Feb 23, 2011 - The Role of Marketing Strategies in the Performance of. Telecommunication Companies: A .... LIST OF ACRONYMS AND ABREVIATIONS .
MS 100
The Role of Marketing Strategies in the Performance of Telecommunication Companies: A Comparative Study of TNM and Airtel.
MBA (MARKETING) NAME OF STUDENT:
JOHN CHINKHWESA JERE
REGISTRATION NUMBER:
109101629
CENTRE:
Malawi (8019)
A Research Dissertation submitted in fulfillment of the requirements for the award of MASTER OF BUSINESS ADMINISTRATION
PRESENTED TO: The Co-ordinator (Projects), School of Management Studies, IGNOU, Maidan Garhi, New Delhi-110068.
SUPERVISOR NAME: DR. A. A. Mwenifumbo
SCHOOL OF MANAGEMENT STUDIES IGNOU, NEW DELHI i
CERTIFICATE OF ORIGINALITY This is to certify that the project titled “THE ROLE OF MARKETING STRATEGIES IN THE
PERFORMANCE
OF
TELECOMMUNICATION
COMPANIES:
A
COMPARATIVE STUDY OF TNM AND AIRTEL” is an original work of the Student and is being submitted in partial fulfillment for the award of the Master‟s Degree in Business Administration of Indira Gandhi National Open University. This report has not been submitted earlier either to this University or to any other University/Institution for the fulfillment of the requirement of a course of study.
NAME OF SUPERVISOR
NAME OF STUDENT
DR. A. A. MWENIFUMBO
MR. JOHN CHINKHWEASA JERE
SIGNATURE OF SUPERVISOR
SIGNATURE OF STUDENT
PLACE:
PLACE:
DATE :
DATE :
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ACKNOWLEDGEMENT To God be the Glory for being the pillar of my strength; for never leaving nor forsaking me; for letting every word He said upon me come to pass. Thank you Lord for the strength, wisdom, grace and every provision I needed in the whole of this course.
I would like to thank all those who supported me in completion of my study and the thesis. In particular I would like to thank Wilma Chalulu (Public Relations and Sponsorship Manager) of TNM and, Enwell Kadango (Marketing Director) and Almond Chinula (Marketing Manager) of Airtel for not only allowing me to research on their companies but also for providing me with vital information that has been crucial in the writing of this edifice.
To my wife Fides, I say thank you for all the support during my tedious studies; for assisting me with data analysis, presentation and automation. To my son Wisdom, I greatly appreciate your support by understanding that I needed to work much as I love playing with you.
My sincere appreciation goes to my supervisor Dr. A. Mwenifumbo for seeing through all the stages of this project. Thank you for your time, guidance, critique and encouragement. I would not have done this without you. To my friend and former Head teacher Mr. Fiddelis Makaula for helping in clarifying my topic and for encouraging me, I say thank you.
Finally, my sincere gratitude to my family, friends and all colleagues for all the support and encouragement they gave me throughout the course. Special gratitude should go to my fellow MBA students. The road was tough but we made it.
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DEDICATION To God be the Glory What would I have done without you Lord? The Lord is my shepherd; I shall not want… though I walk through the valley of the shadow of death, I will fear no evil; for you are with me; Your rod and Your staff, they comfort me…. (Ps.23:1-6) You will never leave me nor forsake me (Hebr 13.5)
To my beloved and loving mother Jane (Nyagwira) and my late father Mackson Chinkhwesa Jere Who have always loved me and believed that I can achieve great things even when many doubted and despised me. This is yours too. To my brother, Vyanekha and my sister Funny and all those who have contributed to my success, this is yours and God bless you.
To my wife Fides, know that you are precious to me. This is for you too. My success is your success.
To my sons Moses and Wisdom and my beautiful daughter Shalom, you are the reason I go the extra mile. The standards have been set; at least you have a way to follow that I never had. Do your best.
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TABLE OF CONTENTS CERTIFICATE OF ORIGINALITY ........................................................................................... II ACKNOWLEDGEMENT...................................................................................................... III DEDICATION .................................................................................................................... IV TABLE OF CONTENTS ........................................................................................................ V LIST OF ACRONYMS AND ABREVIATIONS ....................................................................... VIII LIST OF FIGURES .............................................................................................................. IX LIST OF TABLES ................................................................................................................. X ABSTRACT ....................................................................................................................... XI CHAPTER ONE ............................................................................................................. 1 INTRODUCTION AND BACKGROUND ................................................................................. 1 1.1 INTRODUCTION ........................................................................................................... 1 1.2 MALAWI: COUNTRY BACKGROUND ...................................................................... 2 1.2.1 POPULATION TRENDS ............................................................................................... 2 1.2.2 THE SOCIO-ECONOMIC ENVIRONMENT ................................................................... 4 1.3 PROBLEM STATEMENT .............................................................................................. 6 1.4 OBJECTIVES OF THE STUDY ..................................................................................... 7 1.4.1 AIM ............................................................................................................................ 7 1.4.2 SPECIFIC OBJECTIVES ................................................................................................. 7 1.4.3 RESEARCH QUESTIONS .............................................................................................. 7 1.5 JUSTIFICATION OF THE STUDY ............................................................................... 8 1.6 ORGANIZATION OF THE STUDY .............................................................................. 8 1.7 CHAPTER SUMMARY.................................................................................................. 8 CHAPTER TWO ............................................................................................................ 9 LITERATURE REVIEW......................................................................................................... 9 2.1 INTRODUCTION ........................................................................................................... 9 2.2 THEORETICAL FRAMEWORK ................................................................................... 9 2.2.1 THE PLACE OF MARKETING ....................................................................................... 9 2.2.2 SERVICE MARKETING .............................................................................................. 11 2.2.2.1 SERVICE MARKETING MIX ....................................................................... 12 2.2.2.2 SERVICE QUALITY ...................................................................................... 14 2.3 UNDERSTANDING STRATEGY ............................................................................... 14 2.3.1 PORTER’S GENERIC STRATEGIES ............................................................................. 15 2.3.2 INTERNATIONAL MARKETING STRATEGIES............................................................. 16 2.3.2.1 INTERNATIONAL STRATEGY ................................................................... 16 v
2.3.2.2 MULTIDOMESTIC STRATEGY................................................................... 16 2.3.2.3 GLOBAL STRATEGY ................................................................................... 17 2.3.2.4 TRANSNATIONAL STRATEGY .................................................................. 17 2.4 MARKETING STRATEGIES....................................................................................... 17 2.4.1 ANSOFF’S GROWTH STRATEGY MODEL .................................................................. 18 2.5 TELECOMMUNICATION SERVICES IN MALAWI ................................................ 20 2.5.1 TELECOM NETWORKS MALAWI (TNM) ................................................................... 21 2.5.2 COMING OF MALAWI TELECOMMUNICATION LIMITED (MTL) .............................. 23 2.5.3 THE MALAWI COMMUNICATION REGULATORY AUTHORITY ................................. 24 2.5.4 AIRTEL MALAWI ...................................................................................................... 25 2.5.5 THE STATUS OF TELECOMMUNICATION IN MALAWI ............................................. 26 2.5.5.1 MOBILE TELECOMMUNICATION IN MALAWI ..................................... 27 2.6 RESEARCH RELATED LITERATURE ON TELECOMMUNICATION ................. 29 2.6.1 CORPORATE STRATEGIES OF TNM AND AIRTEL ...................................................... 32 2.6.1.1 TNM’S CORPORATE STRATEGIES ..................................................................... 32 2.6.1.2 AIRTEL’S CORPORATE STRATEGIES .................................................................. 35 4.2.3.6 AIRTEL BAND STRATEGY ......................................................................... 37 2.6.1.3 MARKETING STRATEGIES OF TNM AND AIRTEL............................................... 38 2.7 CHAPTER SUMMARY................................................................................................ 39 CHAPTER THREE ............................................................................................................. 40 RESEARCH METHODOLOGY ............................................................................................ 40 3.1 RESEARCH DESIGN ......................................................................................................... 40 3.2 TYPE OF DATA ................................................................................................................ 41 3.2.1 SECONDARY DATA................................................................................................... 41 3.2.2 PRIMARY DATA ....................................................................................................... 42 3.2.2.1 SAMPLING AND SAMPLE SIZE .......................................................................... 42 3.2.2.2 METHOD OF DATA COLLECTION ...................................................................... 43 3.3 DATA ANALYSIS .......................................................................................................... 44 3.4 LIMITATION OF THE STUDY............................................................................................ 44 3.5 CHAPTER SUMMARY ...................................................................................................... 45 CHAPTER FOUR ......................................................................................................... 46 DISCUSSION OF FINDINGS....................................................................................... 46 4.1 INTRODUCTION .............................................................................................................. 46 4.2 DEMOGRAPHIC CHARACTERISTICS OF RESPONDENTS .................................................. 46 4.3 PHONE USAGE ................................................................................................................ 49 4.4 NETWORK SWITCH ......................................................................................................... 50 4.5 CUSTOMERS’ ATTITUDE AND RESPONSE TO TNM AND AIRTEL STRATEGIES ................ 52 4.5.1 PROMOTION STRATEGIES ....................................................................................... 52 4.5.2 PRODUCTS STRATEGIES .......................................................................................... 57 4.5.3 DISTRIBUTION STRATEGIES ..................................................................................... 61 4.5.4 PRICE STRATEGIES ................................................................................................... 65 4.5.4.1 LATER PRICING DECISIONS ............................................................................... 65 4.5.4.2 LOYALTY PROGRAMMES .................................................................................. 69 vi
4.5.4.3 YAKWATHU AND YANGA ................................................................................. 70 4.6 BRAND VISIBILITY ........................................................................................................... 70 4.7 CUSTOMER SATISFACTION WITH THEIR NETWORKS .................................................... 70 4.8 IMPACT OF MARKETING STRATEGIES IN THE PERFORMANCE OF TNM AND AIRTEL.... 73 4.6 CHAPTER SUMMARY ...................................................................................................... 76 CHAPTER 5 ..................................................................................................................... 77 CONCLUSION AND RECOMMENDATIONS ........................................................................ 77 5.1 INTRODUCTION ............................................................................................................ 77 5.2 CORPORATE STRATEGIES ............................................................................................... 77 5.3 MARKETING STRATEGIES ............................................................................................... 78 5.3.1 PRODUCT STRATEGIES ............................................................................................ 79 5.3.2 DISTRIBUTION STRATEGIES ..................................................................................... 80 5.3.3 PROMOTION STRATEGIES ....................................................................................... 80 5.3.4 PRICING STRATEGIES ............................................................................................... 81 5.4 IMPACT OF THE STRATEGIES.......................................................................................... 81 5.5 RECOMMENDATIONS .................................................................................................... 82 5.5.1 RECOMMENDATIONS ON AIRTEL ........................................................................... 82 5.5.2 MARKETING STRATEGIES ........................................................................................ 82 5.5.2.1 PRODUCT STRATEGY ........................................................................................ 82 5.5.2.2 DISTRIBUTION STRATEGIES .............................................................................. 82 5.5.2.3 PROMOTION STRATEGIES ................................................................................ 82 5.5.2.4 PRICE STRATEGIES ............................................................................................ 83 5.5.3 RECOMMENDATIONS ON TNM ............................................................................... 83 5.5.4 MARKETING STRATEGIES ........................................................................................ 84 5.5.4.1 PRODUCT STRATEGIES ..................................................................................... 84 5.5.4.2 DISTRIBUTION STRATEGIES .............................................................................. 84 5.5.4.3 PRICE STRATEGIES ............................................................................................ 84 5.5.4.4 PROMOTION STRATEGIES ................................................................................ 84 5.5.4.5 CUSTOMER CARE ............................................................................................. 84 5.6 AREA FOR FUTURE RESEARCH ....................................................................................... 85 5.7 CHAPTER SUMMARY ...................................................................................................... 85 REFERENCES ................................................................................................................... 86 APPENDIX....................................................................................................................... 92 APPENDIX 1: GUIDING QUESTIONS FOR INTERVIEW WITH TNM AND AIRTEL OFFICIALS ....... 92 APPENDIX 2: QUESTIONNAIRE FOR SUBSCRIBERS OF TNM AND AIRTEL ............................ 94 APPENDIX 3: TNM AND AIRTEL BUNDLES .................................................................................... 100 APPENDIX 4: APPROVED SYNOPSIS ............................................................................................. 102
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LIST OF ACRONYMS AND ABREVIATIONS ACE
Accelerate, Consolidate and Expand
AMA
American Marketing Association
ATM
Auto Teller Machine
BTS
Base Transceiver Stations
CEO
Chief Executive Officer
CIM
Chartered Institute of Marketing
FMCG
Fast Moving Consumer Goods
GSM
Global System for Mobile Communication
GDP
Gross Domestic Product
GNI
Gross National Income
IGNOU
Indira Gandhi National Open University
ISP
Internet Service Providers
IMF
International Monetary Fund
ITU
International Telecommunication Union
JCE
Junior Certificate of Education
MACRA
Malawi Communication Regulatory Authority
MDC
Malawi Development Corporation
MPTC
Malawi Postal and Telecommunication
MSI
Mobile System Interconnection
MSCE
Malawi School Certificate of Education
MTL
Malawi Telecommunication Limited
NSO
National Statistical Office
R&D
Research and Development
SADC
Southern Africa Development Committee
SAP
Structural Adjustment Programme
SPSS
Statistical Package for Social Sciences
SWOT
Strength, Weakness, Opportunities and Threats
TMB
Telecom Malaysia Berhad
TNM
Telecom Networks Malawi
UNDP
United Nation Development Programme
USA
United States of America viii
LIST OF FIGURES Fig. 1 Population distribution by region ………………………...…………………….….3 Fig. 2 Population composition by age in Malawi…………………………………………..4 Fig. 3 Mobile telecommunication penetration……………………………………….........28 Fig. 4 TNM‟s new logo…………………………………………………………………….34 Fig. 5 Airtel‟s logo…………………………………………………………………………38 Fig. 6 Sex of respondents…………………………………………………………………..46 Fig. 7 Education level………………………………………………………………………47 Fig. 8 Age group……………………………………………………………………………47 Fig. 9 Monthly income of respondents……………………………………………………..48 Fig. 10 How long respondents have been with their networks…………………………….49 Fig. 11 Choice of network………………………………………………………………….50 Fig. 12 Network switch …………………………………………………………………….51 Fig. 13 Reasons for switching ……………………………………………………………..51 Fig. 14 Source of promotion information ………………………………………………….53 Fig. 15 Perception of promotion competition ……………………………………………..55 Fig. 16 Preferred products offered by TNM and Airtel …………………………………...57 Fig. 17 Network coverage through installation of BTS…………………………………….61 Fig. 18 Satisfaction with bundles…………………………………………………………...66 Fig. 19 Satisfaction with normal prices ……………………………………………………66 Fig. 20 Frequency in the use of bundles ……………………………………………………68 Fig. 21 Rating experience with your network ……………………………………………..72 Fig. 22 Network recommendation …………………………………………………………72 Fig. 23 Subscriber growth for TNM and Airtel ……………………………………………74 Fig. 24 Growth in market share for TNM and Airtel ……………………………………….75
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LIST OF TABLES Table 1 Product market development matrix …………………………………………….18 Table 2 Telecommunication penetration rate …………………………………………….27 Table 3 Money spent on airtime during promotion ……………………………………….54 Table 4 Perception on sales promotion …………………………………………………...56 Table 5 Customers‟ perception of TNM and Airtel products and services ………………58 Table 6 Products and services first introduced by TNM and Airtel………………………60 Table 7 Customers‟ perception on distribution …………………………………………..63 Table 8 TNM and Airtel tariffs ………………………………………………………….67 Table 9 Customers‟ perception on prices ………………………………………………...68 Table 10 Level of satisfaction of respondents with their networks ………………………71
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ABSTRACT Significantly, marketing strategies are very essential for the growth and success of any company. This is more applicable to telecommunication industry which is usually marked by tense competition as network providers fight for subscribers. The aim of this study was to determine the role of marketing strategies in the performance of telecommunication companies using a comparative study of TNM and Airtel. TNM was the first to start its operations in Malawi. Airtel came four years later but it managed to overtake TNM within a few years. However, TNM is coming back strongly and is gradually regaining the lost market share from 28% in 2006 to 44% in 2012. The study was conducted in the city of Zomba. It employed a mixture of approaches such exploratory descriptive and comparative. Face to face qualitative methodology was used to gather data from marketing officials from TNM and Airtel. A total of 84 subscribers of both TNM and Airtel in equal number also responded to a questionnaire to determine their attitude and perception of their networks‟ services. Descriptive and comparative approaches were employed in the analysis and presentation of the results. SPSS was used a great deal in the analysis of data collected. Secondary sources were also crucial in writing this edifice. The results indicated that Airtel followed aggressive strategies right from the time of its operations. Airtel has followed product strategies that have made it to be an innovative company and has gained a lot from first mover advantage. It has also gained a lot from distribution and promotional strategies. However, the results also indicate lack of flexibility in Airtel strategies in that they are rarely reviewed to be in line with the changing business environment. TNM had no clear strategy before Airtel came along and was not prepared for competition. The results show that TNM lost a lot on the market. It first survival strategy was to follow Airtel‟s business lead. TNM follows customer-centric strategies which are reviewed yearly or when it is necessary. It also follows low-cost and low-prices strategies which are peoples‟ favourite. The results also show that TNM customers are more satisfied than Airtel customers. Results also indicate that more Airtel customers are joining TNM. However, both companies have weaknesses which have to be properly addressed as recommended, if they are to remain competitive on the market.
