Strategic Marketing Planning for Global Marketplace
Discuss about the Strategic Marketing Planning for Global Marketplace.
In the growing intensity of competition of the international businesses, it is essential for a business industry to design and implement the effective marketing planning and business strategy in order to determine the success of the branded products and services in the new business environment. This assessment will critically evaluate the new business environment by analyzing the external influences, market dimensions, entry modes, and intensity of competition in the chosen marketplace. This assessment will also analyze the resource strengths, strategic capabilities and global sustainability of the firm to adapt to new business environment (Hamiloton, L. and Webster, 2012). For this report, the leading Australian Telecommunication Company, Telstra is taken here and the new business environment of Indian Telecommunication Market is selected.
Introduction of Telstra Company
Telstra is the largest Australian telecommunication company that offers the fixed line and mobile telephony, internet and data services, digital television and network services. It was founded in 1975 having the main headquarter in Telstra Corporate Center, Melbourne, Australia. It offers a wide range of telecommunication services with high speed communication networks and internet data. It provides 7 million fixed voice services, 17.2 mobile communication services, and 3.4 retail fixed broadband services. Telstra is traded as ASX: TLS, NZX: TLS, and OTC Pink: TLSYY (Telstra, 2016).
Critical evaluation of the Indian Telecommunication Industry
The Indian telecommunication industry is one of the fastest growing industries in India contributing significantly app. 3% to overall India’ GDP. It also stands second in the global telecommunication industry on the basis of number of mobile users. According to a recent telecom survey report, 2016, it currently accounts for US$ 400 billion to the GDP of India and is expected to rise to US$ 500 billion to the GDP of India and will create 4.1 billion additional jobs by 2020. During the period of April 2000 to January 2015, the foreign direct investment in the Indian telecom industry was accounted for app. US$ 60,000 million. The total subscribers for India’s global system for mobile operators (GSM) were accounted 285.35 million including 4.14 million rural subscribers in 2014 (IBEF, 2016). The Indian telecommunication Industry has improved from 4% in March, 2001 to 79.38% in March, 2014. The fixed telephony services have been declining to the some extent with an exponential rise in the number of mobile users.
There are almost sixteen players in the Indian telecommunication industry including Airtel, Idea, Vodafone, RCOM, BSNL, Aircel, Tata, Uninor, Telenor, MTS, MTNL and other telecom service providers. Airtel, Vodafone, Idea, Reliance, BSNL, and Aircel are the major players accounting for app. 80% of overall Indian telecommunication industry. The consumer market share by the top Indian telecom companies include Bharti Airtel (22.7%), Vodafone (18.4%), Idea (15.0%), RCOM (12.30%), and BSNL (10.50%), and Aircel (7.8%). Some other players in the Indian telecommunication industry include MTNL, MTS, Telenor, Uninor, Sistema, Telewings, and others, covering less than 20% of the whole Indian telecommunication Industry (Shine, 2016). The smart phones users, internet users, and digital cable subscribers are expected to rise in the Indian market by 2020 that’s great news for both existing and new mobile telecommunication companies.
The Indian telecommunication industry offers a range of telecommunication services such as fixed telephony, mobile telephony (GSM and CDMA), cellular telephony, voice calling, high-speed internet services (3G and 4G), virtual private networks, wireless networks, television digital cable subscription services, and other value added services. The number of buyers has been increasing day by day with a rise in the number of mobile users, internet users, and television cable subscription payers. There is a price battle among the top telecommunication companies for the voice calling packs, internet data, SMS packs, scheme offerings, and cable subscriptions (Dibb and Simkin, 2008). Bharti Airtel is the market leader in the Indian telecom industry, having a large network infrastructure in India with more than 45,000 towers covering almost all rural, urban, and metro politician areas. It offers faster telecommunication networks and high speed data because of the wide communication networks across the Indian country.
TRAI (Telecom Regulatory Authority of India) is the centralized governmental regulatory authority of the Indian telecommunication industry, holding control on the business operation, expansion and production process of the telecommunication companies. It formulates the trade policies and regulates the directives for the Indian telecommunication companies as well as foreign trade regulations and policies for the foreign telecommunication companies.
