Factors driving the 4g related service sales performance analysis and implication to the mobifone

Lunghwa University of Science and Technology Department of Business Administration Thesis for a Master’s Degree Factors driving the 4G-related service sales performance – Analysis and Implication to the MobiFone Researcher: DANG THI ANH DAO Supervisor: Nguyen Phu Hung May 2017 MINISTRY OF EDUCATION AND TRAINING INTERNATIONAL SCHOOL – VNU - MASTER THESIS OUTLINE Major: Business Administration Branch code:EMBA Factors driving the 4G-related service sales performance – analysis and implication to the MobiFone STUDENT:DANG THI ANH DAO INSTRUCTOR: NGUYEN PHU HUNG Hanoi,05/2017 Lunghwa University of Science and Technology Approval Certificate of Master's Degree Examination Board This is to certify that the Master’s Degree Examinations Board has approved the thesis Factors driving the 4G-related service sales performance - Analysis and Implication to the MobiFonepublished by Ms.Dang Thi Anh Dao in the Master Program of Graduate School of Department of Business Administration Master’s Degree Examination Board Board Members： Advisors： Professor Fengi Hu Doctor Nguyen Phu Hung Chair： Date：／ ／ 2017 ABSTRACT Thesis Title：Factors driving the 4G-related service sales performance Analysis and Implication to the MobiFonePages：58 University：Lunghwa University of Science and Technology Graduate School：Department of Business Administration Date：July, 2017 Degree：Master Graduate Student：Dang Thi Anh Dao Advisor： Dr Nguyen Phu Hung Keywords：Sales performance, telecommunication, This thesis is dedicated to study factors driving sales performance of MobiFone’s 4Grelated services The survey findings showa number of factors The most impacting factor is the capability of the mobile data should be improved to match with the need of customers so that to attract more customers Younger customers always have high potential mobile data demand growthfor their social network interaction (e.g., facebook, tweeter), but slow network capability make them reluctant to pay Affordability is the second most important factor – as most of the hardware are recently installed, the price tag to mobiledata customers are high but that in turn driving down the demands, making the pay-back period longer, hiting the financial sustainability of MobiFone Among several implications of the findings, the most important proposal is MobiFone should price different customer groups flexibly i ACKNOWLEDGEMENT It is a great pleasure for me to work with this dissertation I would especially like to thank all teachers, professors for all knowledge, skills and information I received It is very wonderful chance to work with so excellent and enthusiastic professors I am also very grateful to my tutor, Professor Nguyen Phu Hung, for his support I appreciate all his time and efforts to encourage and guide me during my dissertation writing I would like to thank my colleagues, my customers for helping me to support me information to complete this dissertation and answer the questionnaire for my research This thesis cannot be done without their help Finally, I would like to thank and dedicate this dissertation to my family for the unconditional support, who consistency motivated me to complete the thesis Best regards, Thank you! Dang Thi Anh Dao ii TABLES OF CONTENTS ABSTRACT i ACKNOWLEDGEMENT ii TABLES OF CONTENTS iii LIST OF TABLES vi LIST OF FIGURES vi LIST OF ABBREVIATIONS vii FOREWORDS viii CHAPTER INTRODUCTION 1.1 The rationale of the study topic of thesis 1.2 Objectives of thesis 1.3 Objects and scope of thesis 1.4 Study questions 1.5 Research Methodologies and Data 1.5.1 Research process 1.5.2 Data 1.5.3 Handling collected data 1.6 Plan of thesis CHAPTER BACKGROUND OF THE MOBILE PHONE AND ITS CONTEXTS 2.1 Historical developments of MobileFone 2.2 Organizational structure 2.3 MobileFone Vision and Missions 10 2.4 Development policy 11 2.5 Current status of the reorganizing, renovating and restructuring enterprise program 12 iii 2.6 SWOT Analysis of MobiFone performance 13 2.6.1 Threats 13 2.6.2 Strength 14 2.6.3 Weakness 15 2.6.4 Opportunities 15 2.7 Vietnam’sTelecommunications current status and future paths 17 2.7.1 History of broadband service in the Vietnam market 17 2.7.2 Structure of broadband in Vietnam 18 2.7.3 Emergence of 4G services 20 2.7.4 Competition in the mobile market 21 2.8 Conclusion 24 CHAPTER LITERATURE REVIEWS 25 3.1 Overview of mobile data service and the 4G network 25 3.1.1 History of mobile technology generations 25 3.1.2 Outstanding features of the 4G network over previous generations 27 3.2 Drivers of mobile service demands 28 3.2.1 Demand-side drivers 28 3.2.2 Supply-side drivers 32 3.3 Factors affecting sales in telecommunication industry 35 3.4 International mobile market experiences 36 3.5 The future market of mobile data 39 3.6 Conclusions 41 CHAPTER DATA ANALYSIS RESULTS 42 4.1 Introduction 42 4.2 Results of survey 42 4.2.1 The relevant of sample size 42 4.2.2 How the affordability of 4G services influences customers' usage? 42 4.2.3 How the pricing flexibility of service influence your 4G usage? 