Eco-Fone Market Segmentation and Expansion Strategy in the UK

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Eco-Fone
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Introduction
Eco-Fone is a company that serves as a platform for selling smartphones and its accessories from
two shops that are based in Putney and Richmond. It is a UK based firm that started its business
in 2014 and it has been indulging in the sale of smartphones ever since. It has not extended its
services towards selling other electronic gadgets like laptops and tablets. Like every firm who
has set-up their business a few years ago, Eco-fone also plans to expand its business to different
demography. For this, they need to identify potential market segments in the UK and
neighboring countries where they have the highest possibility of earning maximum revenue. This
can be done by performing certain pilot tests using several tools and techniques, which can
provide them an idea before making strategies regarding expansion.
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Task 1
A.
It is impossible to live without a smartphone in today’s time. Most of the activities are
accomplished by a handy device called Mobile Phones. Ever since companies have started
manufacturing smartphones in budget price, their demands have been increasing like anything.
There has been a constant demand for more stylish features in mobile phones by customers. This
is due to the tremendous change in technology. It has helped various youngsters in improving
their knowledge and learning new things every day. According to the survey conducted by
Deloitte, it has been observed that several people are using smartphones to tackle work-related
issues as well. It can be derived from the analysis conducted by Deloitte that with the current
usage of phones as a base, it is predicted that this number will only rise further in the future.
As per the survey conducted by Deloitte, it has been highlighted that 91% of the population use
smartphones and the total number of people accessing mobiles daily for several purposes are
approx. 15.88 Lakh (Deloitte, 2017). To achieve its purpose of Expansion, Eco-fone should
consider the survey conducted by Deloitte in the UK. They can launch smartphones in affordable
ranges to attract middle-class families.
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B.
The below bar chart indicates the four major activities that have been undertaken with a
smartphone and its effect in the year about 2016 & 2017:
Email
Making Standard Calls
Viewing Documents
Managing
Time/Workload
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
2017
2016
It is quite evident, that there has been a decline in the percent of activities that had been
undertaken in 2017 as compared to the year 2016. The addition of new and useful features are
responsible for the change.
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Task 2
2012 2013 2014 2015 2016 2017
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Laptop (%)
Smartphone (%)
Tablets (%)
Linear Regression is a statistical tool that is used to determine the relationship between
independent and dependent variables (Jalayer, et.al., 2015). Eco-fone has used the same tool to
analyze the relationship between different gadgets and their usage over time of certain years.
This analysis will be used to make a forecast for the year 2018 and 2019. After looking at the
results derived from the test, it can be said that an upward trend has been witnessed following the
increase in usage of the smartphone. Along with this, there has been a significant increase in the
percent use of tablets by the individuals as well as adults. The tablet segment is booming as
much as the smartphone segment in the UK. The purpose of linear regression is to recognize the
relationship between two variables and forecast the demand for that variable in the future. It is
evident from the regression analysis that there is equal opportunity for the growth of the sales of
smartphones and tablets.
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Task 3
Eco-fone is making base to expand its services in the UK. This involves the places where the
usage of smartphones is comparatively low than the others. The firm has to identify the
customers and shift their focus on that particular segment for achieving desired results. BBC had
surveyed population of 1163 people, and the results that were published reported that a total
number of 71% of people aged between 55-75 years are using smartphones (BBC, 2017). It was
also observed that this rate is increasing day by day. It has been specified in the article that with
growing companies producing and selling variety of smartphones, it has become difficult to get a
stronghold in the market and now the new target of the companies are old age customers as they
are new in trying their hands in phones. With the introduction of salient features like a mobile
assistant, artificial intelligence and larger screen, it has been very easy for old people to access
smartphones on their own and this has also incremented the demand and sales of the phones.
This has been validated by the BBC article, as it stated that 50% of old customers have installed
Facebook in their smartphone but there is always a scope for better results.
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Task 4
The company is planning to expand its business to Kingston, for this is has to do complete
analysis of the pros and cons related with the expansion The motto of the above table is to
present the various pros and cons that can be expected while executing the plans related to the
expansion of business in Kingston. Appropriate scores have been allotted to these pros and cons
so that it can be mathematically calculated. This technique is known as a balanced scorecard. It
can be seen from the above table that the score of average pros is greater than that of the average
cons which is a good sign for Eco-fone (Vayvay and Kalender, 2015). It signifies that it should
proceed to expand its business to Kingston.
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Task 5
A.
Infrastructure is an important aspect when the firm is expanding its business. As Eco-fone is
planning to expand its business they has to acquire a new building. For this purpose, the firm will
have to take loan from a financial institution for procurement of such building. Following is the
monthly cost of mortgage loan for the company:
Thus it can be said from the above calculation that the company will have to make a monthly
payment of £ 3146 for the installment of a mortgage loan.
B.
Logos of some of the commercial mortgage lenders of the United Kingdoms have been identified
as below for reference:
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TESCO Bank HSBC Bank
Principality
Building
Society
NATWEST Barclays Bank
HALIFAX Lloyds Bank Godiva
Mortgage

Task 6
Testing the Possible Difference in Net Takings in the Two Shops
Eco-Fone used z-test, which is commonly used to determine the difference of the net-taking
between the two shops based in Richmond and Putney. This aids the management of the
company in analyzing and making key decisions regarding the selection of the best option
amongst the two and which suits the best interest of the firm.
The test was applied by the company within the organization to inspect the total net-taking for
both shops of the enterprise. The main reason for the test to be conducted in that the management
wants to analyze the different aspects and further determine whether the decision of expansion of
the business into Kingston will be beneficial for the organization or not. It may or may not be in
favor of the firm, but the ultimate decision is taken based on profitability. This is done to
evaluate, whether these shops act as a strong condition to generate any revenue or it will only
bring loss shortly to the company. This step will guide the management of the firm to provide
measures and eliminate such issues and take a firm decision regarding business expansion into
Kingston.
Z-Test:
Z-Test is applied to determine whether or not two population means are different, under a
condition when the variances are known and the sample size taken for the test is large (Sharpe,
2015). It is a statistical tool that assumes a normal distribution as the parameters of the test. The
use of this is based on the following assumptions or can say it is run on the following points:
 Population or sample size >30.
 Random Selection among the alternatives.
 The data taken for the test should be dependent on each other.
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Below is the formula of calculating mean by the use of the z-test method, this will aid in
determining the value.
1.41, as per the method of the Z-test.
= 0.05>H0<0.05 = 0.05<H1>0.05 (alternative)
This test reflects that no relationship exists
between the variable given (net –taking) of
given two shops (Wilson, 2015).
It represents that a relationship exists
between the two given variables. The
provided variables are net-taking of two
shops of the same organization.
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Task 7
Customer Satisfaction
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