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CHAPTER ONE
INTRODUCTION AND BACKGROUND 1.1 INTRODUCTION Research in telecommunication sector in Malawi is probably long overdue as telecommunication is now the hub for the economic development of the country. It is one of the most important factors that drive trade and economy in general. Telecommunication is amongst the most important driving factors for globalization and the emergence of the information and technological era. Its importance to any country cannot be overemphasized. Invention of mobile phones has been a milestone in the telecommunication industry.
Since its introduction in Malawi in 1995, mobile phones have become the most preferred method of communication by the majority of Malawians. This is because of easy accessibility and convenience making the transfer of information very quick.
TNM was the first mobile phone company to start its operations in Malawi in 1995. It is a home grown company with most of its shares held by the government through Malawi Telecommunication Limited (MTL) (www.tnm.com). Airtel was the second mobile company to come to Malawi and started its operations in 1999 as Celtel. Since then these duopoly networks have been involved in a tense competition to the extent that TNM has been overtaken in terms of market share. However, it seems like TNM has not given up the fight as it has started gaining some ground with a 4% increase in market share in 2010 alone moving from 33% to 37% of market share (www.tnmivestor.com ). By 2012, TNM reached 44% of market share (www.tmn.com ). 1
It should also be pointed out that the market war between the two companies has been fought mainly along their marketing strategies. As such their growth, success or failure can best be explained in terms of their marketing strategies. Mwenefumbo (1984) observes that marketing is accountable for the present and responsible for the future growth and success of a company. This is why this study concentrates much on the marketing strategies of the two mobile companies to ascertain how they have contributed to their performance over the years. 1.2 MALAWI: COUNTRY BACKGROUND Malawi is a beautiful country found in Sub Saharan region. She shares its borders with Tanzania to the north, Zambia to the west and Mozambique to the south and east. Malawi has a land mass of 118484 square kilometers and has three regions namely the North, Central and Southern regions.
1.2.1 POPULATION TRENDS According to the 2008 Population and Housing Census, Malawi‟s population is 13,066,320 (National Statistical Office (NSO), 2008). Malawi‟s population grew from 0.74 million in 1901 to 9.9 million in 1998. The results show that between 1998 and 2008, the population of Malawi increased by 32 percent, representing an intercensal annual growth rate of 2.8 percent per annum. When Malawi became a republic in 1966, the population of Malawi was 4.04 million increasing to 5.55 million in 1977 and by 1987 to 7.99 million. Between 1977 and 1998 Malawi‟s population grew at approximately 2.0% (NSO and International Food Research Institute, 2002). It is estimated that currently Malawi‟s population has reached 14million and is estimated to reach 17million by 2015 (www.tnminvestor.com ).
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According to NSO (2008) approximately 80% of Malawi‟s population lives in rural areas with only 20% living in urban areas. There has been a significant increase in urban population in Malawi since 1977 and 1987 when 8.5% and 11.0% respectively, lived in urban areas. Malawi has one of the highest levels of urbanization in the world which is currently at 20% (NSO, 2008).
A little less than half of the population (45%) lives in Southern region of Malawi while 42% and 13% live in Central region and Northern region respectively (NSO, 2008). This information is crucial in assessing the distribution strategies of TNM and Airtel. Figure 1 below illustrates the population distribution by region. Population Distribution by Region
Southern Region Central Region Nothern Region
Figure 1: Population Distribution by Region
With regards to distribution, the 2008 census reported that approximately 44% of the population was aged below 15 and 4.0% of the population was above 65 years of age and 52% between 15-64 years (NSO, 2008). It can be derived from this that a significant proportion of Malawi‟s population is composed of young people. TNM defines this age group as the Malawi mobile addressable market (www.tnminvestor.com). The chart below shows the population composition in Malawi by age.
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below 15 years 15-64 years above 65
Figure 2: Population Composition by Age in Malawi
1.2.2 THE SOCIO-ECONOMIC ENVIRONMENT
Malawi is one of the poorest countries in the world ranking 160 out of 185 countries according to the UNDP Human Development Index (UNDP, 2011). According to the NSO (2011), 50.4% of the population of Malawi is considered poor. About 22% of the population is ultra poor and cannot meet the recommended daily food requirement (Government of Malawi and World Bank, 2006). The country has per capita Gross Domestic Product of US$900.
Soon after independence in 1964 up to 1979, Malawi‟s economy preformed very well as every sector of the economy especially agriculture registered rapid growth (Chilowa and Chirwa, 1997: 141). During this period, Malawi‟s economy grew at an average of 6% per annum against the population growth of 2.9%. The favourable conditions that prevailed at the time, the expansion of large scale estate agriculture and the high level of gross domestic investment, constituted some of the factors that led to the impressive economic growth (Chilowa, Milner, Chinsinga and Mangani, 2000:123).
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At the end of 1970s however, Malawi‟s economy started declining very sharply to the extent that Structural Adjustment Programme was adopted following the advice of World Bank and IMF (Chilowa and Chirwa, 2000:126).
Malawi‟s economy relies on agriculture which contributes more than 30% of GDP and more than 90% of the export earnings (Capplen, 2008: 99). Since 2004, macroeconomics performance has generally improved and government has also pursued sustainable macroeconomic policies. As a result of good macroeconomic management, Malawi has seen better macroeconomic indicators. For example, inflation reached 9.2% in January 2007 and this was the first time Malawi hit single digit inflation after a decade. As of June 2007, inflation had reached 7.7%. Over the period 2004-2006, Malawi‟s economy has grown at an average of 5.2% (Capplen, 2008:102). This was a remarkable business environment for most companies. TNM and Airtel experienced remarkable growth in this period as it will be seen later on.
In the years 2010 and 2011, Malawi‟s economic environment has continued to weaken. Growth has been slowing down from a peak of 9.7 percent in 2008 to an estimated 5 percent in 2011 (www.tnmivestor.com). Imbalances in the foreign exchange market, fuel and electricity supply shortages continue to make the business environment less favourable, and the cost of living keeps going up. Inflation is on the rise, standing at 28.4 percent as of September, 2012 for urban non-food inflation, compared to single digit figures in 2010 (NSO, 2012).
The economic environment continues to sour following Reserve Bank‟s raising of bank lending rate to 31 percent forcing the commercial Banks to raise their lending rate from 17.5
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percent in 2010 up to 30 percent (Chiyembekezo, 2012). The situation has been exacerbated by the 48% devaluation of the currency in June, 2012. Therefore, the current business environment has a lot of challenges and companies have to strategically position themselves in order to continue being competitive on the market. 1.3 PROBLEM STATEMENT Man has relentlessly devised ways of relating to one another. The 20st century has seen the invention of mobile cellular phone which has greatly changed the face of telecommunication and is gradually becoming a very important pillar of information and technology era. Mobile cellular networks have revolutionized the communication sector to the extent that mobile phones have become the most preferred method of communication across the globe.
TNM was the first mobile telephone company established in 1995. It was soon wholly owned by the government and it enjoyed government protections. However, Airtel which started its operations five years latter has overtaken TNM with an unimaginable margin. It had more than 71% of market share with a total of 2.6million subscribers as of 2009. (www.macra.mw.org). However, the two networks which are enjoying a duopoly status in Malawi, have been involved is very serious market wars outsmarting one another in the process. The difference in their market strategies could better explain such margins.
The common saying that “business is war and the best strategy wins” (Craven & Piercy, 2003: 34) has proved correct in as far as the two mobile phone companies are concerned. Marketing strategies have played a significant role in the growth and success or failure of these mobile phone companies. However, this assertion would better be justified through an in-depth research on the marketing strategies of the two companies and the impact they have had on their companies. 6
1.4 OBJECTIVES OF THE STUDY
1.4.1 AIM
The aim of this research is to assess the role of marketing strategies on the performance of telecommunication companies through a comparative study of TNM and Airtel. It is believed that the growth and success of these companies depends on their marketing strategies.
1.4.2 SPECIFIC OBJECTIVES
The specific objectives of the research were:
To understand the corporate strategies and focus of TNM and Airtel
To compare marketing strategies of TNM and Airtel.
To assess customers‟ response to the implementation of marketing strategies.
To assess the impact of marketing strategies on the performance of TNM and Airtel.
1.4.3 RESEARCH QUESTIONS
The following were the research questions for the study: 1. What are the corporate strategies and focus of TNM and Airtel? 2. What are main differences in the marketing strategies of TNM and Airtel? 3. How have the subscribers responded to different marketing strategies employed by TNM and Airtel? 4. What has been the impact of the marketing strategies on the overall performance of TNM and Airtel?
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1.5 JUSTIFICATION OF THE STUDY Mobile Telecommunication is a growing industry. Its penetration level in Malawi is still minimal at 29 percent. This means that the industry is still very young with a lot of potential for growth. It is hoped that this research will contribute to the growing body of knowledge about telecommunication bearing in mind that Malawi is a growing market for the industry. The research is also useful because it puts marketing strategies in context through a comparative study of the two mobile telephone operators. This brings a better understanding of the concepts. It also raises interest in the study of marketing strategies. It is anticipated that others will use the findings of this research as the basis for further scholarly research in the areas of telecommunication and marketing strategies. 1.6 ORGANIZATION OF THE STUDY The study is organized into six chapters. Chapter 2 contains literature review. This has a theoretical framework on which the study is based. It also reviews different literature in the areas of marketing strategy and telecommunication. Chapter 3 is about methodology. It explains the research type adopted, sampling methods, tools used for data collection and methods of data analysis. Presentation and discussion of research findings are contained in chapter 4 of the thesis and chapter 5 gives conclusions and recommendations of the study. 1.7 CHAPTER SUMMARY This chapter is mainly an introduction to the whole study. It started by giving a brief background of the country. It has highlighted the country‟s population trends and its socioeconomic and current business environment which are crucial for the operations of any company. The chapter has also outlined the aim and objectives of the study. A direction into the organization of the thesis by chapter has also been offered.
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CHAPTER TWO
LITERATURE REVIEW 2.1 INTRODUCTION Literature review has been done by taking into consideration two aspects; a theoretical framework on which the research is built, and review of researches and findings related to mobile telecommunication and marketing strategies. 2.2 THEORETICAL FRAMEWORK
2.2.1 THE PLACE OF MARKETING The chartered Institute of Marketing defines marketing as “a management process of identifying, anticipating and satisfying customer requirements profitably” (CIM in Wilson and Gilligan, 1997: 3). American Marketing Association (AMA) defines marketing as the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchange that satisfies individuals and organizational objectives (AMA, 1985). Unlike the picture portrayed by AMA‟s definition, marketing is increasingly conceptualized as an organizational philosophy or as an approach to doing business.
This strategic approach as opposed to functional approach is further captured by McDonald (1989: 8) who argues, “Marketing is the management process where the resources of the whole organization are utilized to satisfy selected customer groups in order to achieve the objectives of both parties. Marketing then is first and foremost, an attitude of mind rather than a series of functional activities.”
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Blythe (1998) asserts that marketing requires objective setting, marketing audit and tactical planning which should be built within the organization‟s overall strategic plan. This includes a mission statement which states the main business of the organization, shared values, culture and beliefs and attitudes of the organization. The organization has to breakdown its mission into specific goals and objectives which the organization sets out to achieve.
Drucker (1973) echoes the same as he puts it: “marketing is so basic that it cannot be considered a separate function on a par with others such as manufacturing or personnel. It is first, a dimension of the entire business. It is the whole business seen from the point of view of final results, that is, from the customer‟s point of view.”
However, Mwenefumbo slightly differs from the above by observing that marketing is a philosophy of business and a business function as well. He states that as a philosophy of business, a producer has to start with the needs and wants of customers and try to maximize their satisfaction. As business function, marketing is concerned with the management of different elements of marketing mix (Mwenefumbo, 1984: 102). This two tier perspective of marketing shall be the underlying theoretical perspective of this research.
Furthermore, Mwenefumbo (1984) states that strategic planning in essence involves a determination of a corporate mission and objectives in addition to plans and programmes designed to accomplish a set of objectives. According to Mwenefumbo, marketing executives are well positioned to lead the way since they, more than anyone else, are responsible for controlling the interface between the company and the environment (Mwenefumbo, 1984: 103). Mwenefumbo further states that such an assessment should start by examining the economic, political, social, legislative and technological changes and how these affect the
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market, the distribution networks and the policies and practices of the company. Such an assessment is crucial for strategy formulation.
2.2.2 SERVICE MARKETING
Services are becoming very important part of the world's economy in the 21st century. It is stated that over 80% of USA economy is service oriented and its contribution to the economy is over 60% and above in most countries (IGNOU, 2012: 5).
The term service has been defined in different ways by different authors. Kotler (1989) defines service as, “any activity or benefit that one party offers to another that is essentially intangible and does not result in the ownership of anything.” Stanton (2009) views services as, “those separately identifiable, essentially intangible activities which provide wantsatisfaction, and are not necessarily tied to the sale of a product or another service.” Banking, restaurant, education, health, telecommunication etc. are just a few of many examples of services.
Services have unique characteristics that distinguish them from products. Lamb, Hair and McDaniel (2008) identify five of these characteristics. The first is intangibility which refers to the fact that services cannot be touched, seen, tasted, heard or felt in the same manner as goods. The second is inseparability which refers to inability of production and consumption to be separated. Consumer must be present during production. A good example is that of a barber‟s service to the customer. Services are also perishable because they cannot be stored, warehoused or inventoried. The other service characteristic is heterogeneity. This is because there is variability of the input and output of services which cause services to be less standardized and uniform than goods. The last service characteristic is that there is no
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ownership in the sense that payment is not for purchase but only for the use and access to or for hire of an item or facility. 2.2.2.1 SERVICE MARKETING MIX The distinguished nature and characteristics of services require different marketing approaches. The different elements of marketing mix such as product, price, place and promotion are approached differently in case of service marketing. Lamb et al. (2008) give several examples of approaches in the marketing mix that are likely to be different as opposed to marketing of goods. Product for example, will consist of core services and supplementary services. Core services are the most basic benefits the customer is buying. Supplementary services are services that support or enhance the core services. Lovelock (1996) observes that firms usually emphasize supplementary services to create competitive advantage.
On pricing strategies in services, Lamb et al. (2008) identify three categories that are more applicable. These are revenue oriented pricing which focuses on maximizing the supply of income over cost; operations oriented pricing which seeks to match supply and demand by varying prices, and lastly patronage oriented pricing which tries to maximize customers using the service. This pricing varies with different market segments, ability to pay and method of payment.
