Marketing Strategy Analysis of Vodafone: A Comprehensive Report

This report provides a comprehensive analysis of Vodafone's marketing strategy within the UK telecommunications market. It begins with an introduction highlighting Vodafone's market position and brand image. The core of the report involves a detailed investigation using contemporary marketing tools, including PESTLE analysis to assess the economic, socio-demographic, and technological environments, and Porter's Five Forces to evaluate the competitive landscape. The report also examines the bargaining power of buyers and suppliers, the threat of new entrants and substitutes, and the intensity of rivalry among competitors. Furthermore, the report identifies Vodafone's strengths and weaknesses. Based on these findings, the assignment concludes with recommendations for improving Vodafone's marketing strategy within the competitive UK market.

INTRODUCTION
Vodafone is one of the biggest mobile phone network providers in United Kingdom, a
leading network telecommunication brand worldwide (see appendix A for the success of
Vodafone). The company has employed more than 7000 people across with over 19 million
customers (Vodafone, 2011). The corporation has operated its business in 26 different countries
worldwide. The company is a public limited company with stock listing in both London and New
York Stock Exchange.
With their brand slogan “Make the most of now”, Vodafone has built its image as a
trusted and reliable mobile network provider in UK.
Marketing strategy plays an important role in promoting and bringing products closer to
customers. This role is especially significant important in service sector as the process of selling
and using product happened at the same time.
The purpose of this assignment is to investigate and analysis Vodafone’s marketing
strategy, using contemporary marketing tools (PESTLE, Porter’s five force 1980, SWOT
analysis and USP) to identify its own strength and weakness. Based on these findings, the
assignment would propose some recommendations for the marketing strategy.
I. Investigation and Analysis
1.1. PEST analysis
PEST analysis (see appendix B) includes “broad environmental factors that have an effect
to a greater or lesser extent on almost all organizations” (Finlay, 2000, p.54). It is, therefore, a
useful tool to explore the environment and evaluate its effect on any strategic decision.
a. Economic & Politics
During 2007-2009, the world economic witnessed a financial turmoil that take it toll in
all business sector of the economy. As the result of economic downturn, the sales of service
sector, especially mobile network providers, fall sharply as consumer seek for alternate substitute
for mobile phone such as land line, internet phone, etc.

United Kingdom is not aside from this downward trend as the economy has shown no
positive signal of recovery from the financial crisis. Furthermore, the European debt crisis which
spread over almost over Euro zone economy has begun to affect British economy.
In overall, the economy show no sign of positive signal of recovery and in short term,
Vodafone in particular and mobile network provider in general still face with difficulties in
retaining their existing customer while manage to keep a stable revenue ( HY Markets Research
Team, 2012). However, the potential of investing in highly technological innovation segment
could be a solution for the company. Additionally, economic downturn means shorter budget that
spend for entertainment and other service.
b. Socio-demographic
United Kingdom is an aging country with 17% (UK National Statistic) of its population is
over 65, according to UK National Statistics. One important notice is that the number of people
over 85 has doubled over the period to 1.4 million (UK National Statistic) while the percentage
of young people at the age less than 16 decrease from 21 to 19%.
In young population, there is a trend among young people family as an increasing
minority of lone and couple family without children. The decline and delay of marriage, the
increase of divorce are also a significant tendency in British modern family.
UK is among the highest GDP per capita country with this figures in 2011 was $ 39.604
(rank 20th over the world) (International Monetary Fund, 2011).
In overall, United Kingdom is an aging economy with high personal total earning in the
world. This could be an opportunity but also a threat to the mobile network service as older
people requires different kind of service in comparison with young people.
c. Technology
Only over a decade, the mobile phone and mobile network provider witness a tremendous
innovation and changes in technology. 3G network (third generation mobile generation) replaces
GPS as the standard telecommunication for mobile phone. Furthermore, wireless has now

become popular in community, together with 3G; wireless is now a standard requirement for any
mobile network provider (Clapton, 2008, p. 56).
Additionally, a new generation of smartphone, initial developed by Apple Inc, which use
the latest technology, has become the next trend in mobile phone market. This new generation
redefines the face of the world of mobile and smart phone and creating a new trend in
consumption.
There is also a revolution in data storage and data service with the introducing of cloud
storage, part of cloud computing system which bring a whole new method of data storage service
for customer. With this new methodology, there is no need of high weight desktop or mobile
application as all the cloud based application can be accessed through web browser. This allows
business enterprise to run their application faster and data storage could be easily management
with less maintenance.
In overall, new technological wave has changed the face of network provider service
greatly. More and more new kind of services is introduced and requires the service supplier to
upgrade their infrastructure base to supply with better service than before.
1.2. Industrial analysis – Porter five force framework (1980)
Using the Porter five forces of competition model (1980) (see appendix C) to understand
the threat of new entrants, new substitute, the bargaining power of both customers and suppliers
and the rivalry among competitors would have severe effect on Vodafone marketing strategy.
According to Johnson et al. (2008, p. 67), the competitive environment “impacts more directly
on the nature of competition in an industry than general environment does”. Therefore,
evaluating the competitive environment plays an important role in understanding of the
attractiveness of the industry and how the company may choose to compete effectively.
* Bargaining power of buyers
In telecommunication market, buyers surely have a strong power as they can reduce the
cost leader prices but the price cannot be lower than the price of the closest competitors. Because
of lack of differentiation among service providers and low switching costs, Vodafone faces

potential threat from buyers. The company, therefore, may consider reducing cost as that is the
major factor decides the victor in the market at mature phase.
* Bargaining power of suppliers
Surely the suppliers in a mobile network provider have a strong bargaining power in the
market. However, Vodafone is the cost leader in the market with a lower cost margin in
comparison with others competitors. This could allow the company has an advantage in price
negotiation with supplier even if the suppliers want to increase the price of supply.
* Threat of new potential entrants
As mention early in the assignment, the market has reached its maturity period in its life
cycle, therefore, there is no potential entrants threat can danger the existing market player.
Economies of scale and cost leader make it difficult for new entrants to enter the market, but the
company should maintain it position as the cost leader to make sure that the market is
unattractive to new comer.
* Threat of substitute
The main substitute for mobile network service could be the land-line phone service and
voice-over-internet options and satellite based systems, but the convenient and lower price of
mobile service make no potential threat of the land line to overcome the mobile market.
Vodafone applies the cost leadership strategy to make it difficult for other substitute to compete
with them at new lower price even if they have strong bargaining power over suppliers or
advantages in economy of scale. Therefore, the threat of potential substitute is also really weak.
* Rivalry among competitors
As the market reach its maturity date, there is only a small number of company exist and
hold a large part in the market share.

Chart 1. UK mobile operator market share (first quarter 2010)
Source: Telecom market research, 2011
According to Mobile virtual network operator (MVNO) directory, there are 45 operators
active in the sector ranging from some conventional operator to retailing operator such as Virgin
Mobile or Tesco. However, there are only five major operators that hold up to 100% of market
share. Therefore, there is really tight competition between those five companies, especially
between Vodafone, O2, Orange and T-Mobile as their market share is roughly around 20-27%
each. O2 is the primary market leader but their share is only 3% higher than the closest
competitor (Vodafone). And others two is about 3-4% lower than Vodafone.
Price and promotional campaign could play a major role in completion among these companies.
The company with good promotional strategy and price leader could become the victor of this
market.