A Marketing Audit for Du Product & Service

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Introduction

According to Armstrong (2005), marketing management is defined from two different, but interrelated, perspectives. The first definition is from a social perspective. To this end, marketing management is conceptualised as the various initiatives undertaken by a given business organisation.

Some of the processes undertaken by business organisations from this perspective include those meant to ensure that individuals and groups access whatever it is that they need and desire to meet their needs. Through the business organisations, groups and individuals find it easier to produce and exchange values in the society.

The values in this case include, among others, human energy, as well as the products and services generated. In his journal, Diab (2012) is of the view that it is only through such mechanisms that business organisations are able to create desirable exchange.

Marketing management is also defined from a managerial perspective. From this perspective, the concept is defined as those processes involving strategies meant to create competitive advantage and realise better market locations for the business organisation. A case in point is product differentiation, which sets the product of the company apart from those of competitors.

Efforts to improve the quality of the product are also regarded as marketing strategies from a managerial perspective. In all these forms of marketing strategies, businesses, through their management teams, promote, distribute, and price their products in the market. The management team is involved in planning and executing all the procedures associated with marketing and promotion of the product.

The two definitions above provide insights on what needs to be done to make sure that products and services from the business organisation reach the final consumer in the market. There are three theoretical frameworks from which the two definitions above operate.

The three include marketing segmentation, market targeting, and positioning strategy. It is through these three marketing concepts that the management team creates and exploits opportunities in the market.

The concepts discussed above are the major focus of this paper. The author conducts a marketing audit of Du Telecommunication Company in United Arab Emirates in the context of concepts defined above. The Du is a renowned brand in UAE telecommunication industry.

To successfully carry out the marketing audit, it is important to carry out an analysis of the actual brand by conducting a critical review of related and relevant literature. The review provides a platform from which to assess the performance of the company in the market. The author will then come up with viable recommendations for the company.

DU-UAE Telecom Company: A Brief Overview

The company, which is part of the Emirates Integrated Telecommunication Incorporation, is one of the telecommunication business enterprises operating in Saudi Arabia. Although the company is legally known by its full name, rebranding strategies has given it the new name, DU Telecommunications, which came into effect at the beginning of 2006.

In 2011, the company, through the management, invested a total of AED 1.72 billion (Diab, 2012) in its business operations in the region. The continued expansion of the company has seen it serve more that 5 million active subscribers of mobile services today. As far as telephony subscription is concerned, the company serves a total of 624,700 active consumers. The remaining segment of customers is registered under the company’s internet broadband department.

The group consists of a total of 127,000 subscribers. According to the company’s annual report, the UAE telecommunication market is already saturated. Currently, the company has no strategies or plans to expand its share in this market. On the contrary, the company is making plans to venture in other regional and international markets.

There are several products and services offered by DU Telecommunication Company. They include, among others, broadband connectivity, mobile telephony, fixed telephony, as well as IPTV services to business premises and homes.

The United Arab Emirates’ Market: An Environmental Context Analysis

According to Diab (2012), an environmental context analysis refers to a critical analysis of an external market within which a business enterprise is operating. In other articles, different writers have come to refer to this as PESTEL analysis. It is, therefore, one of the most important aspects in marketing management.

The analysis helps business managers to analyse the external environment that their business organisations are operating in. In addition to the current external environment the business is operating within, the analysis is applied in external environment within which the business is planning to operate from in the future.

In this section, the writer provides a critical analysis of the external environment within which DU Telecommunication operates. Basically, the analysis will revolve around the UAE market. To this end, the author will look at the market’s demographic environment, political and legal environment, economic environment, socio-cultural environment, as well as technological environment.

Analysis of the Market’s Demographic Environment

According to the World Bank’s fact book, UAE’s demographic composition, which touches on the country’s population, has grown tremendously since the 1980s. The country had an initial population of approximately 1 million people. According to the findings of recent population census, UAE had about 5.312 million people as of 2010.

According to Diab (2012), the telecommunication environment in UAE has been restrictive for a very long time. For many years, most businesses operating in this sector were owned and controlled by the government. The competition in this industry is still very low.

For consumers, the decision to choose use the services of a mobile or telephony services provider is largely determined by their geographical location in the country. The consumers tend to go for the companies located within their locality. Basically, DU Telecommunication Company dominates this industry in some of the free zones in the country.

The company’s competitors, such as Etisalat, have gained ground, and continue to dominate, the industry in the other market zones. As a result of this, and contrary to the aspirations of most nations in UAE, the region is finding it hard to maintain its position as a global IT hub. Access to internet broadband, among other things, is still very low in the region. In comparison to other markets in the world, access data in UAE is a very expensive undertaking.

