Celcom's Strategic Management Case Study

Assignment instruction: 30 pages Question 1. Times New Roman Fond size 1.5 Heading 15 Bold Paragraph 12 Amended this below assignment with attachment of academic analytical models such as PESTLE analysis, ANSOFF Matrix, Product Life cycle, BCG Matrix, Generic Strategies and Marketing Mix etc..

EXECUTIVE SUMMARY In this project, we choose Celcom as our company and U-verse as the new telecommunication service which we are going to design a marketing plan for. The marketing plan is designed using Phillip Kottler’s Method. The assignment is goes into detail, about the company, the new products and the marketing strategies to be implemented. This strategies are based on our proper understanding of the marketing mix, cognitive marketing implementation and financial. A swot analysis is of the company, shows their weakness and threats as well as revealing the opportunities and strengths the company need to take advantage of. The ending section of the project shows how these strategies would be carried out through our controls and implementation. The project was based on essential researches, which we combined to design the informal marketing plan for the above mentioned company. It is a challenge we couldn’t afford to lose that is why we had to go deeper into understanding what marketing plan is all about and how they are implemented. The conclusion is a summary of the whole project and references shows guides for further reading. The whole project is general designed to teach new user about marketing plan and how this strategies are implemented, that is own main reason for using clear and simple language to aid easy understanding. Important issues are either highlighted or bolded throughout the whole project to aid faster display of key information.

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COMPANYPROFILE

Type

public (privatised)

Founded

1988

Headquarters

82 Jalan Raja Muda Abdul Aziz 53100 Kuala Lumpur, Malaysia

CEO

Datuk Seri Shazzalli Ramly

Industry

Mobile Telecommunication Services

Products Website

3G, 4G and satellite mobile network computer www.celcom.com.my

1.1 INTRODUCTION 1988 witnessed the dynamic birth of celcom, a leading mobile telecommunications provider in Malaysia. Since its inception, celcom has steadily made its presence felt in the Malaysian market. It has, always continued to spread its wings and is undeterred by the dynamic nature of the mobile communication industry. 2

Our brand vision is about pleasing our customers and exceeding their expectation. It is our company’s goal to empower the customers with choices and innovative solutions that will give them greater control and freedom to live it to the fullest. (Dato’ Sri Jamaludin Ibrahim, C.E.O, celcom) Setting up a team of quality directors and staffs, has transited celcom from first-generations to second-generation market leaders. For celcom, communication is a serious business. This is why we have mainly products and service geared toward maintaining business voices. This products and services includes business prepaid plan, business supplementary plan, business post-paid plan and business satellite. A major challenge facing celcom is how to increase profit and maintain their competitive advantage in the Malaysian market. (Celcom Official Website, 2013) An evaluation of the company’s internal strength and weakness and external threats and opportunities served as the foundation for this strategic marketing plan. The plan focuses on the company’s growth, strategic analysis suggesting ways in which it can build on existing customer relationship and launching of the new product and/ or services targeted to specific customer niche. Our new marketing focus, made explicit in this plan, renews our vision and strategic focus on adding value to our target market segments, the small business and high-end home office users, in our local market. This is the sample planned market sale for the first three months of instruction to the market.

2.0 BUSINESS MISSION AND VISION To delight our customers.  To build a profitable enterprise that maximizes investors return.  To empower, develop and reward our people, to become Malaysia’s preferred employer.  To build win-win relationship with all our business partners, based on mutual trust, respect and support  To work to bridge the digital divide, to build our nation and to enhance its standing abroad. 3

 To maintain the highest levels of transparency, integrity and professionalism. Together with all our stakeholders, we will make Celcom Malaysia a premium brand: a brand that symbolizes the spirit of freedom, aspiration, confidence, dynamism, timelessness, universality and globalism. (Celcom Official Website, 2014)

2.0.1 SITUATIONAL ANALYSIS In business for twenty years, celcom was founded as a telecommunications service provider and has evolved into high quality telecommunications provider across the Malaysian market. Dato’ Sri Jamaludin Ibrahim was appointed as director/chairman of celcom (Malaysia) berhad on 25 April 2008. He is currently the president and group chief executive officer of Axiata group berhad (formerly known as Tm International Berhad). (Celcom Official Website, 2014)

