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positioning strategies
Published: 23, March 2015
DiGi's main customers come from almost young segment of society. It would
be wise for DiGi to improve on segmentation and positioning strategies.
Customer relationship in DiGi Telecommunication is use frequently, with this it
helps bring the bond towards DiGi customer. For instance, during DiGi's
customer birthday, DiGi will sent a Birthday Wish through SMS, or some extra
benefit such as extra reload bonus, free call during that particular day or
during that particular month.
Reloading prepaid for DiGi customers is simple now, because DiGi customer
can buy the reload No. anywhere at their convenience. It is located anywhere,
7-11, newsstand store, ATM, e-banking, and even through DiGi website in
advance. With this, customers can reload anytime, anywhere without worry.
It is important for DiGi to differentiate its product by technical and performance
characteristics, especially network coverage, to remain competitive in the
telecommunication market. In the TOWS matrix, several strategies have been
suggested, including technology improvement, low cost strategy, marketing
communication strategy improvement, balancing between post-paid and prepaid subscribers, and backward integration as well.
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From the aspect of offensive strategy, DiGi could make use of its financial
strength to adopt technology improvement that post introduces the 3G and
EDGE technology and low prices strategy in the market in order to secure
DiGi a better standing in the near future as people nowadays are more
knowledgeable and are beginning to seek better technologies to improve their
lives.
DiGi understands that corporate responsibility is not just the preview of one
single department the company to do "good". The responsibility lies in each of
them to make a positive difference in the world they live and work in. Each
person in his or her capacity as an employee, an employer, a parent, a
customer, or an individual, can contribute in the simplest way that can
minimize the environmental impact, for instance, and be a good example to
others. Our corporate responsibilities are tailored to fulfill at least one of these
three objectives which are driving integrity & empowerment, engaging with
community, and minimizing our environmental footprint, with the aim to
engage as many as our employees and the local community as possible.
Multi-language customer support was established as part of Digi drive to
embrace diversity, and to better facilitate request and concerns from DiGi
subscribers of different ethically, empowering them to have a better
understanding of the latest promotions and for them to air their concerns
effectively. Currently the customer support call centre addresses the following
language-specific needs of the community: English, Malay, Mandarin,
Indonesia and Tamil languages. To further increase Customer Support, DiGi
launched D'Chat, a 24-hour real-time Online Customer Service, bringing
Customer Support to a much more personal level.
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remember this Yellow DiGi Man by Digi Telecommunications Sdn. Bhd. This
Yellow DiGi Man represents the signal of your hand phone and DiGi is using
them to tell people how good is their coverage area is! At the end of 2006,
DiGi re launched its brand campaign after 18 months of absence with Yellow
Coverage Fellow (or more officiously called, YCF) through a series of
television commercials. Originally called Yellow Man, until renamed by DiGi's
marketing team, YCF was created by Naga DDB, DiGi's advertising agency.
Entitled "DiGi Yellow", and tagline "DiGi's WIDEST Coverage. Always with
you.", the commercials incorporated an upbeat theme song "I Will Follow You"
that is based on the 1963 Billboard Hot 100 No.1 song "I Will Follow Him" by
Little Peggy March. Public response to the campaign was very positive as "I
Will Follow You" had become a catch phrase among the Malaysian public.
The Brand campaign has the top unaided recall currently in a Malaysian Q1
2007 survey conducted by Research International and is one of the most
successful brand campaigns in Malaysia.
I'll follow you.
DiGi is still actively pursuing its Universal Service Provider (USP) obligation
by providing communication links in the 5 Government-allocated most remote
areas. The number of subscriptions has increased close to 2,000 households,
connecting thousands in the Malaysian population.DiGi was the first telco to
provide USP service via mobile phones (based on GSM), i.e. fixed call USP
rates made over mobile phones to enable greater mobility within the district
for rural users.
Customer relationship in DiGi Telecommunication is use frequently, with this it
helps bring the bond towards DiGi customer. For instance, during DiGi's
customer birthday, DiGi will sent a Birthday Wish through SMS, or some extra
benefit such as extra reload bonus, free call during that particular day or
during that particular month.
GMENTATION
At this stage, DIGI will have to differentiate their customer into different segments based on their common need or their response to
marketing action taken by DIGI.
Each of these response will them decide which strategy mix will be used by the company.
