INTRODUCTION 1
Rationale of Study
As Vietnam experiences economic growth and globalization, its mobile telecom market is becoming increasingly dynamic, characterized by a more informed customer base With a population exceeding 85 million, Vietnam presents significant opportunities for mobile telecom service providers to invest and expand their operations.
To maintain its leading position and foster future growth, MobiFone must enhance its competitiveness by differentiating its brand, expanding its coverage area, addressing service pricing gaps, and excelling in value-added services Therefore, a thorough review and improvement of its current marketing strategy is essential, which will be the focus of this research.
Problem Statement
This research investigates MobiFone's marketing and sales strategies in the Vietnamese market, focusing on its competitors and customer base The study aims to address key questions related to these strategies and their effectiveness.
Q1: What are strengths and weaknesses of MobiFone’s marketing strategy?
Q2: Are the existing strategic marketing approaches by MobiFone in Vietnam telecom market effective enough?
Q3: How should MobiFone improve its marketing strategy to compete with other competitors?
Objectives of the study
To examine the existing competitive marketing strategy of MobiFone in Vietnam.
To evaluate the consumer’s behaviour and satisfaction towards MobiFone marketing strategy.
To find out the aspects that would help MobiFone improve its marketing strategy.
Research Framework
Research methodology
This research focuses on the mobile phone service industry in Vietnam, and MobiFone as a mobile phone service provider.
The study improves the competitive marketing strategy for MobiFone in Vietnam telecom market.
Primary data was get from interviews of MobiFone’s managers and staffs.
Existing Marketing Strategy of MobiFone
Secondary data was collected from Company’s reports and profiles.
Research findings are collected from Marketing research report made by IndochinaResearch Limited.
Organization of the research report
The research consists of six chapters and structured as follows:
This chapter explains the rational of study, problem, objectives, framework, scope and methodology.
LITERATURE REVIEW 4
The need for strategy
A well-defined strategy is essential for organizations to navigate the multitude of external factors that can impact their operations It provides a framework for decision-making amid uncertainty and incomplete information, enabling consistency across various members and time periods By serving as a heuristic, a strategy offers guidelines that facilitate daily decision-making, ensuring that all organizational actions align with overarching goals.
Strategy defines an organization's business focus and competitive approach, providing coherence and direction for its actions and decisions Effective strategy formulation and implementation can significantly enhance business performance In a dynamic environment, overly detailed planning can stifle initiative and adaptability, leading to rigidity However, a well-crafted strategy ensures consistent direction while allowing for the flexibility needed to respond to changing circumstances.
Levels of strategy
Strategies exist at a number of levels in an organization It is possible to distinguish at least three different levels of organizational strategy as follows :
Corporate strategy focuses on defining the organization's overarching goals and scope to fulfill the expectations of owners and key stakeholders, while also enhancing value across its various components, including individual business units.
A business unit strategy refers to a division, product line, or profit center that operates independently from other units within a firm, focusing on how to compete effectively in a specific market Key considerations include identifying competitive advantages, exploring new market opportunities, and determining which products or services to develop Additionally, the strategy aligns with organizational objectives such as long-term profitability, market growth, and operational efficiency Notably, Michael Porter outlined three generic strategies: cost leadership, differentiation, and focus, which guide firms in navigating their competitive landscape.
Long-term, simple and agreed objectives
Profound understanding of the competitive environment
An objective appraisal of resources is essential for effective implementation of differentiation and focus strategies at the business unit level This approach not only fosters a competitive advantage but also helps mitigate the negative impacts of the five forces in the industry.
Operational strategies focus on how an organization's resources, processes, and skilled personnel effectively implement corporate and business-level strategic goals.
Strategic Analysis
It is concerned with the understanding of strategic position of the organization in terms of its external environment, internal resources and competences, and the expectations and influence of stakeholders.
An external analysis is crucial for organizations as it involves assessing various external sectors to uncover both positive and negative trends impacting performance Positive trends represent opportunities that can enhance performance, often revealing untapped market possibilities Conversely, negative trends signify threats that could impede organizational success As open systems, organizations continuously interact with and adapt to their external environments, prompting strategists to adopt two key perspectives on these external factors.
A PEST analysis (Table 2.1) evaluates the environmental factors impacting an organization historically and predicts their potential future effects This analysis focuses on four key areas: political, economic, social, and technological influences that shape the organization's landscape.
Table 2.1: A PEST analysis of environmental influences
1 What environmental factors are affecting the organization?
2 Which of these are the most important at the present time? In the next few years?
Business cycles GNP trends Interest rate Money supply Inflation Unemployment Disposable income Energy availability and cost
Attitudes to work and leisure
Government spending on research Government and industry focus on technological effort
New discoveries /development Speed of technology transfer Rated of obsolescence
For an industry to thrive economically, it is essential to enhance the value of its services, ensuring that the customer perceives the product's value as exceeding its production costs Once economic viability is established, the focus shifts to understanding the competitive landscape and identifying strategies for gaining a competitive advantage The nature of competition within the industry is influenced by its structural dynamics, as outlined by Porter's framework.
(1980) competition model describes the structure very clearly.
Michael Porter’s ‘five forces of competition’ model provides a systematic analysis of the structural features that influence competition intensity and industry profitability This framework identifies five competitive forces: the internal force of ‘competitive rivalry’ within the industry and four external forces, including the ‘threat of new entrants’ and the ‘bargaining power of suppliers’.
‘bargaining power of buyers’ and the ‘threat of substitute products’ Porter’s five forces model shares same similarities with the tools of environmental audit, like the PEST analysis.
Figure 2.2: The five forces model of competition
New entrants in various industries often face significant challenges competing with established firms due to several entry barriers Key factors include economies of scale, strong brand identity, substantial capital requirements, and product differentiation Additionally, switching costs, low-cost product design, government regulations, proprietary learning curves, anticipated retaliation from incumbents, and limited access to distribution channels and essential inputs further hinder new competitors.
Bargaining Power Bargaining Power of suppliers of buyers
Buyers, including distributors, consumers, and various organizations, play a crucial role in the market The strength of their buying power is primarily influenced by two key factors: price sensitivity and bargaining power Additional considerations include buyer concentration, volume of purchases, switching costs, access to information, profit margins, availability of substitute products, pull-through rates, and overall purchase totals.
Suppliers wield significant power when they are large and concentrated, particularly when they provide unique inputs with no alternatives and where switching costs for companies are substantial Additional factors influencing supplier power include the differentiation of inputs, the importance of volume to suppliers, and the availability of substitute inputs.
When close substitutes are available, customers have a maximum price they are willing to pay The threat of substitutes is influenced by three key factors: the availability of alternative products, the comparative price and performance of these alternatives, and the costs associated with switching between them In the mobile phone service industry, potential substitutes include landline services, public phone services, and messaging applications.
The overall state of competition and profitability in an industry is primarily influenced by the rivalry among firms Key factors that shape the intensity and nature of this competition include industry growth, market concentration, fixed costs, competitor diversity, corporate stakes, information complexity, and exit barriers.
The value chain visually represents a company's sequential activities, serving as a robust framework for assessing its resources and capabilities By highlighting the connections between various activities, it enables comparisons between firms on both individual and structural levels A prominent example of this is the McKinsey business system value chain.
Figure 2.3: McKinsey’s business system Value Chain
The value chain is an important tool for understanding how a company positions itself against its competitors (Craig and Grant, 1993).
Core Concepts of Marketing
Marketing is a dynamic social and managerial process that enables individuals and groups to fulfill their needs and desires by creating, offering, and exchanging valuable products At its core, marketing encompasses essential concepts such as needs, wants, and demands; the nature of products; value, cost, and satisfaction; as well as the importance of exchanges, transactions, relationships, and networks between marketers and prospects.
Figure 2.4: Core Concepts of Marketing
(Source: Kotler, Ang, Leong and Tan, 1999)
Marketing strategy
A marketing strategy is essential for achieving a company's marketing objectives, utilizing key tools such as target market identification, effective positioning, product line management, pricing strategies, distribution channels, sales force deployment, service quality, advertising efforts, sales promotions, and research and development initiatives.
A marketing strategy outlines the fundamental principles that guide marketing management in achieving business and marketing goals within a target market It involves determining the necessary marketing expenditures, effectively allocating the marketing budget, and utilizing the marketing mix, which is crucial in contemporary marketing theory Companies usually set their marketing budget as a percentage of their sales targets and must strategically distribute this budget across various marketing tools to optimize effectiveness.
A well-defined marketing strategy allows marketing managers to concentrate on three key levels: markets, segments, and customers, while analyzing how various companies successfully navigate competition To effectively address customer needs and desires, the marketing mix serves as a vital tool for businesses aiming to enhance their competitive edge.