2.1 MARKET SUMMARY Copy paste Diagram – Michael Porter’s Five Forces.

2.1.1 COMPETITIVE FORCE Celcom’s competition especially in advertising industry is very strong both on local, regional and national level, making Celcom the market leader in Malaysia. Following the sales strategy developed by their local rivals, celcom Malaysia has improved their competitive level, through developing many telecommunications feature, providing quality services at considerable price. The competition in the telecommunication industry is very high with the latest introduction of a new telecommunications service provider (U-mobile). Celcom has reduced the cost of sms from 50 cent to 25 cent and reduced the cost of call from 35 cent to 20 cent per minute. Many other competitive measures are expected to enter the market soon as well. (Williams & Ferrell 1997, p.600) Plan – post plan, prepaid plan and Anniversary/Situational Plan/Celebration Plan

2.1.2 BARRIERS TO ENTRY Basically in Malaysia, telecommunication service is not an oligopolistic business. There is full freedom of entry once the company have meet up with the requirements and is ready to fulfil the government obligations. There are many telecommunications service providers in Malaysia, ranging from local service providers to international service providers. This makes the industry a purely competitive market. Nevertheless, celcom has understood the need to make customers satisfied and providing not just what they need today, but what they will need in the future. Through advancing technology, they have made it difficult for small companies to enter the market, thereby, creating barrier to entry for other small companies. (Williams & Ferrell 1997, p.600)

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2.1.3 BUYING POWER (CUSTOMER) In today’s society, consumers have less time for work and leisure. The hallmark characteristics for today’s product are convenience and ease-of-use. In fact, if the product does not save time and is not easy to use, customers will simply ignore it. Such is the same for Malaysian market. The customer’s ideology of “quality service – less price” is still the ruling key to purchase. Understanding this is basics in every industry. Have been provided with many choices, the consumers in Malaysia normally go for the best service that offers the least price. (Williams & Ferrell 1997, p.600)

2.1.4 PURCHASING POWER (SUPPLIER) Technology plays the most important role in this sector of the Malaysian market. Manufacturers understand the consequences of delayed supply, or insufficient supply when the demand and market price is high. This is why they make use of the best technology available to provide quality service to their customers. Many suppliers in Malaysia are more capital oriented than service oriented. This means that they can only provide you with the best for the highest cost that is a “more-for-more” marketing strategy. This makes the purchasing power to be vested more on the hand of the market leaders, and this is another competitive advantage celcom has over its competitors in the Malaysian market. (Williams & Ferrell 1997, p.600)

PESTLE Analysis Diagram

2.1.5 POLITICAL FORCES – public corporation There are no expected political influences or events that could affect the operation of celcom in Malaysia. This is because; celcom is a registered company and functions under company provisions Act of the Malaysian law. But as a company in Malaysia, they have to function under the directions of the Act

2.1.6 TECHNOLOGICAL FORCES Celcom currently offers the best broadband network in Malaysia. Technology is the fastest growing market trend nowadays. To maintain their position as market leader, celcom has enhanced their products technologically to keep the Malaysian telecommunications updated with ever technological advancement. (Williams & Ferrell 1997, p.600)

2.1.7 CURRENT MARKETING OBJECTIVES AND PERFORMANCE Celcom sends personal sales representatives to market their products on potential customers and create service concepts for their business or choice of order. Specifications are then sent to suppliers. This enhances more customer loyalty and relationship with the company. Although some of the customers do go on credit 20 % of the annual sales are obtained from this form of marketing sales and this is designed to reach their objectives of being the market leader and 5

providing quality services for the customer and profit to the company in return. This is a potential advantage they have over their competitors as well. Celcom’s current marketing strategy to maintain customer-company relationship with potential customer. Eg. Customer relation management (current marketing promotional to close with customer) -

Tied up with events eg, Jom Heboh

-

Promo – Hari Raya, CNY etc

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Phone plan

Update the latest figure for Percentage 20% above - refer annual sale of the market telecommunication.

