Customer Analysis: Vodafone

This report analyzes the relationship marketing strategies of Vodafone, including external and internal market analyses, PESTLE analysis, Porter's Five Forces analysis, SWOT analysis, and value chain analysis. It also discusses strategies for customer acquisition and retention, objective and segmentation of Vodafone, and potential new relationship marketing strategies. Recommendations are provided at the end.

CUSTOMER ANALYSIS: VODAFONE
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Executive summary
This report has focused on discussing relationship marketing strategies of Vodafone. These
strategies are made for retaining customers. For understand customer orientation of this
organization, external and internal business environment have been analyzed. PESTLE
analysis helps in understanding the impact of macro environmental factors on customer
management of Vodafone. Porter’s five forces analysis have been done for elaborating
competitive market of this firm. SWOT analysis and value chain analysis have focused on
internal activities of this firm. Strengths of this form can be used to overcome weaknesses
and threats. This report has mentioned that strengths of Vodafone help this company to grab
potential opportunities. Objective and segmentation of Vodafone have been clearly stated in
this study. Current customer acquisition and retention strategies of this firm have been
analyzed. In addition, this study has included areas of improvement and potential new
relationship marketing strategies for Vodafone. Recommendations have been provided at the
end of this report and conclusion part has been drawn from overall discussion of this report.
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Table of Contents
1. Introduction............................................................................................................................4
2. Findings and analysis.............................................................................................................4
a. External marketing environment analysis...........................................................................4
PESTLE analysis................................................................................................................4
Porter’s Five Forces............................................................................................................6
b. Internal marketing environment analysis...........................................................................7
SWOT analysis...................................................................................................................7
Value Chain Analysis.........................................................................................................8
3. Discussion..............................................................................................................................9
a. Strategies for customer acquisition and retention...............................................................9
Objective, segmentation and current relationship marketing strategies of Vodafone........9
Improvement of current strategies and new strategies......................................................11
4. Conclusion and recommendations.......................................................................................12
Reference list............................................................................................................................14
Appendices...............................................................................................................................17
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1. Introduction
Relationship marketing refers to the development and application of effective strategies that
allow organizations to build as well as maintain long term relationship with customers.
Relationship marketing strategies are developed based on current market conditions, status of
competitors, market demand and appropriate marketing opportunities. This report is focusing
on analysis of relationship marketing strategies for Vodafone, UK and areas of improvement
are being recommended. External and internal market analyses help in understanding external
as well as internal environment of Vodafone that affect their relationship with customers.
This company has taken initiatives to ensure customer acquisition and retention by putting
their customers at the center of relationship marketing strategies.
2. Findings and analysis
a. External marketing environment analysis
PESTLE analysis
This analysis can be done to analyze external environment of Vodafone.
Factors Description
Political ● Stable government
● BREXIT can impact on business
Economical ● Inflation rate is 2.48%
● Lower unemployment rate
Social ● Education rate is higher
● Population is 64.1 million
Technological ● London is a technological hub
● Improvement in IT infrastructure
Legal ● Employment act 1996 protects rights
of employees
Environmental ● Climate change due to huge
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industrialization
Political: This factor acts as much influential in the way of progress for companies like
Vodafone. As opined by Niaz and Medina (2018), political factor is essential for developing
infrastructure of the company. The United Kingdom has a stable government and the
government is divided among local and national administrations. This is creating fair and
plenty of opportunities for companies like Vodafone to bloom. However, political decisions
like Brexit are going to hamper trade and business of this firm by increasing duties and taxes.
Economical: Inflation rate in 2018 is 2.48% in the UK, which is lower than that of previous
year (Telecomlead.com, 2019) [Referred to appendix 2]. In 2017 it was 3.58%. Uk is
considered as the fifth largest economy of this globe with a growing GDP. GDP of this
country is $2.89 trillion, which has made this country a safer zone for conducting business.
Hence, it can be said that customers have the capacity to buy different advanced products and
services of this company. Wage of workers in this country is 7.83 Euro per hour and it is
expected to increase up to 8.21 Euro at the end of 2019 (Kull et al. 2016). Rate of
unemployment has decreased in the past few years due to huge amount of industrialization.
Current unemployment rate is 3.8% as measured in December 2018. Vodafone is facilitated
in this market because it is a free market and gross income of people is higher as compared to
other European countries. Moreover, foreign direct investment has also increased in this
country that can help Vodafone by acquiring help from other companies for building
infrastructure.