Developing a marketing strategy
Creating an effective marketing strategy requires identifying a target market and developing a tailored marketing mix for that segment This includes establishing a differentiation and positioning strategy to effectively reach the audience Once the product positioning is determined, the company should focus on new product development, which involves testing and launching the product Each phase of the new product development process demands specific decision-making tools and controls Following the launch, it's essential to adapt the new product strategy to align with the various stages of the product life cycle: introduction, growth, maturity, and decline.
The selection of a business strategy is influenced by the company's position as a market leader, challenger, follower, or nicher, while also considering the evolving global opportunities and challenges.
A target market is defined as a specific group of customers that a company aims to reach To effectively target this consumer market, businesses must first segment it based on two key criteria: consumer characteristics and consumer responses Ideal market segments should be measurable, substantial, accessible, differentiable, and actionable After identifying potential market segments, companies need to evaluate them to determine which ones to prioritize and how many segments to target.
The marketing mix refers to the collection of tools a company employs to achieve its marketing goals within a target market A widely recognized framework for this is the four Ps, introduced by McCarthy and highlighted by Kotler, Ang, Leong, and Tan (1999) These four Ps include product, price, place (distribution), and promotion, each representing essential marketing variables that contribute to a successful marketing strategy.
Figure 2.5: The four Ps of traditional marketing mix
(Source: Kotler, Ang, Leong and Tan, 1999) 2.6.2.1 Product
The product is a vital component of the marketing mix, representing the tangible offerings a company presents to the market Effective product strategies focus on aspects such as quality, design, features, branding, and packaging, all of which play a crucial role in attracting and retaining customers.
Utilizing its own products or services as a marketing tool can significantly enhance a company's advertising strategy Offering a unique product or service not only serves as a compelling reason for promotion but also helps differentiate the brand in the market Additionally, making modifications, such as changing the color of a product, can attract more attention and renew interest among consumers.
Channels Coverage Assortments Locations Inventory Transport
Sales promotion Advertising Sales force Public relations Direct marketing
When considering product variety, quality, design, and features, it's essential to also evaluate the brand name, packaging, and available sizes Additionally, services, warranties, and return policies play a crucial role in customer satisfaction Factors such as list price, discounts, allowances, payment periods, and credit terms further influence purchasing decisions Ultimately, effective product differentiation creates sales and promotional opportunities by highlighting unique attributes and services.
A strong branding strategy is crucial for effectively identifying and positioning a company's products, as it creates value and provides a competitive edge (David, 1991) The most valuable brands possess equity that is recognized as a significant asset for the company.
Price is a crucial element of the marketing mix, representing the amount customers must pay for a product or service An effective pricing strategy should align with the perceived value of the offering; otherwise, customers may opt for competitors Key factors influencing pricing strategies include consumer characteristics, organizational traits, and competitive dynamics.
According to McKinsey (2001), an ineffective pricing strategy can rapidly diminish corporate value, potentially more so than other business errors Additionally, it has been noted that as industries approach deregulation, managers often implement misguided pricing policies that are likely to harm their companies and degrade the services provided to customers and the community.
When developing pricing strategies, it is crucial to analyze competitors' prices, customer switching rates, perceived customer value, and the cost to serve By effectively balancing these elements, a company can justify charging premium prices compared to its competitors, ultimately enhancing profitability.
Place is a crucial element of the marketing mix, encompassing all actions a company takes to ensure its products are accessible to target customers Marketing managers must identify and collaborate with various marketing facilitators to efficiently deliver products and services to the intended market To achieve this, it is essential to understand the different types of retailers, wholesalers, and distribution firms, as well as their decision-making processes.
A distribution channel consists of various organizational units, including manufacturers, wholesalers, and retailers, that facilitate the selling process from the seller to the end consumer The channel's structure is shaped by three key elements: the specific tasks and activities carried out by intermediaries, the types of distributors employed, and the quantity of each distributor type involved in the process.
Channel strategy transfers decision in a channel organization It consists of definition of channel structures, development criteria for evaluating channel structures and the selection of an appropriate structure.
Promotion, the fourth element of the marketing mix, encompasses all activities a company engages in to communicate and promote its products to its target audience This involves hiring, training, and motivating sales personnel, as well as establishing comprehensive communication and promotional strategies that include advertising, sales promotions, public relations, and both direct and online marketing efforts.
Effective promotion strategies enhance brand awareness and consumer understanding of products, leading to both short-term and long-term sales growth They also play a crucial role in shaping consumer attitudes towards the brand while building a strong corporate image and establishing clear brand positioning.
Customers’ behavior
Customer behavior refers to the actions and decisions made by consumers when searching for, purchasing, using, and evaluating products and services that meet their needs This field of study examines how individuals allocate their resources—money, time, and effort—toward these purchases, as well as the factors influencing what they buy, why they choose certain items, how they make their decisions, where they shop, and the frequency of their purchases.
Engaging in conversations with customers can lead to valuable insights into their needs and priorities, ultimately enhancing customer understanding Soliciting feedback on potential improvements allows businesses to leverage customer suggestions, fostering trust and confidence in their products or services.
MOBILE PHONE MARKET IN VIETNAM 17
Country Analysis
The main objective of the country analysis is to understand the environment for the telecommunications market and the main drivers of demand for mobile communications and services.
Vietnam is divided in 8 regions with 64 provinces The country’s population is expected to reach 90 million people by 2012
Figure 3.1: Country Regions and Population
(Source: General Statistic Office of Vietnam)
Vietnam's Real GDP growth has averaged 14% in recent years, positioning it as one of the fastest-growing economies globally and the leader in Southeast Asia This remarkable economic expansion has led to significant social improvements, with the poverty rate in Vietnam decreasing from approximately 50% in the early 1990s to under 20% of the population today.
Country Regions Vietnam Population (in Million)
Source: Pyramid Research, Asian Development Bank
Source: General Statistic Office of Vietnam
Nominal GDP per Capita Nominal GDP per Capita
Figure 3.2: Nominal GDP per Capita in Vietnam
Rapid economic growth has led to high consumer price inflation, which is constraining spending on additional products and services In 2007, inflation surged to 8.4%, with projections indicating it may reach a record high in 2008 However, the average yearly inflation rate is anticipated to remain below 10% in the coming years While increased competition has driven down prices for telecommunication services, the overall impact of high inflation is detrimental, as it restricts the budget available for both private and business consumption.
Consumer Price Inflation Consumer Price Inflation
Figure 3.3: Consumer Price Inflation in Vietnam
Vietnam's population is notably young, with approximately 43% under the age of 20, indicating a promising future for mobile telecom services Despite currently low Average Revenue Per User (ARPU) from this demographic, their potential for growth suggests a significant increase in demand for mobile telecommunications in the coming years.
Figure 3.4: Vietnam Population Age Distribution
Understanding Vietnam's population requires examining its geographical distribution, as the top ten provinces represent approximately 35% of the nation's total population Notably, the regions surrounding Hanoi and Ho Chi Minh City exhibit the highest population density Figure 3.5 provides a detailed overview of the population in these leading provinces.
Top 10 Provinces (Population in Thousands)
Thanh Hoa Ha Noi Nghe An Ha Tay Dong Nai An Giang Nam Dinh Thai Binh Hai Phong
Source: Ministry of Information and Communications, Vietnam, 2008
Figure 3.5: Top 10 Provinces in Vietnam by Population
(Source: Ministry of Information and Communications, Vietnam, 2008)
The concentration of the population to these provinces goes along with a strong trend of urbanization This is reflected in the share of urban population.
Source: Statistic Handbook of Vietnam
Figure 3.6: Share of Urban Population in Vietnam
(Source: Statistic Handbook of Vietnam)
As urban populations grow, the demand for enhanced network capacity to support voice and data services rises significantly Meeting the communication needs of densely populated areas is crucial, while also ensuring that countrywide coverage remains effective to serve a broader customer base This trend of urbanization underscores the increasing necessity for robust communication infrastructure.
The separation of families and friends due to people leaving the rural areas generally leads to an increased desire to communicate thus stimulating telecommunication markets.
Market Analysis
Following the country analysis framework, the next step is to define a specific framework for business and trading plans focused on mobile telecom services.
Since early 2004, mobile penetration in Vietnam was just 4%, but the market has experienced remarkable growth, reaching a 90% increase by 2006 and an impressive 330% by 2008.
Vietnam's mobile market has experienced significant growth, leading to a rise in mobile penetration that aligns with that of its neighboring countries Additionally, the fixed line penetration in Vietnam is on par with regional counterparts Figure 3.7 illustrates the penetration levels of telephony services across the country.
Penetration of Fixed and Mobile Telephony in Vietnam, 2004-2013
Fixed line penetration Mobile penetration
Figure 3.7: Fixed and Mobile Penetration
The GDP/capita is correlated with the current mobile penetration in each country.Compared to its peer group in terms of GDP/capita (China, Indonesia, India and
Vietnam's mobile penetration surpasses that of its GDP per capita peer group, with projections indicating that approximately 70% of the population will be connected This significant growth in the mobile market has allowed Vietnam to outpace other countries in its peer group over the past two years.