GIVE YOUR OWN for SWOT Analysis

2.2 SWOT ANALYSIS

To add SWOT Diagram and include point by point under Strength, Weakness, Opportunities and Threats 2.2.1 STRENGTH Celcom maintains a product differentiation strategy resulting from a strong market orientation, commitment to high quality, and customization of products and services.  There is little turnover among well-compensated employees who are liked by customers. The relatively big size of the staff fosters communication and quick response to client’s needs.  A long-term relationship with the primary suppliers results in shared knowledge of the product’s requirements, adherence to quality standards, and a common vision throughout the development and production process.  The high percentage of sales, suggest a satisfied customer base as well as positive word of mouth, which generates new business per year.  Being the oldest telecommunications service provider in Malaysia, has given celcom a competitive edge and increased customer’s trust and loyalty to the brand. 

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2.2.2 WEAKNESS Celcom’s current facilities are crowded; there is little room for new employers or equipments to fit into the company.  Celcom is reactive rather than assertive in its marketing efforts because of its heavy reliance on customer’s reaction for product satisfaction.  While the staff size improves growth and communication, it also impedes commitment on the side of the staff and lack of specialization.  Both the product line and the client base lack diversification. Dependence on current recorder rates could bleed complacency, invite competition, or create false sense of customer satisfaction. Development of a product that would provide better quality service by the competitors would probably put celcom out of business.  The non-seasonality of the products and services creates bottleneck in productivity and cash flows, places excessive stress on the personnel and strains on the facility.  The poor niche market could be a competitive advantage for their competitors to gain an advantage over them, and this could lead to a dramatic decrease in customer’s loyalty.  High cost of products and service could alter the buying power of the consumers, especially in this time of global recession. 

2.2.3 OPPORTUNITIES Advertisement in Malaysia alone exceeds 200 million Malaysian ringgit annually. More than 20 million ringgit is spent on specialty advertisement which is the potential for celcom’s growth.  Celcom is currently the Malaysian partner of Vodafone.  Celcom is currently doing nationwide promotion using power icons like including international footballers Steven Garrard, Michael Owen, Ryan Gigs and Robert Pires and Chinese entertainers JJ Lin and Wang Lee Hom as well as local actress Maya Karim.  Celcom currently has the widest 3G and HSDPA coverage in Malaysia since its launch on 17thmay, 2005.  Celcom provides many products and services that suites different customer needs, ranging from economic, business, and family and leisure satisfaction.  The director and manager of the company, Dato’ Sri Jamaludin Ibrahim is currently working with the company for the seventh year, this is different when compared with other telecommunication service providing companies and with his full experience, he has helped guide celcom to a resting edge with quality management.  As more and more Malaysians look for ways to keep in touch with each other, celcom’s popularity and quality services has helped draw more customers to the company through customer relationship and brand loyalty. 

2.2.4 THREATS Reengineering, right-sizing and outsourcing trends in management may alter traditional channel relationship with brokers, dealers, and distributors or even lead to elimination of the channel. 

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Specialty advertisement through promotional items relies on gadgetry and ideas that are new and different. As a result, product life cycle may be quite short.  Completion from other telecommunications service providers is strong.  High cost of products and service would be a competitive advantage to their rivals over customers, through implementing low cost quality products and services.  There are no barriers of entry and this could be a great threat because it could make new fast productive companies to come into the market and try to gain a stand of their own.  Fast technological advancements would result in faster product life cycle, increase the need for improvement and might result in low sale of less quality products, or products with less technological features. 

2.2.5 &

MATCHING STRENGTH TO CONVERTING WEAKNESS AND THREATS

OPPORTUNITIES

The acceptance of technological advances and the desire to control time creates a potential need for technologically rich products with varieties of features.  Celcom must modify its management hierarchy, empowering its employees through a more decentralized marketing organization.  Celcom should consider diversifying its product line to satisfy new market niche, as well as developing products that are seasonal to boost sale.  Celcom should consider surveying its current customers and its customers’ client to better understand their needs and changing dreams.  Have gone into partnership with Vodafone, Celcom should consider establishments in its neighbouring countries, especially the lower technologically advanced ones like Vietnam, Laos, Myanmar etc. 

