Analyze of the UK mobile phone market
Introduction
The purpose of this research is investigating consumers’ attitudes and buying patterns of smart-phones. According to Digital Trends Spring - UK (March 2010) in 2010, more advanced smart-phones (currently used by 15% of internet users) will become increasingly popular because of increased choice and lower prices. The research aims are to study how the mobile phone market changed their strategic when the economic recession bit their industry; study what the sector patterns are in terms of overall adoption of mobile phones in the UK; and study what effect has let the customer making decision to buy the mobile phone.
This report have two sections, first section is overview the mobile phone market which includes mobile phone manufacturers and mobile phone retailers and network providers. Also use PEST analyze tool to analysis. Second section is including: aims of the project, context analysis, and key areas of marketing theory and methodology. At the end, the report will indicate the some potential results achieve and challenges
1. Mobile phone markets overview
The whole UK economy suffered huge losses under the financial crisis in last two years. However, research shows the mobile phone markets didn’t suffer much. Although the financial crisis didn’t have effected on mobile phone markets too much, but compare to 2008, the total number of handsets sold dropped last year, as consumers bought fewer phones during the recession. Due to that, the mobile phone markers have been improving their technology in a faster pace than before, such as the mobile operator systems and mobile broadband speed, as they looking forward to increase the revenues in 2010. In addition, following the mobile phone makers’ trend, the network providers also changed their offers to obtaining new customers and keeping the customers it already has.
1.1 Mobile manufacturers
Nowadays, most mobile phone makers focus on the smart-phones’ market, because according to Digital Trends Spring - UK (March 2010) mentioned that in 2010, more advanced smart-phones (currently used by 15% of internet users) will become increasingly popular because of increased choice and lower prices. ‘Smart-phones can provide more functions than traditional mobile phones. On the other hands, despite the mobile phone makers are focusing on smart-phones, but they also consider those not using smart-phones’ customers and they still improving the technology of the mobile phone’s camera or music function.
In general, these mobile phone makers developed many systems* such as symbian OS, Research in Motion, Windows mobile, Mac Os X, Linux, Palm Web, Android, Maemo and OMS for the smart-phones, and improved the high quality camera from 200 Mega Pixels to 1200 Mega Pixels. The main objective is attracting the consumers to buy their products, and ensure that their mobile phone feature is different from other brands, can give the customers some surprise. In addition, for the long-term plan strategic, those smart-phones’ systems can combine with other only belongs to their phones’ software provide their customers variety of mobile phone features and functions.
* See appendix I: Major operating systems used within smart-phones
1.2 Smart-phone markets forecast
From TIMES News paper FEB-15-2010 mentioned that the handset makers’ profits share of global operation profits in 2009 Nokia arrived at 40%, Apple 38.1%, also according to Credit Suisse analysts estimate that Apple will overtake Nokia in 2010 by claiming the biggest share of the handset makers’ profits pool. On the other hands, from the MWC2010 (Mobile World Congress) Microsoft Windows mobile released new mobile phone operating system, Windows phone 7 Series, and will be listed in this year Christmas. Also the Nokia and Intel reach to agreement jointed development to launch a new mobile operating system call Meego.
All above of those activated indicate that the handset makers are hoping improved the consumers’ confidence that can be translate into improved sales and profits, especially Nokia, the world’s largest mobile maker.
1.3 Mobile phone retailers and network providers’ market
Cause by these main mobile phone makers such as Nokia, Motorola, Samsung, Sony Ericsson, BlackBerry, Apple and Google keep improving their technology for their mobile phones and innovate relate products, let competition among the mobile phone retailers and network providers in the evolution of more and more intense. Despite the mobile phone market is very mature and saturated, but as you can seen the retailer and network provider of mobile phone stores are around the world, sometimes you can see high street in your city have three to five retailer of mobile phone stores, for example, O2, Vodafone, 3G, T-Mobile, Orange, Phones 4U and Carphone Warehouse*.
* See appendix II: UK Mobile phone retailers and network providers
The mobile phone retailers and network providers according to the mobile phones’ feature and function segmented the market for different customers, for example, smart-phones divide into business phone, theNavigation phones and real smart-phones. Base on these feature and functions, the retailers and network providers offering different contracts or phone price to customers. Furthermore, the mobile phone network providers not only offer the mobile phone today, the also offer the broadband to their customers.
Although the mobile phone makers developed a variety of operating systems for the smart-phones, the retailers and network providers are following this trend, but according to Mintel (April, 2009), about 36% responders said they don’t use a lot of the features of their mobile phone, and 37% responders said they only use their mobile for calls or text.
Mobile Phone Usage Habits
(Mintel, Telecoms_-_UK_-_April_2009)
In general, consider price is very important to the customers in this economic recession period, although the mobile phone retailers and network providers offering some reasonable contract or phone price, but on the customers’ view, they can accept only use call or text, and they don’t really care about the phones’ function.
