from T-Mobile and Orange’s very
distinct target market in the past. One method to do this is the customer lifetime value
assessment as proposed by Bayer (2010). Following the Pareto principles, the top 20%
customer group who have the highest predicted contribution to overall organisational
profitability will attribute 80% of the company’s profit and therefore can be selected as the
target market (Figure 7). In 2013, EE revealed to aim at Vodafone’s target customers who are
mainly young tech-savvy for their latest 4G launching campaign (Chapman, 2013), indicating
that this is the most profitable segment that EE has identified to focus at.
Figure 7: Example of Value (profitability) segmentation (using aggregated cost data). SOURCE:
Bayer, 2010.
Within the chosen target market, EE needs a positioning strategy to highlight its
differentiation from the competitors. This can be analysed through a perceptual mapping of
the mobile network providers’ perceived quality and price by the customers. The quality
scores are taken from Which? Report (Figure 8) and relative prices are calculated based on
the pricing analysis in Appendix 1. EE claimed to position itself as a premium brand against
Vodafone and O2 in both pricing and quality (O’Reilly, 2014). However, looking at Figure 9, EE
is actually perceived as an expensive brand that delivers low quality services, implying EE can
lose market share into other competitors with better fair value perception. Therefore, EE has
to either reduce their price to move to the low-market end or improve their perceived quality
offered to gain competitive advantage. Considering EE’s pioneering position in 4G service,
recommendation is that EE should improve their product and customer service quality to
increase their value for money position and strengthen the market leader position.
Figure 8: Which? scores for pay monthly mobile phone providers in 2013. SOURCE: Which?, 2013.
Figure 9: Mobile network providers perceptual map.
7 SWOT Analysis
SWOT will summarise the most important points from the External and Internal analysis to
develop appropriate marketing objectives and strategies.
7.1 Strengths
- Market leader position in the mobile network providers industry.
- Pioneers the 4G market and owns the largest 4G customer base in the UK.
- Wide coverage which will be further extended in public locations (McCaskill, 2014).
- Highest performance levels in speed and was the first operator that introduced 4G+ in
central London (EE&ME, 2014).
- Security of devices and data. First UK operator to pre-install the ‘Lookout Mobile
Security app’ on smartphones in order to protect customers’ privacy when their devices
lost or stolen (EE&ME, 2014).
7.2 Weaknesses
- Low brand recognition. According to Gee (2014), around 77% of EE customers still
associate their network as Orange or T-Mobile instead of EE.
- Perceived as a brand that has low value-for-money proposition.
- Poorly rated customer service compared with other network providers (Which?, 2013).
- No 4G roaming available when EE consumers travel abroad (expertreview, 2013).
- High level of customers’ complaints related to report cases that are unsolved and billing
and switching issues (Ofcom, 2014).
7.3 Opportunities
- More chances to advance its products and services by offering new packages to customers
thanks to the increasing usage of smartphones tablets amongst consumers (Langston,
2013).
- Drive profit through strengthening post-paid customers base. This aligns with EE’s
strategic objective to be “the number one for customer loyalty in the UK”.
- Opportunity to penetrate EE newly introduced own-brand’s smartphones and tablets (EE
Eagle) to improve profit.
7.4 Threats
- The increasing popularity of free applications (e.g. Skype, WhatsApp or Viber) thanks to
the WIFI coverage ongoing expansion.
- Aggressive competition from Vodafone, O2 and Three who are getting more advanced in
their 4G offerings.
8 Marketing Objectives and Proposed Strategies
Following the thorough analysis above, it is decided that the key area that EE needs to
improve on its marketing approach is its perceived quality especially on customer service to
retain EE’s current customers and secure the market leader position in the telecoms market.
In addition, EE is recommended to also focus on driving 4G subscribers to avoid losing the
competitive advantage and pioneering reputation into the aggressive 4G followers such as
Vodafone and O2. Therefore, two key objectives were proposed as follows.
Objective 1: Increase the number of satisfied customers by 20% in the next year.
Customers’ satisfaction leads to success in loyalty escalation and the company’s superiority
within the telecommunication industry (Tripathi & Siddiqui, 2010). Researches indicate that
the resources network providers invest in order to approach a new client can be exponential
compared to the resources require to preserve the existing customer base (Naumann et al.,
2009). Especially considering the very low customer satisfaction with EE, it is essential to
firstly tackle this problem to avoid losing customers before investing in acquiring new ones.
2/4Ps aspects will be considered to achieve this objective.
Product/Services
For network operators, the service is provided through different channels such as call centre,
shops, complaints’ management departments, back office, website, and social media.
Customers throughout their interactions with the channels need to feel respected (Avery et
al., 2014), reciprocated emotionally and treated like a part of the company (Tripathi, 2014).
Some of the key values that consumers seek are to have a prompt response to their request,
expeditious a straight forward solution to their problems from their first contact (Tax et al.,
1998), investing the least possible effort (Dixon, et al., 2010). Considering its high rates of
complaints, the company must initially take actions to build a more efficient complaints’
management network by staffing the relevant department with intelligent, well trained and
inspired employees that would be ready to provide high quality service and turn their
subscribers’ disappointment to satisfaction (Alvarez et al., 2011).
As new smartphone and tablet models are released constantly, EE could also provide a new
servicethat would permit their subscribers to change their handset by adding an unamortized
subsidy cost within the ongoing contract to satisfy their customer needs of acquiring the
newest devices. This action would increase the customer satisfaction through a tangible offer
(Lamb et al., 2011).
Promotion
The main promotion tool chosen for the objective is Public Relations. PR is “the management
of relationships between organisations and their stakeholders” (Fill, 2013), which in this case
is especially applicable to the customers’ relationship with EE.
