You are on page 1of 16

Introduction 1.0 Market Overview One of the most significant industries in Srilanka was the mobile industry.

The first mobile operator in Srilanka was the mobile telecommunication which was started with the establishment of celltel lanka limited in 1989.This device developed further and performed as MMS, SMS and internet access but before calls. Mobile operators have contributed to the industry growth which developed further. Competition was maintained among 4 leading mobile operators who reached out to a population of 20,064,780 to 20,222,240 million during the period of 2005-2006. As for the statistics provided by the Telecommunication Regularity Commission of Sri Lanka in 2011, it reported a total of 3,361,775 mobile subscribers in the country during year 2005 and 5,412,496 subscribers in year 2006.Further Dialog Axiata PLC in 2011 reported there were 16 SIMs per 100 persons during 2005 and it developed to 26 SIMs per 100 persons in 2006. The technology it offers was the main factor for the growth mobile industry. The analog technology was offered by the pioneer mobile operator- Celltel Lanka..Due to the rapid development in industry growth it then advanced to the GSM technology in order to adhere to the world standard. 1.1 Description of the Two Industries. 1.1.1 Celltel Lanka Limited In June 1989 Celltel Lanka Limited which was a company of Millicom International Cellular (U.S.A) and was the pioneer to introduce mobile phone technology to Sri Lanka.during early years Celltel used the slogan as Pioneer Cellular Service. With the help of the analog technology Celltel operated a Motorola TAC (Total Area Coverage) network. Prepaid and postpaid connections were introduced to the market by the mobile operator celltel. celltel was able to capture 2644 in 1992 at the beginning of the service. During 1989 to 1993 they charged high call rates when maintaining a monopoly in the market. After Mobitel and several tasks such

this portable device was only used for making

Dialog entered the market in 1993 celltel was facing competitions and several obstacles. By 2006 celltel were having a market share of 10% .Therefore the company had to re-launch as TIGO in 2007. Even though being in the highest rank in the Mobile Industry it did not help Celltel to reach the top due to several difficulties. The industry portfolio reports that 75% from the prepaid and 25% from the postpaid segment cards. The prepaid card offered by the celtell was the CELLCARD and 80% of its new connections were from this category. 1.1.2 Dialog Telekom Limited During 1995 the company made its entrance to the Sri Lankan mobile industry. Dialog Telekom limited was a subsidiary of TM International (L) Limited of Malaysia. In the region Digital network was first introduced by the Dialog. In Colombo stock exchange Telekom Limited was listed and also as the first USD 1 billion market capitalized company. The company used the slogan as the future today. Dialog implemented new technologies and its obligations or commitments to research and development In order to supply its services. Mobile telephony was positioned as an exclusive service IN 1995.Dialogs strategy was to make this an affordable commodity to all citizens. Due to their affordable commodity to all the citizens they were able to be the market leader during the year 2000. In year 2005 while serving over 1.5 Million customers all over the state the company was capable of owning 60% of the market share. Dialog was offering both postpaid and prepaid connections to the market. Dialogs prepaid product was KIT- Keep in Touch was launched in 1999 and obtained a large crowd of customer base of approximately 1.1MN for its prepaid connection.

1.2 Target Market In order to introduce a product to the market it is more important to identify the existing segments. By understanding the segments the business could focus on these groups and make efforts to market the relevant products in the best manner. The procedure would be followed by segmenting, targeting and positioning the products.

1.2.1 Segmentation A segmenting would be a subgroup of the customers who will share common characteristics which would make them have the need for similar products / services. 1.2.2 Targeting A group of clients (buyers) who have a common need for what the business decide to serve is simply defined as target market. In this process the business would have to decide the most important segment (s) to target on. The products are offered to the market by targeting on few selected and necessary segment s by the mobile operators. Both Celltel and Dialog were targeting the mass market which included several segments such as different age groups, income levels, family sizes, etc. as indicated on the below figure. The important weight is given to prepaid connections and mobile connection offers are introduced into segments of prepaid and postpaid packages. Prepaid offers were mainly concentrating on budgeted packages, ideally for young age groups; postpaid packages were concentrating for moderate income segments. 1.2.3 Positioning Celltel being one of the most important in the mobile communication industry and maintaining a monopoly in the market, Celltel positioned in a price skimming strategy during the early 90s. Mobitel and Dialog entered the market during 1993 Celltel did not immediately reduce its service charge rates. Telephony which was considered as a luxury product to a consumer item therefore Dialog was attempting to transform the position of telephony. Dialog was positioning the mass market with a price penetration strategy