There are a few ways to differentiate market segments, like demographic, psychographic, behavioral and geographical location. For
DIGI, is best to use either psychographic and geographical location segmentation. In psychographic segmentation, customers will then
based on the social lifestyle like their daily lifestyle, social class and individual attitudes. DIGI in this section can differentiate
customer to high income or lower income customer. In geographical segmentation, customer will then based on their behavior like
prior purchases and brand preference. In this section, DIGI may provide phone packages along with well-known brand hand phone
like Samsung, Apple and Sony.
TARGETING
After segmenting customer into different groups, DIGI now will have to choose their targets. There is no strategy suits all kinds of
segments, so in order to be effective and efficient, development of the correct strategies is very crucial. There are three general
strategies for target marketing and they are undifferentiated targeting, concentrated targeting and multi-segment targeting.
In this situation, the appropriate targeting for DIGI to be used is multi-segment targeting. In this target is being used because DIGI has
to focus more than two segments and for each of the segments, different strategies must be applied. In this targeting, there are many
benefits, but it also quite costly, as it needs more efforts from management, market research and also new promotional strategies to
attract more customers.
POSITIONING
In this stage, positioning is where DIGI will have to develop a product and provide brand image into the minds of the customers. It
also involves advancing customer's perception to know what does customers experience. DIGI always reminds their customers that
choosing DIGI is the smartest choice. DIGI is also well known for yellow man and the logo sign is yellow. To show the unique of
DIGI, even the store is painted yellow and it really strikes out the customers view.
An effective positioning includes a deep understanding of the competitors' products as well. DIGI should differentiate their advantages
to excel among the competitors.
Introduction
In today's fast-paced competitive business environment, the
telecommunication industry is becoming a fastest growing sector, particularly
the mobile market. In Malaysia the telecommunication sector is growing in a
very fast phase in line with the growth of the nation's commercial and
industrial sectors. The growth rate in the use of telecommunication facilities
has increased tremendously, especially the number of telephone subscribers.
These numbers are expected to grow even faster as the government plan to
increase the telephone penetration rate of 50% across the country and 25% in
the rural areas by 2020 (MCMC, 2007).
In any growing market, competition is one of the important elements for a
company to watch for. In the Malaysian telecommunication background,
companies like Mobikom Berhad, Celcom and Sapura Digital Berhad have
been seen their company either being merged with bigger and more
competitive companies or gone bankruptcy. Only Telekom Malaysia has
managed to maintain its presence in the industry. There are three major
companies competing in this sector today - Maxis Communications Berhad,
Digi.Com Berhad and Celcom Berhad (MCMC, 2007).
The mobile market today has become extremely competitive and service
providers are moving aggressively to attract customer by offering some
attractive promotions and services. Thus, in order to win the market share, it
is important to understand the consumer perception and their passion on the
service, and offer a service that will exceed their expectation. Through this
paper, the writer will submit a proposal using the segmentation, targeting and
positioning strategies for the introduction of free starter packs to potential
Maxis customers.
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Operator of the Year" Award by the Asian Mobile News in 2008 and "Mobile
Data Service Provider of the Year" Award by Frost & Sullivan in 2009. Maxis
was listed on Bursa Malaysia in 2002 and then was de-listed in 2007 due to
privatization offer. On 19 November 2009, Maxis was successfully listed on
Bursa Malaysia again (Maxis, 2010 and Bursa Malaysia, 2010).
Maxis continuously face tough competition from its competitors. However, not
content with merely being a leader in mobile communications, Maxis is
embarking on the next phase of a transformation plan that will see it turning
into Malaysia's premier integrated communications provider.
As the marketing manager of Maxis Communication, the writer will be
presenting a proposal for the introduction of free starter packs to potential
customers. Currently, 76% of Maxis mobile subscriptions are on Prepaid
products, 22% on Postpaid and 2% on Wireless broadband. Although Maxis
has a biggest market share compared to its main competitors Celcom (31%)
and Digi (27%), the price wars are intense especially on the prepaid services,
thus Maxis needs to be competitive in continuously improving its service
offered to their customers. The writer will justify this proposal using the
Segmentation, Targeting and Positioning strategies below.
Segmentation.
Segmentation is the first step in the process and consists of partitions of the
market with the purpose of selecting one or more market segments which the
organization can target through the development of specific marketing mixes
that adapt to particular market needs. Kotler (2009) described market
segment consist of a group of customers who share a similar set of needs
and wants. He cited that a company cannot connect with all customers in
large, broad or diverse market, but they can connect by dividing such market
into groups of consumers or segments with distinct needs and wants.
