marketing strategies and operations (ayokunle)
TRANSCRIPT
MARKETING STRATEGIES AND
OPERATIONS
2015 MTNNIGERIA
Written report by: Ayokunle Bajulaiye
Student number: A4094870.
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Executive Summary
This report provides an analysis of the marketing and communication mix of MTN Nigeria
limited. Methods of analysis include the adoption of 7’Ps of marketing. Prior to that,
industry’s competitive forces were examined alongside the macro environment as well as the
micro environment of MTN Nigeria using Porter’s 5 forces, PESTEL and SWOT analysis.
Findings from the analysis shows that, overall, MTN’s marketing strategies have recorded a
significant amount of success given the increase level of subscriber base and the range of
subscriber groups recorded year in year out.
The report also recommends strategies through which MTN Nigeria improve its marketing
effort by leveraging on its strengths and opportunities to its own advantage through the use
offensive and the adaptive strategies.
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Contents
Executive Summary ................................................................................................................. 2 Contents ................................................................................................................................... 3 List of Tables ............................................................................................................................ 4 1.0 Introduction ........................................................................................................................ 5 2.0 Case background ............................................................................................................... 5
2.1 Company Background ................................................................................................... 5 2.2 Market ............................................................................................................................ 5
3.0 Key Findings ...................................................................................................................... 6 3.1 Nigeria’s Telecommunication Industry, MTN Nigeria and Michael Porter’s 5 Forces .... 6 3.2 Problems and Prospect of Nigeria’s Telecom Giant, MTN Nigeria ................................ 7
3.2.1 PESTEL Analysis .................................................................................................... 7 3.2.2 SWOT Analysis ....................................................................................................... 8
3.3 Current Marketing and Communication Mix at MTN Nigeria ......................................... 9 3.4 Alternative Strategies ................................................................................................... 10
3.4.1 Adaptive Strategy .................................................................................................. 10 3.4.1 Offensive Strategy ................................................................................................ 10
4.0 Conclusion ....................................................................................................................... 11 References ............................................................................................................................. 12 Appendices ............................................................................................................................ 13
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List of Tables
Table 1: Market of Share (%) of MTN Nigeria and other Operators……....................................5
Table 2: Findings of Porter’s Five Forces Analysis………………………………………………..7
Table 3: Findings of SWOT Analysis………………………………………………………………..8
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1.0 Introduction
This report is aimed to examine the marketing and communication strategies used by MTN
Nigeria to market its products and services to its target market. It examines certain strategy
subject areas like marketing mix using the 7P’s of marketing and how MTN Nigeria has been
able to utilize these techniques as well as the accompanying challenges. The report also
suggests strategies through which MTN Nigeria can leverage on its strengths and
opportunities to its own advantage.
2.0 Case background
2.1 Company Background
MTN Nigeria is a telecommunication company and a subsidiary of MTN Group Limited that
operates one of Nigeria’s GSM licenses and has been in full commercial operation since
2001. MTN Group is a multinational telecoms organisation with a mandate to provide world-
class cellular network access for both mobile and business solutions. The Group recorded
about 82 million subscriber base in 2009 in the Middle East and Africa (Rilwan, 2013). Since
it got the license to operate in Nigeria under the democratic regime of former President
Olusegun Obasanjo, the company has continued to spread across the 36 states of the
country including Lagos Nigeria where the company is headquartered.
2.2 Market
MTN Nigeria has a strong presence in the country with a subscriber base that has grown
and estimated to be over 62 million according to the NCC 2015 rating (see Table 1).
Mobile Telecoms in Nigeria MTN Nigeria Globacom Etisalat Airtel
No. of Subscribers 62,493,732 31,306,472 23,492,214 31,134,625
Percentage (%) 42 21 16 21
Table 1: Market of Share (%) of MTN Nigeria and other Operators (Source: NCC, 2015).
MTN Nigeria provides telecom services ranging from internet and broadband services, voice
communication services, SMS services to tracking services.
The firm remains the biggest telecom operator in Nigeria; although fact remains that the
company has been through keen competition, especially given the presence of other major
telecom players like Airtel, Etisalat and Glo Nigeria (NCC, 2015), the company has
continued to spread across the country whilst offering services to about 223 towns and cities
within the country and over 10,000 communities and villages – all totalling a network
coverage of about 88.8% of Nigeria’s land mass. Over the company has enjoyed a long
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overriding advantage and a strong market position being the first in the mobile telecom
business in Nigeria.
As earlier mentioned, this report aims at providing the current marketing and communication
mix of MTN Nigeria; but, in the sequence of strategic analysis, there is a need to first and
foremost examine the problems and prospects of the company/industry (micro and macro
environment) using the Porter’s Five Forces analysis as well as the SWOT analysis. To this I
turn my attention.