GDP per Capita vs Mobile penetration in Asian countries, 2008
GDP per capita (adjusted, in US$)
Source: Pyramid Research, Asia-Pacific Mobile Forecast 3Q/2008
Figure 3.8: GDP per Capita vs Mobile Penetration
(Source: Pyramid Research, Asia-Pacific Mobile Forecast Q3/2008)
The Vietnamese market has experienced a rising churn rate due to increased competition, peaking in 2005, but it is anticipated to decline in the coming years Currently, the churn rate stands at approximately 32.5%, which, while still lower than the average of selected Asian countries, remains significantly high compared to more mature overseas markets As market dynamics stabilize, a gradual decrease in the churn rate is expected in the long term.
Development of churn rate in Vietnam
Churn rate in selected Asian countries in 2008
Source: Pyramid Research, Asia-Pacific Mobile Forecast 3Q/2008
(Source: Pyramid Research, Asia-Pacific Mobile Forecast Q3/2008)
The blended mobile ARPU in Vietnam aligns with that of similar countries, though it is anticipated to experience a slight decline in the coming years Heightened competition in the market is likely to exert additional pressure on mobile service pricing.
Average Revenues per Subscription Development (in US$)
Source: Pyramid Research, Asia-Pacific Mobile Forecast 3Q/2008
PH IN VT ID TH CH MA
Development of mobile ARPU in Vietnam
Mobile ARPU rate in selected Asian countries in 2008 (in US$)
Figure 3.10: Average Revenue per Subscription Development
(Source: Pyramid Research, Asia-Pacific Mobile Forecast Q3/2008)
PEST Analysis
Vietnam stands out as the most politically stable country in the region, led by the dominant Communist Party, which is expected to maintain its influence for the foreseeable future The emergence of a younger and more educated leadership is driving the nation towards rapid modernization and industrialization while aiming to reduce corruption This favorable political environment enhances capital security and supports long-term investment projects, making Vietnam an attractive destination for investors.
The Vietnamese Government has recently begun to ease its control over the telecommunications sector by allowing smaller providers to establish their own pricing, a shift from the previous regulation by the Ministry of Information & Communication (MIC) that mandated all telecom charges for both state-owned and private companies This new policy, referred to as Decision, marks a significant step towards fostering competition and innovation within the industry.
According to No 217/2003QD-TTg, post and telecommunications operators with less than 30% market share can set their own prices, allowing new operators to leverage competitive pricing to gain market share In Vietnam, mobile phone communication costs are relatively high compared to average income, making calling costs a significant factor for consumers, especially new users, when selecting service providers The mobile phone services market is thriving, with numerous new providers entering the market, all competing to attract subscribers through lower prices This competitive landscape poses challenges for MobiFone in both attracting new customers and maintaining its market share.
Effective from 1st of July 2004, a part of population will get higher income based on the new income tax policy This policy is a remarkable change from Finance
Ministry and Government, this will create a new consuming trend, and the telecommunication industry will take advantage in gaining higher revenue
Vietnam is increasingly embracing global free trade, recognizing it as a pathway to development As the country approaches the completion of its commitments to the ASEAN Free Trade Area (AFTA), the government continues to protect certain industries, such as telecommunications However, with AFTA's implementation, new entrants with substantial capital and advanced technology will intensify market competition To maintain market share, companies must prioritize long-term strategies focused on enhancing service quality In this evolving business landscape, leveraging their position as early market entrants in mobile phone services, along with their established operational experience, will be crucial for delivering high-quality services.
In recent years, Vietnam has made significant strides in economic and social development, with a GDP growth rate of 7% per annum and a remarkable 40% annual revenue increase in the telecommunications sector The country's open-door policy, streamlined administrative procedures, and rising Foreign Direct Investment (FDI) are expected to contribute to a stable economic outlook from 2005 to 2010 Currently, with a mobile communication penetration rate of just 5%, Vietnam's market presents substantial growth opportunities The increasing competition within the mobile industry is likely to drive network expansion, ultimately benefiting consumers.
Since 2001, the rise in living standards driven by economic growth has led to a significant increase in mobile phone users Initially, mobile phones were primarily used by the middle class for business purposes, but today, users span various demographics, including younger individuals, white-collar and blue-collar workers, and students, primarily for communication Modern mobile users not only make calls but also seek to share their experiences and photos, expressing their identities through their choice of devices, much like in the automotive industry While these trends present opportunities for mobile communication operators, the competitive landscape remains challenging.
The main mobile phone systems in Vietnam are Digital GSM (Global System for Mobile communications) network and CDMA 2000 - 1x technology (Code Division Multiple Access)
Currently, the mobile phone network covers Hanoi, Ho Chi Minh City and most of main towns of 64 provinces.
Mobile phones offer significant advantages over fixed telephones by enabling faster access to people and information without the constraints of geography or time They enhance business performance and serve as a reliable alternative when fixed lines fail With the advent of applications like text messaging, internet access, email, international roaming, and multimedia messaging, mobile phones provide unparalleled convenience Additionally, expanding and purchasing mobile services is quicker and simpler than with traditional fixed phones These factors demonstrate the exponential growth and importance of mobile phone technology globally.
In April 2009, the Ministry of Information and Communications granted MobiFone permission to launch its 3G network in Vietnam, paving the way for significant market opportunities The introduction of 3G services is expected to boost MobiFone's revenue while enhancing customer satisfaction and attracting new clients Additionally, 3G technology serves as a strategic solution for MobiFone to navigate the challenges posed by the economic crisis and solidify its market position.
Competitive Analysis (Five forces)
The competitiveness of the mobile phone industry is crucial for assessing its overall attractiveness According to Michael Porter, a firm's performance should be evaluated in the context of its industry, as external factors significantly impact its operations The industry's profitability and appeal are largely determined by the competitive landscape, which stems from its structural dynamics rather than just the actions of individual companies.
Figure 3.11: Five forces analysis of the mobile phone industry in Vietnam
3.4.1 Threat of new entrants is low
The mobile phone market is dominated by five operators, creating a high-potential environment that poses significant barriers for new entrants A primary obstacle is the necessity of obtaining a license to operate a mobile network, as operators require access to a frequency band for radio transmission Given that the frequency spectrum is a limited resource, government regulation plays a crucial role in managing its allocation.
The limited availability of frequency spectrum leads to a restricted number of network operators within a geographical market, primarily dominated by Viettel, Hanoi Telecom, and EVN Telecom Since the issuance of licenses for specific frequency bands is tightly regulated, new entrants to the mobile network market face two options: they can either await the government's release of additional licenses or acquire an existing licensed operator.
Access to capital poses a significant barrier for new entrants in the mobile network industry, as substantial financial resources are necessary to cover licensing, infrastructure, and customer acquisition costs before achieving profitability New operators may need external funding and supplier credits for up to four years, which heightens the financial risk and limits the number of potential competitors Consequently, the requirement for large investments not only complicates market entry but also restricts the pool of viable participants in the sector.
From now, due to high entry barriers as analysed, the threat of new entrants is low
3.4.2 Threat of substitute products is low
Paging is not a substitute: A paging/messaging device allows mobility, but fails in simultaneous “two- way” communications All paging services were stopped supply in Vietnam by August 2004
Satellites serve as an alternative communication method, but their high capital costs make them less competitive compared to traditional mobile systems The significant investment required to establish satellite networks results in service pricing that is considerably higher than cellular options, limiting the number of providers to a few, like Iridium and Inmarsat While advancements have improved the portability of satellite phones, most models still require a large antenna, with only briefcase-sized options available.
Fixed line phone networks struggle to compete with mobile telephony due to inadequate landline infrastructure, making mobile services a more affordable option Consequently, mobile phones not only serve as a cost-effective alternative but also pose a significant challenge to traditional fixed line connections.
3.4.3 Bargaining power of customers is high
In Vietnam, buyers exert pressure on the telecommunications industry by driving down prices and demanding higher quality and enhanced services However, the country's telecommunications infrastructure lags behind that of Europe and Singapore, resulting in a significant capacity shortage, particularly in emerging markets.
The high demand for mobile phones is driven by standardized voice transmission services, but operators differentiate themselves through value-added services Increased usage of these services reduces bargaining power among consumers, with notable differences across segments Ultra-demanding customers, primarily business professionals with higher incomes, exhibit weaker bargaining power due to their reliance on premium services In contrast, low-end users, who view their mobile phones as essential for enhancing their quality of life despite lower incomes, possess stronger bargaining power Ultimately, business users have the least bargaining power, while low-end users hold the most.
The above discussion adds up in a strong bargaining power of the buyers in general.