1.2.4 Analysis of the process The above process indicates that Dialog has offered a variety of innovative products to target the mass market which catered to fulfill needs of a large crowd of customers .while Celltel offered only a limited set of products to the market but Dialog was cleaver and tricky in positioning its price in a lower rage in the market while Celltel had overpriced their products which was unattractive to the customers and the customers were frustrated. Therefore the celltel was in a critical situation. Due to this situation Dialog made use of it and led the company to grab the market share by 60% while Celltel was losing its market and ending 10% of market share at the end. 2.0 Market Analysis of the Two Products Indications of the market understanding and application of strategies practiced by each of the mobile operators have led them to either succeed or fail in their products. These have been further identified by applying to the business tools. 2.1 Micro and Macro Environment The business environment would include the Micro and Macro environment.( Micro and macro simply mean internal and external.) This refers to parties of interest internally and externally to the business. 2.1.1 Micro Environment The immediate environment of an organization Company would control of Could identify the strength and weakness within this environment 2.1.2 Macro Environment Environment outside of the organization Company would not have control of Could identify the opportunities and threats within this environment

2.2 PEST Analysis 2.2.1 Political Factors The Telecommunications Regulatory Commission is the legislative body to provide license for telecommunications service providers. The Telecommunications Regulatory Commission of Sri Lanka controls and monitors the industry while suggesting different policies to the legislative bodies. It further manages the

economic analyses to identify the performance of the sector Due to high market penetrations, market completion and frequent band limitations The Commission is following to control or prevent in providing license for new mobile operators Due to the ceasefire or agreement in the political context of the country Dialog was able to extend their network strength to North and East areas during 2005. Therefore it contributed to expand the Dialogs market share 2.2.2 Economic Factors Due to the economic conditions of the state competitors were providing low cost tariff packages to customers Dialog introduced easy reload which was a phone credit top up starting from LKR 50 while Celltel issued pre-paid credit top-up cards starting from LKR 100 Dialog has contributed to the Sri Lankan economy with representing 23.5% of the market value of the Colombo Stock Exchange. Further Dialog was the largest listed company recorded in the Colombo Stock Exchange with 1.82BN of market capitalization by 2006 2.2.3 Social Factors

Mobile phones are currently not only used to make a call or to receive a call, but it provides more services to ease the life of customers. Therefore mobile operators provide such facilities as mobile channeling, booking movie tickets, etc Mobile phones are manufactured with multiple uses such as providing facilities of cameras, mobile TV, etc. Therefore the mobile operators should also provide the services to accommodate these facilities such as MMS, GPRS. Including ring tones / ringing tones are attributes which indicates a life style of ones attitudes that mobile operators provide. Connecting with social networks is also a trend in the society; therefore mobile operators have introduced such features and open SMS chat rooms to cater for the needs There are various groups in the society such as families, friends, couples, commercial groups, etc. Understanding the mentioned trends Dialog was able to introduce many of these to the market although Celltel was behind Dialog. 2.2.4 Technology Factors The mobile industry is based on its technology. In order to capture the market with the most attractive features the mobile operator would need the newest technology to offer. Customers would expect a faster high quality service by any mobile operators. Therefore to provide such service the operators would need to maintain its technology From 2nd Generation mobile technology it has advanced to 3.5 Generation at a short period of time. As technology keeps rapidly changing, to capture the market a large investment on the technology will be required. In order to exist in the mobile industry the operators would need to be in par with the rapidly changing technology environment. Dialog was ahead with the technology in the industry being the pioneer to introduce many technologies such as 2G, 3G, GPRS, MMS, etc. This retained the existing customers satisfied while adding new customers to the company. Further Dialog has maintained its standards in order to be ahead in the market. However Celltel did not have the