2.3 COMPETITION ANALYSIS Competitors: the major competitors are Maxis, Digi and U-Mobile respectively according to their level of threat.

Put Maxis as 2.3.1 follow with Digi and U-mobile. Bincangkan jika boleh diatasi maxis dan lain sykt telco dan kekuatan atau kekurangan sykt masing2 bersaing…

2.3.1 OBJECTIVES AND STRATEGY OF DIGI The main objectives of Digi are to become the main market leader in Malaysian market. This they have done by implementing many marketing strategies to persuade customers. This strategy includes the Digi family and friends, 18 cent per any local call, reward on reload according to the amount reloaded within a month and mass advertisement. 2.3.2 STRENGTHS OF DIGI

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The main strength of Digi is the market size they occupy through their extensive marketing strategy and promotions. This has made them one of the market leaders and their service are largely demanded across the Malaysian market. 2.3.3 WEAKNESS OF DIGI Their main weakness is limited coverage across Malaysia and the world. For example, sometimes when you send message to African continent with Digi, the message will not be delivered to the recipient.

2.3.4 SIZE AND TREND OF DIGI IN THE MARKET SHARES Digi currently holds the second largest trend in the Malaysian market shares.

2.3.5 OBJECTIVES AND STRATEGY OF MAXIS Maxis are one of the new entries into the telecommunication service providers market, and their main objective is to get as much customers as they could. This they have down through mass advertisement, sponsoring sports programmes, rewards to their customers and organizing shows for students and the public at large.

2.3.6 STRENGTH OF MAXIS Their sponsorships for sporting programming is drawing many customers attention since Malaysia is a country vast in sporting activities. To find out more in internet

2.3.7 WEAKNESS OF MAXIS Their services are inconsistent, due to poor and limited coverage as well as products features. To find out more in internet

3.8 CELCOM’S COMPETITIVE ADVANTAGE Being the oldest and most experienced amongst the three, Celcom has many competitive advantages against its major rivals Maxis and Digi. They currently posses the highest trend in the market share, giving the highest coverage, many products features and having the highest customer size in the Malaysian market. They are applying many future strategies to maintain their position as the market leader in the Malaysian market like niche marketing, business package development, intercontinental and international service expansion.

2.3.9 FUTURE COMPETITIVE MEASURES

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In other to maintain their current market position Celcom has developed competitive measures to fight off their rivals both at the present and in the future, this ranges from delighting their customers with their numerous service features, developing greater customer relationship strategy, implementing more societal marketing schemes and supporting the government. (Celcom Official Website, 2014)

2.4 PRODUCT OFFERING BY CELCOM Celcom provides varieties of products and service to their customer, which is why they are presently the best in Malaysia. But we intent to launch a new product (U-verse), that lets customers, pay their bills through phone, book online flight tickets and hotel reservations. U-verse: this is a popular product offered by AT&T in the United States. The products allow customers to pay their bill. Following our counter parts, in developing a cutting edge technology, we enhanced the U-verse service into paying bills, booking flight tickets and making hotel reservation. A service designed for both traveler’s and the market in general. This would be the first of its kind in South East Asia, and it would go long to way to convince Celcom customers about the company’s commitments towards providing the best service to keep them delighted and in developing the country into a globally connected nation with the best telecommunications service.

2.5 DISTRIBUTION With over five thousand trade channels in Malaysia, the distribution of the service won’t be difficult. The service (U-verse) is designed in a way that it can be automatically activated once a customer purchases a SIM CARD, by clicking *128#, then U-verse and following the instructions, or by going to any Celcom dealer near him for activation. The distribution channel is designed in a way that it is so efficient for customers and increases potential sales for the company. Celcom dealers can be found in over 90 per cent of Shopping Malls, Colleges, Universities, Recreation Centres and Mega Stores across Malaysia, making it easy for the customers to reach.