Promotion approaches in services according to Lamb et al. (2008) concentrate on tangible cues in an effort of tangibilising the intangible. It also concentrates on creating a strong brand image and engages in post purchase communications.
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The uniqueness of services has necessitated marketers not only to view the marketing mix differently but also to add three more Ps to service marketing mix. These are people, process and physical evidence (Boone and Kurtz, 1995: 45). People constitute service personnel and customers. Employees represent the first line of contact with customer. The behaviour and attitude of the personnel providing the service is an important influence on the customer‟s overall perception of the services. The customers are important because if they are satisfied they are likely to come back. They are also a source of influencing other customers through a word of mouth.
Parasulaman and Berry (1991) relate the concept of internal marketing to service personnel. Internal marketing refers to treating employees as customers and developing systems and benefits that satisfy their needs. Parasuraman and Burry (1991) argue that, “a service is a performance and it is difficult to separate the performance from people. If people do not meet customers‟ expectations, then neither does the service; investing in people quality in a service business means investing in product quality.” The importance of people is service marketing cannot be overemphasized.
Physical evidence refers to the environment in which the service is delivered and where the service industry and customer interact (Boone and Kurtz, 1995: 45).
It represents the
physical aspect of the service. The aircraft by itself, the seating configuration meant to be comfortable and spacious, and the in-flight food provide physical evidence to the airline service. The process is the system by which you receive delivery of the service. A sound and swift process is crucial for the satisfaction of customers. It also contributes towards the assessment of service quality (Groonroos, 1991: 24).
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2.2.2.2 SERVICE QUALITY Determining service quality is among the most challenging aspects of services because of their characteristics. Unlike physical goods which tend to be relatively high in search quality, services are more of experience and credence qualities. Search qualities are attributes which a customer can determine prior to purchasing a product, such as colour, style, shape, price etc. Experience qualities can only be discerned after purchase or during consumption such as the quality of a network or quality of food in a restaurant. Credence qualities on the other hand, refer to characteristics that consumers find hard to evaluate even after consumption such as surgery at the hospital (Lovelock, 1996: 17).
Customers evaluate service quality by considering reliability, responsiveness, assurance, empathy and the tangibles (Lamb, et al. 2008). Groonroos, (1991) observes that customer retention to a great extent depends on service quality and customer satisfaction. 2.3 UNDERSTANDING STRATEGY Strategy has been defined by different authors. Gluek (1984) defines strategy as “a unified comprehensive, integrated plan that relates the strategic advantages of the firm to the challenges of the environment and is designed to ensure that basic objectives of the enterprise are achieved through proper implementation process.” On the other hand, Bennet (1999: 4) defines it as “a proposed series of actions intended to beat the competition by unifying the various decisions of the organization and determines logically and coherently the direction it is to follow.”
The strategy formulated at the top executive level is called corporate strategy. These define the very nature of business, the line of activities in which the enterprise is to be engaged, the overall allocation of physical, human and financial resources, and the firm‟s general long 14
term goals (Bennet, 1999: 4). Functional strategies on the other hand are concerned with specific operational areas such as marketing, human resource and finance (IGNOU MS11, 2010:13).
The current perspective of strategy is that of market driven strategy in which the market and the customer that forms the market should be the starting point of business (Cravens & Piercy, 2003: 4). This has an advantage of gaining market orientation and an understanding of market and how it is likely to change in the future. 2.3.1 PORTER’S GENERIC STRATEGIES
In line with market driven strategy, Potter (1980) identifies three generic types of strategies; overall cost leadership, differentiation and focus. Under low cost strategy an organization concentrates upon achieving the lowest costs of production and distribution so that it has the capability of setting its prices at a lower level than competitors. Differentiation gives emphasis to a particular element that is seen by customers to be important that it becomes basis for competitive advantage. Through this customers are able to pay premium price. Differentiation can also be achieved through brand image and packaging.
Focus strategy on the other hand concentrates its effort on one or more narrow market segments rather than pursuing broader based strategy. With this, a firm is able to build greater in-depth knowledge of each segment as a way of creating barriers to entry by virtue of its specialist reputation. Zikmund et al. (1995:297) only recognizes two of these; low cost- low price strategy and differentiation. These are referred to as the two basic marketing strategies.
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2.3.2 INTERNATIONAL MARKETING STRATEGIES
Hill (2003) observes that with the breakthrough in technology and communication, business is now becoming boundary-less. He states that global market is becoming the focus of most companies. With this in view, he identifies four basic strategies through which companies enter and compete in the international market: an International Strategy, Multinational Strategy, Global Strategy and Transnational Strategy. These make so much sense in as far as the telecommunications environment is concerned in Malawi. A brief description of these strategies is imperative since they provide a good theoretical understanding of international business which is not new to telecom companies. 2.3.2.1 INTERNATIONAL STRATEGY Hill (2003:342) states that firms that pursue international strategy try to create value by transferring valuable skills and products to foreign markets where indigenous competitors lack those skills and products. Most international firms have created value by transferring differentiated products and services. An international strategy makes sense if a firm has valuable core competences that indigenous competitors in a foreign market lack, and if the firm faces relatively weak pressure local responsiveness and cost reduction. However, due to duplication of manufacturing facilities, firms that pursue this strategy tend to suffer from high operational costs making the strategy inappropriate for manufacturing industries where cost pressures are high.
2.3.2.2 MULTIDOMESTIC STRATEGY Firms pursuing a multidomestic strategy according to Hill (2003) orient themselves towards achieving maximum local responsiveness. The distinguishing feature of multidomestic firm is that they extensively customize both their products offering and their marketing strategies to 16
much national conditions. They also tend to establish a complete set of value creation activities including production, marketing and R & D in major national markets in which they do business. A multidomestic strategy makes much sense where there are high pressures for local responsiveness and low pressure for cost reduction. 2.3.2.3 GLOBAL STRATEGY Firms pursuing global strategy focus on increasing profitability by reaping the cost reductions that come from experience curve effects and location economies. They pursue low cost strategies. The production, marketing and R & D are located and concentrated in a few favourable locations. They have no customization of products because it raises costs. They prefer market standardized products worldwide so that they can reap from economies of scale. These firms market their products worldwide. This strategy is most applicable where there are strong pressures for cost reduction and where demand for local responsiveness is minimal. 2.3.2.4 TRANSNATIONAL STRATEGY This is a business strategy that seeks experience based economies and location economies, transfers distinctive competencies within the firm and pays attention to local responsiveness. This strategy makes more sense when a firm faces high pressure for costs reduction and high pressure for responsiveness. Firms pursuing this strategy are trying to simultaneously achieve low cost and differentiation advantages. However, the strategy is not easy to pursue. 2.4 MARKETING STRATEGIES Marketing strategies have a central role in the comparative analysis of the two mobile telephone operators. Wilson and Gilligan (1999: 33) define marketing strategy as “a process that can allow an organization to concentrate its limited resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage.” Marketing
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strategies serve as the fundamental underpinning of marketing plans designed to fill market needs and reach
marketing objectives. They are developed as multi-year plans, with a
tactical plan detailing specific actions to be accomplished in the current year guided by the corporate mission statement. Bennet (1999:176) observes that Marketing strategies are dynamic and interactive. They are partially planned and partially unplanned.
Marketing strategy involves careful scanning of the internal and external environments which are summarized in a SWOT analysis. Marketing strategies involves a careful manipulation of the marketing mix such as product, price, place and promotion. Wilson and Gilligam (1999: 5) add people, physical evidence and process management as also vital elements of the marketing mix.
From these elements different strategies can be formulated. These include product strategies, price strategies, distribution strategies, promotion strategies. These shall form the basis for assessing the performance of TNM and Airtel in line with their marketing strategies. 2.4.1 ANSOFF’S GROWTH STRATEGY MODEL
The main strategic model on which this research is based is that proposed by Ansoff called the Growth Strategy Matrix or the product/market expansion matrix. The table 1 illustrates the model. Table 1: Product Market Development Matrix Existing products Existing Market
1. Market penetration
New Products 3. Product development
New Market 2. Market development
4. Diversification
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Ansoff identifies four product-market development strategies presented in a matrix in relation to existing market, new market, existing products and new products. These are market penetration strategies, market development strategies, product development strategies and diversification strategies.
Market penetration strategy is an appropriate strategy for a company seeking to increase sales in the existing products in the existing market through more aggressive effort. The company can try to stimulate current customers to increase their current rate of purchase. The company can also increase its efforts to attract competitors‟ customers to increase its market share. It can also increase its efforts to attract non users located in its current market areas.
The second strategy is the market development strategy. This consists of the company seeking increased sales by taking its current products into new markets. This can be achieved in two ways: the company can open additional geographical markets through regional, national or international expansion. It can also try to attract new market segments through developing product versions that appeal to those segments, entering other channels of distribution, or advertising in other media.
The third strategy is the product development strategy. This consists of company seeking increased sales by developing new or improved products for its current markets. To achieve this, the company can develop new product features or content through attempting to adapt, magnify, substitute, rearrange, reverse or by combining existing features (Kotler, 1980: 74). The company can also develop different quality versions of the product or develop additional models and sizes.
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The last is the diversification strategy. This involves developing new products for the new market. The company would attempt to identify fields that make use of its distinctive competencies or help it overcome a particular problem. Diversification can take three forms. Concentric diversification is when a company adds new products that have technological and marketing synergies with the existing product line. These products will appeal to the new classes of customers. Horizontal diversification is when a company adds new products that could appeal to its current customers. Conglomerate diversification is when a company adds new products for new classes of customers if that represents great environmental opportunities for the company (Koltler, 1980: 75).
This study demonstrates how Ansoff‟s model reflects in the operations of TNM and Airtel mobile telephone companies. The research also takes Product Life Cycle (PLC) Model into consideration especially in the treatment of the whole mobile telephone industry (Kotler, 2003). It is assumed in this research that Malawi‟s mobile telephone industry is still in its growth stage in as far as the PLC is concerned. 2.5 TELECOMMUNICATION SERVICES IN MALAWI In Malawi a major breakthrough in the telecommunication sector started with the establishment of the first post office at Chiromo in Nsanje on 20th July 1891 when Malawi became a British protectorate (Phiri, 2011). During this time mail was carried on heads for a long distance. With passage of time, cars were used for the same purpose. Telecommunication started taking a new shape with the introduction of telephone in Malawi (Phiri, 2011). With increase in number of post offices and the introduction of telephone, Malawi Post and Telecommunication (MPTC) was formed in 1994 to be in charge of post offices and telecommunication as a state owned operator. Previously government operated both post office and telecommunication services (www.tnminvestor.com). 20
Before 1998/99, MPTC dominated the telecommunications sector in Malawi. It had a monopoly over local and long distance fixed line services, had the only international gateway and was a part owner of the only cellular provider and the only Internet Service Provider (ISP). It also had a monopoly over the provision of postal services (Clarke, Frew, Gebreab and Mgombelo, 2003:12).
In addition to being the sole provider of these services, Malawi Posts and Telecommunication was also responsible for most regulatory functions. MPTC was responsible for licensing operators in all areas of telecommunication (e.g., Internet Service Providers (ISPs) and cellular companies) spectrum frequency allocation, type approval of equipment, technical standards and numbering plans (Clarke et al. 2003:13). Because MPTC controlled licensing, it was able to prevent entry by potential competitors in several areas where competition would have been possible.
MPTC previously operated as a department of the Ministry of Information, Broadcasting, Posts and Telecommunication. It was corporatized in January 1995 (Clarke et al. 2003:5).
2.5.1 TELECOM NETWORKS MALAWI (TNM)
On 13 January 1995, MPTC and TMB, a Malaysian telecom company, entered into a joint venture agreement to undertake a project to provide GSM mobile cellular telephone, fixed telephone and data network services (Clarke et al. 2003:6). Telekom Networks Limited was incorporated as a private limited company on 24 March 1995 and the name of the new company became Telekom Networks Malawi limited (TNM). Under the terms of the joint
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venture agreement, MPTC and TMB agreed to hold 40% and 60% respectively, of TNM‟s share capital (www.tnminvestor.com ).
By 1995 cellular operators were providing services in 25 Sub-Saharan African countries including Malawi, as compared to 24 where no cellular operators were operating (Clarke et al. 2003:7). Further to this, it was common for the incumbent to either provide the services directly or for it to partially or completely own the cellular provider.
By the end of 1995 Malawi became the second country in Southern Africa to introduce mobile telephony services and TNM became the third operator in the region after South Africa‟s MTN and Vodacom who launched their services about 6 months earlier (www.tnminvestor.com). TNM was therefore an integral part of the introduction of mobile telephony in Africa. TNM was assigned all the frequencies in the GSM900 band (Clarke et al. 2003:6).
TNM started its commercial operations in January 1996 with 36 Base Transceiver Stations (BTS) covering Blantyre, Lilongwe, Mzuzu and Zomba offering post-paid services with a capacity of 7000 subscribers. In the same year capacity was increased to 10 000 subscribers (www.tnminvestor.com). In June 2000, TNM launched its pre-paid services and its SMS services in 2001. By 2005 TNM recorded 100 000 customers and by 2010 TNM customers reached one million milestone. TNM has a geographical coverage of 74% and population coverage of 85%. It enjoyed a market share of 37% with a subscription of 1 140 000 both pre-paid and post-paid as of 31 December 2010 (www.africanir.com). However, as of December, 2011 TNM recorded 1500 000 subscribers with 42% of market share (TNM, 2011).
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2.5.2 COMING OF MALAWI TELECOMMUNICATION LIMITED (MTL)
In August 1998, the Government published a statement setting out a national policy for the development of communications services, covering telecommunications, postal and broadcasting services. In keeping with the objective of maximizing the telecommunication sector‟s contribution to the continued development of Malawi‟s economy, various targets were set to:- increase the number of working telephone lines; raise the quality of service to international standards; stimulate the provision of new services; reduce the price of telecommunications services in real terms; and extend access to modern telecommunication services throughout the country according to a defined programme covering rural areas (Ministry of Information, 1998:8).
Subsequent to the publication of the policy statement and in order to give effect to its principles and policies, the Communications Act was enacted in December 1998 (Clarke et al. 2003:16). This established the framework for the regulation of communications services in Malawi and provided for the separation of the provision of telecommunications from postal services.
Malawi Telecommunications Limited (MTL) was incorporated as a Government owned public limited company on 30 May, 2000 in order to own and operate MPTC‟s telecommunications business. On 31 August, 2000 all of the telecommunications property, rights, assets and liabilities, comprising MPTC‟s telecommunications business, including MPTC‟s 40% holding in TNM, were transferred to MTL by operation of law and in accordance with the terms of the Communications Act (Clarke et al. 2003:17). Since then MTL was the sole provider of fixed telephony services in Malawi.
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2.5.3 THE MALAWI COMMUNICATION REGULATORY AUTHORITY
The Malawi Communications Regulatory Authority (MACRA) was established in 1999 pursuant to Section 3 of the Communications Act, 1998 of the Laws of Malawi to assume the regulatory functions of the communications sector which had been performed by the Malawi Telecommunications Corporation Limited (www.macra.org.mw ).
Under the Communications Act (1998), MACRA is charged with the responsibility of spectrum planning; creating new allocations, fulfilling frequency planning coordination and assignments, issuing licences, regulating and administering the use of radio frequencies; and the monitoring and enforcement procedures. It is further responsible for establishing regulations, frequency fees structure, technical parameters and standards governing the use of each band ensuring that current international regulations are met (www.macra.org.mw).
The general duty of MACRA is to ensure that, as far as practicable, reliable and affordable communication services, sufficient to meet the demand for them, are provided throughout Malawi. In doing so MACRA is required to protect consumer interests; promote efficiency and competition; promote open access; promote research in telecommunications and encourage the introduction of new communication services. MACRA is to be independent in the performance of its functions. MACRA'S regulatory activities take the form of:
Licensing of service providers
Providing advice to relevant Ministers on regulation and policy
Monitoring the activities of licensees to ensure compliance with the terms and conditions of their licenses and other applicable regulations.