Analysis of the Market’s Political and Legal Environments

Since its inception, DU Telecommunication Company continues to face a number of challenges. Some of the challenges arise from the fact that the company operates in the information technology and telecommunication market, which is a fairly recent phenomenon on the global market. Slight changes in UAE’s ICT market end up affecting the company’s operations.

There are three major factors that affect Du Company as far as the political and legal environments are concerned. First, DU Telecommunications Company is facing a lot of criticism because of the operations in its manufacturing plant. Laws dealing with environmental protection, together with other similarly stringent regulations, have significantly affected the operations of this company. To deal with such legal provisions, the company has no option but to implement efficient and effective production methods.

The second political and legal issue has to do with civil unrests, changes in government structures, and possible government takeover. The issues are likely to have an impact on the company’s operations in the region. For example, a civil unrest will negatively affect the company’s sales volume, as well as its general operations.

The prospects of Du Company’s expansion in other markets largely depend on the local political conditions. Since its inception, the company has avoided expanding its operations into other Arab markets. The major reason for adopting this strategy is to utilise and protect the Arab market (Diab, 2012).

Analysis of the Market’s Economic Environment

There exist a number of economic variables that affect the operations of Du Company on the international market. The variables are clustered into three major categories. One of them is the recent global financial crisis, which negatively affected the company’s sales volume.

The impacts of financial crises are significant to this company given the nature of the product and services it is dealing with. The second category has to do with such macroeconomic variables as cost of labour and inflation. When the labour costs are high, for example during a crisis, the operations of the company are affected negatively. The third category of economic variables affecting the operations of the company is related to the nation’s per capita income. To this end, UAE are likely to spend more on telecommunication products.

An Analysis of the Market’s Socio-Cultural Environment

In its efforts to expand and operate in other markets, the company has to contend with various socio-cultural variables. For example, the company has to address issues to do with the local culture and ways of life. On the other hand, the operations of the company may affect the way the local people share information and use technology in their life.

When the company implements the various policies meant to deal with the market’s socio-cultural environment, its investment portfolio will be affected. The company has faced a lot of criticism in the process of distributing its technological products and services. The opposition is mainly from groups concerned with the environmental impact of the company’s operations. In addition, most people are concerned with the effects that technology has on their health. Such issues are likely to affect the operations of the company in the market.

An Analysis of the Market’s Technological Environment

Technological innovation is one of the key resources at the disposal of Du Company. In every stage of its operation, the company integrates the technological advancements made by its researchers, and that which is available on the market. The management realises the fact that the implementation of effective and appropriate technologies will enhance the company’s productivity.

The strength of the company lies in the advertising and marketing channels and strategies adopted. The two factors have continued to affect the performance of the company’s brands. Through its marketing department, the company has, since its inception, embraced such communication mediums as social networks, television, and radio.

Competitor Analysis

The UEA telecommunication market is characterised by an environment that is highly regulated by the government. There exists little competition in the telecommunication market. The choice of product and service providers is determined by the areas within which they operate. Du Company has continued to take advantage of its monopoly in the free zones. On the other hand, Etisalat, which is one of the competitors in the market, enjoys monopoly in the other areas.

Since its inception, Du Company has continued to operate in a less cycle market. The firms operating in the market lack the capacity to compete effectively. There are several issues that should be taken into consideration when analysing competition in a given market.

One of them is the ability to imitate the innovation adopted by the market leaders. In some cases, it is very easy to imitate those innovations, making it inexpensive for new entrants to operate in such a market. In case the market starts to experience a rapid growth due to the entrance of other firms, then it means that decisions by the business leaders need to be faster and effective.

Fixed telephony, broadband, and IPTV business have performed exemplarily for Du Telecommunication Company. The company’s ‘razor’ strategy is very profitable. The management realised that the reverse or blade strategy will lead to increased returns.

Figure 3 in the appendices section clearly illustrates this aspect. Several items need to be replaced from time to time. For example, the company finds it necessary to replace communication devices like those used in fixed telephony and internet subscriptions.

The company has in the past used differentiation strategies to market its products in the market. Innovation and design are some of the factors taken into consideration when the company is adopting a differentiation strategy. It adopts the strategy in the provision of such products and services as fixed telephony, internet, and broadband services.

The combination of products and services is not one of the company’s critical competitive advantages. The company has found it hard to sustain such a strategy for a long period of time. Because of this, Du Telecommunication Company will have to come up with measures that help in introducing new products and services in the market. The adoption of such a strategy helps market players to deal with competition.