Lynch (1997) described segmentation is the identification of specific parts of a
market and the development of different market offerings that will be attractive
to those segments. He also cited that segmentation is the fundamental to the
development of corporate strategy as some parts of markets may be more
attractive than others. Thus, careful analysis of segments and their
characteristics is therefore important.
McColl (1994) described segmentation as a process of dividing a
heterogeneous group of buyers into more homogeneous group with relatively
similar product needs, and through segmentation the company can serve its
customer better, compete more effectively and achieve profitability.
Regardless of the type of segmentation a marketer use, the outcome of the
segmentation process should yield "true market segments" and recognize the
customer differences. Segmentation is done for consumer market and
industrial market. The followings are the several different kinds of variables
can be used for consumer market segmentation:
Demographic segmentation
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Dividing the market into groups on the basis of age, gender, income,
occupation, education, religion, race, family size, nationality and social class.
Psychographic segmentation
Dividing the buyers into different groups on the basis of psychological /
personality traits, values and lifestyle. People in the same demographic Group
can have different psycho graphic makeup. Thus, psychographic
segmentation helps the marketer in examining attributes related to how a
person thinks, feels, and behaves.
Behavioral Segmentation
Dividing buyers according to their knowledge of attitude towards use of, or
response to a product. Behavioral segments also can group consumers in
term of :
Occasion - defined in term of time of day, week or year. Distinguished buyers
according to product use occasions. For example, airline passengers
triggered by occasions related to business, pleasure, or emergency.
Usage level segmentation - grouping of people into whether they are heavy,
medium, light users and nonusers of the products.
Benefit Segmentation - grouping of people seeking similar benefits, for
example, buyers who seek for low price, higher product quality and excellent
service.
The industrial markets are contrast to consumer markets as the number of
customer are fewer but they purchase in large quantities. However, some of
the consumer market segmentation variables can be applied to industrial
market segmentation such as demographic, geographic and psychographic
segmentation. The followings are the variables can be used for industrial
market segmentation:
Targeting.
Once the segments are identified and their relative importance to the firm
determined, the targeting strategy is selected. In this process, the decision to
target one or more segments is being made. McColl-Kennedy (1994)
describes the process of evaluating and selecting the target market using the
following seven factors:
This is done using a number of tools such as market potential and sales
forecasting; jury of expert opinion; sales force composite; buyer intentions;
and regression and time series analysis
Step 7
Select the market segment and an appropriate marketing strategy
the selection is depends largely on the market potential in each segment and
the company's sales forecast in each segment
Source: McColl-Kennedy, (1994) Marketing: Concepts and Strategies.
In evaluating different market segments, Kotler & Keller (2009) suggest
marketers to look at two factors - the segment's overall attractiveness and the
company's objectives.
Porter (1985) proposes a similar approach but also recommends studying the
company's resources and skills as reflected in the value chain, and their
suitability to target market alternatives. Aaker (1995) bases his selection
criteria on the SWOT analysis produced during the strategic marketing
planning process.
Lancastre and Massingham (1996) proposed to analyze the characteristics of
the market segment itself with regards to a number of key factors such as
market size, market dynamics, factors for success, competitive structure and
profitability analysis.
Selecting a target market is very crucial for a company. Thus, the writer
suggests the marketers need to pick up the right group of consumers through
a careful segmentation and targeting process to determine the needs and
buying behaviour of the consumers in each segment and the differences
between one segment and the others. In other words, the marketers not only
identify the characteristics of each segments but also the 'distinctive
excellence' that is required for catering the specific needs of the consumers
and the capability of the company in delivering the products or services.
Positioning.
Positioning is the act of designing the company's offering and image to
occupy a distinctive place in the minds of the target market. The goal is to
locate the brand in the mind of consumers to maximize the potential benefit to
the firm (Kotler and Keller, 2009). Successful creation of a customer-focused
value proposition is the result of positioning, a cogent reason why the target
market should buy the product. Positioning requires the similarities and
differences between brands be defined and communicated. For example, in
the automobile industry Mercedes is positioned for luxury segment and Volvo
is positioned for safety.
Kerin et al. (2009) prescribe two approach for positioning a product in the
market. "Head-to-head positioning" involves directly competing with
competitors on a similar product attributes in the same market and
"Differentiation positioning" involves seeking less competitive, smaller market
niche in which to locate a brand.