Social: the United Kingdom is a densely populated country with around 64.1 million
inhabitants (Alshurideh, 2016). A large portion of the population is educated and tech-savvy.
The population of this country is expected to rise up to 74 million by the end of 2039. This is
providing a wider market to Vodafone with various types of customer segments. Standard of
living in this country is comparatively higher, which is facilitating the business of this
company (Marketingweek.com, 2019). However, it can be seen that the population of this
country is getting older as 18% of the total population aged above 65 years. This can impact
on operational procedure of this company as effectiveness of workforce may decline in
future.
Technological: the UK is considered as a technologically advanced country in this globe.
London is the hub of many technological organizations. Hence, Vodafone can receive any
technical assistance in this country that can help them to improve their operations and
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services. The UK has attracted 28 billion pounds of investment to improve technology.
Internal competition is higher in the IT industry in this country that has stimulated to grow.
Legal: Business of Vodafone can be impacted through various laws of this country that
includes Employment act 1996. As stated by Nikou et al. (2016), this law protects the rights
and benefits of an employee and protects them from any sort of discrimination. Employees
are also protected from discrimination by equality act 2010.
Environmental: Different economic activities in this country impacts on the environment of
this country. Britain is facing harsh impacts on climate change at present with other countries.
Government and local councils have taken steps to reduce harsh impacts of economic growth
on environment of this country. Vodafone also needs to include different CSR activities to
protect the environment of this country.
Porter’s Five Forces
This analysis can help to evaluate competition in the market that Vodafone faces.
Risk of new entrants (low): Vodafone is a popular and recognized telecommunication firm
in the UK, which can create great barrier for new companies. In addition, entering in
telecommunication market needs huge investments for building infrastructure, which is
another barrier.
Risk of getting substituted (Medium): Main focus of telecommunication companies like
Vodafone is in voice communication. This feature has been used by majority of consumers
but increasing the popularity of social media applications like WhatsApp, Snapchat can
impact on the use of this feature. As opined by Kortmann and Piller (2016), new technologies
like good quality municipal Wi-fi service can also impact on business of telecom operators.
Hence, Vodafone needs to improve its quality of service and price range to acquire more
market share.
Bargaining threat from suppliers (High): Different suppliers like infrastructure suppliers
and device suppliers pose great risk on business of the Vodafone. Many device manufacturers
get committed to telecom service companies for internet and network connections. This long-
term commitment between suppliers and networking companies poses risks on other telecom
operators.
Threat from buyers (High): Customers’ buying decision depends on quality of service and
price range. They can change their purchasing decision upon unavailability of these criteria.
Moreover, huge market competition is increasing bargaining power of customers in the
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telecom industry (Ascarza et al. 2018). Vodafone needs to increase consumer satisfaction to
reduce threats from customers.
Market rivalry (High): Market rivalry is very high and it can impact on business of this
company. Other telecom companies like, British Telecom and O2 are close competitors.
Hence, Vodafone needs to build strong relationships with customers to reduce market
competition.
b. Internal marketing environment analysis
SWOT analysis
Strength Weakness
● Brilliant advertising strategies
● Large market coverage and loyal
customers
● Wide range of packages
● Customer orientation
● Decreasing number of subscribers
● High product price
Opportunities Threats
● Merger with similar companies
● Availability of low cost and
advanced technologies
● Impact of Brexit
● Increasing competitors
Table 1: SWOT analysis
Vodafone always pays value to their customers and develop strategies as per demand of their
customers. Internal environment of this company is affecting their long-term relationship
with their customers. Due to this reason, Vodafone needs to improve its relationship
marketing strategies (King et al. 2016). This company offers a wide range of packages for
satisfying needs of different customer group. Their advertisements are unique and potent
enough to draw attention to existing as well as potential customers. They develop packages
based o0n demand of customers and this strength of this company is helping them to
overcome weaknesses such as declining subscriber base. On the other hand, this company is
covering wide marketplace and this strength is helping them to get high-income customers.
According to Afeche et al. (2015), effective advertising plan of this firm is capable to attract
maximum loyal and potential customers towards their business. Large market share of this
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organization can influence other companies to merge with Vodafone. As this company is
customer oriented, they can rely on available advanced and low-cost technologies. Grabbing
this opportunity may help this firm to decrease the price of packages for attracting more
potential customers.