Macro environmental analysis of the Indian Telecommunication Industry
Pestle analysis- Pestle analysis is an acronym to analyze the impact of macro environmental analysis on the Indian telecom industry. This is an important strategic planning framework that can be used to implement the marketing planning and strategies effectively after analyzing the impact of external environmental forces- political, legal, technological, socio-cultural, economic, and environmental factors. The macro environmental analysis for the Indian telecommunication industry is as following:-
Political factors- The political factors for the Indian telecom Industry will include antitrust regulation, employment and customer protection laws, environmental laws, tax regulations, foreign trade regulations, the stability of the Indian government, and TRAI’s attitude toward the foreign companies are such forces that will create complexities and challenges for Telstra while entering into the Indian telecommunication industry (Kumar, Nautiyal, Mukherjee, Rastogi, Kumar and Jain, 2015).
Economic factors- The economic factors for the Indian telecom industry are related to changes in the fiscal and monetary policies, changes in interest rates, exchange rates, inflation rates and GDP, cost control, revaluation/devaluation, and price controls by TRAI are such factors that will influence the marketing planning and business strategy of Telstra while entering into the Indian markets.
Socio-cultural factor- The socio-cultural factors for the Indian telecom industry include change in lifestyles and shopping habits, regional shifts in population, networks’ availability, age distribution of population, consumer activism, geographical and demographic diversities, income distribution are such factors that will affect the customers’ spending and purchasing behaviors in the Indian marketplace that in turn may affect the marketing planning and strategies of the company.
Legal factors- The TRAI regulations and telecom policies, government spending and taxation policies, protection laws, employment legislations, foreign trade regulations, entry barriers, fair trade laws and competition policies are such legalities in the Indian Telecom Industry that may affect the business expansion, sales figures, customer base, product performance and marketing planning of Telstra while operating the businesses into the Indian telecom market.
Technological factors- The government spending on research and development, availability of technical labors and technological facilities, research laboratory, scientific instruments and measures, Industry investment on research and development, patent protection, tower service providers, technological efforts, technological transfer and improvements and internet infrastructural network are such technological factors that will affect the production planning, product performance and sustainable development of Telstra while running the businesses across the Indian markets (Keilor and Kannan, 2011).
Environmental factors- The environmental protection laws, union’s regulations, global warming, ecological footprints and carbon emissions, excessive electronic wastages and unused material, ethical approaches, and increased equipment obsolescence are such factors that may affect the environmental performance and brand reputation of Telstra in the Indian telecom marketplace.
Micro Environmental Analysis of the Indian Telecommunication Industry
Porter’s Five Forces Analysis
To analyze the business environment of the Indian telecommunication industry, Porter’s five forces model will be used that will provide the industry analysis of the Indian Telecommunication sector. Porter’s five forces include Industry rivalry, buyers’ power, suppliers’ power, threats of new entrants and the threat of substitute products. Porter’s five forces analysis for the Indian telecommunication industry is following discussed as:-
Industry Rivalry- The Indian Telecommunication industry is the second largest telecommunication network in the world on the basis of number of users. It contributes to 3% India’s GDP and revenues USD 33,500 million (surveys reports, 2014). It is highly competitive sector in which more than 15 telecommunication companies are competing with each other to enhance the market share and brand positioning. The major telecommunication companies include Bharti Airtel (22.7%), Vodafone (18.4%), Idea (15.0%), RCOM (12.30%), and BSNL (10.50%) accounting for 70% of overall telecom market of India (Shah, 2016). Tata, Aircel, MTS, MTNL, and other telecommunication companies account for more than 30% of the Indian telecommunication sector. There is a price war among the Indian telecommunication companies for different telecom products and services.
(Market Share by Indian telecommunication service providers, 2015)
Buyers’ power- The bargaining power of the buyers in the Indian telecommunication industry is high because of low switching cost, low new connection cost, high buyers’ information, high product differentiations and increasing the number of mobile users. But, the TRAI’ new mobile sim portability regulations have increased the customers’ switching to another telecommunication network to the great extent. There are two types of customers in the Indian markets-individual customers and enterprises (Banks, IT companies). Airtel, Vodafone, Idea, and Reliance have almost similar prices for the mobile voice callings, internet packs, and television digital subscriptions. So, the Indian buyers have high bargaining power because of low competition, and access to another network because of mobile network portability.
Suppliers’ power- The suppliers have high bargaining power in the Indian telecommunication industry as there are large numbers of telecommunication companies and price war among the different telecom service providers in the Indian market. There is high switching of the companies to another supplier. The mobile operators in India don’t import the sim cards from a single supplier because of avoiding the possibility of any delays. The telecom tower suppliers for the Indian telecom companies include Bharti Airtel, Reliance, Idea, Tata, Vodafone, and BSNL include BIL/ITL,RITL, ITL, Viom, ITL, and BSNL/MTNL representatively.