Ferrell et al. (1998) recommends to differentiate the products from competitive
offerings and then, position it so that it seems to possess the characteristics
the target market most desired. The most important element that
communicates the differences between one product and another is the brand,
besides that, three other important bases are product descriptors, customer
support services and image. In product positioning strategies, Ferrell et al.
(1998) recommends the following strategies in which marketers can choose
any one or all of them to create a positive image for their products Strengthening the current position, moving to a new position, or attempting to
reposition the competition.
Gunter and Furnham (1992) prescribe the marketers to develop positioning
objectives to then develop them into a detailed marketing mix. However,
Aaker (1996) recommends developing the positioning objective only after the
brand identity and value proposition have been developed. In exploring the
latter, it is useful to understand Aaker's definition of positioning is "the part of
the brand identity and value proposition that is to be actively communicated to
the target audience and that demonstrates an advantage over competing
brands." Kotler (1994) refers to it as the unique selling proposition.
Geographic Segmentation
Other than Malaysia, Maxis had ventured into the telecommunication market
in India and Indonesia. The firm has localized its products there by having
local celebrities in their advertising promotions and providing services that is
adapted to serve local needs such as mobile astrology in India (Maxis, 2010).
Demographic Segmentation
Malaysia is a multicultural diverse country with 28 million populations with 30
million mobile subscribers or 106% penetration rate (MCMC, 2009).
Maxis offers "HerMaxis" service for their female customers and provides
mobile coupons on beauty, fitness, spa and cosmetics products. There is
income segmentation when it comes to the type of rates for its mobile
services. A package is available for customers subscribe to the minimum topup amount because of lower usage and enjoy the longer validity period. Race
segmentation can be noticed through Maxis WAP portal dedicated to the
Muslim community where Islamic information are provided, while Chinese
customers often receive discounts for Chinese concert tickets.
For college students, special services are offered according to their needs, for
example, allowing the phone to act as a bulletin board among their friends.
Finally, for younger generation, a youthful outlook is portrayed by having
music, games and sports web portals, exclusive for them (Maxis, 2010).
Psychographic Segmentation
Through psychographic segmentation, Maxis has allocated its products
according to the life style of their consumers. This ranges from travel,
entertainment, traffic check, API reading to dining hotspots. Besides that,
information on stock, news and entertainment is provided to consumers who
pay for these services (Maxis, 2010).
Behavioral Segmentation
Behavioral segmentation is divided into segments like occasion, benefit, user
status, user rates and attitude towards product (Kotler and Armstrong, 2006).
Occasion segmentation is obvious during the festive periods as Maxis offers
lower call and SMS rate to increase the usage. Benefit segmentation can be
seen through the different types of services offered ranging from mobile
money transfer, mobile instant messaging, banking and rewards. On user
status, Maxis gives a special bonus on the customer's birthday as an
appreciation to their loyalty. Maxis also segment its market according to the
usage rate. For those customers forget to reload their prepaid within the
validity period, a text message is sent with a reward offer as inducement for
them to reload within a stipulated time. Lower rates are also given to
customers who frequently use their mobile services. Segmentation is also
seen according to the attitude towards the product. Customers concern in
safeguarding their information in the phone can request for backup service for
the phonebook and messages (Maxis, 2010).
Upon completing the segmentation, it is important to evaluate those segments
and decide which segment Maxis can serve best. Maxis' main targeting
strategy is through differentiated marketing. It offers different
telecommunications products aimed at defined segments. Postpaid services
is targeted to high usage pattern while prepaid services is targeted at
customers who use less or requires control over their usage.
Maxis use concentrated marketing when endorsing its prepaid segment. It
tends to use more of its resources on the promotions and advertisements for
its prepaid market compared to the other segments. Concentrated marketing
is advantageous as Maxis is able to market more effectively by fine-tuning its
prices and products for the prepaid services. This in turn makes it highly
profitable (Maxis, 2010).
Recently Maxis is facing high competition from its rivals, Digi and Celcom.
Thus, this is hitting Maxis badly as it needs to compete to maintain its market
position.
After evaluating the different segments, Maxis can offer the free starter pack
targeting to all its Prepaid customers. Some of the target segment that will be
attracted with this free starter packs are those listed in the demographic and
psychographic segments. Currently, Celcom is offering free starter pack for
schooling younger generation through its "School Of X (S.O.X)" package
(Celcom, 2010). Maxis can offer this package in order to stay competitive from
its competitors while increase its market share position. This can be easily
achievable as Maxis has the economies of scale with a huge subscriber base.