3.4.4 Bargaining Power of Suppliers is high
Equipment manufacturers: provide the infrastructure and handsets to create the network, and are represented by a very limited group of companies to supply the high demand of the industry
The standardization of equipment driven by inter-operability requirements allows operators to open bidding for competitive pricing However, variations among vendors in terms of financial support, service, and expertise enhance their bargaining power, contrasting with that of the operators Suppliers can leverage this power by threatening to increase prices or diminish the quality of goods and services offered, impacting industry participants.
A few suppliers dominate the network equipment industry and the group is more concentrated than the operators There are currently no threatening substitutes to the network technologies and suppliers
3.4.5 Intensity of rivalry is high
Rivalry among competitors typically manifests through price competition, advertising efforts, product launches, and enhanced customer service In industries with high fixed costs, such as Vietnam's mobile sector, firms are pressured to maximize capacity, often resulting in aggressive price-cutting during times of excess capacity This competitive dynamic arises when firms either feel the pressure to maintain their market position or recognize opportunities for improvement Additionally, actions taken by one company can significantly impact its rivals, prompting retaliatory measures and reinforcing the interdependence among firms in the industry.
Over the past five years, Vietnam has experienced an impressive average annual growth rate of 40% to 60% in mobile phone users, with projections estimating 10 million customers by 2007 Despite this growth, the mobile penetration rate in Vietnam remains relatively low at around 5%, especially when compared to over 30% in China, indicating significant potential for future expansion in the industry As noted by Michael Porter in 1980, a slow industry growth can intensify competition for market share; however, the rapid growth of Vietnam's mobile phone sector suggests a dynamic and competitive landscape ahead.
Major competitors analysis
Vietnam's mobile telecommunications market is comprised of seven operators, with MobiFone, Vinaphone, and Viettel being the primary competitors Together, these three companies dominate the market, holding over 90% of the market share as of September.
Since its launch in 2004, Viettel has established itself as the market leader in telecommunications, significantly increasing its connections and impacting competitors like Vinaphone and MobiFone, whose market shares have declined due to Viettel's aggressive strategies Meanwhile, S-Fone, the fourth player in the market, is gradually gaining traction The distribution of market share is illustrated in Figure 3.11.
Figure 3.12: Market Share Mobile Operators Vietnam
Figures 3.13 to 3.20 detail MobiFone's competitive landscape, highlighting business areas, key figures, strategies, market positioning, and pricing of its rivals Viettel stands out as a comprehensive telecommunications provider, excelling in fixed voice, broadband, mobile, and international services, with its mobile division leading the market It has rapidly become the fastest-growing mobile network in Vietnam, significantly impacting competition and mobile growth through competitive pricing and swift network expansion.
Viettel is the second fully integrated telecommunications provider in Vietnam offering the full service portfolio almost equal to VNPT.
With aggressive promotions, international partnerships and segment-specific marketing Viettel gained significant market shares in all telco businesses, particularly mobile.
Viettel is the main competitor to Mobifone.
Viettel differentiates from competitors by offering segment-specific packages to families, students etc.
In mobile, it is perceived as being both price and quality leader with better coverage than the competitors.
Broadband access: partially 50% cheaper packages.
Aggressive promotions with waiving of postpaid fees, price drops etc.
Launched fixed services in 2000 and mobile in 2004.
By the end of 2007 it had 480,000 fixed and fixed- wireless customers including 228,000 fixed line customers.
Viettel reached 26m subscribers end of Q3/2008 in mobile services.
Key Figures Market Positioning and Pricing
Network currently has limited capacity.
Connection difficulties could prompt potential subscribers to opt for alternative networks.
Entrance of new mobile entrants likely to lead to pricing war.
Nationwide coverage should guarantee substantial market share in medium term.
Won license to test WiMAX mobile broadband service.
License to offer fixed wireless, mobile and value-added services.
Nationwide coverage and mobile market leader.
S-Fone is the leading CDMA operator and focused to develop its distribution channels and marketing to trail the leading GSM operators It tries to differentiate with innovative services in both fixed and mobile offering Video-over-DSL and mobileTV and justifies higher prices with this The strategy has been focused on service quality hence
Vietnamese-Korean joint venture S-Telecom was awarded a network operator's license in 2001operating under the brand S-Fone.
S-Fone’s strategy is focused on service quality instead of competing solely on price
S-Fone subsidized its handsets, with some customers paying just 25% up front, with the remainder to be paid off in installments.
S-Fone offers an extensive list of VAS incl video-on- demand, music-on-demand and mobile internet via EV-
Prices per minute for mobile are generally higher than the prices of the 3 main players in the mobile market.
Coverage is currently limited to 13 provinces and cities.
Subscriber base reached 3.5 m customers end of
Q3/2008, positioning S-Fone after the 3 main mobile operators in the market.
Strategy and Overview Areas of Business
Key Figures Market Positioning and Pricing
SK/LG not permitted to own equity in entity.
Coverage currently limited to 13 provinces and cities.
Pricing structure already undercut by Viettel.
Falling further behind market leader Viettel and VNPT subsidiaries Mobifone and Vinaphone.
Entrance of new mobile entrants likely to lead to pricing war.
Continued growth of mobile sector offers opportunity for expansion.
Helped by its nationwide coverage, there is the potential for considerably more mobile growth, especially from next generation services.
Backed by leading Korean players SK Telecom and LG
License to offer fixed wireless, mobile and value-added services.
EVN Telecom utilizes a CDMA network to compete in the telecommunications market by offering low-cost tariffs The company also provides fixed wireless services and is actively promoting both fixed and wireless voice and broadband services through CDMA, supported by handset subsidies to attract customers.
Subsidiary of EVN – Vietnam’s national electricity provider
EVN faces challenges in differentiating its fixed-wireless access services due to limited mobility options However, the company is promoting the adoption of alternative technologies beyond POTS and GSM by providing subsidies for CDMA CPEs.
EVN is providing products for both consumer and business customers with focus on higher-value customers
Service is priced lower than mobile services based on its limited mobility characteristic
Launched fixed, fixed-wireless and mobile services in
60% of its subscribers are in rural areas.
EVN's fixed-wireless subscriber base reportedly reached
1.77 m by the end of June 2008.
Strategy and Overview Areas of Business
Key Figures Market Positioning and Pricing
Limited mobility for the fixed-wireless access services.
Existing subscriber base is limited.
Strong competition from GSM operators.
Less market share and popularity of CDMA technology
Investment in fibre-optic cable system.
Expansion of mobile network coverage and broadband upgrades.
Strong subscriber share in rural areas.
Vinaphone, once the leading mobile operator in Vietnam in terms of subscribers and coverage, has seen its position overtaken by Viettel In response, the company is now concentrating on enhancing network coverage, as well as improving its marketing and branding strategies.
The wholly-owned subsidiary of VNPT operates a nationwide GSMbased digital cellular telephone network under the VinaPhone brand name.
The strategy in 2007 was focused on network coverage, marketing and branding
VinaPhone provides post-paid plans, pre-paid 'VinaCard' packages, SMS and WAP
Launch of a number of new services in 2007 including EasyTopUp and VnTopup to allow prepaid subscribers to recharge mobile accounts via SMS.
VinaPhone offers similar price plans as MobiFone with slight price advantages.
The network was launched in June 1996.
By the end of Q3/2008, the number of mobile customers served by VinaPhone is estimated to have risen to
Strategy and Overview Areas of Business
Key Figures Market Positioning and Pricing
Struggling to keep up with market growth since 2005, giving up its leading position to Viettel in 2006.
Unable to enjoy any positive externalities from its name, as “Vina” brands generally are growing in popularity in Vietnam due to its patriotic image.
Additional pressure from sister company Mobifone.
Mobile market expected to increase to above 65mn by the end of 2008.
Since 2006 nationwide coverage in all districts.
Ongoing expansion of the network in the southern provinces of the country.
Rollout of GPRS upgrade in all cites completed.
VIET NAM MOBILE TELECOM SERVICES COMPANY AND ITS MARKETING STRATEGY 38
Company Background
Vietnam Mobile telecom Services (MobiFone), a state-owned company was founded in April 1993 MobiFone is an independently financial unit belonging to VNPT (Vietnam Posts & Telecommunications Corporation).
MobiFone, established in Ho Chi Minh City in 1994, is Vietnam's first mobile phone service provider Utilizing advanced GSM 900 MHz digital technology, MobiFone delivers superior voice quality and is part of a global network used by over 600 operators in 170 countries.