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2.5.4 AIRTEL MALAWI
Although the 1998 Communications Sector Policy in Malawi advocated the issuance of a second cellular license, the Government actually started the process of doing this before it issued the Policy. To offer a second license, the Government first had to re-negotiate the allocation of spectrum with TNM, which had been allocated the entire GSM 900 band in its provisional license. Further, since the negotiations for the second license preceded the establishment of MACRA and the 1998 Communications Act, the license had to be bid under the earlier 1994 Telecommunications Act and was offered by the Ministry of Information on the recommendation of the Post Master General, the head of MPTC (Clarke et al. 2003:33).
The fifteen-year license was awarded to Celtel Limited on December 25, 1998. Celtel was 80 percent owned by Mobile Systems International (MSI) of the United Kingdom, 10 percent owned by the Malawi Development Corporation (a Malawian parastatal holding company) and 10 percent owned by Indebank (a second Malawian parastatal). MSI has extensive cellular operations in other countries in Sub-Saharan Africa including in Uganda, Zambia, Gabon, Congo-Brazzaville, Guinea, Chad, and the Democratic Republic of Congo.
Following the negotiations with Celtel, the Commission proceeded to negotiate a similar fifteen-year license with TNM (Clarke et al. 2003: 36). Prior to starting operations in October 1999, Celtel negotiated an interconnection agreement with MPTC and TNM.
Airtel rolled out its operations in October, 1999 as Celtel. It offered pre-paid services unlike TNM which offered Post-paid services. However, in its early days the company faced the problem of interconnectivity which favoured MPTC and TNM against Celtel to the extent that Celtel had to sue MACRA and MPTC (Zuze, 2001: 5). 25
Celtel Malawi grew quickly due to its pre-paid system which was more appealing to the low income citizenly. By 2005, Celtel had already overtaken TNM with over 300 000 customers against TNM‟s 100 000. In August 2008, Celtel changed its brand to Zain. In 2010, Airtel acquired the Zain African Operations. This led to change in brand name once more from Zain to Airtel (www.zain.com ). Airtel started its operations in Malawi as Celtel. It was a second mobile phone company to come to Malawi. Celtel was acquired by Zain Africa in 2008 and later by Airtel in 2010.
Airtel is part of Bhart Group of companies started by Sunil Bharti Mittal in 1995 in India (Singn, 2010). Bharti Airtel paid US$700million (MK105 billion) for the acquisition of Zain Malawi (Khanje, 2011). Airtel Malawi is solely owned by Bharti Group of Companies headed by Sunil Bharti Mittal.
Airtel Malawi has population coverage of 90 percent and a geographical coverage of 72 percent. By 2009 it had over one million customers with 71percent of market share with TNM taking the remainder (www.ide.go.jp). However, by 31 December, 2010, Airtel lost about 4 percent of its market share to TNM who reached 37 percent of market share (www.africanir.com). This happened within a year after Zain Africa was acquired by Airtel.
2.5.5 THE STATUS OF TELECOMMUNICATION IN MALAWI Malawi‟s telecommunication penetration rate is still very low as compared with the African and the world rates. The table 2 below shows the general telecommunication penetration rates as of October, 2012 (www.macra.mw.org ).
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Table 2: Telecommunication Penetration rate Market
Penetration rate
Mobile
29%
Fixed
1%
Internet
7%
(Source: www.budde.Com)
2.5.5.1 MOBILE TELECOMMUNICATION IN MALAWI Since the introduction of mobile phone in Malawi with 7000 subscribers in 1995, the industry has grown at a very low pace especially in its first five years during which TNM had no competitor. Since then penetration rate has increased. By 2000, there were 49 000 subscribers, in 2005 there were 421 163 subscribers. Subscription reached a million mark in 2007 (1 050 852), two million mark in 2009 (2 374 051) and three million mark in 2010 (3 037 469) (www.macra.org.mw). It is stated that penetration rate is at 29 percent as of October, 2012 (www.budde.com).
It is estimated to reach over 40 percent by 2016
(www.africanir.com). The figure 3 below shows the mobile telecommunication penetration rate by figures since 2001.
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Source: www.tnm.com Figure 3: Mobile Telecommunication Penetration
In 2011 MACRA introduced a universal licence meaning that fixed phone operators (MTL and ACCESS) can also provide mobile phone services. This is likely to increase competition. Additionally, a national fibre backbone is being implemented and the country is set to gain access to international submarine fibre optic cables for the first time when a transit link via neighbouring countries is completed. This is expected to reduce the cost of mobile phone services in Malawi. It will be very interesting to understand how the two main mobile service providers have fared on the market and how they are strategizing to face the new business challenges and opportunities lying ahead of them.
As already noted TNM is gaining ground. It will also be very interesting to see what strategies it is employing at the same time understand strategies of Airtel as it jealously guards its market share. As such this research which aims at assessing the marketing strategies of TNM and Airtel through a comparative study is more relevant now than ever before.
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2.6 RESEARCH RELATED LITERATURE ON TELECOMMUNICATION There is not much literature on mobile phone telecommunication. However, a few related to the research in question have been reviewed in the following passages.
One important research worth noting is that conducted by Clarke et al. in 2003 titled Telecommunication Reform in Malawi (Clarke et al. 2003). They point out that Malawi Postal and Telecommunication (MPTC) was at the centre of industry as an operator and regulator since 1994. However, it was marked by inefficiency to the extent that a waiting list for connection in 1997 would take it about 25 years to clear at the rate of its expansion then.
As a regulator MPTC is blamed for slowing down development of telecommunication by deliberately preventing competition in the industry by not awarding licences to the upcoming operators who were likely to be its competitors. The article also points out that MPTC held 40 percent of TNM shares since its inception and awarded it all the frequencies in the GSP 900. The assumption one can draw from this is that MPTC as well as TNM never expected competition and TNM was set to be a monopoly mobile phone provider.
Clarke et al. (2003) point out that despite early entry of TNM in 1995 with 7000 subscribers, cellular penetration was very slow. By 1998 there were only 10500 subscribers. They point out that TNM‟s policy of offering only post-paid services excluded the majority low citizenly that could not afford monthly phone bills. The impression one gets is that TNM targeted rich people only in its early inception with no clear plan to incorporate the majority of the low income populace. It will be observed in the research how the early attitude of TNM affected the company as it faced competition by Airtel, Celtel then. 29
Another literature worth reviewing is a thesis by Mwenefumbo titled: Cement Marketing in SDCC Countries with specific reference to Malawi: A comparative Analysis. The thesis gives a detailed analysis of cement marketing in Malawi by looking at its strength and weaknesses that affected its performance in comparison with other cement companies in the SADC region. Mwenefumbo among others found that Portland Cement Company did not explore much of the cement market provided by the local populace but relied much on the contractors in the building and construction industry in the country. The other reason is that the cement company in Malawi restricted itself to Malawi with no plans to explore international market as other cement companies did in SADC.
He further observed that the company assumed that government protection of domestic market was an automatic guarantee of demand of the locally made cement. Actually mwenefumbo stated that Portland had very passive attitude to marketing to the extent that it had very little sales promotion activities restricted on to exhibition at trade fairs. This outlook affected the formulation of marketing strategies such as price, distribution, promotion etc. which were not all that aggressive. This made the company to grow at a very low rate as compared to its counterparts in the SADC countries. This made the company not ready for competition in a liberalized market.
The research exposed very useful facts that tend to be common with most early Malawian companies. However, it will be seen if the same reasons also applied to the first mobile telecom companies. Since the research was based on a cement company in around early 1980s, the business environment might be very different from the one telecom companies are found in this era.
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Mubasshir Ahmed (2008) in his article titled „Zain: A New look with Global Vision’, exposes useful information about Zain‟s strategies. He points out that Zain was the first mobile operator in the Middle East and is growing fast. It envisions to become a global wireless operator. He quotes the CEO, Dr. Saad Al Barrak who states: “now we are entering a new and dynamic chapter in our history; one that will take us into the world top 10 mobile telecommunication companies.”
Ahmed describes Zain‟s strategies by firstly exposing the 3x3x3 plan which seeks to make Zain a global player in three stages: regional, international and global, with each stage completed in three years, with an aim of reaching a subscriber base of 70 million, all this in just nine years. He also exposes Zain‟s aggressive expansion strategies that would have four strategic elements. Firstly, Mass markets focus and segmented customer strategy. Through this Zain is focusing to enter mass market in full throttle. It targets to reach at least 70% of the market – both in terms of subscribers as well as segment value. The subscriber growth will be generated through aggressively targeting under-penetrated segments, whereas value growth will come from the existing customer base. It aims to attain 50% market share in markets where Zain is a “leader” and a minimum of 30% market share in markets where Zain is a “challenger.”
Secondly, Zain is following a competitive positioning and differentiation strategy: Ahmed observes that what makes Zain competitive and different is not its “price-only” but a combination of differentiated elements of their value proposition. The company classifies customers into value segments of different class and addresses them all.
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The third is its high-value technology strategy. Ahmed points out that invention and exploration are the technological buzzwords at Zain. Yet, it only invests in commercially viable technologies in order to benefit the customer from the full range of services that at the same time add value both internally and to end-customers.
Last is the company management strategy which aims at synergy realization and excellence by assuming and promoting a people-oriented culture. It also rewards and empowers its employees in line with their performance. Zain‟s marketing strategies were based on the corporate strategy called ACE. ACE is an acronym that stands for Accelerate, Consolidate, and Expand.
It will be interesting to see how these strategies applied in the context of Airtel Malawi which replaced Zain in 2010. It will also be interesting to note if TNM had similar strategies or if Airtel inherited the same as its marketing strategies.
2.6.1 CORPORATE STRATEGIES OF TNM AND AIRTEL 2.6.1.1 TNM’S CORPORATE STRATEGIES TNM„s vision is “Always with you”. It was adopted in 2007 when TNM rebranded from TELECOM to TNM. TNM„s mission is “to be Malawi's premier mobile company of choice, offering best in class mobile telecommunication services to people everywhere." By premier TNM means to be the best in terms of customer value, customer service, employee talent, consistent and predictable growth (TNM, 2008:4).
TNM values its customers and treat them with respect, providing friendly, courteous, knowledgeable and prompt service at all touch points. “We never forget that they come to us 32
by choice. We seek and are driven by our customers' feedback. We are committed to direct relationships and outperforming the competition with value and a superior customer experience” (TNM, 2011).
TNM started its operations in Malawi by following a niche strategy. Its focus was on the corporate sector and a few rich individuals who could afford premium price and payment of monthly phone bills (Chalulu in TNM, 2011). This strategy made sense considering the fact that cell phones were very expensive at that time and not everyone could afford them. This was also important to cushion the cost of new technology.
TNM had no clear strategy and did not expect competition just as its sister company MTL. According to Chalulu, the network had a confused identity and lacked proper personality. A decision was made to redefine TNM to make it a more consistent and appealing brand on the market and to give it a proper personality (Chalulu in TNM, 2008). This took place in 2007. Prior to this TNM was mostly reactive and tended to copy its rival‟s business strategies.
In 2007 TNM made a decision to carry out major changes in the company. Apart from rebranding decision, it also adopted growth strategies that would eventually shape the business activities of TNM and make it more competitive on the market. According to TNM (2008:1) these strategies placed emphasis on the following thematic areas:
Constantly improve and expand infrastructure and capacity
Grow the depth and availability of telecommunication services.
Promote telecommunication accessibility to Malawians.
Protect and promote customer loyalty.
According to Chalulu (2012), TNM strategies are reviewed every year or when it is necessary to do so. This is because the market trends and customers‟ preferences are always changing. 33
“What worked last year may not work again this year; the economic environment last year may not be exactly the same this year; we always wants our services to be relevant to our customers” (Chalulu, 2012). In 2009 TNM‟s strategic focus was an aggressive rollout of network coverage and capacity expansion at the same time looking to enhance efficiencies from a cost perspective in order to improve availability, reliability and quality (TNM, 2009:2).
The company also envisioned to enhance customer loyalty, improve and optimise distribution efficiency and position TNM as an innovative brand focussing on exciting customer‟s life styles (TNM, 2010:8). Dr. Mathews Chikaonda, Chairman of the Board, announced that innovation, cost reduction and appropriate infrastructure maintenance investment would be the strategic focus of TNM„s attention in 2012 (TNM, 2011). Following rebranding decision, TNM adopted a new logo with higher case scrambled „T‟ and a lower case „tnm‟ beside it. TNM also adopted a promise “always with you”. It changed colours from orange to green. TNM identified itself as a Malawian brand appealing to both the older and younger generations. Its new colour, green, is fresh and synonymous with Malawian‟s prosperity derived from agriculture and the environment (Chalulu, 2012; TNM, 2008). Figure 4 is TNM„s brand logo.
Figure 4: TNM’s New Brand Logo
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TNM‟s main focus is Malawi and has no immediate plans to go international since Malawi„s mobile industry is still young and growing with only 29 percent penetration rate as of 2012 (TNM, 2012).
TNM has divided its subscriber base into price conscious pre-paid and premium paying postpaid subscribers. Initially, TNM‟s focus was on post-paid premium price paying customers. However, with the change in market environment, TNM has redefined its focus on subscribers. TNM has realized that Malawi‟s population is dominated by the youth aged 15 to 64. These make up to 52 percent of the population. TNM defines these as Malawi‟s mobile addressable market. (www.tnminvestor.com). TNM regards these as its main focus at the moment.
2.6.1.2 AIRTEL’S CORPORATE STRATEGIES Bharti Airtel‟s vision is: “Airtel will be the most admired brand, loved by more customers, targeted by top talent and benchmarked by more businesses” (Singh, 2010). According to Chinula, Airtel Malawi‟s marketing manager, Airtel Malawi‟s vision is: “to be the most loved brand to the lives of Malawians” (Chinula, 2012).
Airtel Malawi‟s mission is: “Airtel always thinks in fresh and innovative ways about the needs of our customers and how we want them to feel. We deliver what we promise and go out of our way to delight the customer with a little bit more” (www.airtel.mw.com). One of Airtel Malawi‟s objectives is to increase its subscriber base from the current around 2 million to 7million.
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If Airtel is now a famous brand in Malawi, it is because of its strategic entry into the mobile phone industry as Celtel. Celtel entered Malawi with a distinct market differentiation strategy by offering unique pre-paid services which were more appealing to the majority of the low income Malawians. TNM‟s focus was on corporate post-paid customers, Celtel tried to win the majority of the low income customers who had great potential for growth. As such Celtel‟s penetration strategies were very effective to the extent that within a couple of years Celtel managed to overtake TNM in both revenue and market share. This was exactly what the corporate strategy at that time entailed i.e. to grow in terms of customer number and revenue (Chinula, 2012).
According to Chinula, corporate strategies have not really changed even though the company has changed hands from Celtel to Zain and later to Airtel. Swain (2012) points out the same observation about Airtel in India: “Bharti Airtel has somewhat missed the bus. With the changing dynamics in the telecom space, it is still using the same strategies it had ten years ago”. The current Airtel‟s corporate strategic objectives are:
To grow our customer base
To improve customer satisfaction levels
To grow our revenue
To grow our brand equity
In order to achieve these strategic objectives, the company has developed following strategies:
Maximising revenue margins
Capture maximum telecommunication revenue with minimum geographic coverage
Offer multiple telecommunication services to provide customers with one stop shop solution 36
Position itself to tap data transmission opportunities and offer advanced mobile data services
Focus on satisfying and retaining customers by ensuring high level of customer satisfaction
Leverage strength of its strategic and financial partners and emphasize on human resource development to achieve operational efficiency
According to Bharti Mital on his first visit to Malawi in 2011, Airtel‟s corporate strategy is to roll out a high quality network, add more people to the network and make its services more affordable (Mittal in Khanje, 2011). This was anchored by Manoj Kohli, Bharti Airtel‟s International Chief Executive who observed that Malawians talk only for an average of 40 minutes per month which is very low if compared to 450 to 500 minutes talk time per month enjoyed by Indians. Airtel‟s plan was to increase talk time per month from 40 minutes to at least 250 minutes per month by reducing tariffs (Kohl in Khanje, 2011). 4.2.3.6 AIRTEL BAND STRATEGY Airtel came to Malawi as Celtel. It changed hands to Zain (a wonderful world) and later to Airtel (express yourself). The change in brand name had strategic significance. It was a growth strategy to grow the brand globally to gain competitive advantage and to enjoy economies of scale. Airtel Malawi has greatly benefited from this (Chinula, 2012). Airtel is now a global brand ranked 5th in the world in terms of subscriber base. Its main focus in Malawi is on the low income population with emphasis on the youth. The figure below presents Airtel‟s logo.