Du Company, through its R&D department, has continued to introduce new and innovative products and services in the market. It is a strategy meant to create competitive advantage from in any given market. For firms that operate within a fast cycle market, it is hard to compete favourably and retain their competitive advantage in the market. To cope with this scenario, firms find it important to formulate and implement high value and innovative strategies for their products and services.

What this means is that the firms are able to take advantage of the fast cycle market sectors. There is continued expansion of the market to allow other players to operate. The expansion will force the market players to formulate and implement innovative strategies. It is in this area that Du Company takes advantage of its skills in the market.

Etisalat Telecommunication Company was formed in 1976. At that time, the company had a market share of 69% (Diab, 2012). In 2006, the monopoly of Etisalat Telecommunications Company was challenged by the entry of Du Telecommunications Company. Two years ago, another company, Yahsat, was awarded a ten year licence to operate in the telecommunication sector.

Since its inception, Du Company has continued to expand its market share in UAE. The expansion is clearly illustrated in figure 1 in the appendices section. On the other hand, Etisalat’s share market has continued to decline over the years.

Market Research and Du Company

Overview

Like in any other business organisation, research and development is an important component, as a well as a strategy, adopted by Du Company to increase its market share. Du Company has set up a research and development centre (R&D) at its manufacturing plant.

Through this R&D department, and in collaboration with personnel in other departments, the company has continued to come up with new ways to deliver quality products and services. However, the company is still at its infancy as far as development is concerned. As such, it continues to encounter a number of challenges in the market. It needs to invest more in its R&D centres to overcome such challenges. The various challenges have negatively affected the adoption of innovative technology in the company.

Customer Analysis

DU Telecommunication: market segmentation and market targeting

Market segmentation refers to the process whereby a business organisation subdivides the market within which it is operating. The market is subdivided into groups of potential future and current customers. There are various factors that guide the segmentation process. The factors, according to Armstrong (2005), include shared characteristics, shared needs, and shared consumption patterns. Segmentation strategy also assists in implementing policies aimed at enhancing the company’s competitive advantage.

There are various criteria used by Du Company to segment the market. In the first criterion, the company markets its products horizontally. Through this strategy, the company, through tariff setting on phone subscribers, spreads a small charge across this group of customers.

The second criterion adopted involves vertical marketing and segmentation. The strategy allows the company to create specific tariff charges for specific customers. For example, the company provides special broadband connectivity to business users, which is different from the one provided for home and personal users.

During product and service marketing, Du Company targets different segments of consumers. According to an article by the company, and which is cited in Diab (2012), the primary segment for Du’s products and services consists of carrier services for business individuals.

The secondary target market for telephony devices includes government agencies, home owners, and small businesses. When targeting these market segments, the company takes into consideration customers who need broadband connectivity, mobile offers, call tariffs, and IPTV connectivity.

Du Telecommunications: positioning strategy

The company has positioned itself in the market to target specific consumers. By offering different telephony products and services, the company targets low income individuals, high income home and business owners, as well as high income business carriers.

If the company made the decision to target high income businesses only, then the low and middle income earners and home owners could lose to the big players, which will affect the company’s earnings. The move will end hurting the company’s overall performance. The sales volume will be affected as a result of increased prices targeted at high income earners.

Du Product’s Marketing Mix Strategies

Product Strategy

Du Telecommunication Company, through the management team, designs a number of communication products and services that helps to meet the needs of the customers. As already indicated, the products and services offered by the company in the market include broadband connectivity, mobile telephony, fixed charges, and IPTV services.

Fixed charges, prepaid subscription, and IPTV services remain some of the most vertically-integrated and closed services offered by the company. Although Du Telecommunications offers documented interface for its communication technologies, the R&D department still needs to add more products and services to the already existing portfolio.

For example, the existing fixed telephony services do not allow consumers to make calls across networks. At the beginning of 2008, the company began to selectively block some of its VOIP traffic. The move forced many consumers to abandon the phone to computer functionality of the company’s VOIP system.

Refusal to license the consumers was justified given that the system remains illegal in most countries in UAE. Telecom providers operating in the UAE market derive most of their income from the expensive charges imposed on expatriates.

However, there exists a special form of exemption where the law permits the use of VOIP services. Consumers are able to make calls in a computer-to-computer mode. Under this arrangement, consumers can still access VOIP websites, set up their accounts, download software in VOIP mode, as well as use software to make video and audio computer-based calls.

Still in 2008, Du Company began to institute similar censorship measures on the web. The measure has for a long time been practiced by its competitor, Etisalat. According to UAE censorship results, any effort to get online content was regarded as inappropriate. As a result, the company’s page was blocked. In addition, matters related to pornography instigated the closure of various forums used to share news articles, such as blogs.