In May 1995, MobiFone was licensed by the State Committee for Cooperation and Investment to work together with Comvik International Vietnam AB in ten years under business co-operation project
Under Vietnam's Law on Foreign Investment, a Business Cooperation Contract (BCC) is defined as a written agreement between two or more parties aimed at conducting investment activities without forming a legal entity In this arrangement, MobiFone, the local partner, will manage the network operations, while Comvik will provide funding for network infrastructure and assist MobiFone in its operations The net revenue, calculated as total revenue minus joint costs, will be equally shared, with each party receiving 50% Each party is responsible for their own expenses, leading to potential variations in profit for each participant.
From May 2005, the BCC between MobiFone and Comvik was officially expired.
In the next decade, VMS aims to become a leading mobile phone service operator, positioning itself to effectively compete with international operators entering the Vietnamese market Our mission remains steadfast: to deliver exceptional results and value to our customers.
“A vision for a brighter future, where people can communicate wherever, whenever and however they wish”
“To become the first global Mobile communications brand wherever it operates- to be first for service, first for quality, first for innovation and first choice for the consumer”
Lead in Services quality (network services and customer care services)
Lead in new services supply
In order to achieve above goals, VMS has settled its own strategies:
Be the first to launch new services in the market
Keep continuous improvement on services quality by investing huge amount money on network
Strengthen Sales and Customer Care Department to increase Customer Satisfaction by a specific percentage each year (vie annually customer satisfaction survey by market research agency)
The organizational structure of MobiFone is described in the figure 4.1 below:
Center I, II, III, IV and V
Deputy Managing Director (Investment and Building)
Deputy Managing Director (Sale, Marketing and customer care)
Deputy Managing Director (Final, accounting and bill collection)
Planning, Sales Dept Marketing Dept.
IT and Billing Dept Bill collection Dept.
Human Resource and Administration Dept.
Billing and Business support Center
Figure 4.1: Vietnam Mobile Telecom Services Company- Organization Chart
MobiFone currently provides a range of mobile services, including both post-paid and prepaid options The prepaid packages feature MobiCard, Mobi4U, MobiQ, and Mobi365, catering to diverse customer needs In contrast, MobiGold stands as the sole post-paid offering Each package includes essential voice and SMS tariff plans, designed to target specific customer segments effectively.
Launched on September 1, 1998, MobiCard is the pioneering prepaid service that has evolved into MobiFone's most successful offering Today, it remains a popular choice among customers, providing a pay-as-you-go plan that eliminates the need for any active charges or daily/monthly fees.
This prepaid package caters to budget-conscious customers, offering a daily subscription fee of just 1,700 VND, which results in a more affordable unit price for voice calls compared to other prepaid options.
This SMS package is ideal for frequent users, featuring no monthly or daily subscription fees and no activation charges It offers the lowest SMS rates available compared to other packages, although the voice call charges are relatively higher.
This service is designed for customers, particularly in suburban and rural areas, who receive a high volume of incoming calls but make fewer outgoing calls and send fewer SMS messages It provides the most affordable rates for voice calls, ensuring cost-effective communication for users who primarily receive calls.
MobiPlay offers a service specifically designed for low-income customers who primarily rely on SMS and incoming calls This service enables users to send and receive SMS messages and receive calls at a standard price, making communication more accessible and affordable for those with heavy usage needs.
MobiFone's service plan caters to high-end customers, particularly those with significant voice call usage, including business clients To enhance customer satisfaction and loyalty, the company offers a birthday gift program, a loyalty initiative, and convenient ATM payment options.
Voice telephony is the main and most important service of MobiFone
Messaging services provide the function of sending/receiving multiple media messages, such as text, picture and audio
MobiFone provides a range of value-added services (VAS) through its GPRS network, including MMS, WAP portal browsing, and downloads Customers can utilize their mobile devices to access various data applications, enabling them to send and receive MMS, manage emails, interact with WAP portals, and connect with computers seamlessly.
Fast connect service allows customers to access mobile broadband through a USB data card, enabling SMS messaging via PC within MobiFone's network coverage Currently, MobiFone provides data download connections using GPRS, with plans to introduce additional products in response to the evolving 3G network and market demands.
Other Value Added Services (VAS)
MobiFone provides a wide range of Value-Added Services (VAS) for both postpaid and prepaid customers, categorized into three main types The first category includes information services such as stock updates, weather forecasts, lottery results, and exchange rates The second category focuses on entertainment services, enabling customers to download music, ringtones, pictures, wallpapers, and screen savers Additionally, MobiFone offers Super SIM Cards available in 64k and 128k memory options, which allow for greater data storage and come with pre-installed applications.
4.1.7 Subscriber by Package and Service
Figures 4.2 and 4.3 illustrate the number of subscribers and the evolution of subscriber distribution for MobiFone MobiCard has emerged as the most popular tariff option, currently representing over 80% of MobiFone's subscriber base, with its share steadily increasing in recent years.
VMS Total Subscriber of Packages
Source: VMS Planning & Sales Division
Figure 4.2: MobiFone Total Subscriber by Package
(Source: MobiFone Planning & Sales Division)
VMS Subscriber Distribution by Package
Source: VMS Planning & Sales Division
Figure 4.3: MobiFone Subscriber Distribution by Package
(Source: MobiFone Planning & Sales Division)
Beside the distribution according the package, the MobiFone subscriber base can be allocated to the data services offered.
4.1.8 Revenue of Prepaid and Postpaid
The basis for the revenue allocation to each service is the distribution of the revenue between the prepaid and postpaid services This is shown in the Figure 4.4.
VMS Revenue Distribution – Prepaid and Postpaid
Source: VMS Planning & Sales Division
Figure 4.4: MobiFone Revenue Distribution, Prepaid and Postpaid
(Source: MobiFone Planning & Sales Division)
MobiFone has implemented a revenue allocation system to provide a consistent indication of revenue for each service, based on its total revenue The revenue distribution between prepaid and postpaid services is documented within MobiFone's system, enabling the identification of revenues for MobiGold, its sole postpaid product The remaining revenue is then allocated to prepaid services in accordance with their respective subscriber bases Figure 4.5 illustrates the allocated revenue for each service.
Source: VMS Planning & Sales Division
MobiPlay Mobi365 Mobi4U MobiGold MobiQ MobiCard in bn VND
Figure 4.5: MobiFone Revenue by Package
(Source: MobiFone Planning & Sales Division)
The Figure 4.6 shows the development of the revenue generated by each service offered by MobiFone.
Source: VMS Planning & Sales Division
GPRS SMS Voice Others in bn VND
Figure 4.6: MobiFone Revenue by Service
(Source: MobiFone Planning & Sales Division)
4.1.11 Tariff of Voice and SMS Services
The following Table 4.1 summarizes the tariff as of December 2008 in VND followed by a summary of historical tariff.
Table 4.1: Actual MobiFone communication tariff for Voice and SMS services
2,220 2,018 1,500 1,364 1,990 1,809 1,200 1,091 Off-net call charge (VND)
Charges per sec: sec 1-10: 199.83 following sec: 333.17
Charges per sec: sec 1-10: 181.67 following sec:
On-net call charge (VND/minute)
- - - Daily subscription fee (VND/subscriber/day)
(VND/subscriber/connecting) incl VAT w/o incl VAT VAT w/o VAT incl VAT w/o VAT incl VAT w/o incl VAT VAT w/o VAT
2,220 2,018 1,500 1,364 1,990 1,809 1,200 1,091 Off-net call charge (VND)
Charges per sec: sec 1-10: 199.83 following sec: 333.17
Charges per sec: sec 1-10: 181.67 following sec:
On-net call charge (VND/minute)
- - - Daily subscription fee (VND/subscriber/day)
(VND/subscriber/connecting) incl VAT w/o incl VAT VAT w/o VAT incl VAT w/o VAT incl VAT w/o incl VAT VAT w/o VAT
The mobile telecommunications market in Vietnam has officially established in
Marketing Strategy
MobiFone stands out in the mobile phone service industry by providing extensive coverage across all 64 provinces, supported by over 15,000 transmission stations that ensure superior quality The company offers nearly 40 value-added services, enhancing customer experience and engagement To maintain a competitive edge, MobiFone's product strategy emphasizes expanding its coverage area and improving service quality, while also introducing innovative value-added services This approach not only enriches the subscriber experience but also boosts the Average Revenue Per User, even as call charges decrease.
MobiFone aims to establish its brand as synonymous with high-quality coverage and excellent customer care With over 70% of its advertising efforts centered on promotions, customers often associate the MobiFone name primarily with sales promotions.
Pricing strategy is presently a main factor that influences buying behaviors of the Vietnam consumers, since different level of people have different incomes
MobiFone's service tariffs are currently higher than its competitors, with S-Fone offering rates 16% lower and Viettel about 5% lower Even when compared to Vinaphone, which has similar tariff plans, Vinaphone prepaid users enjoy a 3% to 5% discount on card purchases Despite this, MobiFone retains a significant user base, as 70% of its subscribers are prepaid customers who prefer MobiFone for its extensive nationwide coverage, superior quality, and a wide range of value-added services To maintain its market position and maximize average revenue per user, MobiFone continues to set its prices above those of S-Fone and Viettel, in line with regulations that favor new entrants in the market.