Advertisements of this company do not focus on any specific culture and this fact is helping
them to target customers from all cultural backgrounds. This company focuses on the
feedback of customers and work on that feedback for improving quality of service
(Vodafone.com, 2019). This approach is helping Vodafone to overcome threats regarding
effect of Brexit and increasing market competition.
Value Chain Analysis
Porter’s value chain model is helpful to understand internal activities of organizations
(Alshurideh, 2016). This tool is being used to analyze product, services, and activities of
Vodafone that affect customer satisfaction.
● Primary activities
Inbound: Vodafone has centralized distribution model
Operations: Flexible operations within the business. Constant improvement in service
quality is being ensured by Vodafone.
Outbound: Vodafone provides excellent network and broadband connection to their
customers. Attractive recharge plans help them to retain customers.
Marketing: Large customer base is being attracted by innovative advertising of Vodafone
(Vodafone.co.uk, 2019).
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Service: They focus on developing public relations and provide premium customer services.
● Support activities
Infrastructure of organization: Advanced IT infrastructure is present in Vodafone. They
offer strong network to their customers.
HR management: Good salary structure and training programs ensure employee retention in
Vodafone. As mentioned by Srinivasan et al. (2016), this company pays value to its
employees and employees provide their best effort to maintain customer satisfaction.
Technology: Customers can get services online from Vodafone and it saves their valuable
time. This company offers 2G, 2G, and 4G services currently to its customers with a wide
range of recharge scheme (Vodafone.co.uk, 2019).
Procurement: This firm is maintaining effective relationship with suppliers and working
collaboratively with them to provide the best telecommunication experience to their
customers.
3. Discussion
a. Strategies for customer acquisition and retention
Objective, segmentation and current relationship marketing strategies of Vodafone
Aim of Vodafone is to become communication leader in this current connected world.
Primary objective of Vodafone is about maximizing profit generation. Customer oriented
marketing strategies are helping this organization to get loyal and potential customers. This
company is continuously improving its network and offering innovative services to its
customers. As opined by Cacciolatti and Lee (2016), segmentation helps organizations to
split their market areas into small groups. Vodafone focuses on market segmentation for
offering services as per different choices of different customer groups. Demographic and
psychographic segmentations are being considered by this firm to split their market. In
case of demographic segmentation, this company focuses on gender, income, age, family
size, education, and ethnicity. On the other hand, Ashley and Tuten (2015) have narrated that
psychographic segmentation is done based on common beliefs, traits, interests, values, and
attitudes of current customers. Vodafone considers both of these segmentation processes for
market segmentation. Target customer of this company is from 13 to 65 age groups.
Management of this company targets customers from all economic conditions
(Marketingweek.com, 2019). For example, small recharge schemes are for attracting low-
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income customers and students. On the other hand, this company offers premium services to
their high-income customers. Customers from rural, urban and semi-urban areas are relying
on this telecommunication company for their good quality service. As mentioned by
Nyadzayo and Khajehzadeh (2016), psychographic segmentation helps to meet expectations
of customers as it allows firms to offer products based on customer preferences. In case of
psychographic segmentation, this company focuses on youth customers and offer products as
per their preferences. On the other hand, this company is trying to draw attention of high-
income customers towards their premium services.
Vodafone has focused on improving data communications, which is its major customer
retention and acquisition strategy. They want to provide the best mobile network performance
that can help them to gain more profitability. This customer acquisition and relationship
strategy have been implemented by modernizing IT platform in the UK. mobile data growth
has been increased by 63% and 2.1% of service revenue growth has been seen for this
strategy (Vodafone.com, 2019). Customers of this company have enjoyed the best network
service and experienced frequent improvement in service [Referred to appendix 1]. This has
helped to build a strong relationship between customers and management of this company.
However, improvement in network services and providing network at remote places can help
Vodafone to build strong relationships with customers. This improvement can be done by
investing more on capacity building and expansion of business.
Strategy of networking leadership is another essential customer retention and acquisition
strategy that can help to gain leadership of the market. This firm has invested a lot to make
them prepared to launch 5G service in different European countries like UK, Germany, and
Italy. As opined by Kotabe and Kothari (2016), strategy of bringing new and innovative
services, create a buzz regarding a firm and attract new customers. Vodafone management is
confident to launch their services by 2020, which can attract different other segments of
customers. On the other hand, digital technology has been used as a strategy by Vodafone
to engage customers. In this competitive era, it is essential for telecommunications companies
to increase experience of consumers. Vodafone has made digital technology as a core pillar
of its marketing strategy. This has helped them to increase engagement of customers and
improving their relationship and connection with current and potential customers. As
mentioned by Dahiya and Bhatia (2015), digital technology is a fast and efficient tool that can
be used to establish relations with customers. Vodafone has started a program called CXX
(Customer Experience Excellence). Through the help of this program, Vodafone has aimed to
deliver differentiated and outstanding customer experience. This can also help in building its
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network leadership position further. CARE is the main focus of this program, which stands
for connectivity, always providing excellent value, Real-time rewards, and easy and instant
access.