(Source: Indian Telecom Sector Analysis, 2016)
Threat of Substitutes- This is low or moderate for the Indian telecom Industry. The internet subscribers have increased by 18.06% in compared to 10.60% for GSM/CDMA services in India. Some substitute products are emerging in the Indian markets, such as Skype, Teamviewer, messenger, online chat, and satellite phones. But, it is not easy to replace the existing business operations of the established companies, such as Airtel, Idea, Vodafone, BSNL, Reliance, and Aircel.
Threat of new entrants- This is low for the Indian telecom industry because of declining ARPU, decreasing profits, growing government spending, access to optical fibre network, and retaliation by the established telecommunication companies (Hill, 2011). There is low possibility of the entry of new mobile and fixed telephony communication companies into the Indian markets because of huge investments and large infrastructure telecommunication network are required. The cost for maintaining one tower is estimated 60,000-80,000, monthly rent for an active network- 40,000- 50,000, and monthly outflow of a TSP is estimated 80,000-90,000 per month for a tower in India. For ex- Bharti Airtel has invested 230 billion to create a cellular network infrastructure of more than 45,000 towers across the Indian country.
On the basis of above findings from the industry analysis, it is highlighted that Telstra can grow its business and enhance its market share in the global telecommunication industry by operating the businesses in the Indian marketplace effectively through offerings of the fixed, cellular and mobile telephony, rural telephony, voice calling services and SMS packs, high speed internet data, and digital subscriptions. The complex regulations, TRAI’ foreign trade policies, high capital investments, sound network infrastructure, high competition from the established brands and substitute products, continuous evolving technology, lowest tariffs, and declining ARPU can create barriers to the entry of Telstra into the Indian Telecom Industry. But, it can use the cost leadership strategy, focused strategy and differentiation strategy to operate the sustainable businesses across the Indian markets. It can observe the strategy of major competitors (Airtel, Vodafone, Idea, BSNL, RCOM, and Aircel) and identify the local customers ‘needs to make regular changes in the market planning, production process, and business strategy (Ferrell, 2012).
By using the unique patents, designs, resources, and strategic capabilities, it can determine the sustainability of the businesses in the Indian telecom industry by beating the competitors’ strategy. Along with this, by following the TRAI’ new trade regulations and policies, it can run the smooth businesses in the Indian markets without any hindrance. In the initial time of entry into the Indian market, it can face major challenges and complexities because of high level of competition from the established brands, but it can design and implement the sustainable business strategies to ensure its success in the Indian market.
To ensure the success running of the businesses in the Indian marketplace, it is essential for Telstra to apply the following strategies:-
Strategic Alliance or joint ventures- Telstra can make strategic partnership or joint ventures with the local Indian telecommunication firms to cover the broad telecommunication market of India. It can make mergers, acquisitions, takeovers or partnerships with other telecommunication service providers to attain the significant market share and product positioning in the Indian telecom industry. Along with this, it could be effective for Telstra to grow businesses in India through franchising offerings to the desired franchisee firms or independent agencies (Harrison, 2013).
Market Research Strategy- This strategy will be effective for Telstra to conduct spacious market research to implement the marketing planning and strategies effectively in the new business environment. By organizing the specific marketing research, the firm would be able to identify the needs, interests, and expectation of the Indian customers. By identifying the customers’ demands and market flexibilities, it will be able to make changes in its products and services accordingly and to design result-oriented marketing strategies to intensify the satisfaction level of the customers.
Integrated Marketing Communication- This strategy will be efficient for the firm to get significant competitive advantage by improving its overall marketing strategies. This strategy will assist the firm to implement the coordinated and persuasive brand communication programs and campaigns to target the potential customers across the Indian telecom markets. Through this strategy, the management of Telstra would be able to communicate the customers effectively by using various marketing communication tools such as social media sites (Facebook, Twitter, Pinterest, Instagram, Google+, and linkedIn), teamviewer, Skype, and e-media (Gilligan, and Wilson, 2013). This strategy will be effective for the firm to create the brand awareness and customer loyalty of Telstra in the Indian market by conveying the promotional message of the company to the targeted customer segments.
From the above discussions, it can be concluded that the Indian telecom industry is the high-potential marketplace that provides new telecommunication firms lots of opportunities to grow the businesses with their telecom products and capital investments. The pestle analysis analyzed the impact of external environmental forces that may have influences on the business expansion, marketing planning, and sustainability of Telstra while entering into the Indian telecom markets. Along with this, Porter’s five forces analysis analyzed the intensity of industry competition, entry modes, buyers’ powers, suppliers’ strengths, and threats from the established brands and substitute products for Telstra in the Indian telecom market.
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