The various measures taken by the company, as analysed above, have become key components of its marketing mix strategy. Products and services are the ideal advertising platforms in marketing mix. The strategy helps in the distribution of products and services in UAE. It also helps in exploring marketing opportunities and channels to improve customer relationship.

Product Pricing Strategy

Business organisations operating in a competitive market regard pricing strategies as important aspects of their marketing strategies. Harrison (1989) argues that the worth of an enterprise depends on the perception that consumers have towards its pricing strategy. Du Company’s marketing and selling department sets competitive prices for its products. In doing this, the company uses both competitive and value based pricing strategies.

Value based pricing strategy means that the company determines the worth of the product on the basis of the value that a consumer derives from it. It is one of the strategies adopted by Du Company. For example, the company charges broadband internet subscribers depending on the amount of data bundles spent.

The company also uses market based pricing strategies. The strategy focuses on consumers who, through their fixed-line or active mobile subscriptions, pay depending on the market conditions. According to figure 2 in the appendices section, the number of pre-paid subscribers has grown at a higher rate than that of post-paid subscribers.

Promotion Strategy

The company uses three major channels to implement its promotion strategies. They include advertising campaigns carried out at the company’s customer care centre, as well as publicity stunts and personal selling to consumers.

In addition, the company advertises its products through television, billboards, and social media. Personal selling is conducted through the use of specialised and highly trained employees.

Distribution Strategy

Du Telecommunication utilises wholesalers, regional retailers, resellers, and cataloguers to distribute its products and services in the UAE market. In addition, the company’s marketing and sales department sells most of the products to third parties. The consumers targeted by the company include home owners, individuals, businesses, as well as government agencies.

Majority of the company resellers operate on narrow margins. The resellers are significantly affected by the varying economic conditions in the country.

Du Telecommunication Company’s management team believes that it is crucial to establish direct contacts with consumers. The direct contact will help the company to demonstrate to the consumers the advantage of using their products and not those of competitors.

Effective product distribution has helped the company in meeting the demands and needs of the consumers. As already indicated, the company uses a network of individual consumers, resellers, wholesalers, regional retailers, national retailers, as well as cataloguers.

Product Lifecycle

The company’s marketing strategy includes developing strong products and services suited to the market. Through its R&D department, the company has introduced a number of technologically advanced products and services in the market.

Product strategy ensures that the company, using the established distribution channels, effectively accesses the end users. The company was established recently. As such, most of its products and services are still in their growth stage. The nature of the company’s core products and services calls for continued development, creating room for further growth.

Du Company: Customer Service and Relationship Activities

Like in any other business organisation, customers are the most critical asset that the company can have. To enhance their survival in the market, business organisations need to attract new customers. At the same time, the organisation should retain the established customer base. According to Harrison (1989), customer loyalty, as far as a given brand is concerned, is very critical. The level of loyalty determines consumer’s attachment to the brand.

Through the company’s human resource department, Du Telecommunication Company has adopted a number of strategies aimed at increasing the number of customers. The strategies are aimed at establishing and maintaining a critical base of loyal consumers. At the company’s customer service centre, which is located at the headquarters, highly trained and specialised customer care representatives are used to establish a connection between the company and the consumers.

The company also offers after sales services to the consumers. Customers who purchase IPTV are helped to connect the device. The company has adopted an extended product and service warranty strategy that lasts for more than 12 months. The customers find it easy to test and use the company’s products. Through these mechanisms, Du Company has managed to create a positive and healthy relationship with the customers.

Recommendations

Based on the discussion and analysis of Du Company conducted above, it suffices to note that marketing management is one of the strategies used in improving the operations of a given company. The management needs to implement such strategies as market segmentation, targeting, and positioning. The three are essential as they help businesses to establish and exploit opportunities in the market.

The management at Du Telecommunication Company needs to take into consideration the following recommendations, based on the marketing audit carried out on the firm:

It is important to conduct an environmental analysis of the market in which the company is operating (or intends to operate). The analysis will help to identify and deal with problems associated with political, economic, socio-cultural, and technological issues.
Understanding the market through competitor analysis will assist in managing the business. Some of the advantages accruing to competitor analysis include coming up with a viable competition strategy and the adoption of effective pricing and product positioning strategies.
Marketing research plays a major role in discovering new products and services. Du products are still in their early stages of development. As such, the management needs to invest more in R&D.
The company needs to a comprehensive consumer analysis to fully understand their needs. The analysis will help in coming up with strategies to improve customer satisfaction

References

Armstrong, K. (2005). Marketing: An introduction. New Jersey: Prentice Hall.

Diab, S. (2012). Telecommunication broadband explosion. Dubai: Dubai International Financial Centre.

Harrison, T. (1989). A handbook of advertising techniques. London: Togan Page.

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