Firstly, a reliable identification of their customers’ desires and perspectives must be done
(Byus & Deis, 2013) and this would be achieved throughout surveys and direct meetings with
consumers concerning their overall satisfaction. Consequently, the firm would acquire
extensive knowledge of all the problems that their subscribers are having and encounter
those (Lutz & Foong, 2008). After, all these interactions will be advertised via the social
networks to establish communities orientated for instance to youth or corporate customers
(Hajli et al., 2014). EE can also use media relations through press releases or conferences to
promote how customer-oriented the company is to tackle the poor perception of EE’s
customer service. In addition, the formation of a department that would provide personalized
treatment to high value customers who can influence EE’s image among large number of
followers.
Direct marketing can also be employed. Sales and customer service representatives would
provide a different approach to continuously promote new products and packages to the
existing customers to make sure they are aware of the most suitable offer for their needs
(West et al. 2010). This helps keep the customers always satisfied with the package they have
and avoid losing them to competitors’ more attractive offers.
Objective 2: Increase 4G subscribers by 30% in the next year.
4G was chosen as the area for EE customer acquisition as it is the main market driver at the
moment for telecoms companies. In 4 months, EEattracted 2 million 4G subscribers (Williams,
2014) and the number nearly triples after a year (Thomas, 2014). Even though the growth
rate will slow down significantly, the 4G penetration rate in the UK is still around 7% (Styles,
2013), indicating an enormous potential to continue exploiting the market with an ambitious
growth target. The strategies to achieve the objective willfocus on price, placeand promotion
while EE’s current 4G products and services will be maintained completely.
Place
EE embodies a variety of channels that provide its products and services (Hollensen, 2010).
To cover customer needs efficiently, EE should facilitate the customers in having a quick and
direct access to its channels (McDonald, 2007). The increasing Internet usage of the
purchasers indicates opportunity to the companies to construct a profitable online channel
(Dooley, 2011). EE can offer their customers a more convenient, straightforward and
accessible navigation throughout its online page (Markova et al., 2011) and improve the
converting rate online. Also, EEcan expand their customer catchment area through increasing
their retail stores in commercial roads and areas so as to gain the interest of new local
customers and visitors (Shea, 2013).
Price
EE should maintain the current pricing structure and continue following the price-skimming
approach to protect its position as 4G UK market pioneer. Despite being more expensive than
O2 and Three, EE is not recommended to reduce the price to compete but should rather focus
on the added offerings to improve the value-for-money proposition.
EE’s customers have the right with an extra cost in their monthly fee if they face any problem
with their handset (i.e. damaged, lost, and stolen) this to be replaced by the company. EE in
order to captivate new 4G subscribers will provide this opportunity to 4G users without
charging them any extra fee (EE & ME, 2014).
Promotion
The 4G promotion campaign will kick off with an up-weighted advertising campaign. The
campaign will focus on raising the awareness of 4G benefits. This comes from an insight that
28% of current 4G users and 53% 3G users barely know about the advantages of 4G compared
with 3G (Figure 10). Filling up this gap of understanding will drive more natural interest and
purchase intent from the consumers.
Figure 10: Attitude to 4G by current 3G users. SOURCE: Thomas, 2014
This campaign can be aided by having 4G posters and booklets in stores to attract interest
and provide more information for store visitors and current customers. Social media will also
be used to raise target customers’ understanding of the 4G benefits through competition and
celebrity endorsement tactics. On Facebook alone, EE has nearly 800K fans, combining with
another 7.7M of Orange and 5M of T-Mobile. EE should utilise these existing fanbases and
use strong engagement to increase 4G awareness as well as improve word-of-mouth.
Sales promotions will be included to support the campaign. A two-months extra 500MB 4G
trial will be given away as benefits for all the new EE customers. This sampling tactic can
encourage trial and convert 3G users to 4G users effectively with lower marketing cost (Smith
& Schultz, 2004). Besides,following the success ofOrange Wednesday promotion, EE can also
roll out a special offers that enable access to unlimited data very Friday for 4G student users
– an important group of the chosen target market for EE.
9 Conclusion
Despite being a new brand, EE has many distinct advantages that greatly differentiate it from
the competitors in the market. With the recommended strategies, EE will be able to
encounter its current weakness in brand image to increase the customer retention rate as
well as continue growing its customer base through both exploring new-to-market customers
and encouraging competitor’s customers to switch using the 4G potentials. This will help
strengthen EE’s market leader position in the mobile network providers market as well as
increase the company’s profitability by maximising the efficiency of the company’s resources
usage.
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11 Appendices
Appendix 1 – Detailed analysis of the competition between mobile network
operators.
EE was the first operator in the UK launching 4G network service in 2012, leading to an
unexpectedly growth of customers to over a million in September 2013, four months before
the original plan in January 2014 (Withers, 2013).
However, EE is not the exclusive operator after the successful entry of Vodafone and O2 in
2013 (Thomas, 2013). Specifically, in the first month of launching 4G, there was 100,000
customers signing up for Vodafone as the company incorporated music and sports into its 4G
service (Garside, 2013). Accordingly, EE, Vodafone, O2 and Three have released their 4G
package with different coverage, speed and price as follows.
Coverage
Regarding coverage, with the advantage of the first company investing in the market, EE leads
the field with 281 cities in the UK, allowing 70% of the total UK citizens to utilize 4G by August
2014 (Thomas, 2014). However, EE lost the exclusivity when O2 and Vodafone entered the
market covering 233 cities in 2013, following by Three’s coverage of 36 cities since 2014
(Thomas, 2014).
Speed
Thomas (2014) also noted that EE has currently launched a double – speed 4G in 20 locations
(e.g. Belfast, Birmingham, Bristol), helping customers access to the Internet faster than ever
before. As a results, EE came first in the speeds assessment by RootMetrics (2013), achieving
an overall score of 102.4 out of 125. O2 came in 2nd place with 75.9, followed by Vodafone
(72.9). Three was the last with 69, half as much as that of EE.
Figure 3: Performance of 4G Speed. SOURCE: RootMetrics, 2014.
Pricing
Regarding the tariff for 1GB 4G package (Figure 4), EE is the 2nd most expensive network just
behind Vodafone. Three is clearly the price leader within the market, offering customers a
1GB package at only £13 compared with £17 of EE.