1.4 Mobile phone retailers and network providers’ markets forecast
In this depressed period, the MMA (Mobile Marketing Association) has released their forecast for the Top 10 Trends in the US mobile market for 2010.The predictions cover a wide range of topics, from medicine to mobile TV, from barcodes to augmented reality to video conferencing. And according to that Orange in UK is innovating with HD call quality. Also all the network provider will improve their mobile broadband speed. In addition, according to BBC news, the UK network providers which T-mobile and Orange are planning to merge their UK businesses, and point out If completed, a deal between Deutsche Telekom's T-Mobile and Orange owner France Telecom would see a firm with sales of 9.4bn Euros (£8.2bn; $13.5bn). Also it would be the UK's largest provider, overtaking Telefonica's O2, with about 37% of the mobile market.
2. PEST Analysis
2.1 Political factors
According to Keynote (July 2007) shows that the mobile internet users are continuous growth, compared to 2006 about 5% increased. Basically, they used mobile internet to check their email, watched youtube, and surf the internet. So according to this, in autumn 2008, the European Parliament proposed the Telecom Package which applies to the telecommunications market of all EU members. One amendment has attracted lots controversy from some governments, as it puts restrictions on user’ rights to access internet. The UK government seeks to modify this and suggest that the Internet Service Providers (ISPs) would be obliged to monitor content going through their networks. It is unlikely that the Telecom Package will pass into law in the UK before the end of 2009. (Keynote, 2009)
2.2 Economic factors
As the results of the more customers’ trend to use Pay As You Go (PAYG), and some using contract customers also trade down to PAYG or SIM only contract, the mobile phone retailers provide free gifts and free handsets strategic to help in more expensive fixed-term contracts like 18 months or 24 month contract. Also the retailers concerned by those using PAYG customers, change their PAYG plan turn to the contract for example, Vodafone family plan, only top up five pounds per month, then enter your five family member number that you can have unlimited call to each others.
On the other hands, according to Mintel (April 2009), 24% responders said the retailers offered the lowest price for handset can influences their choice; 23% responders said that offered cheapest deal for package can influences their choice.
2.3 Social factors
The social networkings are rapidly increasing from the internet to the mobile sector, according to BBC News (Friday, 5 February 2010), nearly half of all the time people are using their mobile phones spend going online in UK. And from the GSMA (GSM Association) data shows that during December 2009 people in UK spent around 2.2bn minutes for browsing the social network. Facebook is currently winner and currently the largest social network on the web, Google is the second one.
Cause by that, the smart-phones functions such as video downloads and faster broadband access will gradually become a part of the standard mobile device.
Furthermore, there are a lot of legal issues surrounding mobile phone unlocking, but in fact, mobile phone is your own property that you are allowed to unlock it. So what is illegal? It is trying to make a stolen phone work, changing the IMEI (International Mobile Equipment Identity) code. According to this, nowadays, most people would like to try to unlock their phones because unlock the mobile phone network can save the money, due to some people often not in the UK then they can use other countries’ SIM card, it can avoid the international call charge fee.
2.4 Technological factors
As the Mintel (January 2010) mentioned that compared to men, women are more likely to focus on design and camera functionality, and link to MMA forecast in top ten trends in mobile market, mobile phone makers are improving the high quality camera technology then be part of the standard mobile phones. Also in Mintel (January 2010), Nokia is planning to launch the digital TV and overcome the unclear problem.
Following the currently smart-phones’ trend, the third-party developers are accelerate to developing the new mobile phone applications for those mobile phones’ operating systems.
Another technology will be continue to offer in the next generation mobile phones is
Global Position System (GPS), it will be part of the mobile phones standard.
3. Project Design
3.1 Overall Project aim and the Project objectives
The aim of this research is analyze the UK mobile phone retailers and network providers strategic when the economic recession in period 2007-2009, and analyze currently UK mobile phone consumption patterns. Also in this project will investigating consumers’ attitudes and buying patterns of smart-phones
Aim of the report:
Analyze the UK mobile phone retailers and network providers strategic when the economic recession in period 2007-2009
Analyze currently UK mobile phone consumption patterns
Investigating consumers’ attitudes and buying patterns of smart-phones
3.2 Context analysis
The whole UK economy suffered huge losses under the financial crisis in last two years. However, research shows the mobile phone markets didn’t suffer much. Although the financial crisis didn’t have effected on mobile phone markets too much, but compare to 2008, the total number of handsets sold dropped last year, as consumers bought fewer phones during the recession. Due to that, the mobile phone markers have been improving their technology in a faster pace than before, such as the mobile operator systems, quality of camera and mobile broadband speed, as they looking forward to increase the revenues in 2010. Nowadays, most mobile phone makers focus on the smart-phones’ market, more advanced smart-phones will become increasingly popular because of increased choice and lower prices. ‘Smart-phones can provide more functions than traditional mobile phones. Cause by the smart-phones trend, the mobile phone retailers and network providers’ competition more and more intense, they often changed their strategic which include in contract’s length, contract’s package, PAYG plans etc. On the other hands, the mobile phones users respond that due to the economic recession, they would like prefer the retailers and network providers offered the lowest price for the handset and offered cheapest deal for package, these two offers can influences their choice. Also some using contract’s customers are trading down to the PAYG.