Apart from these strategies of customer retention and acquisition, branding and advertising
is another essential strategy that helps to gain competitive advantage. Vodafone has
strategically created a consumer-friendly image through prompt service, creative marketing,
and proper branding. Creative marketing techniques like Zoozoo advertisement has helped to
attract many potential customers and increase consumer loyalty. This ad has helped this firm
to gain attention of customers of all ages and attracted them. They have also focused on
sports marketing to attract youths. Social media platform has also used by this company
strategically to share advertisements and offers. This is a part of marketing strategy of
Vodafone that increased their reach and enhanced relationship with customers. As said by
Harmeling (2017), social media platform is a cheap and effective strategy that can be used to
attract large base of consumers.
Improvement of current strategies and new strategies
Vodafone has focused on improving data communication and this company may ensure
customer acquisition and retention by this approach. However, they are focusing more on
satisfying urban and semi-urban customers. As stated by Navimipour and Soltani (2016),
customers from rural areas are not getting effective network comparatively. Many travelers
visit rural places and they face weak network issues during traveling. Vodafone must focus
on improving network quality in rural areas to cover customers from rural areas and
travelers. Improving data communication in rural areas will help this company to increase
market share and automatically they will be able to maximize profit generation, which is the
primary objective of this company.
On the other hand, this company has planned to launch 5G internet service for ensuring
retention and acquisition of customers. However, Ritter and Geersbro (2018) have mentioned
that developing 5G service may cause harm to the environment. It means that environment-
friendly customers may switch this company for this reason. In addition, this service can be
expensive and cannot be afforded by lower middle-income customers. It may lead customers
to think that this form, is only focusing on high-income customers. As suggested by Bernabé-
Moreno et al. (2015), advanced and low-cost technologies are available that can help to
develop 5G services without harming nature. Using these technologies, Vodafone will be
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able to offer 5G services at an affordable price by lowering production cost through the use of
advanced technologies.
Digital technology and social media platforms are being used by this organization to engage
customers in their business. Innovative concepts of advertising have helped in establishing a
good brand image. However, this company needs to make advertisements that can convey
a social message. According to Liu et al. (2015), advertisement with social message touches
emotions of customers and it helps in the development of society. This approach of this
company will help to improve brand image and more potential customers will be able to rely
on this brand. Vodafone must improve their direct communication with customers. Direct
communication with customers helps in developing good bonding with customers and helps
in achieving long-term loyalty of customers. This relationship marketing strategy must be
implemented by Vodafone to sell their services as well to target customer groups. For
implementing this strategy, management of Vodafone needs to train current employees
regarding the process of direct communication with customers. In addition, more options
must be provided to customers to reach customer care representatives easily within minimum
time.
4. Conclusion and recommendations
From the above findings and discussion, it can be concluded that Vodafone has adopted
different creative and effective relationship strategies for its customers. This can help them to
become a leader in the market. Moreover, external environmental factors like a stable
government and good technical support can help this company to enhance their strategies in
future. However, it was found that market competition is high due to the presence of a large
number of competitors and bargaining power of customers. However, different
recommendations can help Vodafone to improve their performance and gain greater
percentage of market share.
Intense research and development of 5G service is an essential recommendation for this
company. Customers prefer improved and new services that help to increase tier satisfaction
rate. Faster service can help Vodafone to strengthen their relationship with customers.
Moreover, this company needs to focus on providing network at remote and distant areas.
This can help to increase experience of customers and it can be noticed that poor network in
hilly areas creates a bad impact on customers. This can be done by establishing proper
infrastructure on those remote areas and investing in research and development of networking
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services. Creation of attractive packages and special offers can also help this firm to build a
strong relationship with customers.
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Appendices
Appendix 1: Growth of data communications
(Source:
https://www.vodafone.com/content/annualreport/annual_report18/index.html#strategic-
review)
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Appendix 2: Inflation rate in the UK
(Source; https://www.bbc.com/news/business-46889433)
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