49 and trying to narrow the price gaps in comparision with those of other mobile phone services providers.
MobiFone provides its products by two ways: directly and through distributors The current distribution system is shown in following figure 4.9.
Figure 4.9: MobiFone current distribution channel
MobiFone operates over 110 shops dedicated to providing after-sales services, which encompass new service activation, bill collection, and customer claims processing Each element of the distribution channel is tailored to deliver specific products or serve distinct regions effectively.
Wholesale Dealer (Scratch card only)
Dealer Point of Sales Franchiser
MobiFone operates through 18 Point of Sales shops in major cities such as Hanoi, Ho Chi Minh City, and Danang, along with additional locations in 61 provinces, each serving as local representatives The direct sales teams, which focus on postpaid contracts, require customers to present legal documents like ID cards and family record books, leading dealers to prioritize other sales MobiFone has established 10 direct sales teams across key markets, including Hai Phong, Quang Ninh, Vung Tau, Can Tho, and Nha Trang Notably, dealers account for 90% of new MobiCard subscriber sales.
MobiFone's distribution network primarily operates through over 2,000 dealers' points of sale, predominantly in major cities like Hanoi, Ho Chi Minh, Danang, and Can Tho, while largely neglecting the remaining 61 provinces due to high management costs and limited market size To enhance its presence in provincial markets, MobiFone adopted a franchise model in August 2002, resulting in over 200 franchised shops across Vietnam within 20 months These franchisees serve as local representatives, selling products and providing after-sales services Scratch cards are distributed differently from Starter Kits, with daily sales of scratch cards being ten times higher, allowing them to be sold at non-traditional points of sale such as newsstands and convenience stores MobiFone has established seven wholesale dealers to facilitate this distribution, resulting in nearly 4,000 non-traditional sales outlets With a minimum order value of USD 500,000, wholesale dealers enjoy the highest commission rates, enabling them to distribute scratch cards through regular dealers, which accounts for 95% of scratch card revenue.
From the year 2010, MobiFone will focus on maintaining the loyalty of distribution network in big cities and develop dealers and franchisee system in provincial markets
4.2.4 Sales promotions and Advertising strategy
MobiFone has launched various sales promotions to attract new customers, including adding funds to prepaid accounts, offering discounts on monthly or connection fees for postpaid users, and running lucky draw programs for both prepaid and postpaid customers over a span of ten months In addition to customer-focused promotions, trade promotions targeting dealers are also available, typically involving extra scratch cards or Starter Kits Retaining existing customers is crucial, leading to the implementation of numerous promotions for current users, such as account top-ups for prepaid customers and bill discounts for postpaid users.
The company's advertising objectives focus on effectively communicating new coverage areas, product updates, and sales promotions to customers This includes informing customers about ongoing sales promotions, persuading them to choose MobiFone services, and ensuring that the MobiFone brand remains top-of-mind for consumers.
MobiFone utilizes a diverse range of mass media, including TV, newspapers, magazines, radio, and the Internet, with over 40% of its advertising budget allocated to TV and nearly 40% to newspapers In addition to these channels, MobiFone employs posters, banners, flyers, and other point-of-sale materials to enhance its marketing efforts The company collaborates with several creative advertising agencies for various projects, while a local agency manages media buying Approximately 70% of MobiFone's advertising campaigns focus on sales promotions, with the remainder promoting new services and coverage areas To differentiate itself from competitors, MobiFone emphasizes its superior coverage area and high-quality customer care in its advertisements.
Findings on customer satisfaction based on the results of MobiFone’s market research Y2008
Because of time limitation so we could not implement a market survey for our own.
Based on a market research study conducted by Indochina Research Limited from July to September 2008, we present practical recommendations aimed at enhancing MobiFone's marketing strategy The findings reveal key insights that are crucial for the effective implementation and improvement of MobiFone's marketing efforts.
- In general, the awareness of customers on MobiFone brand name is at high level (about 30%) but there is still a fairly far distance in comparison with its competitor Viettel (about 50%)
- Customer group aged from 23 to 29 is making up the highest density in target groups of customers using mobile telecom service divided by age and target customes.
- There are 15% target customers will choose MobiFone network since they have friends and relatives have been using MobiFone.
- The main reasons that customers chose to use the mobile network are: coverage and service quality, pricing, promotion, customer care services and famous brandname
- Tariff act as an very important role for customers when selecting a mobile networks but most customers are not satisfied with current charges of MobiFone in comparison with its competitors’
Value-added services (VAS) are becoming increasingly vital in today's market, with research indicating that 90% of customers utilize these services Notably, among VAS users, a remarkable 91% rely on short message service (SMS) for their communication needs.
- Generally, the satisfaction of customers using mobile telecom services is relatively equal and there is no difference between existing mobile operators in the market.
Market research indicates that while MobiFone customers express overall satisfaction with the service, there are significant areas for improvement Specifically, customers are seeking enhancements in network coverage, signal quality, and connection reliability to boost their confidence in MobiFone's offerings.
Customers also recommended that MobiFone should have more helpful sales centers and after sales services
CONCLUSIONS AND RECOMMENDATIONS 56
Conclusions
The mobile phone services market in Vietnam presents significant opportunities for both existing and new providers Currently, MobiFone holds the position of the second-largest player in terms of market share However, MobiFone's customers have the flexibility to switch to other service providers if the company fails to enhance its services and marketing strategies to align with customer demands.
This research shows that there are not much differentiation of MobiFone in comparison with other mobile phone services providers
When selecting a service, users prioritize coverage area and quality above all else, often willing to pay a premium for enhanced coverage However, the cost becomes a significant factor if there is a substantial price difference among service providers.
In conclusion, MobiFone must enhance its coverage area and service quality while establishing a brand identity that signifies superior value compared to competitors Additionally, the company should focus on providing more value-added services and improving customer care quality Finally, implementing a strategic pricing policy and innovative product design will help close the pricing gap in the market.
Recommendations
MobiFone is committed to enhancing its market position amidst increasing competition by focusing on customer-centric products and services while embracing innovation This strategy has enabled the company to achieve rapid growth and establish itself as a market leader To further strengthen its competitiveness and become the preferred choice for mobile service providers, MobiFone must expand its coverage area and lead in value-added services (VAS), thereby demonstrating the value of its network offerings.
MobiFone currently offers four distinct products tailored to various market segments: MobiFone, a postpaid monthly payment service with five tariff packages aimed at high-end users like businessmen; MobiCard, a prepaid option based on scratch card usage; Mobi4U, a daily fee prepaid service designed for students and job starters; and MobiPlay, a prepaid service for pupils, students, pager users, and low-income earners While these offerings cater to diverse customer needs, there remains an opportunity for MobiFone to enhance its product lineup to better serve additional market segments in the future.
Based on the SWOT analysis and market research, the researchers assess consumer usage and attitudes towards MobiFone's services, offering recommendations for enhancing the company's future marketing strategy Key areas for improvement include branding, product and service offerings, pricing, distribution, and promotional strategies.
After over a decade in operation, MobiFone has established significant brand awareness; however, many customers confuse the post-paid service name with the MobiFone brand itself Additionally, the brand's values and competencies remain unclear, leading to a perception that MobiFone is similar to other mobile service providers Research indicates that MobiFone needs to emphasize its core values through its mother brand, ensuring that it consistently reflects the identity and values of the entire company This approach will highlight the unique attractions that differentiate MobiFone from competitors To effectively build the MobiFone mother brand, a thematic campaign should be developed and communicated consistently, focusing on these essential elements.
- Core message: MobiFone represents the best value choice with a combination of great coverage, call quality (quality of coverage), reasonable prices and extensive range of value added services.
- Positioning: to be the first choice among mobile phone services providers in
A strong brand identity should embody modernity and high-tech functionality while offering a wide range of economical services Additionally, it should evoke emotional values that promote a sense of freedom, youthfulness, and a carefree lifestyle This approach appeals to individuals who prioritize what truly matters in life, providing them with the aspiration of choice.
Based on market research findings and MobiFone's competitive advantages, it is clear that extensive geographic coverage is a crucial factor influencing potential customers' choice of mobile service providers While pricing is also significant, MobiFone's rates remain higher than those of its competitors Therefore, the company should adopt a strategic approach to address this pricing challenge.
MobiFone's competitive advantages lie in its reasonable pricing, call quality, and value-added services While these factors may play a lesser role in consumer choice, they significantly influence customers in selecting their service providers.