37
Figure 5: Airtel’s Logo Sunil Bharti Mittal described the brand as “youthful, international, inclusive and dynamic – representing the journey of the first Indian brand to go truly global” (Khama, 2010). 2.6.1.3 MARKETING STRATEGIES OF TNM AND AIRTEL TNM‟s current marketing strategies are focused on six pillars of continued business growth as outline in TNM, (2011: 11). These include:
Competitive tariffs and affordable prepaid bundles (Mtolo)
A connection -focused distribution methodology
Continued development of electronic vouchers distribution system
Aggressive brand visibility
Improvement of customer services
Innovative technology and product development
According to Chinula (2012) Airtel has set out the following as its strategic marketing objectives:
Stimulate of usage through consumer and trade promotions
Quality and product innovation to gain first mover advantage
Introduction of new pricing solutions such as bundles
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2.7 CHAPTER SUMMARY This chapter has discussed the theoretical framework on which the study is based. It started by exposing the definition of marketing as given by different authors. It also briefly discussed service marketing. It then explained the general understanding of strategies where corporate strategies among others were explained. Strategies involved when venturing in international business were also highlighted.
The chapter also discussed different marketing strategies including the Ansoff Market Growth Strategies. The coming of telecommunication and its related companies in Malawi such as MPTC, TNM MACRA and Airtel were explained. It also reviewed the current status of telecommunication in the country. Lastly, different research related telecommunication literatures were also discussed.
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CHAPTER THREE
RESEARCH METHODOLOGY 3.1 RESEARCH DESIGN The type of study adopted for this research is mainly exploratory. An exploratory study has the goal of defining a problem precisely, gathering explanations, gaining insight and formulating hypothesis (Kolb, 2008: 26). Churchill (1996:114) defines exploratory research as, “a research design in which the major emphasis is on gaining ideas and insights; it is particularly helpful in breaking broad, vague problem into smaller, more precise sub-problem statements.” This study mainly uses qualitative research approaches (Kolb, 2008:26). However descriptive and explanatory approaches have also been used in considerable depth.
Churchill (1996: 114) describes a descriptive study as a research design in which the major emphasis is on determining the frequency with which something occurs or the extent to which two variables differ. This approach provides important data that can be used for comparative analyses (Chisnall, 2001: 36). Most of the data under descriptive study is quantitative in nature and can be used to test hypotheses (Kolb, 2008: 25).
The study follows a comparative approach. A comparative study is the act of comparing two or more things with the view of discovering about one or all of the things being compared (www.wikipedia.com). This technique often utilizes more multiple disciplines in one study (Chisnall, 2001: 51). This explains why several types of studies are prevalent in this research combining both qualitative and quantitative approaches. The general method of comparing things is the same for comparative research as it is in our everyday practice of comparison.
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Like cases are treated alike, and different cases are treated differently; the extent of difference determines how differently cases are to be treated (www.wikipedia.com).
For a study of this nature, it is inevitable not to use observational method of data collection especially by considering the aspect of physical evidence that is also crucial in as far as marketing of services is concerned. Observation approach was key in determining the visibility strategies of the two networks.
3.2 TYPE OF DATA This research has used both qualitative and quantitative types of data. When data is presented according to some attributes (distinct categories) which are not capable of measurement, it is known as qualitative data. Quantitative data is usually measureable and in number form (Churchill, 1996: 45). This data can further be categorised according to their sources namely primary data and secondary data. These are described in the following passages.
3.2.1 SECONDARY DATA Secondary data refers to data collected for purposes other than the specific research needs at hand. (Chisnall, 2001:51) The following are sources from which secondary data for this research was obtained among others:
Annual reports of TNM and Airtel
Malawi Communication Regulatory Authority (MACRA) reports
Marketing plans and reports of TNM and Airtel
Telecommunication International Union (ITU) data and reports
Newspaper and magazines
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Several internet sources including websites of the companies and their related stakeholders.
3.2.2 PRIMARY DATA This study has also used primary data. Primary data is data which is collected afresh and for the first time specifically for the research situation at hand (Kolb, 2008:12). It aims to answer the research questions for which the research was designed. The following passages provide a description of how primary data was collected. 3.2.2.1 SAMPLING AND SAMPLE SIZE
TNM and Airtel networks cover almost the whole country. However they are more conspicuous in the four cities of Malawi namely Blantyre, Lilongwe, Zomba, and Mzuzu. This is partly because when the first network was introduced in Malawi, these were the first to be targeted because of their business potential among other reasons. When Airtel then Celtel, started its operations in Malawi the same cities were targeted. Each one of these cities would equally provide a well representative sample in as far as research of the two mobile networks is concerned.
The elements in these cities are heterogeneous though the cities are homogeneous. Therefore, based on cluster area sampling and convenience sampling the city of Zomba was chosen to provide samples for interviews. Simple random sampling was used to select subscribers as samples for the research. Simple random sampling is when all the elements in the population have an equal chance of being included in the sample (Kolb, 2008: 185).
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A total of 90 subscribers of both TNM and Airtel were targeted for the study of which 45 would come from each of the networks. The main guiding factor for inclusion in the sample was possession of a functioning mobile phone of either of the two companies mentioned and the consent of the individual.
Purposive or judgment sampling was adopted to identify officials from the two networks for an in-depth interview. Purposive or judgment sampling is when a researcher deliberately or purposely draws a sample from the population that he thinks is a representative of the population or when judgment or opinion of the expert forms the basis for sample selection (chisnall, 2001: 78). Taking this into consideration, the Public Relations and Sponsorship Manager and the Marketing Director of the two companies namely TNM and Airtel were chosen for an in-depth interview respectively. These were better placed to provide the information needed for the research. 3.2.2.2 METHOD OF DATA COLLECTION
Primary data for the research was collected using two main methods. The first method was through in-depth face- to-face interviews involving open ended questions. This form of interviews is also called Unstructured Direct Interviews (IGNOU, 2011: 36). Guiding questions were used for the interviews. Refer to appendix 1. The purpose of this type of interview was to get in-depth information about the companies‟ marketing strategies and how they have transformed over the years with emphasis on the past five years. The information on the impact of marketing strategies on the performance of the two telecommunication companies was also realized.
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The second method involved the use of a paper based semi-structure questionnaire (See appendix 2). The research followed a self administered questionnaire where the subscribers were identified and given the questionnaire to complete on their own. It was anticipated that 45 customers from each of the two mobile networks would be identified and included in the sample making a total of 90 subscribers. However, a total of 84 questionnaires were returned representing 93% response rate. Of these, 42 were from TNM and 42 were from Airtel. Data collected reflected the perceptions of the subscribers of their mobile phone providers, their knowledge and responses to different marketing strategies employed by their companies, and the benefits they enjoy as customers.
3.3 DATA ANALYSIS Comparative data analysis was the main tool for analyzing data for this research. However both quantitative and qualitative data was coded summarized and presented using appropriate tools before a meaningful comparison and conclusion could be drawn. For much of the data Statistical Package for Social Science (SPSS) version 16.0 was used for analysis. Many descriptive statistical approaches were applied on most of the quantitative data. Tables, charts etc. were used for presenting data for comparison purposes. Qualitative tools such as categorization of data, recognizing relationship and developing categories etc. were also used for coding, summarizing, analyzing and presenting qualitative data.
3.4 LIMITATION OF THE STUDY Since the two companies are rivals and in stiff competition it was not possible for them to give the full information required especially considering the fact that the companies regard strategies with great privacy. There was some information which they considered as private and confidential. The other limitation is the relatively small sample. It may be difficult to 44
generalize the findings. It is also possible that the data collected from questionnaires do not capture the complexity of subscribers‟ perceptions of their networks.
3.5 CHAPTER SUMMARY This chapter has given a detailed account of the methodology followed in the process of coming up with this research. It started by explaining the different research design on which the study is based. These included exploratory study, descriptive study and the comparative study. The chapter then discussed different types of data and the methodologies used in their collection, analysis and presentation. It concluded by explaining area for future research that is worth considering. The next chapter will look at the findings and discussion from the study.
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CHAPTER FOUR
DISCUSSION OF FINDINGS 4.1 INTRODUCTION
This section is about the discussion of finding of the study. The presentation involves descriptive statistics where graphs and tables have been used. The chapter used information obtained through the use of questionnaires answered by TNM and Airtel subscribers. A total of 84 questionnaires were returned. The information obtained relates to the customers‟ perception and response to marketing strategies of the two mobile companies. The other sources of data used include interviews conducted with the Marketing Manager for Airtel Malawi and the Public Relations Manager for TNM, annual reports and other secondary sources.
4.2 DEMOGRAPHIC CHARACTERISTICS OF RESPONDENTS
Sex of the respondents
Female Male
Figure 6: Sex of Respondents
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Figure 6 above depicts the gender of respondents. A total of 82 respondents participated in the study and the results indicate that there was a fair representation 52 % for males and 48% for females.
Academic Qualification PSLC JCE MSCE DIPLOMA DEGREE ABOVE DEGREE
Figure 7: Education Level Figure 7 depicts the academic qualification of the respondents. The sample was well represented since it drew from all educational spectrums. Over 53% had a diploma and above and 47% had MSCE and below. 40 35 30
PERCENT
25 20 15 10 5 0 Below 20
21-30
31-40
41-50
Above 50
Figure 8: Age Group 47
Figure 8 depicts the age group of respondents. The majority of the respondents are in the age groups of 31-40 years (35.7%), 21-30 years (23.8%) and below 20 years (17.8%). Fewer respondents fell in the age groups of 41-50 years (9.5%) and 50 above 13%.
Respondents' Monthly Income below K25 000 K26000- k100 000 K101 000-k249 000 k250 000-k449 000 K500 000 above
Figure 9: Monthly Income of Respondents Figure 9 indicates the monthly incomes of respondents. The results indicate that the majority of respondents had a monthly income of between K26 000 and K100 000 (55%) and 21% had income below K25 000). Only 7.1 % and 3% enjoyed monthly income of between K250 000K449 000 and K500 000 and above respectively.
Out of these respondents 25.2% were students, 11% were farmers, 21% were business men and women and the majority were civil servants 33.3%. Those who worked in companies, organizations and other occupations represented 10.7% of the respondents.
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4.3 PHONE USAGE A presentation is made in this section about information related to the use of mobile phone service for both TNM and Airtel subscribers. Figure 8 below is about how long subscribers have been with their networks.
100 90 80 70 60 50 40 30 20 10 0
AIRTEL TNM
Less than 1year
1 to 3years
4years above
Figure 10: How long respondents have been with their network Figure 10 illustrates how long respondents have been with the network. The results show that majority of the subscribers of TNM (86.9%) and Airtel (92.9) have been with the network for more than 4 years. The remaining 7.1% of Airtel and 10.7% of TNM have been with their networks for less than one year and 1to 3years respectively.
On average, subscriber of the two networks spend equal amount of money per month on air time which ranges between K2001 to K5000 (US$15). Figure 9 below depicts reason for choosing the networks.
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60
Choice of Network
PERCENT
50 40 30
AIRTEL
20
TNM
10 0 Network coverage
Efficiency and quality
Has most family and friends
Cheaper phones available
Figure 11: Choice of Network
Figure 11 above depicts reasons why the respondents chose to subscribe with their networks. The results show that 50% of both TNM and Airtel subscribers chose their networks because most of their family members and friends were in these networks. A total 35.7% of TNM subscribers chose it because of the efficiency and quality of its network against 23.8% of Airtel. Airtel had a larger percentage of subscribers (19.1%) against 7.1% of TNM that chose the network because of availability of network coverage. This means that Airtel was the first to come to most areas before TNM. An equal number of subscribers (7.1%) each chose the network due to availability of cheaper phones.
4.4 NETWORK SWITCH A total of 66.7% of all the respondents say that they have ever switched networks. Of these 47.6% are from Airtel and 19% are from Airtel. This indicates that more subscribers from Airtel move to other networks. Among those who switch networks 64.3% switch from Airtel to TNM against 35.7% who switch from TNM to Airtel. Figure 12 illustrates the findings.
50
Network Switch 64.3
35.7
TNM to Airtel
Airtel to TNM
Figure 12: Network Switch
Cheaper prices for their services TNM to Airtel
Quality services by other network
Airtel to TNM No network coverage 0
5
10
15
20
25
30
35
40
PERCENT
Figure 13: Reasons for Switching
Figure 13 above depicts reasons for switching from one network to another. Results show that there are three main reasons for switching. A total of 35.7% of Airtel subscribers who switch to TNM do that because they want cheaper prices. No TNM customers switch to Airtel because of low prices. A total of 35.7% of Airtel subscribers move to TNM following better quality of services while only 14.3% of TNM switchers go to Airtel for quality services. A total of 14.3% of TNM subscribers switch to Airtel because of network coverage 51
while no one moves from Airtel to TNM because there is no Airtel network in an area. This indicates that TNM has better quality and price scheme while Airtel has wider network coverage.
The results above correspond well with reason why some subscribers decided to be subscribers of both networks. A total of 40.0% did that because it is very expensive to call across networks while 47% did that to enjoy benefits from both networks. Only 13% decided to subscribe to both networks because of network coverage problem.
4.5 CUSTOMERS’ ATTITUDE AND RESPONSE TO TNM AND AIRTEL STRATEGIES
4.5.1 PROMOTION STRATEGIES The product or service must be communicated to prospective buyers and users. This is the role of promotion in the overall marketing strategy- communication with the market to stimulate demand for the company‟s products or services (Davidson, 1987). Advertising and sales promotions are critical elements of the promotion mix in Malawi telecommunication industry.
All respondents have ever heard about promotions conducted by their networks. The figure below shows the sources of information for the promotions.
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Sources of Promotion Information
Television Radio Newspaper Posters SMS
Figure 14: Media for Promotions Figure 14 above depicts sources of information for promotions. Most people hear about promotions on radio (32%), SMS (27%), television (26%) and newspapers (16%). Only 6% of subscribers get their information from posters. Both TNM and Airtel carry out heavy advertising through these media. TNM stated serious advertising after the coming of Airtel (Celtel) which entered the market with aggressive promotions.
All the respondents have ever entered a promotional competition. There is a remarkable difference between TNM and Airtel in their sales promotion strategy. Since its introduction in Malawi, Airtel has carried out heavy sales promotion one after the other with an average of two major promotions per year. The purpose is to stimulate product and services usage. It is also a way of maximizing revenue for the company and paying back to the community which has made Airtel a success. Huge prizes are given usually cars and cash. The following are some of promotions quickly recalled by respondents: Lololo (plenty) promotion where Toyota Prados were given every week, Migolomigolo (plenty) promotion brand new Toyota minibuses were given every week for sixteen weeks.
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On the other hand, TNM has carried out its sales promotions courteously by avoiding extravagant expenditure on the same. According to TNM (2012) “growing a business is not just about promotions. TNM follows a multifaceted approach not just focusing on one aspect of the marketing mix”.
Some of the promotions recalled by respondents are Zeni Zeni (real deal), Shop-a-Dream promotion where people were encouraged to recharge and would stand a chance of winning a 1 million kwacha shopping voucher every week, and Call-for Free Promotion in which customers were required to recharge their phones with any recharge voucher and enjoy free calls from 9 PM to 7 AM. TNM promotions are very rare and they are not as extravagant as Airtel‟s sales promotions.
