International Marketing Persuasive

Introduction

In general, communication means the exchange of ideas between two people or more. The definition is different from that of telecommunication in which National Telecommunication and Information Administration of United States define telecommunication as any transmission, emission, or reception of signs, signals, writing, images and sounds or intelligence of any nature by wire, radio, optical or other electromagnetic systems. In digital era, the face of telecommunication is changing so much since there are continual invention in electronics and network technologies.

The condition is obvious since telecommunication becomes one industry that experience fast develpoment in technology that shape how consumers use technology to communicate with their friends and relativies. If in 80’s, they relie on voice communication, in 21st century, they can communicate one another via video.

However, all advanced technology is useless if carriers or operators cannot employ the benefits of the technology to serve the market. In order to serve the market well, a carrier should understand what the customers want and needs. This condition also becomes a challenge for Hutchinson Whampoa.

Concerning the issue, this paper will discuss about Hutchinson Whampoa especially regarding the importance of new product development in the mobile phone market, the suggestion on extending the maturity stage for ‘3’ by introducing new innovations, and development of a medium-term directional marketing plan for the company for their new video conferencing product.

2. Importance of new product development in the mobile phone market

Rivalry in the telecommunication industry in the world is highly concentrated. This is because there is a small number of large firms hold large market share. Therefore, the telecommunication industry in some country is less competitive since the industry is closed to a monopoly.

However, in recent years, the rivalry between carriers (telecommunication companies) gets more intense since the industry has reached economy of scale that brings down the price of customer premise equipments (CPEs). This situation favours customers that can freely choose service providers that match their needs. Basically, the customers’ needs for telecommunication services compose of three things: attractive services such as mobile internet, reliable products, and low costs.

The three things can be fulfilled by the invention of 3G technology, which provide higher bandwidth than previous generation of mobile phone and the mass production of the 3G handsets and networks that bring the cost down.

However, the potential benefits that 3G has must be accompanied with the continual product development since the technology faces many threats from product substitution. In business analysis, product substitution is most damaging impact on a product although corporations often overlook it. Porter (1998) says that a product’s elasticity of price is influenced by the existence of substitute product. If the customers are easily turned to substitute products, than the price is inelastic, which makes it harder for producer to raise price without loosing market share.

For 3G technologies, the product substitution includes WiMAX and CDMA 2000 1x that also provide greater bandwidth for accessing internet and downloading music at mush lower costs since the price of customer premises equipments are much lower than 3G.

WIMAX currently become the center of attention of most carriers in the world since their advantages over current access technology including 2G, 3G, xDSL, and Wi-Fi (Wireless Fidelity/Hot Spot).

WIMAX stands for Worldwide Interoperability for Microwave Access is a broadband wireless technology that enables carriers like Indosat to provide end customers with direct high-speed connection up to 70 Mbit/s (shared data rates) within the range up to 50 km theoritically (non line of sight) although some vendors report that it reaches 30 km in range. The benefit of using WIMAX is their ability to complement with the existing network technologies (2G, 3G, and DSL). 3G and its successor 3.5G only provide the access up to 2.6 Mbps, the speed that much lower than the capability of WiMAx

Figure 1           Network Design in WIMAX system

In addition, WIMAX technology also offers customers with the benefits of wireless technology in which it enables customers to move from one apartment to another apartment as long as WIMAX signal covers it.

            Therefore, in order to become winning telecommunication system, 3G provider must continuously develop attractive program that enable customers to experience endless benefits when using 3G.  3. Suggestion on extending the maturity stage for ‘3’ by introducing new innovations 3.1 Product Life Cycle (PLC)  Kotler and Amstrong (218-219) define product as everything that can be sold to a market for use or consumption of consumers that may fulfill their needs or wants. The definition suggests that since customers may have altered wants or needs. Therefore, products compose of two forms tangible and intangible including ideas and events.

Since customers may alter their wants or needs, firms may change the features of their products as well. In addition, a product may experience undulating performances due to several factors such as customers’ demands, technological changes, amendments in regulation, and many others. The concept that explains the situation is Product Life Cycle (PLC), which developed by Vernon in 1966. There are four stages of PLC concept as shown in the figure 1:

Figure 1           Product Life Cycle

Source: Internet Center for Management and Business Administration, 2004

             Currently, 3G services of Hutchinson Whampoa is still in the growth stage, which is a stage where a product experience fast growth marked by rapid market acceptance, increasing demands and huge profits.  In order to shift 3G services into maturity stage, the stage where a product experiences slow growth since it has reached almost all market that further decreases of profits level in order to maintain the growth, the company must provide mass products that are affordable by their target markets. 3.2 Taking Benefits of Growing M-Commerce

The greater bandwidth that 3G technology provides opportunity for network and application providers to develop features that run over the broadband network. One of application that grows today is mobile commerce or mobile e-commerce.