Figure 4: 4G Tariffs and Subscribers comparison for a 1GB package. SOURCE: Williams, 2014.
Customer Service
Two major forces related with telecoms firms are their customer base loyalty and growth.
This devotion is also capable in developing the company’s superiority within the
102.4
75.9
72.9
69
0 20 40 60 80 100 120
EE
O2
Vodafone
Three
telecommunication industry (Tripathi & Siddiqui, 2010). According to Ofcom report (2014),
EE seems to have a stable performance (Figure 5) regarding the recorded complaints.
Furthermore, in this field EE meets the highest volumes for two continuous years (2013-
2014). The three top categories of customers’ complaints are related to the way that
complaints’ management departments handle the cases, charges and problems in
transferring to another operator (Ofcom 2014).
When it comes to customer satisfaction index, EE appears to be in the lowest level among
the telecoms firms (Figure 6). While the overall mark for the telecommunication industry
was 72% (Commsbusiness, 2014), EE scored 51% a long way from Tesco mobile that met the
highest score of 75%.
Figure 5: Monthly Complaints per 1000 customers, March 2012-March 2014 (Ofcom, 2014)
Appendix 2 – EE’s detailed internal analysis.
The organizational structure
A structure of an organization shows vertical operational responsibilities with horizontal
linkages and represented by an organization chart (Bhattacharyya, 2009). Table 1 is the
organizational structure of EE.
Figure 6: Customer satisfaction index (Which, 2014)
As an digital communications company, EE has six UK based contact centres in North
Tyneside, Plymouth, Merthyr Tydfil, Greenock, Doxford and Darlington separately ( ABOUT
EE, 2014). Holding a highly efficient and convenient multi-channels with customers, which
makes EE can catch up the steps of its customers with diverse needs.
Staff morale and skills
Gottschalk( 2011) claimthat a business can achieve its objectives more easily if it has a good
and consistent reputation among its key stakeholders, such as current and potential
employees.
From the aspect of EE,
1. An excellent treatment is provided to its staff (Careers, 2014).
- Competitive salary(lowest OTE £9.47 p/h)
- A discounted mobile package,
- 25 days' holiday
CEO
Sales department
Marketing
deparment
HR deparment
Customer service
deparment
Financial
deparement
ITdepartment
CPO
Table 1
- A bonus/commission plan – including childcare vouchers or travel insurance.
2. Enable to serve customers better, EE has launched a Digital Living section and Fast
Track programme on its website to inspire its colleagues to improve digital skills(About
EE,2014).
From the aspect of employees,
So as to teach people especially elderly to utilize the Internet. In 2013, 565 employees
volunteering to improve the digital skills of 861 people, depending on 68 Techy Tea Parties
(EE Responsible Report, 2013).
As the result, EE ranked 18th in the Sunday Times 25 Best Big Companies to Work (EE
PUBLISHES FIRST RESPONSIBILITY REPORT, 2014).
Pricing Structure
Products and Prices
1. Smart phones.
EE sales phones, which include 7 brands (Apple, Samsung, Sony, HTC, Nokia, Motorola and
EE) in total 61 different types.
2. Tablets
The tablets sold in EE stores including Apple, Samsung, EE, Alcatel, Google and Sony, 6
different brands and 46 different models. All of the devices sold in EE’s stores are
compatible with 4G.
Karen (2004) states that Customers have become more educated and more demanding.
Hence, to make sure providing the highest-performance devices which will consolidate EE’s
leader position in 4G where the tremendous potential market, keeping a high
competitiveness in digital communications.
3. Phone Monthly SIM
Price Data 4G
Lowest £12.99 250MB
£15.99 500MB
£18.99 2GB
£24.99 5GB
Highest £30.99 10GB
Table 4 (Sauce from Root Metrics)
As the third main product, EE’s phone Monthly SIM card lowest price retails £12.99 higher
than Vodafone’s £9.5, but the SIM pack of EE support 4G network, which means EE has a
higher capacity with advanced technology at the same product. It can be demonstrated
from the best reputation on Overall performance and Mobile internet performance showing
on Table 4. Friedrich, R., et al. (n.d.) state that an omnichannel experience and better
products and services will allow operators to boost value. Yeoman&Mcmahon-Beattie
(2010) also argued that customers are willing to pay various prices for the same product and
that by differentiating the price according to customer characteristics. Higher Speed and
EE Vodafone
Lowest
250MB
£12.99 4G £9.5 3G
was£22
now16.5(1GB
data) 4G
Highest
10GB
£30.99 4G £33.6 4G
Table 3
Numbers from EE&Vodafone Websites
higher Audio-visual feeling are attractiveness of 4G, thus higher capacity products will be
more suitable for its targeting customers apparently.