The table below portrays how much subscribers spend during promotions. Table 3: Money spent on Airtime during promotion
Variable Below K5000 K5001-K10 000 K10 001-K15 000 K15 001-K 20 000
TNM No % 21 50.0 8 19.0 4 9.5 9 21.4
AIRTEL No % 24 57.1 6 14.2 9 21.4 3 7.1
From table 3 it can be seen that half of the subscribers from both networks still spend less than K5000 a month during promotions. However, there is general increase in expenditure with an average expenditure of K6000 per month in both networks which is slightly higher than the average expenditure where there is no promotion (K5000). In general TNM subscribers respond well to promotion than those of Airtel.
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All respondents said that they have never won grant prizes apart from minor prizes or bonuses such as airtime. This has brought mix perception regarding promotional competitions. The figure below portrays these perceptions.
100
PERCENT
80 60 40 20 0 Yes
No Airtel
TNM
Figure 15: Perceptions of Promotional Competitions Figure 15 above depicts perceptions of subscribers over promotional competitions especially after failing to win major prizes. A majority of TNM (90.5%) and Airtel (66.6%) customers indicate no change in the perception of their networks. However, 33.3% of Airtel customers indicate dissatisfaction and frustration with failure to win in the promotions even after spending a lot of money on the same. They feel that promotional competitions are used just to steal even more from them. They are reluctant to join new competitions. The table below gives a general perception regarding sales promotion.
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Table 4: Perception on Sales Promotion
Variable Promotional prizes are well distributed
Promotions attract subscribers and increase usage
Not a good idea to enter promotional competitions
It is easy to win a prize in a promotion
Promotions are just a waste of time and money
My network has grown fast because of promotions
Promotions prevent switch to other networks
Strongly agree Agree Disagree Strongly disagree Strongly agree Agree Disagree Strongly disagree Strongly agree Agree Disagree Strongly disagree Strongly agree Agree Disagree Strongly disagree Strongly agree Agree Disagree Strongly disagree Strongly agree Agree Disagree Strongly disagree Strongly agree Agree Disagree Strongly disagree
TNM no % 8 19.1 26 61.9 5 11.9 3 7.1 16 38.1 18 42.8 5 11.9 3 7.1 5 11.9 21 50.0 16 38.1 3 7.1 8 19.1 18 42.8 13 30.9 11 26.1 16 38.1 15 35.7 5 11.9 21 50.0 16 38.1 3 7.1 3 7.1 13 30.9 21 50.0 5 11.9
AIRTEL no % 1 2.3 21 50.0 10 23.8 10 23.8 12 28.5 24 57.1 3 7.1 3 7.1 5 11.9 8 19.1 18 42.8 11 26.1 3 7.1 13 30.9 26 61.9 8 19.1 23 54.7 11 26.1 8 19.1 13 30.9 13 30.9 8 19.1 5 11.9 21 50.0 16 38.1
The results in table 6 above show that over half of both TNM (19.0%+61.9%) and Airtel (2.3%+50.0%) subscribers agree or strongly agree that promotional prizes are well distributed. Over three-quarter of both TNM (38.1%+42.8%) and Airtel (28.5%+57.1%) agree or strongly agree that sales promotions attract subscribers and increase usage of products and services. Similarly, a large number of TNM (88.1%) and Airtel (68.1%) disagree or strongly disagree that it is not a good idea to enter promotion competitions. However, over 30% of Airtel customers still show reluctance to enter Airtel promotions.
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Likewise, a majority of TNM (42.8%+30.9%) and Airtel (61.9+30.9%) disagree or strongly disagree that it is easy to win prizes in TNM and Airtel promotions. However, a large number of them still disagree or strongly disagree that these promotions are just a waste of time and money since they mean nothing to customers. Both TNM (61.9%) and Airtel (59.9%) subscribers agree or strongly agree that promotions have played a vital role in the growth of their companies.
However, respondents disagree or strongly disagree with the greater margin (TNM 61.1% and Airtel 88.1%) that customers cannot switch to other networks if they love promotions of their network. The findings indicate that sales promotions are very important for business. However, it is not wise to overdo them and they should also be supplemented by other elements of the marketing mix since, they do not prevent switching on themselves.
4.5.2 PRODUCTS STRATEGIES It is common business phraseology that good product means good business (Lamb et al. 2008). Product strategy concerns determination of specific product that is consistent with the company‟s marketing objectives. TNM and Airtel have identical products and services with very minor variations. The figure below shows the preferred products and services by respondents.
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Preferred Services AIRTEL
TNM
69
39.3
35.7
25
21.5 9.5
Internet
Voice calls
SMS
The figure 16: Preferred Products Offered by both TNM and Airtel.
Figure 16 above depicts preferred network services. The results show that more TNM customers like calling while most Airtel customers prefer texting and internet. This could be a function of price. Both TNM and Airtel observed that prepaid services bring greater profits than post paid services. Table 5 below portrays customers‟ perception as regards their networks‟ products and services. Table 5: Customers’ perception of TNM and Airtel products and Services Variable My network is usually first to bring new products
My network’s products are relevant to modern envt
My net’s success is due to being first product mover
Products and services are simple to use
Strongly agree Agree Disagree Strongly disagree Strongly agree Agree Disagree Strongly disagree Strongly agree Agree Disagree Strongly disagree Agree Disagree
TNM no % 12 28.5 16 38.1 14 33.3 10 23.8 25 59.5 4 9.5 3 7.1 6 14.2 11 26.1 10 23.8 15 35.7 30 71.4 12 28.6
AIRTEL no % 6 14.2 14 33.3 19 45.2 3 7.1 3 7.1 30 71.4 6 14.2 3 7.1 9 21.4 21 50.0 9 21.4 3 7.1 18 42.8 24 57.2
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The results from table 5 indicate that a total of 71.4 % of TNM subscribers disagree or strongly disagree that TNM is the first to bring new products on the market while a total of 47.5% agree or strongly agree that Airtel is the first to do that. The subscribers of both TNM (83.3%) and Airtel (78.5%) agree and strongly agree that the services rendered by both networks are relevant to the modern environment. A total of 71.4% of Airtel Agree and strongly agree that their network has grown faster because it is the first to bring new products and services on the market.
The findings correspond well with the strategies of the two networks. Product innovation is part of Airtel Marketing strategies. Airtel‟s aim is to be the first to introduce new products and services on the market in order to gain first mover advantage and remain a leader in innovation. According to Chinula (2012) this has greatly assisted the company to acquire virgin customers and customer retention which have helped to grow the company‟s revenue.
However, from the table 57.2% of respondents indicate that most Airtel products are too complicated to be used by an average Malawian. This is agreed by Swain (2012) who observed that Airtel products and services are not simple enough to use for the majority of the population in India giving the example of Airtel Money services. This indicates that Airtel products and services are rushed into the market without thorough research. This can be counterproductive if customers are disappointed with them. On the other hand, 71.4% agree that TNM products and services are simple to use. The table 6 below shows some of the products and services that TNM and Airtel were the first to introduce on the market.
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Table 6: Products and services first introduced by Airtel and TNM
Airtel Prepaid services SMS International roaring Blackberry solution Bundles 3.75 G Kutapa Yakwathu 5X One network Low cost phones Internet
TNM Me to you Family and friends 3.5 G Use of kwacha instead of dollars
The table above indicates that it is Airtel that has been the first to introduce most new products on the market.
Chalulu in TNM (2010) observed that TNM may not be the first to introduce most of its products and services on the market, but once its products are introduced, they are loved by customers and are sustained because TNM is customer- centric. Daniel Makata, TNM‟s Strategy and Planning Manager stated: “Let me tell you what it means to be customercentric: all our decisions are driven by the customer. New products, new pricing, new networking- all of it is first put to a customer focus group. When we have something new we offer it because we know firsthand that there is demand for it, not because it might be the new hot technology. Developing products and services with integrity means promising something and being able to deliver it to the satisfaction of the customer” (Makata in TNM, 2010). Chalulu substantiates that while Airtel may be the first mover; TNM is the perfect mover (Chalulu in TNM, 2010).
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Nevertheless, TNM loses a lot as a follower on the market especially since it take quite some time before it responds to the new product introduced by Airtel. TNM has to seriously consider its innovation strategy.
4.5.3 DISTRIBUTION STRATEGIES Physical distribution is a term employed in business to describe the broad range of activities concerned with efficient movement of finished products from the end of production line to consumers (Blythe, 1998). The aim of distribution activities is to maximize the utility or economic value of the product by transmitting the right product, at the right time to the right place. Distribution policy and strategies have to be well formulated in line with demand and supply.
Network coverage is very crucial as a distribution strategy in telecommunication. TNM and Airtel have been locked in a tight race over mounting BTS to increase network coverage. The figure below illustrates the rate at which the two networks have been establishing BTS cumulatively. 600
number of BTS
500 400 300
Airtel TNM
200 100 0 2007
2008
2009
2010
2011
Figure 17 Network coverage through installation of BTS
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Figure 17 above shows that Airtel became a leader in construction of BTS. This was one of Airtel‟s penetration strategies. By 2003 Airtel had already overtaken TNM in the installation of BTS and by 2011 Airtel had 524 BTS while Airtel had 420. The implication of being the first to have network coverage in an area is that all those who have an appetite for cell phones have no choice but to subscribe with your network. Even after the other networks have come to an area, the first network still influences friends and relatives who would prefer to subscribe with the network with most of their friends and relatives. As such BTSs were of strategic significance to both networks. Airtel as a global brand enjoying economies of scale had enough resources to lead the way other than TNM which has had financial problem.
Currently, TNM has geographical coverage of 74% and population coverage of 85%. On the other hand Airtel has population coverage of 90% and a geographical coverage of 72%. This indicates that Airtel concentrated on areas with large population rather than merely geographical coverage. The two networks concentrated on Southern and Central regions first due to large populations in these regions. Northern region still have a lot of areas without network coverage as depicted in coverage maps (www.tnm.com; www.airtel.mw.com). Table 8 below contains results about customers‟ perception on distribution.
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Table 7: Customers’ Perception on Distribution Variable Cards and recharge vouchers are easy to find
Strongly agree Agree Disagree Strongly disagree My network still has network coverage problems Strongly agree Agree Disagree Strongly disagree My network has wider network coverage than rival Strongly agree Agree Disagree Strongly disagree Easy accessible airtime makes me buy more Strongly agree Agree Disagree Strongly disagree My network has grown faster due to wider coverage Strongly agree Agree Disagree Strongly disagree Cheaper phones helped in growth of market share Strongly agree Agree Disagree Strongly disagree My first phone was Mose wa Lero (low cost phone) Agree Disagree I have ever used Low cost phone Agree Disagree
TNM no % 24 57.1 15 35.7 3 7.1 6 14.2 10 23.8 16 38.0 10 23.8 4 9.5 24 57.1 10 23.8 4 9.5 10 23.8 30 71.4 4 9.5 10 23.8 24 57.1 4 9.5 4 9.5 8 19.0 20 47.6 8 19.0 6 14.2 28 66.6 14 33.4 36 85.7 6 14.3
AIRTEL no % 20 47.6 22 52.4 6 14.2 10 23.8 20 47.6 6 14.2 10 23.8 10 23.8 16 38.0 6 14.2 6 14.2 17 40.4 16 38.0 3 7.1 6 14.2 30 71.4 3 7.1 3 7.1 10 23.8 32 76.2 31 73.8 11 26.2 38 90.4 4 9.6
The results from table 7 above show that a majority of respondents (57.1%+35.7%) for TNM and (47.6%+52.4%) Airtel agree or strongly agree that it is easy to find cards and recharge vouchers. This indicates that both networks have good distribution channels in the form of wholesalers and retailers. Only a few (38%) from both networks (14.2+23.8) agree or strongly agree that the two mobile networks still have problems due to inadequate network coverage. This indicates that there is still challenge for both networks to cover the whole country.
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The respondents of both networks also agree that easily accessible airtime increases the frequency of buying and usage, (23.8%+ 30.0% TNM, and 14.2%+40.4% Airtel). A higher percentage of interviewees (23.8%+57.1% TNM and 14.2%+71.4% Airtel) agree and strongly agree that their networks have grown faster because of wider network coverage. A total of 66.6% for TNM and 100% for Airtel agree or strongly agree that low cost phones have greatly assisted in the growth of their networks.
The results also show that 66.6% of TNM and 73.8 of Airtel subscribers had low cost phone as their first phone. Over 80.5% TNM and 90.4% Airtel subscribers have ever used a low cost phone which in Malawi is called Mose wa Lero. These phones were first introduced by Airtel to increase access and penetration into the low income rural market. Airtel‟s ZTE phone cost K1, 400 ($12). The phones greatly increased subscription to the network. TNM responded four months later with Hauwei phones which had improved functionality and quality than the ZTE and its price was a little higher K1,800 ($15). Many people preferred these phones to the ZTE phones.
These phones were called Mosewalero (Moses of today) because they came during the first term of President Dr. Bingu Wa Munthalika who was accorded to title „Mose wa Lero‟ (Moses of today) after the biblical Moses for improving the lives of people and the economy during the first term of his office 2004 -2009. During this period, mobile connectivity rapidly scaled up to cover a majority of Malawi‟s predominantly rural population (Choleman, 2011). Both networks continue to sell these phones though the price has slightly increased now. The introduction of low cost phones had remarkable strategic advantage and Airtel as a first mover gained a lot from this strategic move. Overall results indicate that distribution plays a
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crucial role in accessibility and greatly affects usage of the products and services. It has been instrumental in market penetration and development for both networks.
4.5.4 PRICE STRATEGIES A huge difference is observed in the way respondents perceive prices of TNM and Airtel. According to Chalulu (2012) price skimming was the initial TNM‟s pricing strategy. TNM carried out a post paid service charging premium price targeting top corporate citizenry, government departments and rich people who could afford paying monthly bills. The aim was to quickly recover the cost of investment before facing competition.
Airtel (Celtel) on the other hand, entered the market with penetration price strategy. Airtel (Celtel) introduced a pre-paid service where customers could buy airtime recharge vouchers. This became more appealing to the majority of the low income populace who could not afford monthly telephone bills. TNM introduced pre-paid services in 2000, a year later after Airtel. This gave room for Airtel (Celtel) to consolidate its position on the local low income masses. 4.5.4.1 LATER PRICING DECISIONS By 2008, stiff competition started mounting up between TNM and Zain on pricing of their products and services particularly on local calls and low cost phones which became crucial in market penetration and market development. According to Werner Schrijver, TNM CEO, TNM avoided price war tactfully by positioning itself differently (TNM, 2009). TNM introduced lowest recharge vouchers which were more appealing to low income masses. In 2010, TNM started charging its tariffs in Local currency rather than US dollar. Airtel followed a month later and introduced even a lower denomination voucher of K20 against the K40 introduced by TNM.
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The two networks have introduced many price schemes and customers have responded differently to these schemes. Figure 18 depicts level of satisfaction of respondents to bundles introduced by TNM and Airtel.
PERCENT
Bundles 70 60 50 40 30 20 10 0 Very satisfied
satisfied
Somewhat satisfied
AIRTEL
Not satisfied
TNM
Figure 18: Satisfaction with Bundles The results from figure 18 indicate that both TNM (61.9%+33.3%) and Airtel (26.1%+66.6%) customers are satisfied or very satisfied with Mtolo/ Bundles. This may be the reason why this scheme is very successful for both networks. Figure 19 shows level of satisfaction with normal prices.
Normal Prices TNM
Not satisfied
AIRTEL
4.7
33.3 19
Somewhat satisfied
33.3
Satisfied Very satisfied
33.3 71.4
4.7
Figure 19: Satisfaction with Normal Prices
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The results from figure 19 show that 76% of TNM customers are satisfied or very satisfied with normal prices. On the other hand almost three quarters of Airtel subscribers indicate that they are not satisfied or very unsatisfied with normal prices offered by their network. Swain (2012) points out that even in India Airtel prices are a little higher than those of its competitors.