43 4.2.4 Influence of the affordability of 4G capable mobile devices 43 4.2.5 Influence of Availability of 4G capable mobile devices 44 4.2.6 Influence of the marketing campains 44 4.2.7 Influence of the Customer Relationship Management program 44 4.2.8 Customer demands for high data rate applications(youtube, facebook video, etc.) 45 4.2.9 Influence of Competition in the 4G mobile data market 45 4.2.10 The status of the national and international economy 46 4.2.11 Influene of the Availability of Free Wi-Fi Access Points 46 iv 4.2.12 The influence of personal income to customers’ demands of 4G service 47 4.3 Results of secondary data 47 CHAPTER FINDING DISCUSSIONS AND IMPLICATION TO MOBIFONE 49 5.1 Summary of factors driving 4G market 49 5.2 Implications to MobiFone 49 5.2.1 Pricing Flexibility 49 5.2.2 The requirement to upgrade mobile data service to 4G 50 5.2.3 Working with CSPs and mobile app developers to generate while harness data growth 51 5.2.4 Targeting younger customer groups 51 5.2.5 Solutions on business, marketing 52 5.2.6 Measures of Technology 52 5.2.7 Measure to improve management and operation performance 53 5.3 Conclusions 54 LIST OF REFERENCES 57 APPENDIX 59 Questionnaire 59 v LIST OF TABLES Table Total revenues of MobiFone (billions) 14 Table 4G licenses in the Vietnam Market 20 Table An example of flexible plan offered in the Latin American region 32 LIST OF FIGURES Figure The study model of the thesis Figure Organization of MobiFone Figure SWOT analysis on MobiFone 16 Figure Mobile technology evolution 26 Figure Structure of the 4-G network 27 Figure Annual global mobile data traffic (in Exabytes) 39 Figure How the affordability of 4G services influences customers' usage? 42 Figure Influence of pricing flexibility of service to 4G usage 43 Figure Influence of the affordability of 4G capable mobile devices 43 Figure 10 Influence of Availability of 4G capable mobile devices 44 Figure 11 Influence of the marketing campains 44 Figure 12 Influence of the Customer Relationship Management program 45 Figure 13 Customer demands for high data rate applications 45 Figure 14 Influence of Competition in the 4G mobile data market 46 Figure 15 The status of the national and international economy 46 Figure 16 Influene of the availability of Free Wi-Fi Access Points 47 Figure 17 The influence of personal income to customers’ demands of 4G service 47 vi LIST OF ABBREVIATIONS MIC Ministry of Information and Communication MobiFone Vietnam Mobile Telecom Services One Member Limited Liability Company Telecom Telecommunication VIETTEL Viet nam Telecommunication corporation VNPT Vietnam Posts and Telecommunication Corporation vii Figure 16 Influene of the availability of Free Wi-Fi Access Points Responses Grand total The availability of Free WiFi Access Points 0 12 50 10 72 Percentage (%) 0% 0% 17% 69% 14% 100% 4.2.12 The influence of personal income to customers’ demands of 4G service The personal income drive the customers’ demands of 4G service Total 90% of responses said personal income has high or very high influence, as seen in the figure below Figure 17 The influence of personal income to customers’ demands of 4G service Responses Grand total 4.3 The personal income drive the your demands of 4G service 0 50 14 72 Percentage (%) 0% 0% 11% 70% 19% 100% Results of secondary data High capacity for content service provider The outlook for mobile data use in 2017 show that the mobile data traffic will continue to show double-digit growth MobiFone experts expects traffic to grow 60 percent this year Newer and faster networks, a rise in the number of users of these networks, and more affordable 3G and 4G handsets will help to increase data traffic 47 However, the key driver of data growth on a global scale is mobile apps, particularly mobile video apps Although network speed and reliability are priorities for many mobile customers, it is really apps and content that are driving traffic volumes as people increasingly chat to friends and family, watch videos on the move, and listen to streamed music 48 CHAPTER FINDING DISCUSSIONS AND IMPLICATION 5.1 Summary of factors driving 4G market Study above shows that in more advanced mobile markets, 4G services are driving a surge in data usage Therefore, more importantly, any mobile service operator if want to share the growth of mobile data traffic should participate in the 4G usage Main factors driving mobile data growth and inturn sales performance of the MobiFone include: Internal factors 1.1 The capacity of the network 1.2 The affordability of the 4G service 1.3 The quality of the service 1.4 Customer service and relationship management External factors 2.1 The capacity of the communications service providers (CSPs) and the mobile app developers will lead the market 2.2 The availability of data-consuming apps in mobile phone 2.3 The quantity of contents provided in the internet 2.4 The quality of contents provided in the internet 2.5 The affordability of 4G handsets 5.2 Implications to MobiFone 5.2.1 Pricing Flexibility Currently, MobiFone has a simple set of price.MobiFone should introduce an extensive array of plans that support a variety of broadband use cases 49 The first plan would be Daily Charge Plans: the subscriber acquires the right to