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EE marketing report

  • 1. EE’s Marketing Report Student Name: Vasiliki Evangelou Word Count (excl References and Appendices): 4041 words
  • 2. Table of Contents 1 Executive Summary...........................................................................................................4 2 Industry Overview.............................................................................................................5 3 Company Background .......................................................................................................6 4 External Environment Analysis.........................................................................................6 4.1 PESTLE Analysis ................................................................................................................ 6 4.1.1 Political factors............................................................................................................. 6 4.1.2 Economic factors..........................................................................................................6 4.1.3 Social-Cultural factors...................................................................................................7 4.1.4 Technological factors....................................................................................................7 4.1.5 Legal Factors................................................................................................................ 7 4.1.6 Ecological Environment.................................................................................................8 4.2 Competition Analysis – Porters’ Five Forces........................................................................8 4.2.1 Competition between mobile network operators – High risk............................................ 8 4.2.2 Threat of New Entry – Low Risk...................................................................................... 9 4.2.3 Bargaining Power of Buyers – Medium Risk....................................................................9 4.2.4 Bargaining Power of Suppliers – High Risk.................................................................... 10 4.2.5 Threat of Substitute Products or Services – Medium Risk............................................... 10 5 Internal Environment Analysis........................................................................................11 5.1 Financial performance .................................................................................................... 11 5.2 Value ChainAnalysis....................................................................................................... 11 5.3 Product Portfolio Analysis............................................................................................... 12 6 Segmentation–Targeting-Positioning.............................................................................13 7 SWOT Analysis.................................................................................................................16 7.1 Strengths ....................................................................................................................... 16 7.2 Weaknesses................................................................................................................... 16 7.3 Opportunities................................................................................................................. 16
  • 3. 7.4 Threats.......................................................................................................................... 17 8 Marketing Objectives and Proposed Strategies.............................................................17 Objective 1: Increase the number of satisfied customers by 20% in the next year........................... 17 Product/Services..................................................................................................................... 17 Promotion.............................................................................................................................. 18 Objective 2: Increase 4G subscribers by 30% in the next year........................................................ 19 Place...................................................................................................................................... 19 Price ...................................................................................................................................... 19 Promotion.............................................................................................................................. 20 9 Conclusion........................................................................................................................22 10 References.......................................................................................................................23 11 Appendices......................................................................................................................32 Appendix 1 – Detailed analysis of the competition between mobile network operators.................. 32 Appendix 2 – EE’s detailedinternal analysis.................................................................................. 35 The organizational structure.................................................................................................... 35 Staff morale and skills............................................................................................................. 36 Pricing Structure..................................................................................................................... 37
  • 4. 1 Executive Summary This report was produced to evaluate the EE’s marketing environment, identify and recommend suitable potential strategies by using thoroughly several models to assess and examine the external and internal environment. The examination of the external environment was carried out with the useof PESTLE, Porter’s 5 forces and an overview of current telecoms segmentation. In order to assess the internal environment, EE’s current performance, value chain and product portfolio were reviewed. The analysis revealed that despite having apparent strengths in 4G technology and market position, EE still has some issues especially with its brand image, perceived value for money proposition and customer satisfaction. Recommendations were made to improve on EE’s customer service as part of a customer retention focus and continuingly increase the 4G customer base as EE’s main growth driver.
  • 5. 2 Industry Overview The mobile network provider market value was estimated at £15.8B in 2013 (Gee, 2014). The market is expected to grow steadilywith a7% increasein 2018 (Figure 1) due to the increasing number of mobile devices owned by consumers and the successfulrollout of the 4G networks. Different from most of other technology markets, the mobile services market has been relative resilient to the effect of the economic downturn. Ofcom (2014) attributes this phenomenon to the consumer’s significant switch from pre-pay to post-pay services in the past years, in which consumers are tied in with a mobile network provider for longer-term through contracts. Figure 1: Forecast retail value of sales of mobile network connections, 2008-18. SOURCE: Mintel, 2014.
  • 6. 3 Company Background EE was the result of the collaboration of two major players in the Telecommunications Industry, Orange and T-Mobile, in 2010. It was the first company to introduce the advanced technology of 4G in the market. Within its four years it made an over £1.5bn investment and it’s estimated to reach 98% coverage in the UK by the end of 2014 (Ofcom, 2014). EE is considered to be the UK’s largestprovider with more than 700 stores (Holton, 2012) providing services to approximately 27 million customers. 4 External Environment Analysis The external environment can be analysed using PESTLE factors (political, economic, social, technological, legal and environmental) (Mc Donald, 2007) and Porter’s five competitive forces (Porter, 2008). This can lead to the contemporary/upcoming pliability of the service’s providers (Willsher et al., 2013). 4.1 PESTLE Analysis 4.1.1 Political factors The UK Government examines issues related with the sufficiency of national coverage (Thomas, 2014), where areas far from urban centres face significant problems (Morris, 2014). Furthermore, research related with the coverage incidents showed that although the overall customer satisfaction is 76%, this index presents spatial variation, diminishing at 67% in rural areas (Ofcom, 2014). Consequently the UK Government and Ofcom have been in collaboration in order to invest approximately £150m on providers for ameliorating the network coverage in non-urban areas (Morris, 2014). 4.1.2 Economic factors Within 2008-2009, the UK Economy came across a period of decline (Grahame, 2010) and as a consequence, householders affected by the government’s action plan, involving VAT augmentation to 20% and national benefits’ reductions (Timms, 2010). This led customers feel chary about their expenses (Euromonitor International, 2012). Although the economy started to recover in 2013 (Inman & Traynor, 2013), it is an ongoing process and consumers will take time to feel secure in spending again (BBC News, 2014). In addition, after European
  • 7. Union’s demand of £1,7bn payment on 1st December (BBC News, 2014b), UK producers will face a considerable struggle with inflation in the next years (Allen, 2014). 4.1.3 Social-Cultural factors Each customer segment has different purchase behaviours within telecoms market. According to Euromonitor International survey (2013) there was a noticeable augmentation in the proportion of teens that use smartphones from 61% to 81% between 2011-2013. This age group combines at the same time several ways of communication, using social networks, streaming websites (Lee, 2013), texting free messages or making free calls by using different types of applications (Kleinman, 2013) and sharing opinions and media files (Euromonitor International, 2010). According to ONS, in the period 04/2013-06/2014, about 550,00 EU/International citizines ebtered the UK, for work, studies or other purposes (ONS, 2014). This target group has accordingly different communication needs and aspects. 4.1.4 Technological factors Telecoms are influenced by technology and their goal is the network’s coverage enhancement, by delivering exceptional data/network services (Telecoms, 2014). LTE- advanced 4G Network was launched in order to cover the above needs, and brought new capabilities to the customers (Department for Culture, Media & Sport, 2012), at a reduced cost (Curtis, 2013). 4.1.5 Legal Factors Ofcom reinforces the base for companies in providing their products and services through healthy/competitive approaches (Barnett, 2010). The regulator determined that consumers have the ability of terminating their contracts without penalties,under specificcircumstances of price’s increase without any notification within a month’s period (BBC News, 2013). Additionally, the roaming rates have periodically degraded (Osborne, 2014) and it is predicted that until 2015 will be removed (Garside, 2014).