resources to do so or react to these situations immediately and its failing nature to introduce new technologies to the market would have led to the fall of the company. The discussed PEST factors have been applied in different manners by the two organizations. By flexibly presenting to these factors Dialog has approached the market appropriately while Celltels have not faced these factors well enough which led them to be the last in the mobile industry in terms on market share. 2.3 Porters Five Forces 2.3.1 Supplier Power Suppliers for the industry would be mobile phone providers, and mainly technology providers.Nokia, Motorola is few of the Phone manufacturers. Along with a phone the mobile connectivity will be subscribed. Further without the infrastructures and technology a mobile service provider cannot compete in a market. Therefore suppliers of these would also have a moderately considerate bargaining power in the market. 2.3.2 Buyer Power During the discussed period there were four mobile operations in the market. Therefore the customer had several options to choose from this provides a high bargaining power to the customer. If the customer was not satisfied with the provide service he could always switch the mobile operator. Therefore the operation should be more value additions, and be more attractive in the market. However the bargaining power would also depend on another fact. If the coverage of a certain area is only provide by one operator the customer will have no bargaining power but to connect with the relevant service provider. 2.3.3 Competitive Rivalry

By 2006 there were four operators in the Srilankan mobile industry. They were Dialog,Mobitel,Hutch and Celltel. Having nearly 60% of the market Dialog was the market dominator in 2006 while Celltel was having the lowest market share of only 10% Therefore a high market competition is seen in the industry. All mobile providers compete among each other to capture a large subscriber base in order to grow their markets. Due to high competition in the market the mobile providers attempt to offer the best rates and new services. 2.3.4 Threat of Substitution Mobile-phones have become the most used communication form at present.it facilitates not just phone calls, but application such as Skype, messenger and internet services. However due to these services customers would use more on these application rather than making calls or sending text messages which would generate high revenue to the mobile operators. Direct substitute products would be fixed lines. When the substitute products fulfill the customer needs the customer needs the threat of substitute products would be high. However considering the bigger picture the threat of substitute product is low. 2.3.5 Threats of New Entry A threat of new entrance is considerably low in the market. The government regulations to enter the market will be challenging.in Srilanka the approval of the Telecommunications Regulatory Commissions (TRC) is required to enter the market. Further a considerable investment will be required on the involved technology in the industry. As new entrance to the industry is not smooth this would not be a significant threat. 2.4 SWOT Analysis 2.4.1 Strength Analysis of Dialog and Celltel Strength Analysis of Dialog Being the market leader- By 2006 Dialog reported a market share of nearly 60%

Having the widest coverage around the country with over 500 base stations Being par with the latest technology and being the pioneer to introduce them (Ex. 3G, MMS, GPRS, International Roaming) High Quality of work force. - In the technical and support division Dialog has maintained a retention rate of over 97% since 2000 Maintaining a quality in service-Dialog received ISO 9001certificateion standard. They were the 1st telecommunication operator in the region to receive such standard. Received many other awards such as 3 GSM World Awards Maintaining brand equity. Dialog has extended its brand equity through sub brands such as KIT and also international brands such as Dialog Global Having a strong management and leadership. Reaching a market share of 60% is evident of the right decisions and leadership Having a Market Capitalization of USD 1.82BNby end 2006 Dialog was the largest listed company of the Colombo Stock Exchange Strength Analysis of Celltel Being established in 1989 Celltel was the pioneer mobile operator in the industry Celltel became generic product name and created brand awareness Having a call success rate of 99% and a call drop rate of 2% Having a subscriber base of 1.5MN by end of 2006 By 2006 Celltel was a business worth of 200MN dollars Being permitted for a 10 year license extension to 2018 Having 10,000 distribution outlets by 2005 2.4.2 Weakness Analysis of Dialog and Celltel