3.0 MARKETING MIX 3.1 OBJECTIVES Celcom has been in the telecommunication business with the primary objective to keep people connected and helping companies to market their goods and services as well as keeping them close to their customers. Besides formulating a market-orientated and customer-focused mission statement, celcom has established and objective to achieve cumulative growth in the next five years with a 50 per cent net profit for the newly launched U-verse. To accomplish these objectives, Celcom has developed a benchmark for progress in three different categories. Firstly, through using a market penetration pricing, the service will be brought to the customers at affordable and reasonable prices. Secondly, by gaining a better understanding of the need and satisfaction of the current customers, they will improve the service to encourage re-orders. Finally, the service is to be able to utilize it’s current technology and

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knowledge base, and research as well would be conduct on similar products with an eye towards developing the services to a specialty advertising product.(Williams & Ferrell 1997, p. 364)

3.2 TARGET MARKET 3.2.1 TARGET MARKET 1 large travel agencies or holiday planners For example, travel agencies like Wahtung sdn bhd, can use the service to provide 24/7 travel planning’s to their numerous customers, thereby increasing the companies ticket sales and profit. 

3.2.2 TARGET MARKET 2 Niche market of business travelers For example, business men and women who normally use online system for their reservation will find it easy to make reservations and flight booking by just a simple press on the button, and that would be more convenient to travelers. 

3.2.3 TARGET MARKET 3 Direct consumer market of hand phone user. For example, this service can be utilized in our day to day life, like paying bills and checking account balance, making it easier for our families by just pressing a button instead of having to go to the company or bank to pay our bills. 

To add target market 4 and 5 if any – Executive packages/company packages.

3.3 POSITIONING Celcom has since its establishment, positioned itself as the number one Malaysian network in the Malaysia market. This they have done by providing efficient network connectivity and linking of individuals together. Today celcom stands in the heart of every Malaysia as the telecommunication service provider that offers a “more for more” customer satisfaction, by providing the customers with products to keep them satisfied above their competitors and charging them more money for the quality they yield in the products. It has made our work so easy, that by launching this service as the first in south East Asia, it will go a long way towards convincing the present customers that celcom is truly the number one Malaysian network, persuading the non-customers both in Malaysia, and the neighbouring countries where celcom is currently expanding to join the leading network. Physiologically, celcom has influenced the status of their customers, because they are considered to be financial capable by using celcom services. 3.4 STRATEGIES By understanding the customer’s needs, celcom has used its strength to fill the needs of the customers more than any other telecommunications service provider in Malaysia presently. This 11

has given them a competitive advantage, boosted enthusiastic sale and increased more customer loyalties. Through careful and in-dept research in the characteristics if the Malaysian market, celcom has created distinctive target markets for its products through creating a strategic marketing mix that just not makes the product available, but also affordable, convenient and unique at a consistent and flexible level. This is geared towards improving new and existing products as well as profit to the company.

3.5MARKETING MIX 3.5.1 PRODUCT Celcom has developed an intangible attributes to the new products, to consistently meet or exceed customer’s expectation, enhance speedy response to customers demand and attribute anticipate new customer needs. This will be achieved through investing in research for consumer buying behaviour and product development. (Celcom Official Website, 2009)

3.5.2 PRICE With high availability of internets across the Malaysian globes, a price penetration strategy is advisable to enhance customer’s usage, and introducing the service. On the other hand, they would use that opportunity to increase price on improved products. Celcom should also be sensitive to the price elasticity of its product and overall consumer demand. (Celcom Official Website, 2009)

3.5.3 PROMOTION Through educating consumers on product improvement and creating awareness to nonconsumers, advertisement and sales promotion would be used to introduce the new service to the Malaysian market. (Celcom Official Website, 2009)

3.5.4 DISTRIBUTION Through gaining retailers cooperation and distribution channels across Malaysia, it would be easy for the service to reach the targe market. The SIM PACK is light weight and would be easy to transport huge number of the product with the service in it across Malaysian market. (Celcom Official Website, 2009)

3.6 MARKET RESEARCH Extensive market research is to be implemented to regulate customer’s satisfaction, anticipate and understand customer’s new need, and improve the products to either make the customers delighted or satisfied. This marketing research comprises of two types, firstly the internal marketing research which would be done by team employed and directed by Celcom, and 12

secondly research paid institutions. The result from both researches will be compared and analysed by the customer relationship team, to find a new year of maintaining quality customercompany relationship and brand loyalty. (Celcom Official Website, 2009) To add more