  • 8. 4.1.6 Ecological Environment According to Ofcom, there are noticable environmental factors and constraints to be taken into consideration in telecomms. These can be classified to the production and usage of the handsets, the development of the relevant infrastructure and their impact on flora and fauna (Ofcom, 2009). 4.2 Competition Analysis – Porters’ Five Forces 4.2.1 Competition between mobile network operators – High risk Figure 2 shows the market share of the main operators in UK in 2013. EE accounted for 31% as the market leader, following by O2 (23%), Vodafone (16%) and Three (9%). Figure 2: Mobile Network Provider Consumers Use December 2013. SOURCE: Mintel, 2014. A detailed analysis of the telecoms market competition can be found in Appendix 1. In conclusion, the analysis indicates that the competition within the telecoms market is very intense. The market is saturated and players in the market all have strong competitive advantage in different areas. Although EE was ranked first in the network quality criteria including coverage and speed, it performs poorly in terms of customer service which significantly impact its customer satisfaction. This is a danger point which can make EE’s market leader position vulnerable.
  • 9. 4.2.2 Threat of New Entry – Low Risk The telecoms industry is significantly attractive because it is one of the most profitable markets (Malinić & Milićević, 2013). However, the capital requirements to enter the market are very intensive. As an illustration, Vodafone, Three, EE, O2 and BT had spent £2.3 billion on acquiring 4G spectrum alone in 2013 (Ofcom, 2013). Hence, entrants have to pay at least £700,000 to win the contract which is difficult for tight capital company to enter the market. Figure 3: Winning Bidders for the Auction of Radio Spectrum. SOURCE: Ofcom, 2014. In addition, the main four players (EE, O2, Vodafone and EE) already are established in the market with strong loyal customer bases and attractive product differentiation. For example, while other providers are releasing standard network EE’s 4G is already advanced to double speed with LTE Advanced and 4G roaming. Hence, it would be highly unlikely that a new operator will enter the market while there are already a number of small operators who are striving to compete with the Big Four already. 4.2.3 Bargaining Power of Buyers – Medium Risk The competition within the telecoms market is more intensified considering the fact that customers have the right to change their network providers in order to obtain the best offer, having negative impact on mobile network operators (Lyons, 2010). As a result, companies have to introduce new services and products to attract mobile users, thus raising customers’ loyalty (Gillison et al., 2014). However, number portability is not easy to be changed as
  • 10. customers have the responsibility to inform their providers of contract cancellation in advance, which might cause them inconvenience. For this reason, the bargaining power per customer is lowered. 4.2.4 Bargaining Power of Suppliers – High Risk Although EE is the market leader in 4G market, it has to face an intense competition from its rivals. To compete its puissant rivals, EE has chosen Huawei ICT as a technological partner to support its fastestmobile network---LTE-A (EE&ME, 2013), Furthermore, EE has just upgraded its 4G network to double speed but the coverage of this new service is limited in some locations. Hence, EE made a decision to work with NSN to support its biggest LTE network, continue to expand its 4G coverage (Swantee, 2014). In 4G market, being the technology leader is not easy. EE needs to maintain its outstanding performance at a high level which relies on the high-quality technology from its suppliers. In conclusion, the bargaining power of EE’s suppliers is strong and EE needs to maintain a good relationship with the suppliers to remain its competitive advantage and customer’s loyalty 4.2.5 Threat of Substitute Products or Services – Medium Risk Mobile network operators are no longer the sole providers of message and voice communication services, losing the exclusivity to internet telephony services such as Skype and Viber, and message applications like Whatsapp and Imessage (Gee, 2014). According to Vincent (2013), Skype achieved an impressive 280 millions monthly active users and the number is 250 millions for Whatsapp in 2013, imposing largethreat on to telecoms companies who have historically used high mark-ups on SMS and MMS messaging prices as a cash cow. Indeed, both total outgoing call minutes and SMS messages sent in 2013 slightly declined compared with the previous years (Gee, 2014). BBC News (2014) estimated that the telecoms industry is losing around $100m (£59m) a day to Skype alone. The only advantage that the mobile network operators have over thesenew platforms is interoperability. For the moment, until the data-driven services willingly choose to interact and cooperate with one another, network operators remain the most cohesive and simple way for consumers to talk to each other based on a single identifier (the phone number).
  • 11. 5 Internal Environment Analysis A more detailed internal analysis of EE in Appendix 2. Overall, EE has an efficient organisational structure and high staff morale especially through opportunities for staff to take part in social volunteering activities. 5.1 Financial performance 2013 2012 Revenue £6.5B £6.7B Total net assets £9,733m £10,317m Net cash provided by Operating activities £1,201m £1,051m Net cash used in Investing activities £1,215m £629m Financing activities -£409m £134m Figure 4: EE’s 2013 Financial Performance. SOURCE: EE Annual Report, 2013 In 2013, EE’s revenue was £6.5 billion, decreasing an alarming 2.6% compared with 2012. However, decreasein profit does not always indicate the overall performance of the company because it might be associated with inventories, capital equipment etc. (McDonald & Wilson, 2011). Table 1 shows that the cash invested increased to about 1.2 billion in 2013, such as invest to 2G and 4G equipment and backhaul (EE Annual Report, 2013). 5.2 Value Chain Analysis As the biggest digital communications company, EE expanded its selling approach into an omni-channel trading environment, where from high-street retailstores to online stores. Now EE has more than 700 retail stores, and one official site EE.CO.UK.