3.0 Key Findings
3.1 Nigeria’s Telecommunication Industry, MTN Nigeria and Michael Porter’s 5 Forces
There are already about 4 major companies in the Nigeria’s telecoms industry including MTN
Nigeria. Thus, as the market is growing, competition is getting stringent, and the individual
companies are getting new customers (subscribers) using different strategies including
coverage capacity.
Porter’s 5 forces provide information about this nature of competition. The model entails two
themes known as the horizontal competition and the vertical competition. The latter
comprises of the bargaining power of suppliers and the bargaining power of buyers while the
former entails the threat of new entrants, competitive rivalry within the industry and threat of
substitutes (see Appendix).
Noticed that as the telecoms market is growing in Nigeria since MTN gained its operational
license in 2001, the bargaining power of customers (i.e. vertical competition) seem to be
high due to high growth rate of market, desires of customers for new and competitive
services from operators including MTN Nigeria.
On the other hand, bargaining power of supplier has gone from high to low given the
increase number of telecom supplier. The presence of major competitors like Glo NG, Airtel
and Etisalat makes competition high. The increase number of suppliers, telecom industry
thus reduce the bargaining power of suppliers.
The presence of other service providers like Airtel or Etisalat in the Nigeria’s telecoms
market also makes high availability of substitute for MTN subscribers. Noteworthy is that
entry barrier is also low because the industry is still at a maturity stage in the country, hence,
it involves high investments and players looking to invest would need to consider the
economies of scale.
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Following the descriptions, we can present the findings of the porter’s five forces compare
with the telecom market in Nigeria in relation with MTN Nigeria.
Market forces Challenges
Bargaining power of buyer High
Bargaining power of supplier Low
Threat of substitute product Moderate
Competitive rivalry High
Entry barrier Low
Table 2: Findings of Porter’s Five Forces Analysis (Source: Author, 2015).
3.2 Problems and Prospect of Nigeria’s Telecom Giant, MTN Nigeria
Of a fact, problems and prospects of any company has to do with its strengths, weaknesses,
opportunities, threats (SWOT); as well as political, economical, socio-cultural, technological,
environmental and legal (PESTEL) issues of any nation and the organization. Though the
telecoms sector of Nigeria faces lots of problems, it’s also a prospective field till now.
3.2.1 PESTEL Analysis
The PESTEL tool (an acronym for Political, Economic, Social, Technology, Environmental
and Legal factors) is used in analysing some factors that affect the macro-environment of the
mobile telecommunication industry.
• Political Instability:
Government’s intervention in the industry through various policies including fiscal policy, tax
policies, privacy policies, trade and labour laws among others, can affect the mobile telecom
industry as it is expected of the telecom operators to abide by these laws and policies
imposed by the government.
• Economical Issues:
With global GDP of 3.6%, the global mobile telecom industry can be described as a key
player in the world economy. This growth is subject to economic factors like interest rates
and inflation. Hence, there is a likelihood that operators will increase tariffs in a period of
recession. Income tax associated to the importation of telecom equipment is also a great
problem for the industry to survive in the industry.
• Social Factor:
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Social factors relating to safety and effectiveness or functionalities have affected the telecom
industry. The increasing usage of mobile devices has led to an increase in the desire of
customers to utilize more improved phone features like conference calls, emails, instant
messaging, as well as faster connectivity through 3G and 4G.
• Technological Factor
As the demands of consumers grow, technology also grows. Hence, telecoms industry
players invest heavily in the industry so as to meet the demands of mobile phone and
internet users. The increasing demand for improved connection speed (e.g. 4G wireless
technologies like LTE), fibre technology as a replacement for ADSL (Asymmetric Digital
Subscriber Line) also calls for heavy investments (Albini, 2013). Hence, telecom players
spend more on Research and Development as well as innovation (Lee, 2012).
• Environmental Factors
One of the latest concern in the industry is environmental issues and climate change. The
wide spread of Nigeria’s telecom giant across the country and other telecom industries in the
country is creating an intense hike in the quantity amount of e-waste in the country.
• Legal Factors
Telecom industry is well regulated in the country. Like any other major industry, the industry
has enjoyed stringent regulation from the Nigerian Telecommunication industry.
3.2.2 SWOT Analysis
Strength - First in the market - Lots of freebies to customers - Excellent sales team - Good brand identity, and brand
awareness - Wider coverage compared to competitors
Weakness - Unstable government policies - Poor road and transportation network - Non-sustainable packages - Poor brand perception (perceived as
economic dominance/hegemony)
Opportunities - Opportunities to explore the lower price
imposition by NCC - More room for expansion - Increased demand for services and
internet bundles - Market leader
Threats - Government sanctions and policies - Fallen oil price - Tight competition - Insatiable demands of loyal customers - Increased cost of sustaining alternative
power supply
Table 3: Findings of SWOT Analysis (Source: Author, 2015).