Weakness Analysis of Dialog Lack of revenue growth Increase in administrative costs Lack of expansion in foreign markets (being limited to the Sri Lankan geographic limits) Weakness Analysis of Celltel Though Celltel was the pioneer of the mobile industry in Sri Lanka, it owned only 10% of the market share. This would result due to its poor management and lack of leadership Delay in making co-operate decisions. Celltel was acquired by Millicon in 2000; however even by end of 2006 it did not rebrand Celltel under its global brand Lack of marketing strategies. Celltel did not have an attractive marketing campaign and did not offer a range of products as done by Dialog Lack of technology. Celltell did not analyze the market to identify the growth of the industry. Therefore it did not switch to the GSM technology immediately Poor network performance- Celltels attempts taken for system upgrades were failed in several occasions during end of 2004, further these affected failing the entire network 2.4.3 Opportunities for Dialog and Celltel Mobile market penetration of 27% reflects positive market prospects As mobile phones are being used for multiple purposes the mobile providers have openings to develop various technologies to introduce to the market Having opportunities for network expansions in new markets- such as areas which are not yet been given mobile coverage Dialog being the market leader in Sri Lanka could expand to countries such as Maldives Provide personalized packages to cater needs of certain groups

Being able to do acquisitions, re-launches or explanations the business. (Celltel could relaunching by the global brand of Millicom) Having the technology of telecommunication integrating with related businesses for market expansion Further mobile commerce and market products via SMS 2.4.4 Threats for Dialog and Celltel Change of local regulations on license, rates tariffs, etc. according to the Telecommunications Regulatory Commission of Sri Lanka Threats of current competition of having four mobile providers in the industry and threats from new entrances High bargaining power of customer Advancement of technology - a high cost may occur for investing on technology and the mobile operators will have to upgrade their services in order to sustain in the market Technology failures- this would lead to network failures (similar to what Celltel faced in 2004) and put down the entire network Security issues- mobile technology could have many security errors

Observing the conducted SWOT Analysis, it indicates that Dialog have more strengths and less weaknesses in contrast with Celltel. Further, the opportunities and threats referring in the external environment indicates that Dialog have utilized the maximum opportunities of the environments than Celltel has attempted. 3.0 Innovations for the Failed Product- Celltel to Succeed in the Market Celltel never had good or proper vision and also there were many decision errors in their process. Celltel was led to failure due the following reasons.

Not working for a vision of the company in order to make strategic planning Poor leadership, management Poor marketing skills Poor network performance High price rates /packages/ offers Complicated package which confuse customers Wrong marketing strategy In order to succeed in the market, the above reasons would be needed to correct. Therefore the following practices could be recommended for Celltel Analyzing the Environment and applying strategies accordingly Following the New Product Development Process Applying appropriate marketing strategies (Philip Kotlers C-C-D-V-P) 3.1 Analyzing the Environment and Applying Strategies As discuss above a market analysis is important for a company. It would describe the existing situation as well as provide a forecast of the future. Celltel would need to analyze the market further .Tools such as SWOT; PEST would be more helpful and supportive. Understanding the marker properly would help to implement strategies. 3.2 New Product Development Process Most of the business develops further by finding out the customers demands and certain other matters but Celltels failure was due to reasons of not understanding their customer satisfactions or the market requirements such as offering with high prices marked. Celltel did not analyze the market thoroughly to supervise the market volume or the market threats which later appeared. If Celltel would follow a NPD process the company would able to identify these areas to put a successful product to the market.

Customers will always be satisfied with products that fulfill their needs. And wants in various ways. In order to this, the application of NPD process is more important. The NPD process clearly discusses the sequence of steps which needs to be followed in order to bring in a new product or service to the market. This structured method of NPD would assure to satisfy the customers market The initial stage would attempt to generate product ideas Customer requests, suggestions and market survey Stage 1: After collection of data, in order for the project formation a team would be assigned and it would set the expected milestones Stage 2 would discuss the design of concept which would include retails requirements, market feasibility study, etc. The project plan, justification, test plan would be implemented Stage 3 of Product Development would discuss the plans into solid deliverables. The product design would be implemented at this stage. Further the operational plans would be drawn and the test plans for stage 4 would be defined Stage 4 refers to understand the validation of the project. This includes customer acceptance, the project economics, etc. Stage 5 would be the launch of the product. The completed product would be finally start production and make a viable launch. As discussed above, at each stage a particular activity would take place and between each of the stages there would be a gate. Once a stage is completed the gate would review the relevant procedure and decide if to move on to the next stage. Therefore this filtering system which is seen on this model would finally help to put out a successful product. 3.3 Marketing the Products Celltel was unable to understand its customers or the segments the right group in the

market.celltel did not follow the marketing strategy properly .Further the customer is required to install a phone card in order to obtain certain benefits this condition which were un advertised.