  • 12. Figure 5: EE’s value chain analysis. Based on model developed by Porter (1985). 5.3 Product Portfolio Analysis The Boston Box classifies a firm’s products according to their cash usage and their cash generation using market growth and relative market share to categorize them in the form of a box (McDonald & Wilson, 2011). Figure 6: EE’s Product Portfolio Analysis using BCG Matrix EE 4G products can be positioned as the Star in EE’s product portfolio. 4G gained 816,000 new customers for EE in the 4th quarter of 2013, indicating a rapid market growth. For the market share, the total number of EE’s 4G subscribers is 4.2 million which occupies 46% of total 4G
  • 13. market (EE Annual report, 2013). Thus, the positive number on market growth and market share indicated that 4G products account for a stars situation. As a result, EE needs to keep a sufficient cash flow to invest and support 4G technology. For example, it costs £1.5 billion investment for 4G in 2013 alone (EE Annual report, 2013). On the other hand, the 3G market is becoming saturated and has very low growth rate compared with the 4G market (Gee, 2014). Considering EE is the market leader of this slow- growing market, 3G products are positioned as Cash Cow for EE. This means EE can stably earn huge amount of revenue from the 3G products without the need of huge investment into it. Therefore, the 3G market needs to be milked continuously with as little investment as possible to generate enough cash for EE to invest in its future growth strategy. 6 Segmentation–Targeting-Positioning The following analysis looks at EE’s current STP strategies and identifies potential areas for improvement. First of all, segmentation is the process of dividing the market into segments according to their affinity or similar characteristics to analyse the buying behaviour of these groups and adjust the communications for each group accordingly (Jansen, 2007). A consumer market is most often segmented by demographic variables such as income level, age, socio economic status etc (McDonald & Ian, 2004). However, Bayer (2010) suggests that behavioural segmentation approach is more suitable for telecoms companies. Sub-segments can be characterised by attributes such as their retention likelihood, their ‘stickiness’ (use of different Value Added Services), their promotion score (response to marketing offers) and their average value. After the market is grouped into different segments, EE needs to choose one or a few segments to target their communications and offers at. This is especially important for a new brand like EE to find a mutual profitable customer group from T-Mobile and Orange’s very distinct target market in the past. One method to do this is the customer lifetime value assessment as proposed by Bayer (2010). Following the Pareto principles, the top 20% customer group who have the highest predicted contribution to overall organisational profitability will attribute 80% of the company’s profit and therefore can be selected as the target market (Figure 7). In 2013, EE revealed to aim at Vodafone’s target customers who are
  • 14. mainly young tech-savvy for their latest 4G launching campaign (Chapman, 2013), indicating that this is the most profitable segment that EE has identified to focus at. Figure 7: Example of Value (profitability) segmentation (using aggregated cost data). SOURCE: Bayer, 2010. Within the chosen target market, EE needs a positioning strategy to highlight its differentiation from the competitors. This can be analysed through a perceptual mapping of the mobile network providers’ perceived quality and price by the customers. The quality scores are taken from Which? Report (Figure 8) and relative prices are calculated based on the pricing analysis in Appendix 1. EE claimed to position itself as a premium brand against Vodafone and O2 in both pricing and quality (O’Reilly, 2014). However, looking at Figure 9, EE is actually perceived as an expensive brand that delivers low quality services, implying EE can lose market share into other competitors with better fair value perception. Therefore, EE has to either reduce their price to move to the low-market end or improve their perceived quality offered to gain competitive advantage. Considering EE’s pioneering position in 4G service, recommendation is that EE should improve their product and customer service quality to increase their value for money position and strengthen the market leader position.
  • 15. Figure 8: Which? scores for pay monthly mobile phone providers in 2013. SOURCE: Which?, 2013. Figure 9: Mobile network providers perceptual map.
  • 16. 7 SWOT Analysis SWOT will summarise the most important points from the External and Internal analysis to develop appropriate marketing objectives and strategies. 7.1 Strengths - Market leader position in the mobile network providers industry. - Pioneers the 4G market and owns the largest 4G customer base in the UK. - Wide coverage which will be further extended in public locations (McCaskill, 2014). - Highest performance levels in speed and was the first operator that introduced 4G+ in central London (EE&ME, 2014). - Security of devices and data. First UK operator to pre-install the ‘Lookout Mobile Security app’ on smartphones in order to protect customers’ privacy when their devices lost or stolen (EE&ME, 2014). 7.2 Weaknesses - Low brand recognition. According to Gee (2014), around 77% of EE customers still associate their network as Orange or T-Mobile instead of EE. - Perceived as a brand that has low value-for-money proposition. - Poorly rated customer service compared with other network providers (Which?, 2013). - No 4G roaming available when EE consumers travel abroad (expertreview, 2013). - High level of customers’ complaints related to report cases that are unsolved and billing and switching issues (Ofcom, 2014). 7.3 Opportunities - More chances to advance its products and services by offering new packages to customers thanks to the increasing usage of smartphones tablets amongst consumers (Langston, 2013). - Drive profit through strengthening post-paid customers base. This aligns with EE’s strategic objective to be “the number one for customer loyalty in the UK”. - Opportunity to penetrate EE newly introduced own-brand’s smartphones and tablets (EE Eagle) to improve profit.