4.0 FINANCIAL STRATEGY 4.1 CONTROL AND PERFORMANCES STANDARDS The following performance standards and financials are suggested. The total budget for launching the new product, research, and customer’s survey will be equal to 80 percent of the annual promotional budget for the product introduction year.  Each team is responsible for reporting all financial expenditures, including personnel salaries and direct expenses, for their segment of the project. A standardized reporting form will be developed and provided by the marketing director.  The marketing director is responsible for adherence to the project budget and will report overages to the company president on a weekly basis. The marketing director also is responsible for any redirection of budget dollars, as required for each project of the business analysis team.  The new product offering would be evaluated on quarterly bases to determine its profitability. Product development expenses will be distributed over a two year period, and will be compared with gross income generated during the same time period. 

5.0 CONTROLS STRATEGY 5.1 IMPLEMENTATION SCHEDULE Activities, responsibilities and time for completion: all implementation are designed to create customer awareness and boost sales and are to begin along with the New Year on January 1, 2014. On January 1, create sales manager position along with marketing and advertising director. The marketing director will serve as a project leader for a new business analysis team, while the advertising director will take full charge of advertisement  By January 18, the business analysis team will review all recommendations from the project managers.  By January 20, develop a marketing information system to monitor client reorder patterns and consumer satisfaction. The managers are responsible.  By February 2, develop a plan for one year product offering along with potential customer. The business analysis team is responsible.  By February 5, finalize customer satisfaction for current customers.  By February 10, implement a new product offering advertisement and sample to potential customers. The business analysis team is responsible. 

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By February 15, analyses and report the result of all customer satisfaction survey and evaluate new product offering. The market director is responsible.  Re-establish the objectives of the business analysis team for the New Year. The directors are responsible. 

5.2 MARKET ORGANIZATION Because the new product requires extensive commercialisation to match customers need, it is necessary to organize the marketing function by customer groups. This will give Celcom the opportunity to focus its effort on the need and specifications of each target market. Celcom marketing efforts will be organized around the following marketing groups: 1] manufacturing group, 2] business-to-business group, 3] customer satisfaction group, and 4] customer relationship group. It group will be headed by a sales manager who will report to the marketing director. Each group will have full decision making authority and responsible for marketing the new product to the target customers within the segment. These changes in marketing organization, enables Celcom to be more creative and flexible in meeting customers’ need, reduce highly centralized management hierarchy and finally, give better opportunities to monitor the activities of competitors.

6.1 think

CONCLUSION

-

own

conclusion

on

what

we

For any given organization to market any new product, marketing planning is strategy used to coordinate a well planned product testing and launching. A well designed marketing planning ends up bring back positive results for companies. This project covered the main point as well as other minor strategies and implementations involved in building a cognitive marketing plan. We designed the above marketing plan based on intensive research and broader understanding marketing in general. As shown above, the new product U-verse is the first of its kind in the whole of South East Asia. As pioneers, the chances of gaining higher market shares and being the market leaders is what we looked into, a well planned strategy has be designed to make that happen. These strategies if implement as stated would probably bring out a well balanced positive result. The by understanding the environmental factors and analysis the strength, weakness, opportunities and threats of Celcom, we had the better opportunity to look into the situation as if we were their new product managers. This gave us the chances to build a better marketing plan that if well implemented, would bring in a positive result. 6.1

Which area Celcom can penetrate into Maxis market

6.2

Will Digi become a threats to celcom

6.3 Will Celcom has a bright future in Malaysia telecommunication market or international is better. 14

REFERENCES

Joe, T, John, B & Keith, P, 2005, managing innovation: integrating technological, market and organizational change, 3rd Ed, john Wiley, England Philip, K & Armstrong, G2001, principles of marketing, 9th edit, Prentice Hall, New Jersey. William, D & Jemore, M 1999, Basic marketing; a global-management approach, McGraw-hill, London William, M & Ferrel, 2005, marketing: concept and strategies, 10th Edition, Houghton Mifflin, New York. Corporate Strategic Management Transport (EMM) manual provided by ATC Perai.

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