TNM has successfully positioned itself as a low cost leader. Most of its products and services are priced lower than those of Airtel. It has also carried out price related promotions that offer better deal than those of Airtel. The table below 8 illustrates prices of TNM‟s normal tariffs against that of Airtel in the month of July, 2012.
Table 8: TNM and Airtel Tariffs in July, 2012 per minute TNM
Local calls: Pick time Off pick SMS
: Local
AIRTEL
tnm to tnm
to others
airtel to airtel
to others
K50
K64
K52
K66
K24
K33
K26
34
K10
K10
K12
K22
Table 8 shows that TNM tariffs for both calls and SMS are slightly lower than those of Airtel in both pick time and off pick. Prices of SMS are also higher at Airtel than TNM.
Figure 20 below indicate frequency in the usage of bundles. The results indicate that close to three quarters of respondents (38.0%+26.1% for TNM and 45.2%+14.2% for Airtel) use bundles often or very often. This indicates that bundles are people‟s favourite. It also shows that Malawian market is still very price sensitive.
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PERCENT
Use of Bundles 50 45 40 35 30 25 20 15 10 5 0 Very Often
Often AIRTEL
Rare
Very rare
TNM
Figure 20: Frequency in the use bundles Table 9 below shows results on customers‟ perception and attitude on prices of TNM and Airtel. Table 9: Customers’ Perception on Prices of TNM and Airtel Variable Bundles make phone services cheaper
Smaller vouchers increase frequency of purchase
Bundles make you spend more than expected
Competition between TNM and Airtel is on price
Strongly agree Agree Disagree Strongly disagree Strongly agree Agree Disagree Strongly disagree Strongly agree Agree Disagree Strongly disagree Strongly agree Agree Disagree Strongly disagree
TNM no % 16 38.0 21 50.0 5 11.9 8 19.0 26 61.9 8 19.0 8 19.0 19 45.2 15 35.7 11 26.1 19 45.2 12 28.5 -
AIRTEL no % 11 26.1 28 66.1 3 7.1 14 33.3 24 57.1 2 4.7 2 4.7 14 33.3 14 33.3 13 30.9 1 2.3 11 26.1 24 57.1 5 11.9 2 4.7
The results from table 9 shows that over three quarters of respondents (TNM-38.0%+50.0%; Airtel-26.1%+66.6%) agree or strongly agree that bundles have made phone services to be cheaper than before. They also agree with similar margin that low denomination vouchers
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increase frequency of purchase (19.0%+61.9% TNM and 33.3%+57.1%). However, over 66% of Airtel respondents agree or strongly agree that bundles make them spend more than expected, about 80% of TNM subscribers disagree or strongly disagree with this. This may indicate that TNM customers enjoy Mtolo better than Airtel. In addition, with TNM Mtolo bundles a subscriber can make calls across networks. Airtel bundles on the other hand, can only be used on Airtel network. TNM has at least one low price bundle that one can use during the day from 7AM to 5PM. A good example is Mtolo 40 costing K40 implemented in the month of September, 2012.
On the other hand, most Airtel bundles can only used at night. Those that can be used during the day are very expensive for most people. For example, the cheapest Airtel bundle for calls during the day in the month of September was Chezani Bundle 200 costing K200 which could only be used between 11AM to 4PM. Appendix 3 gives more information about bundles and other services offered by TNM and Airtel.
Results from the table also show that both TNM and Airtel funs agree or strongly agree that competition between the two rival networks has greatly been through price. This indicates that price strategies create competitive advantage on the market.
4.5.4.2 LOYALTY PROGRAMMES Both TNM and Airtel have loyalty programmes that are aimed at encouraging subscribers to stay longer with the network. TNM runs a usage bonus scheme where a subscriber automatically gets 10 percent if they use K900 and more every 15 days. The bonus can be used to call any network any time including SMS. TNM also introduced Muyaya (forever) Loyalty Discount. Under this scheme subscribers automatically enjoy discount on their calls 69
according to how long they have stayed with the network. Those who have been with the network for more than 4years get 20percent discount. See appendix 3.
The only well known loyalty schemes run by Airtel is the Airtel Rewardz (sic) in which subscribers register to enter the scheme and accumulate points every time they recharge. These points can then be redeemed into minutes which are used to call Airtel subscribers only. This scheme is more complicated if compared to that of TNM no warder it is not as popular as TNM‟s bonus scheme. 4.5.4.3 YAKWATHU AND YANGA Airtel was the first to introduce a discount scheme called Yakwathu (ours) where subscribers enjoy discount depending on time and location of where they are calling from. TNM introduced similar scheme called Yanga (mine) and improved on Airtel‟s scheme by making it easy to enter and indicating discount in percentage on the phone which one can enjoy according to time and place. Yanga is the talk of the town since subscribers can enjoy up to 99 percent discount which runs concurrently with other schemes. People talk literary for free with this scheme.
4.6 BRAND VISIBILITY From observation, TNM has greater brand visibility than Airtel in both rural and urban areas where most shops are painted in TNM colour and logo. This is a big change since Celtel and Zain had great brand visibility than Airtel at the moment.
4.7 CUSTOMER SATISFACTION WITH THEIR NETWORKS Table 10 below depicts level of satisfaction of respondents with the services offered by their networks. 70
Table 10: Level of Satisfaction of Respondents with their Networks Variable Customer care services
Quality of the network services
Prices of goods and services
Promotional activities
Very satisfied Satisfied Somewhat satisfied Not satisfied Very satisfied Satisfied Somewhat satisfied Not satisfied Very satisfied Satisfied Somewhat satisfied Not satisfied Very satisfied satisfied Somewhat satisfied Not satisfied
TNM no % 13 30.9 18 42.8 8 19.0 3 7.1 3 7.1 33 78.5 3 7.1 3 7.1 8 19.0 18 42.8 11 26.1 5 11.9 8 19.0 8 19.0 21 50.0 5 11.9
AIRTEL no % 6 14.2 16 38.0 6 14.2 14 33.3 6 14.2 16 38.0 9 21.4 11 26.1 9 21.4 16 38.0 17 40.4 9 21.4 17 40.4 16 38.0 -
The results from table 10 depict that more TNM subscribers are satisfied (30.9%+42.8%) than those of Airtel (14.2%+38.0%) with customer services of their network. Likewise, about 85% of TNM customers show satisfaction with the quality of their network services against only 53% of Airtel. Close to 62% (19.0+42.8%) of TNM are satisfied or strongly satisfied with prices offered by TNM while 79% (38.0%+40.4%) of Airtel customers are somehow satisfied or not satisfied at all with the price schemes of their network. However, a total of 61.9% of TNM respondents are somewhat satisfied or not satisfied with the promotional activities of their network. However, a similar range (61.8%) of Airtel subscribers is satisfied or very satisfied with the promotions by Airtel.
The results indicate that in general TNM subscribers are more satisfied with services of their network than Airtel customers. This is especially in line with prices, customer care and quality of the network. These variables are crucial determinants of switching networks. This may explain why Airtel has more switchers than TNM. The above scenario is also reflected in the level of experiences people have with their network as depicted in figure 21 below.
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Experience with Network 70 60
PERCENT
50 40 AIRTEL
30
TNM
20 10 0 EXCELLENT
GOOD
AVERAGE
BELOW AVERAGE
Figure 21: Rating Experience with your network On the overall, TNM subscribers have better experience with their network provider with over 80% of subscribers rating their experience as either excellent (47.6%) or good (42.8%). A total of 66.6% rate Airtel as excellent (7.1%) or good (59.5%). The Figure below indicates a very interesting finding about network preference.
Recommending a Network 80 70
PERCENT
60 50 40 30 20 10 0 TNM
AIRTEL
Figure 22: Network Recommendation
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Figure 22 above indicates that 73.8% of all the respondents (62) said that they would recommend TNM to a new subscriber while only 26.2% (22) said that they would recommend Airtel. Of those who would recommend TNM a good number are Airtel subscribers especially those who are subscribers of both networks. This indicates that TNM has positioned itself strategically for continued growth and is now a greater threat to Airtel than ever before. The results also show that TNM‟s strategies are effective on the market.
4.8 IMPACT OF MARKETING STRATEGIES IN THE PERFORMANCE OF TNM AND AIRTEL Marketing strategies as already observed, play a crucial role in the overall performance of both TNM and Airtel. A remarkable impact is on the growth of the networks. Sound marketing strategies have led Airtel to become the market leader in terms of market share despite being second mobile company to start its operations in Malawi.
Airtel‟s success is attributed to its product strategies, promotional strategies and distribution strategies. Airtel has demonstrated that it is an innovative company by being the first to introduce cutting- edge products and services and the company benefited a lot from first mover advantage. Airtel is also known for carrying out aggressive promotions usually with huge grand prizes that attracted new subscribers. For example, Lololo Promotion with Toyota Prado as a grand prize netted in over 500 000 new subscribers (Mtumbuka in Mhango, 2011). Airtel was also very good with distribution strategies. It was able to cover a wide population than it rival TNM. The figure below depicts subscriber growth for the two networks.
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Growth of Subscribers 2500000
SUBSCRIBERS
2000000 1500000 1000000 500000 0 1995
1997
1999
2001
2003
2005
AIRTEL
2007
2009
2010
2011
2012
TNM
Source: Annual reports
Figure 23: Subscriber Growth for TNM and Airtel
Figure 23 above shows that Airtel grew quickly in terms of subscribers and overtook TNM within three years of its existence. TNM did not have aggressive marketing strategies at the time as a result it was easily outsmarted. However, TNM fought hard firstly by following the footsteps of Airtel‟s strategies such as distribution and advertising heavily. TNM also adopted pricing strategies that made its services more affordable to the price sensitive Malawian population especially under economic recession. TNM is currently Airtel‟s strong challenger as it is slowly but surely regaining its lost market share.
Figure 24 below
illustrates the scenario.
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Market Share 120 100
PERCENT
80 60
AIRTEL TNM
40 20 0 1995 1997 1999 2001 2003 2005 2007 2008 2009 2010 2011 2012
Source: Annual reports Figure 24: Growth in Market Share of TNM and Airtel
The figure above indicates that the gap in market share between the two companies is now narrowing down with TNM having 44% market share with Airtel still a market leader at 56% as of 2012 (TNM, 2012).
Both TNM and Airtel have registered growth in revenue following growth in subscriber base. For example,
TNM‟ revenue has grown from K4.7 billion in 2006 to K12.8 billion in 2011;
EBITDA grew from K2.7 billion in 2006 to K7.9 billion in 2011 (www.tnm.com). The margins at Airtel have been higher. However, in the last few years, Airtel has been experiencing decline in revenue not only in Malawi but also as a global company. Swain (2012) states that Bharti Airtel has lost 30% in revenue in the last three years. This may indicate that Airtel‟s strategies are no longer as effective as they were in the past.
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4.6 CHAPTER SUMMARY This chapter has discussed the findings of the study. The various marketing strategies adopted by the two companies and the response from their customers were exposed. The impacts of these strategies on the performance of the two networks were also highlighted. The following chapter deals with conclusions and recommendations.
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CHAPTER 5
CONCLUSION AND RECOMMENDATIONS 5.1
INTRODUCTION
This chapter is about conclusions and recommendations from the study. The study aimed at assessing the role of marketing strategies in the performance of telecommunication companies through a comparative study of TNM and Airtel. The specific objectives of the research were: to understand the corporate strategies and focus of TNM and Airtel; to compare marketing strategies of TNM and Airtel; to assess customers‟ response to the implementation of marketing strategies and to assess the impact of marketing strategies on the performance of TNM and Airtel.
5.2 CORPORATE STRATEGIES The study found out that TNM did not have well formulated corporate strategies prior to the coming of Airtel in 1999 and it lacked proper identity and personality. Like its sister company MTL, it enjoyed government protectionism and was never expecting competition soon. This was the trend for most government owned companies and most of them fared badly when faced with competition. TNM‟s initial focus on post paid financially viable customers was rather myopic since it did not anticipate growth in demand especially on the low income masses. It shows lack of market research and open mindedness on what was happening on a wider business environment.
TNM later adopted growth strategies that concentrated on improving infrastructure and capacity, availability, accessibility and promotion of customer loyalty. Cost reduction and a move towards low cost leadership strategy have proved to be vital for the growth of the 77
company. TNM reviews its strategies every year to make sure that it is always in line with the customer‟s preference. Its focus is still wholly local although it is competing with one of the world‟s largest telecom companies. TNM needs support in areas of finance and technological innovation which are its major hiccups. It is commendable that TNM fought its way up and is gradually setting itself as a force to reckon with as it is gradually regaining market share.
Airtel entered the market with growth strategy aimed at growing customer base and revenue. Its market differentiation strategy through product innovation such as bringing pre-paid services that appealed to the majority of low income populace was critical for its establishment on the market. Airtel has established itself as a leader in product innovation especially to gain first mover advantage. Airtel has managed to explore more of the growth strategies such as market penetration, new product development, market development and currently diversification. Though TNM has followed strongly, Airtel has been the pace setter. Airtel for sure has been very important in the growth of telecommunication services in Malawi by exposing Malawians to the technology they just dreamed of.
However, strategically, the results indicate that Airtel has not been versatile. It does the very same things all the time. Airtel strategies are rarely changed. This makes the company to be very predictable and vulnerable to competitors as already observed in literature review. This may negatively affect the company in the near future. Both TNM and Airtel focus on the youth as their target market.
5.3 MARKETING STRATEGIES The marketing strategies of the two networks have been critical in the success of these companies. TNM did not have aggressive marketing strategies in its early stages of its 78
existence in Malawi. This changed soon after Airtel came on the scene. Airtel had viable product strategies, aggressive promotions and distribution strategies. TNM has no choice but to follow Airtel‟s lead though with problems since it did not have the financial bag Airtel had as a multinational company following international and global strategies. The marketing strategies of TNM and Airtel have therefore, not been very different apart from a few reasonable variations.
While Airtel continues to concentrate on stimulating usage through sales promotion and product innovation to gain first mover advantage, TNM devised a multifaceted approach to marketing. Among others, TNM concentrated on providing competitive tariffs, connection based distribution, improved quality, customer retention and customer services, and aggressive brand visibility among others. Some of the remarkable differences in marketing strategies and customer perception about the two companies are highlighted below.
5.3.1 PRODUCT STRATEGIES Airtel has demonstrated to be more innovative than TNM since it is always the first to bring new products on the market. Over 71% of respondents agree that Airtel is first to bring new products on the market. A similar percentage agrees that Airtel has grown faster because it was first to bring new products on the market. Airtel has done very well in product development strategy. However, most products and services that Airtel brings on market are not user friendly. TNM on the other hand, is not usually the first mover but its products are user friendly and more appealing to the majority of Malawians. This indicates that they are well researched.
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5.3.2 DISTRIBUTION STRATEGIES Distribution was a major tool for both networks for market development. Airtel had an upper hand in distribution especially in installing BTS since it had better financial position than TNM. Airtel also led TNM is the selling of low cost phones that were crucial in market penetration. Respondents are satisfied with distribution of both networks although Airtel has benefited a lot as indicated by respondents.
The two networks share a great deal in
distribution channels since most distributors stock both TNM and Airtel products. Both networks still have network coverage problems which need to be addressed.
5.3.3 PROMOTION STRATEGIES Promotion strategies are very importance in increasing awareness of products and services as well as promoting usage.
Both TNM and Airtel have very competitive advertising
programmes mainly on radios and television. These are the two main sources subscribers have singled out as being the main sources of promotional information apart from SMS.