The key to success in e-commerce turns out to be creating consumers database together with the persistence to conduct business in hard times. The condition should drive mobile operators to lessen the customers’ burden in following ways:

1. Lessen the ownership of 3G handsets by conducting bundling programs with handset manufacturers like Nokia and Sony Ericsson that enable customers to have the handset and the service at much lower costs
2. The ownership simplification is also conducted by partnership with financing companies that provide monthly installment when customer purchase the 3G handsets
3. Developing rich contents applications to let customers experience several applications run over the broadband network

The two strategies drive operators to obtain many users of 3G. In turn, the large number of customer database becomes the keys to drive the implementation of mobile commerce. The capability of 3G technology also becomes the basics for direct marketing.

Direct marketers have acclaimed the web as the promotional medium of the future due to its potential for sales and for communicating a message. Some benefits of doing online direct marketing on mobile technology like 3G are as following:

• It Allows them to closely target their advertising (important in reducing their costs and in avoiding the fallout from approaches to consumers who don’t want the product/service)
• It can be seamlessly integrated with databases (e.g. to measure the effectiveness of online campaigns, tie them to offline promotional activity and underpin incentive or other schemes)
• It can be trialed for a national audience or particular demographic more cheaply (and more quickly) than marketing via print, radio, television or other media
• It is a step closer to one-to-one marketing (“Direct Marketing”).

3.3  Target Entry Users of Mobile Technology

Another strategy to speed up the market acceptance in order to reach maturity stage, Hutchinson Whampoa must obtain as many as customers. In order to do so, Hutchinson Whampoa must expand their target market. one of potential markets is Generation Y. Generation Y are people who were born within 1979-1988 or currently they are in 18–27 year-old.

      Peter Sheahan (2005) in Generation Y – Thriving (and surviving) with Generation Y at Work reveals that Generation Y must be viewed as the ambassadors of a company’s brands. The reason is because they purchase many of today’s products and services and they are hungry for new and distinctive ideas. Therefore, Sheahan advise that a company should properly manage and involve the Generation Y or else they become enemies that are ready to destroy the company’s brands.

      In addition, Beck (1997) found that the Generation Y is influenced by several factors such as economic, social, political, cultural, and environmental changes. The situation suggests that in order to target them effectively, the company must find out how to attract them that further influence the company’s design in advertsing and product offerings.

       For this reason, it is important that a service provider understands the characteristics of the Generation Y. Below is the findings of Generation Y’s spending behavior based on their lifestyle choices, values, social influence and aspirations.

3.3.1        Lifestyle choices

      Zollo (1997) explains that according to estimation from Teenage Research Unlimited (TRU) the reason to target the Generation Y is because they spent about $63 billion in 1994. Moreover, the TRU also found that average teenage boys of the Generation Y spent at least $44 a week while the girls spent about $34.

      In addition, Rosenthal (1998) also found interesting findings telling us that the Generation Y accounted for 46 percent of total adults spending on audio equipment. Rosenthal also found that the Generation Y also represented 48 percent on athletic shoes.

3.3.2        Values

      As a generation that plays a significant role in the U.S. communities today, the Generation Y is eagerly to lead the societies in terms of becoming trendsetters. In this manner, it is found that some younger kids consider members of Generation Y (people who were born within 1973-1988) as their model (Neuborne, 1999).

            In terms of personal finance, we also find that most Generation Y expect and enjoy a higher level of financial securities that those of Generation X. Romeo (1999) says that this financial expectation drives the Generation Y to conduct high-class lifestyle. For example, it is common to find out high school students that have various credit cards in their wallets that are co-signed by their parents.

4.                    Development of a medium-term directional marketing plan for the company for their new video conferencing product.

To reach optimum results, Hutchinson Whampoa should take into consideration a fundamental procedure of successful business that is creating and implementing a marketing plan. While a market is a particular group of who needs services, a marketing plan composes of several components as described below.