3.3 Specific marketing analysis
3.3.1 Key areas of marketing theory
The aim of this report is to study three areas of marketing theory. Firstly, the report will look at the Marketing strategy; use SWOT analysis tool to analyze currently UK major mobile phone retailers and network providers’ internal capability (Strengths and Weaknesses) and the external situation (Opportunities and Threats). Analyze how they prompt thought about converting weaknesses into strengths and threats into opportunities (Baines 2008).
Secondly, a lot of mobile phone features and functions in the mobile phone market, such as the operation systems, quality of camera, design of the model etc. this part I will analysis how the companies segment the mobile phones’ market and focus on investigate using smart-phones customers’ attitudes and patterns
The third study area of marketing theory will look at the Buying Behavior, and shows that how mobile phone technology environment has been changed and global economic recession that affected the consumers make a decision to buy the smart-phones. Customer decision making is essentially a problem solving process (Boyd 1990).
3.3.2 Research methodology
In this research I will use primary data and secondary data to analyze. According to J Curwin 2008, “There are many useful sources of secondary data will not adequately meet the needs of our particular enquiry. The available secondary data is likely to give us some useful overall figures, but not the detail we may require in terms of products, issues or opinions.” The primary data collection will adopt quantitative method –questionnaire. According to Milne (1999) there are three advantages of questionnaire. Firstly, the respondents are gathered in a standardized way, thus the result of more objective and reliable. Because of set a range can make data objective and reliable, such as, 20 female and 20 male for the respondents that is a fair data and data comparable.In addition, using questionnaire may have more potentially information which can remind researcher some special issues they did not mention in the questions; furthermore, most of the questions are closed questions, because closed question has more focus on my topic and goals. For example, students will follow the order of this questions and answers, also can avoid some respondents have unreliable answers.
4. Potential results achieve and challenges
Nowadays, there are many types of mobile phone in the market, such as smart-phones, music phones and camera phones etc, this report will help the people to get to know these phones, also will help the people to understand the relationship between mobile phone retailers and mobile phone network providers. Furthermore, a possible potential result can achieve of this report would be understand the marketing manager how to overcome those uncertainly and unforeseen changed which including in macro and micro environments factor. Also will see the marketing managers how to deal with the trends and make right decisions to help their company to make a profit or help the company through the economic recession period. In addition, will see the marketing managers need to understand their customers’ attitudes, tastes and habits then changed companies strategic to solve the internal problems and external problems to make a profits;. As (Boyd 1990) mentioned thatCustomer decision making is essentially a problem solving process (Boyd 1990).
Also according to the CIM, the definition of marketing it is the management process responsible for identifying, anticipating and satisfying customer requirements profitably.
The potential challenges might cause by the limitation of the smart-phones users; firstly, those using smart-phones but they don’t know what the type they using, due to some people they just know the mobile phone can use internet or other functions, they don’t exactly know the type of their phones belongs to smart-phones; second, some mobile phone have high quality camera and smart-phone functions, and some mobile phone combined the camera, music and smart functions all in one that could make the customers confuse which one is real smart-phones, which one is real music phones. All above of this two reasons will cause that when I dong questionnaire investigate, the responders might be provide wrong data or information or might be some questions they don’t understand.
Reference:
A Parker and P Taylor (15 Feb 2010) Mobile businesses send out differing signals, Financial Times, P17
BBC NEWS (2009) T-Mobile, [online], available from: and Orange in UK merger
http://news.bbc.co.uk/1/hi/business/8243226.stmAssessed on: 22/04/2010
BBC NEWS (2010) Facebook dominates UK mobile use, [online], available from:
http://news.bbc.co.uk/1/hi/8500368.stm Assessed on: 22/04/2010
H Boyd, Jr and O Walker, Jr (1990) Marketing Management, International student edition, IRWIN, Boston
P Baines, C Fill and K Page (2008) Marketing, Oxford University Press, Oxford
J Curwin and R Slater (2008) Quantitative Methods for Business Decisions 6th edition, Thomson
J Milne (1999), Questionnaires: Advantages and Disadvantages: Learning Technology Dissermination Initiative, Aberdeen University
Keynote (2010) Digital Trends Spring UK, assessed: 28/03/2010
Keynote (2007) Mobile Telecommunications, assessed 28/03/2010
Keynote (2009) Mobile Marketing, assessed 05/04/2010
Mintel (2009) Telecoms UK, assessed 27/04/2010
Mintel(2010) Mobile Phones and Networks Re-igniting The Replacement Cycle UK, assessed 27/04/2010
MMA (2010) http://mmaglobal.com/news/mobile-marketing-association-forecasts-2010-trends-north-america-and-celebrates-2009-accomplish assessed: 04/04/2010
MWC (2010) 2010 MWC Event Highlight, Available from: http://www.mobileworldcongress.com/index.htm assessed: 28/03/2010