Figure 5.1: Proposed MobiFone brand strategy model
SMS promo alerts, Direct at POS Selected mailing
Functional values: modern, high tech, many services, economical to use
Emotional values: enables freedom, young and carefree
Extensive range of Value added services
Functional values: modern, high tech, many services, economical to use
Emotional values: enables freedom, young, carefree
Live SMS quiz Promo launch events Mobile Internet Cafes
Press conference, Sponsorship linking, Expert opinions on value
While MobiFone generally enjoys customer satisfaction, its products do not fully cater to all market segments, particularly evident in the MobiPlay case Targeted at young users aged 15 to 18, MobiPlay emphasizes SMS functionality; however, its limited adoption suggests a gap in meeting customer needs The inability to make phone calls with MobiPlay has hindered its appeal To enhance competitiveness and boost MobiPlay's user base, MobiFone should introduce a calling feature while ensuring that the call charges for MobiPlay are significantly higher than those of other products to prevent overlap.
Especially, on December 15, 2009, VinaPhone is the first operator to provide 3G services in Vietnam so that in order to enhance the product and services strategy, the company should:
To effectively attract young consumers aged 23 to 29, MobiFone must develop tailored services and products that meet their unique needs Market research indicates that this demographic represents the highest percentage of current and potential usage Without offerings that resonate with their specific demands, MobiFone risks losing the opportunity to engage this vital segment of the market.
MobiFone leads in value-added services, which not only attract new customers but also significantly boost revenue To effectively meet the diverse needs of various market segments, MobiFone should prioritize high-value customers, such as business professionals, who require "Mobile Office" services and are willing to pay a premium for them Additionally, targeting younger audiences who seek entertaining and trendy services is essential; collaborations with platforms like MTV and Yahoo to offer features such as Yahoo Instant Messenger and MTV celebrity chats can effectively cater to this demographic's preferences.
In the Philippines, Globe has demonstrated the significant impact of value-added services, with SMS accounting for 35% of its total revenue, as highlighted by the EMC World Cellular Database Market research indicates that 91% of customers frequently utilize SMS services, establishing it as a vital application in Vietnam MobiFone capitalizes on this trend by enhancing SMS usage through offerings like SMS TV voting, SMS games, SMS dating, and menu-based applications, which simplify the user experience However, MobiFone is also focused on the future by developing high-speed data services such as GPRS and 3G, recognizing the importance of evolving mobile phone services.
MobiFone aims to enhance its coverage areas to surpass Vinaphone's reach If investment capital is limited, MobiFone will focus on expanding and improving coverage in key potential regions, strategically differentiating itself from Vinaphone and avoiding provincial markets where Vinaphone currently holds a competitive advantage in coverage.
MobiFone offers a comprehensive range of mobile communication and information services tailored for both individual and enterprise customers At the core of the company’s mission is the provision of high-speed mobile Internet access and innovative services With a commitment to delivering value and user-friendly experiences, MobiFone plans to expand its offerings to include a variety of 3G products and services These will encompass basic voice services, advanced video messaging, broadband Internet access via HSDPA, and entertainment options such as music, movie, and game downloads MobiFone is confident that its enhanced 3G service lines, alongside its existing 2G/2.5G portfolio, will significantly impact the market To further improve customer convenience, MobiFone will implement the SIM application toolkit, providing users with a dedicated display menu and pre-installed features.
60 applications This enables the SIM to build up an interactive exchange between a network application and the end user and access
The company will categorize its 3G data services portfolio into four distinct segments: mobile broadband Internet access, communication, entertainment, and various applications These services will be accessible to both prepaid and postpaid customers.
MobiFone currently faces higher pricing than its competitors due to regulatory constraints, which has led to customer dissatisfaction as price is a crucial factor in choosing a mobile service provider While customers often associate low prices with poor service quality, MobiFone must strategically adjust its pricing to remain competitive against new entrants like S-Fone and Viettel, while still maintaining a price premium A viable strategy to narrow the price gap without significantly impacting revenue is to offer discounts for users within the MobiFone network, as research indicates that potential customers are more likely to choose MobiFone if their friends and family are already subscribers This approach not only attracts new subscribers but also allows MobiFone to retain full revenue from internal network usage, while incurring a 40% inter-connect fee for external network services.
Summary of recommendations
In conclusion, MobiFone must enhance its marketing strategies based on the specific recommendations provided to maintain its market share A thorough analysis of the company's current marketing approaches reveals that MobiFone has been operating with certain limitations.
66 the right track However, if MobiFone wants to gain a competitive advantage in the market, it has to urgently undertake the following:
MobiFone is synonymous with exceptional value, offering extensive coverage and superior call quality at competitive prices With a wide array of value-added services, MobiFone stands out as the top choice for customers seeking reliable telecommunications solutions.
Extend coverage area in smart way and keeping ahead in supplying Value added service.
Improve the gap of service prices.
To successfully implement this marketing strategy, the Planning - Sales & Marketing departments must create a detailed action plan, estimate costs, and set achievable targets, which will then be submitted for top management approval The support of top management and collaboration with other departments, such as Technical, IT, and Customer Care, is crucial for success If the Planning - Sales and Marketing teams aim to introduce new Value-Added Services (VAS), such as mobile marketing, they will require the IT department's expertise for development, customization, installation, and operational support The Technical department is essential for expanding coverage, conducting site surveys, installing equipment, and ensuring ongoing maintenance Additionally, to address service pricing through new tariff packages, the Marketing department will need assistance from the Vietnam Posts and Telecommunications Corporation and government authorities.
Recommendations for further research
This study primarily examines MobiFone's mobile phone services to assess its current marketing strategies and propose enhancements for the future It also analyzes how these strategies align with customer expectations, ultimately offering recommendations to enhance MobiFone's marketing mix.
In general, the proposed marketing strategies are mostly based on traditional marketing mixed Further researches may be continued by approaching additional
Ps (people, physical evidence and process) which should be considered in a services firm like MobiFone.
This research information could be also generated for future research concerns on the mobile telecommunication services in Vietnam.
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6 Rudolf Grünig, Richard Kühn, second edition (2002), Process-based
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8 McKinsey Quarterly (2001), no 3, The race to the bottom.
9 Indochina research limited (2008), MobiFone global project report
11 MobiFone (2003, 2004, 2005, 2006, 2007, 2008), monthly and annual marketing reports.
12 Vietnam post and telecommunication Corporation (2003, 2004, 2005, 2006,
- MobiCard call package is a prepaid mobile communication package
- No connection fee and monthly fees.
Target users of the package:
- Customers who want to control cost and have an average monthly payment from VND 100,000 – 120,000.
- No connection fee and daily/monthly fee.
Regulations on call package usage:
(Source: www.mobifone.com.vn)
- Mobi4U call package is a prepaid mobile communication package.
- No connection fee, only daily subscription fee.
Target users of the call package:
- Customers who want to control cost and have average monthly payment more than 130,000 VND.
Benefits of Call package Mobi4U
- No limitation on account usage period.
- Simple procedures of registration and usage.
Regulations on call package usage:
- Daily subscription fee, call and SMS charges will be automatically deducted from customer’s account balance You can make calls until your account runs out of value
- When your account runs out of credit, you have one more day just for receiving calls before two-way communication is blocked
(Source: www.mobifone.com.vn)
- MobiQ call package is a prepaid mobile communication package.
- No connection fee, no subscription fee.
Target users of the call package:
- High demand of sending SMS.
- Need to use services over a longer period of time.
- Simple procedures of subscription and usage.
The usage period for the service is flexible, lasting 92 days from the date of the first outgoing call If the current usage period exceeds 92 days at that time, it will continue to remain valid.
- When the usage period is ended, the subscriber will have
10 more days for incoming calls and topping up
If failing it will be blocked for all calls
(Source: www.mobifone.com.vn)
- Mobi365 call package is a prepaid mobile communication package.
- No connection fee, no subscription fee.
- Customers can keep it active for a longer time period
- Enjoy outstanding savings in tariff.
Target users of the call package
- Low-income, especially in suburban or countryside
- Need to use services over a long period of time
- More incoming than outgoing calls and mostly no need of SMS
Benefits of Call package Mibi365:
- No connection fee, no subscription fee.
- No differences between on/off-net network charges
- Long usage period: upon activation valid for 365 days.
- Enjoy better value: only 200 VND /10 first seconds
(Source: www.mobifone.com.vn)
MOBIFONE MARKET RESEARCH PROJECT Y2008 IN BRIEF
1 Objectives of the market research
MobiFone aims to establish a thorough research plan that will supply valuable insights for crafting a targeted marketing strategy and provide actionable market feedback to continually refine and adjust this strategy over time The primary goals and scope of the market research include:
- To measure the level of incidence/penetration of mobile phone use among different ages and gender segments of the population
To create effective and targeted marketing campaigns, it is essential to develop detailed consumer profiles for each subscriber segment These profiles will encompass a variety of information, including demographics, preferences, and behaviors, allowing marketers to tailor their strategies to meet the specific needs of each identified segment.