By employing the five components of marketing plan, below we provide the marketing plan for Hutchinson Whampoa that have business in information technology segment. The promotional tools we provide as an example is a brochures.

4.1              Market Situation

Hutchinson Whampoa is a telecommunication company that develops the implementation of 3G in the first time in the world after NTT DoCoMo in Japan. Basically, 3G technology that Hutchinson Whampoa offers is similar to other operators or carriers in other parts of the world where the technology provides more bandwidth than 2G technology does. In telecommunications, more bandwidth means more space for transmitting large amounts of information such as music downloading, mobile games, internet browsing, video call, and video conferencing.

The technology can be upgraded into the 3.5G technology that provide speed up to 2.6 Mbps, some operator claims 3.6 Mbps, faster than 3G technology that offer 384 kilobytes per second when a device is stationary or moving at pedestrian speed. Currently, other operator like Vodafone also offer video conference features as the basic service for their 3G product.

4.2              Threats and Opportunities

Threats:
The Company faces four identifiable threats in the coming year:

1. As we face various customers’ needs, we need to send our employees regularly into IT-related training that might costly. If we do not conduct this action, we will be at a service disadvantage with some clients.
2. Major competitor may hijack our best employees to strengthen their technical to marketing departments. This may happen since they want to take advantage of our expertise in developing and marketing Hutchinson Whampoa’s 3G

Opportunities:

1. Video Conferences become Hutchinson Whampoa’s main target in addition to information services and communications:

Figure 2           Hutchinson Whampoa’s Main Target

2. Video Conference is features that all customers may use in order to communicate more effectively with their family, friends, and relatives
3. The global economy continues to be strong, and we believe our repeat customer and prospective clients will continue to flourish in this growth cycle.

4.3              Marketing Objectives

Here are four marketing objectives of Hutchinson Whampoa’s video conferences applications:

• Introduce value-added video conference application for companies such as integration to video conference devices (Polycom etc)
• Create demands for video conferences for entry-level customer (students or hobbyist clubs)
• Enter into long-term contracts with desirable clients
• Maintain prices with improved customer satisfaction

4.4              Marketing Goals

To achieve the objectives as defines in section 4.3, here are actions or goals that we need to accomplish:

1. Convert 50% of existing 3’s 2G customers to be 3G subscribers
2. Develop rich-content applications that attract customers to use their 3G phone more often à increase revenue
   • Budget

Below in examples of flyers design of Hutchinson Whampoa’ Video Conference:

5.                   Conclusion

This paper has discussed the use of two major theories of consumer behaviour (Motivation and Perception) in analysing consumer behaviour (including beliefs, feelings and actions.

Concerning the impact of theories of consumer behaviour on Hutchinson Whampoa in delivering 3G services, I see that the telecommunication carrier has many things to do when targeting the Generation Y.

In conclusion, selling 3G services to Generation Y is not a simple task since these members of Generation Y have their own characteristics such as they are hungry for new and distinctive ideas. Therefore, Hutchinson Whampoa should properly manage the Generation Y by finding out what their preferences are.

Bibliography

Beck, M. (1997). the next big population bulge: Generation Y shows its might. The Wall Street Journal

Direct Marketing.  Caslon Analytics Web Marketing Guide. Retrieved January 3, 2008 from http://www.caslon.com.au/marketingguide5.htm

Internet Center for Management and Business Administration. (2004). The Product Life Cycle. Retrieved January 3, 2008 from http://www.quickmba.com/marketing/product/lifecycle/

Neuborne, E. 1999, ‘Generation Y’, Business Week. 36(16): 80-88.

Omelia, J. 1998, ‘Understanding generation Y: A look at the next wave of US Consumers’, Drug & Cosmetic Industry, 163(6), 90-92.

Porter, Michael. 1998, Competitive Strategy: Techniques for Analyzing Industries and Competitors, Free Press

Romeo, P. 1999, ‘Yo, operators’, Restaurant Business, 98(4), 6.

Rosenthal, N. 1998, ‘The boom tube’, Media week, 8(20), 44-52.

Sheahan. (2005). Generation Y – Thriving (and surviving) with Generation Y at Work

Tiffany, Laura. The Ingredients of a Marketing Plan. Retrieved January 3, 2008 from http://www.entrepreneur.com/article/0,4621,291716,00.html

Zollo, P. (1997). Wise up to teens: Insights into marketing and advertising to teenagers. Adolescence, 32(125), 250