  • 17. 7.4 Threats - The increasing popularity of free applications (e.g. Skype, WhatsApp or Viber) thanks to the WIFI coverage ongoing expansion. - Aggressive competition from Vodafone, O2 and Three who are getting more advanced in their 4G offerings. 8 Marketing Objectives and Proposed Strategies Following the thorough analysis above, it is decided that the key area that EE needs to improve on its marketing approach is its perceived quality especially on customer service to retain EE’s current customers and secure the market leader position in the telecoms market. In addition, EE is recommended to also focus on driving 4G subscribers to avoid losing the competitive advantage and pioneering reputation into the aggressive 4G followers such as Vodafone and O2. Therefore, two key objectives were proposed as follows. Objective 1: Increase the number of satisfied customers by 20% in the next year. Customers’ satisfaction leads to success in loyalty escalation and the company’s superiority within the telecommunication industry (Tripathi & Siddiqui, 2010). Researches indicate that the resources network providers invest in order to approach a new client can be exponential compared to the resources require to preserve the existing customer base (Naumann et al., 2009). Especially considering the very low customer satisfaction with EE, it is essential to firstly tackle this problem to avoid losing customers before investing in acquiring new ones. 2/4Ps aspects will be considered to achieve this objective. Product/Services For network operators, the service is provided through different channels such as call centre, shops, complaints’ management departments, back office, website, and social media. Customers throughout their interactions with the channels need to feel respected (Avery et al., 2014), reciprocated emotionally and treated like a part of the company (Tripathi, 2014). Some of the key values that consumers seek are to have a prompt response to their request, expeditious a straight forward solution to their problems from their first contact (Tax et al., 1998), investing the least possible effort (Dixon, et al., 2010). Considering its high rates of
  • 18. complaints, the company must initially take actions to build a more efficient complaints’ management network by staffing the relevant department with intelligent, well trained and inspired employees that would be ready to provide high quality service and turn their subscribers’ disappointment to satisfaction (Alvarez et al., 2011). As new smartphone and tablet models are released constantly, EE could also provide a new servicethat would permit their subscribers to change their handset by adding an unamortized subsidy cost within the ongoing contract to satisfy their customer needs of acquiring the newest devices. This action would increase the customer satisfaction through a tangible offer (Lamb et al., 2011). Promotion The main promotion tool chosen for the objective is Public Relations. PR is “the management of relationships between organisations and their stakeholders” (Fill, 2013), which in this case is especially applicable to the customers’ relationship with EE. Firstly, a reliable identification of their customers’ desires and perspectives must be done (Byus & Deis, 2013) and this would be achieved throughout surveys and direct meetings with consumers concerning their overall satisfaction. Consequently, the firm would acquire extensive knowledge of all the problems that their subscribers are having and encounter those (Lutz & Foong, 2008). After, all these interactions will be advertised via the social networks to establish communities orientated for instance to youth or corporate customers (Hajli et al., 2014). EE can also use media relations through press releases or conferences to promote how customer-oriented the company is to tackle the poor perception of EE’s customer service. In addition, the formation of a department that would provide personalized treatment to high value customers who can influence EE’s image among large number of followers. Direct marketing can also be employed. Sales and customer service representatives would provide a different approach to continuously promote new products and packages to the existing customers to make sure they are aware of the most suitable offer for their needs (West et al. 2010). This helps keep the customers always satisfied with the package they have and avoid losing them to competitors’ more attractive offers.
  • 19. Objective 2: Increase 4G subscribers by 30% in the next year. 4G was chosen as the area for EE customer acquisition as it is the main market driver at the moment for telecoms companies. In 4 months, EEattracted 2 million 4G subscribers (Williams, 2014) and the number nearly triples after a year (Thomas, 2014). Even though the growth rate will slow down significantly, the 4G penetration rate in the UK is still around 7% (Styles, 2013), indicating an enormous potential to continue exploiting the market with an ambitious growth target. The strategies to achieve the objective willfocus on price, placeand promotion while EE’s current 4G products and services will be maintained completely. Place EE embodies a variety of channels that provide its products and services (Hollensen, 2010). To cover customer needs efficiently, EE should facilitate the customers in having a quick and direct access to its channels (McDonald, 2007). The increasing Internet usage of the purchasers indicates opportunity to the companies to construct a profitable online channel (Dooley, 2011). EE can offer their customers a more convenient, straightforward and accessible navigation throughout its online page (Markova et al., 2011) and improve the converting rate online. Also, EEcan expand their customer catchment area through increasing their retail stores in commercial roads and areas so as to gain the interest of new local customers and visitors (Shea, 2013). Price EE should maintain the current pricing structure and continue following the price-skimming approach to protect its position as 4G UK market pioneer. Despite being more expensive than O2 and Three, EE is not recommended to reduce the price to compete but should rather focus on the added offerings to improve the value-for-money proposition. EE’s customers have the right with an extra cost in their monthly fee if they face any problem with their handset (i.e. damaged, lost, and stolen) this to be replaced by the company. EE in order to captivate new 4G subscribers will provide this opportunity to 4G users without charging them any extra fee (EE & ME, 2014).
  • 20. Promotion The 4G promotion campaign will kick off with an up-weighted advertising campaign. The campaign will focus on raising the awareness of 4G benefits. This comes from an insight that 28% of current 4G users and 53% 3G users barely know about the advantages of 4G compared with 3G (Figure 10). Filling up this gap of understanding will drive more natural interest and purchase intent from the consumers. Figure 10: Attitude to 4G by current 3G users. SOURCE: Thomas, 2014 This campaign can be aided by having 4G posters and booklets in stores to attract interest and provide more information for store visitors and current customers. Social media will also be used to raise target customers’ understanding of the 4G benefits through competition and celebrity endorsement tactics. On Facebook alone, EE has nearly 800K fans, combining with another 7.7M of Orange and 5M of T-Mobile. EE should utilise these existing fanbases and use strong engagement to increase 4G awareness as well as improve word-of-mouth. Sales promotions will be included to support the campaign. A two-months extra 500MB 4G trial will be given away as benefits for all the new EE customers. This sampling tactic can encourage trial and convert 3G users to 4G users effectively with lower marketing cost (Smith & Schultz, 2004). Besides,following the success ofOrange Wednesday promotion, EE can also
  • 21. roll out a special offers that enable access to unlimited data very Friday for 4G student users – an important group of the chosen target market for EE.
  • 22. 9 Conclusion Despite being a new brand, EE has many distinct advantages that greatly differentiate it from the competitors in the market. With the recommended strategies, EE will be able to encounter its current weakness in brand image to increase the customer retention rate as well as continue growing its customer base through both exploring new-to-market customers and encouraging competitor’s customers to switch using the 4G potentials. This will help strengthen EE’s market leader position in the mobile network providers market as well as increase the company’s profitability by maximising the efficiency of the company’s resources usage.