Sale promotions are still very important in telecommunication business. The study found out that many subscribers enter promotional competitions. About three quarters think it is a good idea to participate in sales promotions. It also found out that people spend more during promotions which means usage is encouraged and the company gain more profits. The study also revealed that more Airtel customers (61%) are satisfied with sales promotion than TNM customers who feel their company should improve on the same. However, some Airtel customer show resentment towards sales promotion following continuous loses in the many competitions ran by their network. 80
5.3.4 PRICING STRATEGIES TNM and Airtel demonstrated different price schemes in the early years of their existences in Malawi. The two networks have had great competition in line with pricing decisions. Recently TNM has emerged as having a better price scheme than Airtel. The study showed that 71.4% of TNM subscribers are satisfied with the normal prices of their network while 66% of Airtel subscribers are not satisfied with normal prices offered by their network. They think Airtel still has higher charges than its rival. This is one of the main reasons why Airtel customers switch to TNM.
Bundles are favourites of both TNM and Airtel subscribers. Over 80% of respondents agree that bundles have made phone services to be cheaper.
The study also indicated that
Malawians still prefer low denomination vouchers. Results also show that TNM loyalty schemes are liked better by respondents than Airtel‟s. The results point to the fact that Malawi as a market is still very price sensitive especially under hard economic times. A strategic decision that does not take price seriously is self defeating.
5.4 IMPACT OF THE STRATEGIES Marketing strategies have led to growth of the two networks in terms of subscriber base, market share and revenue. Airtel gained more on these due to its sound strategies. However, TNM seems to have found its winning formula as it is quickly regaining market share. It can be concluded that currently TNM is a better performer in as far as effectiveness of strategy is concerned.
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5.5 RECOMMENDATIONS
5.5.1 RECOMMENDATIONS ON AIRTEL Airtel needs to take its strategies seriously. It should make them more versatile according to environmental trends. Airtel should regularly review its strategies to be in line with what people really want and the changing business environment.
5.5.2 MARKETING STRATEGIES 5.5.2.1 PRODUCT STRATEGY Airtel should continue product innovation to get first mover advantage which has already greatly benefited the company. However, Airtel should carry out thorough research before bringing new product on the market. Airtel should try as much as possible to make products user friendly. Airtel should also improve the quality of its services which is at the moment being questioned by subscribers and should continue updating the network to avoid network congestion problems. 5.5.2.2 DISTRIBUTION STRATEGIES Airtel has so far done well with distribution. However, it should continue installing BTS since many areas still do not have network coverage. 5.5.2.3 PROMOTION STRATEGIES Airtel promotions have become too predictable. They are monotonous and no longer inspiring. Airtel should consider slowing down on sales promotions since they create more frustrated losers than winners. They should consider variations in the marketing mix. For example reduce expensive competitions and offer lower price facility that can be enjoyed by
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as many customers as possible. Airtel should also stop sending people too many useless SMS which bore customers. 5.5.2.4 PRICE STRATEGIES Airtel is strongly advised to consider revising its normal service prices since many people are not satisfied with them and they move to other networks to that effect. Lower prices would bring a great difference to Airtel and its subscribers. It should also make more flexible bundles and loyalty schemes. 5.5.2.5 CUSTOMER SERVICES Airtel is still poor on customer satisfaction. Airtel should start taking its customers grievances seriously and solve them quickly. It should consider establishing parallel customer care centres in each region to improve responsiveness. In general, Airtel should work hard on satisfying its customers because it seems they have more reasons to leave than to stay with the network. Airtel needs to improve its customer retention strategies since more customers are leaving the network.
5.5.3 RECOMMENDATIONS ON TNM Although TNM fared badly in the face of competition against Airtel, it should be commended for establishing itself as a strong opponent. TNM should continue to be customer-centric in its strategic approach. However, TNM should start contemplating of engaging a strategic partner for financial and technological innovation support. This can also help TNM to venture into international markets as is common with most Telecommunication providers.
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5.5.4 MARKETING STRATEGIES 5.5.4.1 PRODUCT STRATEGIES TNM should improve on innovation since it is perhaps its weakest point. It should try to be first to bring quality products on the market to enjoy first mover advantage rather than always following Airtel. TNM should continue providing quality services to its customers which is one of the reasons it wins customers. 5.5.4.2 DISTRIBUTION STRATEGIES TNM still has many areas not yet covered by its network. It should therefore, continue installing BTS to increase coverage so as to live by its distribution motto “everywhere all the time”. TNM should also continue upgrading its systems to avoid network failure. 5.5.4.3 PRICE STRATEGIES This is probably TNM‟s strongest point. TNM should continue offering lower prices where necessary since it is one of its strategic advantages. However, it should avoid price wars as much as possible since it stands to lose a lot in that situation. Flexible Mtolo bundles and Yanga price schemes should be continued as they are customers‟ favourite. 5.5.4.4 PROMOTION STRATEGIES TNM should pay considerable attention on promotion. TNM should consider running sales promotion with bigger prizes as well once in a while. This can bring excitement to customers and increase usage. 5.5.4.5 CUSTOMER CARE TNM is good at customer care and customer retention strategies. It is recommended that more ways should be explored on how best to retain customers apart from the already
84
existing ways. Customer satisfaction is key in this industry; TNM should never retract on this.
5.6 AREA FOR FUTURE RESEARCH This research concentrated much on marketing strategies and the effects they have brought on the companies both positive and negative using a comparative study. The comparative study approach gives chance to discover diverse information about a company and how different it has done its business in a competitive environment. However, it is not exhaustive. There are still possible areas for future research. For example, Airtel seems have displayed different marketing strategies each time it had rebranded i.e. from Celtel to Zain and from Zain to Airtel. For instance, Celtel started at a moderate note, but after take over by Zain, growth and market share grew exponentially. However, soon after take over by Airtel growth and visibility has been minimal to the extent that within two year (2010-2011) TNM gained 9% of the market share moving from 33% in 2009 to 42% by 2011. This area is rich for further investigation especially by looking at focus and marketing strategies adopted after each acquisition.
5.7 CHAPTER SUMMARY This chapter has presented conclusions and recommendations for both TNM and Airtel. Both networks need to correct their weak spots and continue what they do best to satisfy customers if they are to remain competitive on the market.
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APPENDIX Appendix 1: GUIDING QUESTIONS FOR INTERVIEW WITH TNM AND AIRTEL OFFICIALS 1. What is your position in the company? 2. How long have you worked for the company? CORPORATE STRATEGY 3. What is TNM‟S/Airtel‟s? (Provide necessary documents if available) Vision Mission Objectives 4. What are the current corporate strategies for TNM? 5. Have they changed for the past five years? What necessitated the change? 6. What were the corporate strategies when TNM /Airtel was first introduced in Malawi? In what ways have the corporate strategies affected the company over its existence positively or negatively? 7. What are the main factors considered when determining the corporate strategies of TNM/Airtel? 8. Of what significance was the decision of rebranding for your Networks? Has this change placed the company at any strategic advantage? 9. What is TNM‟s/Airtel‟s main focus area? 10. Describe TNM‟s/Airtel‟s main target market/ customers. 11. Do you have plans to expand the network beyond Malawi? Why and when? 12. Where does the company want to be in 10 to 20 years time? MARKETING STRATEGIES 13. TNM was the first company to start its operations in Malawi but it has been overtaken by Airtel in terms of market share among others. Where did TNM go wrong and why? 14. What did Airtel do right? 15. Which areas do you think your company is better than its rival? 16. What are the current marketing strategies for TNM/Airtel? ( Please provide copies of marketing plans for previous years if possible) 17. How have these marketing strategies changed over time? What are the factors that have necessitated changes in strategies? 18. What are the direct and indirect effects of using the strategies mentioned over the years? 19. What is your planned growth rate of sales for the period 2009-2015? PRODUCT/SERVICES 20. What are the main products/services offered by TNM/Airtel? 21. How did such innovation assist the company to gain competitive advantage on the market? Give example and figures where appropriate. 92
22. Which products or services bring the greatest profits? 23. Which products /services are mostly preferred by subscribers? DISTRIBUTION 24. What are the major ways that have assisted TNM/Airtel in line with network coverage and subscription? 25. Is the selling of cheap or low cost phones by TNM /Airtel of any strategic significant in line with distribution? How do you compare with Airtel on this? 26. What would you comment on the rate at which you established BTS. 27. What are the main challenges TNM /Airtel is facing in line with network coverage and distribution of airtime? 28. What distribution channels do you use? PROMOTION 29. What are the main promotional strategies for TNM/airtel? 30. List down main promotions carried out by TNM/Airtel over the last 5 years and their main impact on the company. 31. Provide information on promotion mix that you use. 32. Have these promotions put TNM/Airtel at any competitive strategic advantage? Examples. 33. Many people think TNM offers very few promotion competitions than Airtel. Others have attributed the success of Airtel to their aggressive promotional strategies. What is your comment? 34. What are the media commonly used for advertising PRICE 35. What was TNM/ Airtel rationale for using post-paid services /prepaid services as d to in the first years of its establishment in Malawi? 36. What factors dictate your domestic prices? 37. Competition between TNM and Airtel has recently shifted towards pricing, why is this the case? 38. How strategic has been the use of bundles or Mtolo for your company? 39. People have observed that telephone charges are becoming cheaper these days than before. Do you agree? Comment why this is the case. Thank you very much for your cooperation
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APPENDIX 2: QUESTIONNAIRE FOR SUBSCRIBERS OF TNM AND AIRTEL INFORMED CONSENT My name is JOHN C. JERE. I am conducting a study on customers‟ perception on services offered by TNM and Airtel. This information shall be used to write a thesis which is a requirement for the award of Master of Business Administration offered by Indirah Gandhi National Open University in conjunction with The University of Malawi-Chancellor College.
You are being asked to participate in this study by answering questions below. Your participation is voluntary and there is no penalty for refusing to take part. The questionnaire will take about 15minutes to complete.
The Information obtained will be treated as confidential and will only be used for academic purposes. Thank you in advance for accepting to willingly participate in this research. You may sign below to indicate your consent. Respondent ______________________________________
A. Demographic Information of Respondents 1. How old are you? Below 20 [ ]
21-30 [
]
31-40 [
]
41-50
[
]
50 above [ ]
2. What is your level of education Below PSLC [ ] JCE 3. Your gender: Male
[ [
] MSCE [ ] Diploma [ ] Female [ ]
4. What is your monthly income? Below K25000 K26000-K100 000 K101000 -K249 000 K250 000-K449 000 K500 000 and above
[ [ [ [ [
] Degree [
] above Degree [ ]
] ] ] ] ]
5. What is your occupation? Student [ ] Farmer [ ] Business person [ ] Civil servant [ ] Company official [ ] Other (specify) _______________________________________________________________
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B. Phone Usage 6. Which network do you use? TNM [
]
Airtel [
]
7. How long have you been using the network? Less than one year [ ] 1-3 years [ ] above 4years [ ] 8. On average how much do you spend on airtime per month? Specify the amount_______________________ 9. What made you choose this network? Network coverage in my area [ ] Efficiency and quality of services [ ] Most family and friends have this network [ ] Availability of cheaper phone for this network [ ] Other (specify) __________________________________________________________ 10. Have you ever switched networks?
Yes [ ]
No [
11. The switch was: From TNM to Airtel [ ] from Airtel to TNM [
] If no go to question 14. ]
12. What made you switch networks? No network coverage in my new area [ ] Better and quality services by the other network [ ] Cheaper price for their services [ ] Chance to win in promotion competitions [ ] Other (specify) ___________________________________________________________________________ ___________________________________________________________________________ C. Only for those with both TNM and Airtel cards. 13. What made you to have cards for both TNM and Airtel? Most of my friends were of the other network [ ] Very expensive to call across networks [ ] To enjoy benefits from both networks [ ] Other (specify) ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ D. Customers’ attitudes and response to TNM/Airtel promotions 14. Have you ever heard that your network is conducting promotion? Yes [ ] No [ ] 15. How did you hear? Television [ ] Radio [ ] newspapers [ ] Posters [ ] SMS [ ] Otherways_________________________________________________________________ 16. What was the requirement for one to enter the promotion competition? Tick the ones applicable. Buy air time [ ] Answer questions and send with charged SMS [ ] buy SIM card [ ] Any other (specify) ___________________________________________________________________________ 17. Have you entered these competitions? Yes [ ] No [ ]
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18. How many promotions have you entered quantified by percentage? 0-20 % [ ] 21-40% [ ] 41-60% [ ] 61-80% [ ] 81-100% [ ] 19. How much airtime do you buy during promotion? Specify _______________________________________________________________________ 20. Have you ever won any prize in Airtel promotion? question 20f
Yes [ ]
No [
] If NO go to
If YES a. What was the Prize _____________________________________________________________ b. How much did you spend to win the prize ___________________________________________________________________________ c. Did this change the perception of your network ___________________________________________________________________________ d. Do you think those people who win during promotions deserve it? Yes [ ] No [ ] e. Why_______________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ If NO f. What was the reason for not winning? ___________________________________________________________________________ g. Did this change the perception about your network provider? ___________________________________________________________________________ ___________________________________________________________________________ 21. Mention promotions that you can remember offered by your network.
22. Indicate the extent to which you agree or disagree with each of the statements as applicable to your network: Tick the appropriate box. SN Issue Strongly Agree Disagree Strongly agree disagree 1. Promotion prizes are well distributed Promotion is used to attract more 2. subscribers and promote service usage 3 It is not a good idea to enter promotion competitions It is easy to win prize in 4. promotions Promotions are just a waste of 5. time and money since they mean
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nothing to customers
6.
7.
My network has grown fast because of promotions Customers love my network‟s promotions as such they cannot switch to other networks
E. PRODUCTS AND SERVICES 23. Which service/products do you find very useful? Internet services
[
]
Call services
[
]
SMS
[
]
Others (specify) ______________________________________________________
24. Are you happy when your network is the last to bring a new product on the Market?
Yes [ ]
No [ ]
a. Give a reason for your answer. ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ 25. Show how you agree or disagree by ticking the appropriate box. SN
Issue
1.
My network is usually the first to bring new products and services on the market
2.
My network‟s products and services are more relevant to modern environment My network‟s products are more appealing to the youth than the older generation The success of my network is because of being the first to introduce new products on the market My network‟s products and services are simple to use
3.
4.
5.
Strongly agree
Agree
Disagree
Strongly disagree
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F. DISTRIBUTION 26. Show how you agree or disagree with the following by ticking the appropriate box: SN
Issue
1.
My network‟s cards and airtime are easy to find
2.
My network still has problems due to poor network coverage Easily accessible airtime makes you buy more. My network has grown fast because of wider network coverage
4. 5.
6.
7. 8.
Strongly agree
Agree
Disagree
Strongly disagree
Selling of cheap phones assisted the growth of my network‟s market share. My first phone was Mose wa Lero (low cost phone) I have ever used Low cost phone G. PRICE 27. How satisfied are you with the prices of products or services of your network? Very satisfied
satisfied
Somewhat satisfied
Not satisfied
Mtolo/bundle Normal prices 28. How often do you use Bundles? Very often
often
rare
Very rare
Not at all
How often do you use Mtolo/Bundles?
29. Show how you agree or disagree with the following by ticking the appropriate box: SN
Issue
1.
Mtolo or Bundles make the phone services cheaper Smaller denomination airtime increases frequency of purchase Using bundles make you spend more money than expected More competition between TNM and Airtel is through prices
2. 3
4.
Strongly agree
Agree
Disagree
Strongly disagree
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30. How satisfied are you with the following regarding your network? Issue
Very satisfied
satisfied
Somewhat Not satisfied satisfied
Customer care services Quality of network Quality of voice calls Diversity of products and services Price of services Distribution of the network Promotional activities 31. How would you rate your experience with the following brands? Excellent
Good
Average
Below average
Airtel TNM 32. Which brand would you recommend for a new subscriber? TNM [ ] Airtel [ a. Give a reason for your answer.
]
___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ 33. In which areas does your network perform very well? __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ 34. In which areas does your network fail to perform well? __________________________________________________________________________ __________________________________________________________________________ ________________________________________________________ 35. What suggestions would you give to help improve your network services? ___________________________________________________________________________ ___________________________________________________________________________ _________________________________________________________
Thank you very much for taking your time to complete this questionnaire
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Appendix 3: TNM and Airtel Bundles
100
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Appendix 4: Approved Synopsis
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