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3.3 Current Marketing and Communication Mix at MTN Nigeria
Communication is done side by side with marketing owing to the importance they provide
(Rilwan, 2013). Attaining an achievable target market and delivering the right product or
service at a reasonable price is the core principle of marketing (Rilwan, 2013). Marketing mix
however stands as the tool needed to achieve this core principle. This section of the report
examines the current communication and marketing mix of MTN Nigeria using the 7p’s
(recently upgraded from 4p’s). The 7p’s include: product, place (distribution and marketing
channel), promotion, price, process, people and physical evidence.
• Product
MTN offers both services and goods in form of SIM Cards, Internet Modems, and even
cellular and smart phones to its target market. The firm also offers consumer products and
individual/business products. Consumer products offered comprise of Internet and Bundle
Plans; while business products include the mobile numbers issued out to consumers which
usually begins with 0803, 0806, 0703, 0706, 0813, 0816 and in recent times, 0810 and
0903.
• Place
MTN Nigeria is to offer a reliable and sufficient channels of distribution from it organisation
unit to the final consumers of their product and service by creating more experience centre
(retail store) and making their recharge cards and others products and services to their
customers easily available.
• Promotion
Advertising is the tool used by MTN Nigeria in it is promotion strategy, which is more
preferable than another means of promotion strategy. Finally marketing activities enable
companies like MTN Nigeria to reach it final objectives and goals, which enable the MTN
Nigeria to satisfy its customers.
• Price
MTN Nigeria has adopted its pricing structure in diverse packages to generate the income
the organisation needed as a profit on the one hand and also to create a friendly and
affordable price for its subscribers. Some of these packages include the MTN magic number
that allows free calls for a day, MTN family and friend, which allows customers to make
cheaper calls to five family and friends; MTN zone and MTN extra connect, which allows
cheaper tariffs but not as cheap as family and friend.
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• Process
The flow of information and services to the target market is based on a number of
advertising and effective distribution chain.
• People
MTN Nigeria limited has leveraged on the diversity of the people to its advantage. The firm
also established a sound Customer Relationship Management with its customers as regards
the services they offer. MTN engages the people through sponsorship programs like #MTN
Project Fame,’ “Who Wants to be a Millionaire,” ‘MTN Family Challenge,’ just to mention a
few.
• Physical evidence
MTN Nigeria has a good number of experience centres (see Appendix) in the country with
well organised employees on uniformed wears. MTN Nigeria uses customer calling centres
as an activity which is relatively easier than an experience centre. Experience centres may
be some distance away from the location of some subscribers, it usually a phone call is
enough to resolve any claim (Rilwan, 2013).
3.4 Alternative Strategies
3.4.1 Adaptive Strategy
Adaptive strategy is a way of identifying a new approach to solving the ambiguity, problems,
uncertainty, complexities a business face. This strategy can be applied by exploiting
opportunities to tackle the firm’s weaknesses. Opportunities abound everywhere and the first
point of call is the potential customers who can patronize more services. Price reduction is a
promising way of attracting (not sustaining) potential customers. This can be used to
restructure MTN’s poor brand perception.
3.4.1 Offensive Strategy
In the corporate world, investment in Research and Development units as well as market
research is vital to organisational success. An offensive strategy can be beneficial to MTN
Nigeria in that it will go a long way in helping an organisation stay ahead of competitors. This
strategy entails the exploitation of both the strength and opportunities surrounding the firm
through a sound R&D in order not to be defeated as the market leader of the telecom
industry.
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4.0 Conclusion
Lastly, the marketing strategies of MTN Nigeria limited are well laid out and executed whilst
reflecting on how its activities improve the brand of the firm. Overall, findings showed that
the strategies have been successful as it has attracted more subscribers over the years than
any of its competitors in the industry. Going by the range of subscriber groups (0803, 0806,
etc.) and the significant growth in subscriber base over the years, it can be concluded that
MTN’s marketing activities have, to large extent, reached its goals and objectives.
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References
Albini, G. (2013). “An Analysis of the European Telecommunications Strategic Environment:
How Can Strategic Actions Be Defined to Adapt to the New Scenario? A Teleonica Case
Study”. International Master of Industrial Management, 8th Edition.
Lee, I. (2012). Mobile Services Industries, Technologies, and Applications in the Global
Economy. Hershey, IGI Global.
Nigerian Communication Commission (2015). Nigerian Communications Commission.
[Online]. Available at: http://www.ncc.gov.ng (Accessed 19 November 2015).
Rilwan, A. (2013). Marketing Activities and its Implications on Telecommunication Industry in
Nigeria: Case Study MTN Nigeria.
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Appendices
Showing Porter’s Five Forces (Source: David Braun, 2013)
PESTEL Tool (accessed from http://www.consultants-on-line.com)
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Showing MTN Experience Centre (Source: Rilwan, 2013)