EE’s Marketing Report

Student Name: Vasiliki Evangelou

Word Count (excl References and Appendices): 4041 words

Table of Contents

1 Executive Summary..........................................................................................................

2 Industry Overview...........................................................................................................

3 Company Background......................................................................................................

4 External Environment Analysis.........................................................................................

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........................................................................................................7

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.......................................................................................

5.1 Financial performance............................................................................................................11

5.2 Value Chain Analysis...............................................................................................................11

5.3 Product Portfolio Analysis.......................................................................................................12

6 Segmentation–Targeting-Positioning.............................................................................

7 SWOT Analysis...............................................................................................................

7.1 Strengths................................................................................................................................16

7.2 Weaknesses............................................................................................................................16

7.3 Opportunities.........................................................................................................................16

7.4 Threats....................................................................................................................................17

8 Marketing Objectives and Proposed Strategies..............................................................

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.......................................................................................................................................19

9 Conclusion.....................................................................................................................

10 References.....................................................................................................................

11 Appendices....................................................................................................................

Appendix 1 – Detailed analysis of the competition between mobile network operators....................31

Appendix 2 – EE’s detailed internal analysis........................................................................................34

The organizational structure...........................................................................................................34

Staff morale and skills.....................................................................................................................35

Pricing Structure.............................................................................................................................36

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 use of 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 steadily with a 7% increase in 2018 (Figure 1) due to the

increasing number of mobile devices owned by consumers and the successful rollout 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.

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 largest provider 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 specific

circumstances 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%).

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.

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 fastest mobile 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 large threat 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 these new 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

In 2013, EE’s revenue was £6.5 billion, decreasing an alarming 2.6% compared with 2012.

However, decrease in 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 retail stores to online stores.

Now EE has more than 700 retail stores, and one official site EE.CO.UK.

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).

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.

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.

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

service that 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, EE attracted 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 will focus on price, place

and 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, EE can 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.

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 of Orange 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 2 nd place with 75.9,

followed by Vodafone (72.9). Three was the last with 69, half as much as that of EE.

EE

O2

Vodafone

Three

0 20 40 60 80 100 120

102.4

75.9

72.9

69

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.

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

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).

Figure 5: Monthly Complaints per 1000 customers, March 2012-March 2014 (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 6: Customer satisfaction index (Which, 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.

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) claim that 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

deparmentFinancial

deparementIT department

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

Table 3

Numbers from EE&Vodafone Websites

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

higher Audio-visual feeling are attractiveness of 4G, thus higher capacity products will be

more suitable for its targeting customers apparently.