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  • 32. 11 Appendices Appendix 1 – Detailed analysis of the competition between mobile network operators. EE was the first operator in the UK launching 4G network service in 2012, leading to an unexpectedly growth of customers to over a million in September 2013, four months before the original plan in January 2014 (Withers, 2013). However, EE is not the exclusive operator after the successful entry of Vodafone and O2 in 2013 (Thomas, 2013). Specifically, in the first month of launching 4G, there was 100,000 customers signing up for Vodafone as the company incorporated music and sports into its 4G service (Garside, 2013). Accordingly, EE, Vodafone, O2 and Three have released their 4G package with different coverage, speed and price as follows. Coverage Regarding coverage, with the advantage of the first company investing in the market, EE leads the field with 281 cities in the UK, allowing 70% of the total UK citizens to utilize 4G by August 2014 (Thomas, 2014). However, EE lost the exclusivity when O2 and Vodafone entered the market covering 233 cities in 2013, following by Three’s coverage of 36 cities since 2014 (Thomas, 2014). Speed Thomas (2014) also noted that EE has currently launched a double – speed 4G in 20 locations (e.g. Belfast, Birmingham, Bristol), helping customers access to the Internet faster than ever before. As a results, EE came first in the speeds assessment by RootMetrics (2013), achieving an overall score of 102.4 out of 125. O2 came in 2nd place with 75.9, followed by Vodafone (72.9). Three was the last with 69, half as much as that of EE.
  • 33. Figure 3: Performance of 4G Speed. SOURCE: RootMetrics, 2014. Pricing Regarding the tariff for 1GB 4G package (Figure 4), EE is the 2nd most expensive network just behind Vodafone. Three is clearly the price leader within the market, offering customers a 1GB package at only £13 compared with £17 of EE. Figure 4: 4G Tariffs and Subscribers comparison for a 1GB package. SOURCE: Williams, 2014. Customer Service Two major forces related with telecoms firms are their customer base loyalty and growth. This devotion is also capable in developing the company’s superiority within the 102.4 75.9 72.9 69 0 20 40 60 80 100 120 EE O2 Vodafone Three
  • 34. telecommunication industry (Tripathi & Siddiqui, 2010). According to Ofcom report (2014), EE seems to have a stable performance (Figure 5) regarding the recorded complaints. Furthermore, in this field EE meets the highest volumes for two continuous years (2013- 2014). The three top categories of customers’ complaints are related to the way that complaints’ management departments handle the cases, charges and problems in transferring to another operator (Ofcom 2014). When it comes to customer satisfaction index, EE appears to be in the lowest level among the telecoms firms (Figure 6). While the overall mark for the telecommunication industry was 72% (Commsbusiness, 2014), EE scored 51% a long way from Tesco mobile that met the highest score of 75%. Figure 5: Monthly Complaints per 1000 customers, March 2012-March 2014 (Ofcom, 2014)
  • 35. Appendix 2 – EE’s detailed internal analysis. The organizational structure A structure of an organization shows vertical operational responsibilities with horizontal linkages and represented by an organization chart (Bhattacharyya, 2009). Table 1 is the organizational structure of EE. Figure 6: Customer satisfaction index (Which, 2014)
  • 36. As an digital communications company, EE has six UK based contact centres in North Tyneside, Plymouth, Merthyr Tydfil, Greenock, Doxford and Darlington separately ( ABOUT EE, 2014). Holding a highly efficient and convenient multi-channels with customers, which makes EE can catch up the steps of its customers with diverse needs. Staff morale and skills Gottschalk( 2011) claimthat a business can achieve its objectives more easily if it has a good and consistent reputation among its key stakeholders, such as current and potential employees. From the aspect of EE, 1. An excellent treatment is provided to its staff (Careers, 2014). - Competitive salary(lowest OTE £9.47 p/h) - A discounted mobile package, - 25 days' holiday CEO Sales department Marketing deparment HR deparment Customer service deparment Financial deparement ITdepartment CPO Table 1
  • 37. - A bonus/commission plan – including childcare vouchers or travel insurance. 2. Enable to serve customers better, EE has launched a Digital Living section and Fast Track programme on its website to inspire its colleagues to improve digital skills(About EE,2014). From the aspect of employees, So as to teach people especially elderly to utilize the Internet. In 2013, 565 employees volunteering to improve the digital skills of 861 people, depending on 68 Techy Tea Parties (EE Responsible Report, 2013). As the result, EE ranked 18th in the Sunday Times 25 Best Big Companies to Work (EE PUBLISHES FIRST RESPONSIBILITY REPORT, 2014). Pricing Structure Products and Prices 1. Smart phones. EE sales phones, which include 7 brands (Apple, Samsung, Sony, HTC, Nokia, Motorola and EE) in total 61 different types. 2. Tablets The tablets sold in EE stores including Apple, Samsung, EE, Alcatel, Google and Sony, 6 different brands and 46 different models. All of the devices sold in EE’s stores are compatible with 4G. Karen (2004) states that Customers have become more educated and more demanding. Hence, to make sure providing the highest-performance devices which will consolidate EE’s leader position in 4G where the tremendous potential market, keeping a high competitiveness in digital communications. 3. Phone Monthly SIM Price Data 4G
  • 38. Lowest £12.99 250MB £15.99 500MB £18.99 2GB £24.99 5GB Highest £30.99 10GB Table 4 (Sauce from Root Metrics) As the third main product, EE’s phone Monthly SIM card lowest price retails £12.99 higher than Vodafone’s £9.5, but the SIM pack of EE support 4G network, which means EE has a higher capacity with advanced technology at the same product. It can be demonstrated from the best reputation on Overall performance and Mobile internet performance showing on Table 4. Friedrich, R., et al. (n.d.) state that an omnichannel experience and better products and services will allow operators to boost value. Yeoman&Mcmahon-Beattie (2010) also argued that customers are willing to pay various prices for the same product and that by differentiating the price according to customer characteristics. Higher Speed and EE Vodafone Lowest 250MB £12.99 4G £9.5 3G was£22 now16.5(1GB data) 4G Highest 10GB £30.99 4G £33.6 4G Table 3 Numbers from EE&Vodafone Websites
  • 39. higher Audio-visual feeling are attractiveness of 4G, thus higher capacity products will be more suitable for its targeting customers apparently.