According to Philip Kotler it was identified that marketing was about C-C-D-V-P which is defined below. Following this procedure would help to deliver better results in the market. Creating Celltel should offer mobile packages according to their demands because Customers always seek for mobile packages of lower price and better network strength Communicating Youth are the ones who use the Budgeted packages. Therefore the product could target at the youth segment of the market setting a brand for youth. Delivering Celltel should look into investing on the technology to deliver results to customers because the customers mainly focus on a strong network performance Value to target market By targeting the youth, it is important to advertise products with the youth involving on televisions commercials/paper advertisements and offering them low prices and packages such as couple packages. In order to this, providing sponsorships for youth involved events such as concerts, and college functions would be useful. Profit It should offer the customers a low price high quality network services. With high marketing penetration, the profits would increase because Celltels over pricing attempt was neglected by the customers. 4.0 Further Improving the Successful Product By being the market leader Dialog has proven itself as a success in the mobile

communication industry by having a market share of 60%.Dialog should improve further In order to maintain this position and to capture a large amount of market share. The below mentioned procedures should be followed

Revise its marketing objectives and the company vision Philip Kotlers Marketing Strategies as shown before 4.1 Marketing the Products According to Philip Kotler it was identified that marketing was about C-C-D-V-P which is defined below. Following this procedure would help to deliver better results in the market Creating Different consumers would have different levels and practices in using a mobile connection. Some would be using internet, text messages, etc. while others would only use the connection to making a call. In order to cater to their different usage levels Dialog could offer mobile schemes which would personalize the package according to the customer requirements Communicating The personalized packages could be targeted at different segments such as families, commercial organizations, couples, friend groups, etc. Dialog could therefore provide their marketing campaign emphasizing on these groups Delivering Dialog would need to invest on the technical support required for this process. In addition to it, customer service facilities should be provided with easy access for long hours. Value to target market Dialog could provide value additions, promotions, loyalty rewards, free call hours, etc. in order to create more value to these target markets. Profit In order to this, its important to offer the service to the customers at a moderate price with a high quality network services. 5.0 Conclusion

Dialog and Celltel were the two selected mobile providers by the report .In order to analyze the products success and failure I the mobile telecommunications industry during 2006 .the report gives us very clear detailed about the market overview of the mobile telecommunications industry and mobile penetration increased with the developing number mobile subscriber

growth. Next, it defines the market competitors as Dialog, Celltel along with Mobitel and Hutch along with their respective market shares during this period. The report has discussed details of the selected companies. Making the pioneer entrance to the mobile telecommunication industry in 1989 Celltel had a market share of 20 percent by 2006, while Dialog captured the market by 57 percent after making its appearance in 1995. The two organizations have been compared and contrasted in qualitative and quantitative means. The third section of the report discusses clearly about the Target Market of the two operators. In the segmentation and targeting of the companies it was identifies that Dialog defined its customer segments more effective than Celltels . Further when Celltel positioned its elf with the price skimming strategy, Dialog was able to use a price penetration strategy to be more attractive in the market. Tools such as PEST, SWOT, and Porters 5 forces these business tools were able to recognize the products success and failure and have been further analyzed. It identifies how Dialog took advantage of the external environment changes by being the first to extend its coverage to North and East areas of Sri Lanka during the ceasefire in 2005 while other mobile providers did not make any efforts to extend further. It identifies how effectively Dialog was able to identify its internal strengths and capitalize on its workforce and technology to provide a better service. Next it identifying areas of success factors for new product development, proper market segmenting, targeting and positioning processes along with the innovation diamond strategies by Robert Cooper. Finally the report gives us a clear description and discusses the improvements to be made in both the success and failed products. Most essentially it has been introduced to apply the New Product Development process to get rid of the errors or omit the errors and to put out a successful product with high potentials to succeed in the competitive marketplace.

You might also like