- Advertising Source & Message Recalled & Appeal
- Reasons for main brand preference
- Reasons for phone use & Services used (call, data, sms etc )
- Key Purchase Drivers (price, availability, image, coverage etc )
- Other purchase influences (family, friends, card retailers etc )
Brand & Product Image (Perceptual Brand Mapping)
- Key Identifying Attributes of each service
- Relative Imagery assessments of each provider and service
The methodology to be used in this research will be quantitative face-to-face Interviews, conducted among the various target groups The research specifications are:
Coverage : Hanoi, HCMC, Da Nang, Vinh, Quang Ninh, Can Tho, Phan Thiet and
Sampling: To obtain a representative sample that best defines current and potential mobile users, random sampling techniques will be used in urban and suburban areas each survey location.
To achieve the necessary sample size of N=3,600 current subscriber users, it is anticipated that approximately 5,000 to 7,000 interviews will need to be conducted Each full interview will last around one hour and will involve all current subscribers.
Potential subscribers will be assessed in terms of service awareness, timing and likely service intend to subscribe to, media & demographics – interview will last about 15 minutes
Sample Size N=3,600 (current subscribers used for segment profiling & analysis)
N000 to 5000 (Potential and non-intending subscribers profiled)
Respondents: 50% Male , 50% Female in each age group.
3 Research Co-ordination & General Principles
Research Team - All interview staff put forward for this project are experienced with similar mobile telecom studies and will also undergo specific training for this project.
Research Company and timing: This resarch will be done by Indochina Research
Limited from July to October 2008.
The selection and recruitment process involves administering a screening questionnaire to potential respondents to confirm their eligibility based on specific criteria Only those who meet the qualifications will be selected for interviews in this research study.
Quality Control - experienced supervisors managing the fieldwork will carry out quality control of the survey results The specific roles of supervisors will be as follows:
Collect incoming completed survey forms and check for incomplete, omitted or otherwise erroneous data recording practices
Conduct random post-checking of 30% of completed surveys
4 Results of survey and discussion on findings
More than 22,000 random contacts were conducted to achieve samples above.
Fieldwork was conducted from June 28th to August 8th 2008.
Respondents were urban population, Males & Females, Aged 15 to 49.
The survey was conducted in 8 locations including HCMC, Hanoi, Halong,
Vinh, Da Nang, Can Tho, Long Xuyen and Phan Thiet.
Table 1: Sample profile Gender Age Group Type of Respondent
Gender Age Group Type of Respondent
(Source: Indochina research limited report, 2008)
The result of research in this part shows that:
The mobile phone industry in Vietnam is currently experiencing low penetration rates, but survey results indicate a rapid growth potential Out of 15,949 projects with successful contacts, only 23% of individuals are current users, while 51% are non-intending users and approximately 26% plan to subscribe within the next year This presents significant opportunities for expansion in the Vietnamese mobile market.
Segments aged 23 to 29 represent the highest current and potential usage rates across nearly eight locations, making them prime target customers for mobile phone service providers Additionally, the 15 to 18 age group should be prioritized as a key demographic for future market expansion.
The age group of 15 to 22 is not currently a significant contributor to mobile penetration, but they represent the future of mobile usage MobiFone should focus on increasing brand and service awareness among these young users to secure their loyalty and engagement in the coming years.
Table 2: User Profile - by Demographic Groups
(Source: Indochina research limited report, 2008)
The result of research in this part shows that
MobiFone is capitalizing on the growing brand awareness among potential users, creating new opportunities for the company While Vinaphone maintains its leadership in brand recognition across most regions, it falls behind in Danang and Ho Chi Minh City.
MobiFone's brand awareness is nearly on par with Vinaphone in Vinh and Can Tho, particularly excelling among the younger demographic aged 15 to 18 In Phan Thiet and Long Xuyen, where Vinaphone holds a significant advantage in brand recognition, MobiFone stands out as the preferred choice among both male and female consumers in the same age group, indicating a positive trend for the brand.
In mind of potential subscribers – MobiFone and Vinaphone are the only dominant brands for consideration but increasingly S-Fone becomes an eligible comer in the competition battle
S-Fone's recent advertising campaign has significantly increased its presence in Vinh and Ha Noi, outperforming other mobile service providers In Can Tho and Long Xuyen, S-Fone leads over MobiFone, while in Ho Chi Minh City and Ha Long, it surpasses Vinaphone.
Advertising awareness amongst potential users is given another scenario than amongst current users where S-Fone found even more “echo” across all locations
Figure 1: Top of Mind brand awareness - Current User
(Source: Indochina research limited report, 2008)
Viettel Mobifone Vinaphone E - Mobile S-fone HT-Mobile
Reasons for mobile phone use
Over one-third of respondents indicated that the primary reason for using their mobile phones is work-related, with this trend becoming more pronounced among older users, particularly those aged 23 to 25 who are entering the workforce In contrast, younger users prioritize ease of use and maintaining connections with friends as their main motivations for mobile phone usage.
- Convenience resulting in the easiness of contacting people was mentioned as the second reason closely followed by calling friends and family.
Figure 2: Primary reasons for subscribing to a mobile phone service
(Source: Indochina research limited report, 2008)
Call family Call friends Easy to contact Work purpose
Figure 3: Primary reasons for subscribing to a mobile phone service break down by ages
(Source: Indochina research limited report, 2008)
- Potential user’s decisions will be mainly based on technical, functional and costing issues:
Geographical coverage area – TECHNICAL CONVENIENCE
System used by relatives/ friends – RELATIONAL INFLUENCE /
Low cost per month – ECONOMICAL
- Rationale of wide geographic coverage raises with age while contrary happen with the SMS usage.
- System used by relatives/ friends importance declines with age amongst male and Value added services is not so important for people to chose the mobile phone services provider.
Figure 4: Key Purchase Drivers for mobile phone services provider
(Source: Indochina research limited report, 2008)
Previous experience with current network
All users w ho made the decision themselves (n#69)
All last 12 month buyers w ho made the decision themselves (n= 562 )
Table 3: Key Purchase Drivers for mobile phone services provider break by ages
Rationale For Operator Selection 15 to 18 19 to 22 23 to 25 26 to 29 30+
Is the system used by family/friends 15.7% 13.7% 12.9% 13.2% 11.5%
Can purchase different card denominations 10.8% 8.9% 9.4% 7.3% 7.4%
Easy Subscription Process / Ease of connection 7.3% 8.0% 9.1% 9.1% 8.4%
Have more value added services 5.8% 4.7% 7.9% 8.5% 5.0%
Pre-paid cards are widely available 4.8% 5.0% 3.8% 5.8% 5.6% Because everyone has this service provider 4.9% 3.9% 3.9% 5.8% 4.5%
(Source: Indochina research limited report, 2008)
Mobile phone services provider selection:
MobiFone is projected to capture approximately 41% of new market shares from consumers interested in mobile phone services within a year, while Vinaphone is expected to secure around 36% S-Fone is anticipated to gain 18%, Cityphone 4%, and Viettel, which had not yet launched its services at the time of the research, is expected to acquire 1%.
In urban markets, MobiFone and S-Fone are preferred over other providers, while a comprehensive study across all 64 provinces would likely reveal a higher selection of Vinaphone However, the growth of market share in secondary cities presents MobiFone with significant opportunities for expansion in these areas.
- In addition Vinaphone and S-Fone is identified as the biggest threat for MobiFone in Ho Chi Minh City and Cityphone as well in Hanoi within next 12
79 months In Vinh and Danang cities (S-Fone have not yet cover Da Nang, Vinh), S- Fone would be even more a threat once the coverage will be available
Figure 5: Network’s Share of 1st Choice Network – Prospects Vs Users
(Source: Indochina research limited report, 2008)
Figure 6: Network’s Share of 1st Choice Network - by Region
(Source: Indochina research limited report, 2008)
4.5 The main reason for choosing particular mobile phone services provider:
The perceived Cheap Price & Promotion (give the hand phone free) are the main reasons for choosing S-Fone 51% of people chose S-Fone because cheap price and 48% because S-Fone have promotion.
Viettel Mobifone Vinaphone S-fone E-Mobile
HCMCViettel Mobifone Vinaphone S-fone E-Mobile
The dominant reason to chose Vinaphone is Coverage area (47%), Friends use it (34%) and Popular (31%)
For MobiFone the most important reason for choosing is Friends use it (36%) and follows is Coverage area (36%) and call quality (25%)
At the time of research, 78% people chose Viettel because their prices is cheap and 24% for coverage in comparison with 10% of S-Fone
Figure 7: Top Reason for Selecting Mobile Network – Users Vs Prospects
(Source: Indochina research limited report, 2008)
In general, both MobiFone & Vinaphone users are more satisfied with Pre Paid Cards Availability, Network Coverage, and Call Quality than Customer Service