access the Internet on a daily basis at a price paid each month as a function of the number of days purchased This allows the user to control the amount spent per month based on what is economically feasible The second plan category would be Plans based on download volume cap Volume cap (such as 20 or 100 MB per month) is to promoteflexibility This option allows the subscriber to have permanent access to theInternet while adapting the consumption pattern to the type of content accessed.The high school or university subscriberswould often uses the Internet primarily to access social networkslike Facebook and Twitter, therefore 20 Mbps package would be adequate The school or business men would prefer an alternative with substantially higher access to ‘‘heavier’’ content, like video clips andYouTube The third Plan category is based on the user’s type of broadband use: 3G or 4G This mechanism is used by many regional operators worldwide to increase servicepenetration In this way, the plans that only include email (Gmail) or chat (MSN, Talk, andYahoo Messenger) would be more affordable A variety of those plans are the ones thatoffer unlimited use of that particular access mode during the month Along theselines, the price will increase by a certain additional percentage (for example, 30 %) when purchasing unlimited useof social networking (Facebook and Twitter); finally, the most expensive planincludes unlimited use of YouTube and Google The following examples of use cases show how flexible pricing can offer asolution to the demand gap at the bottom of the sociodemographic pyramid 5.2.2 The requirement to upgrade mobile data service to 4G As Vietnam becomes richer it faces challenges in adapting its infrastructure policies and institutions While the old challenges of providing basic services to all remain, new challenges are emerging, such as accessing new sources of finance, refining planning processes, preparing for rapid urbanization, improving the efficiency of infrastructure service providers, developing stronger institutions to encourage private finance of infrastructure or direct private provision of infrastructure, and developing more targeted approaches to poverty alleviation 50 5.2.3 Working with Content Service Providers and mobile app developers to generate while harness data growth The amount of time consumers spend on the Internet, whether via mobile phone, tablet or PC, will continue to increase Consequently, MobiFone should focus on creating new pricing with a focus on data access, such as shared plans MobiFone will also need to refine the services it already provides, with a focus on creating richer, more immersive and more personalized experiences, to increase their customer numbers If MobiFone cannot provide contents, it should work with other content service providers to promote more contents The future will be tough for MobiFone and for its CSP partners and mobile app developers if they cannot upgrade the user experiences they deliver on their services and products The winners will be those providers best able to satisfy consumers' demand for high data use, while maintaining their margins For that, in the mobile app market, MobiFone should sigh partnership with app developers in order to support them to sharpen their focus on the marketing and transparency of their apps, in order to retain customers for mutual benefits 5.2.4 Targeting younger customer groups Gartner's research indicatesthat "although affluent people and traditional early adopters are the leading users of new technologies and devices, younger, less wealthy people make greater use of mobile apps" Thus, MobiFone should pay more focus on this customer group However, young people's greater acceptance of apps and mobile content will require MobiFone and its partnered app developers to adjust their techniques to address the differences between user groups MobiFone members should commit to make customers happy and satisfied with MobiFone services Every time meet with customers, MobiFone has to listen to customers and treat them with respect; Try to understand, find out, and anticipate the 51 customers’ needs in order to meet their needs and exceed their expectations; Provide accurate product information on all MobiFone services and products, and answer customers’ questions correctly and quickly; Whenever receive a request or a problem from our customers, MobiFone has to take the problem as responsibility to solve or contact those who can solve the problem, and personally follow up until customer is satisfied 5.2.5 Solutions on business, marketing - Focus on services having high-growth revenue potential, or having profitability and growth These services in the fields of mobile, retail, television, or other multiservice - MobiFone is to build and enhance the selling systems, synchronizing sales channels, extend retail and distribution systems throughout the country - MobiFone is to build multi-service integration packages for different types of customers, ensure competitiveness, attract customers, increase market share, organize customer care 5.2.6 Measures of Technology MobiFone is to focus on investment in transmission infrastructure, optimization, arrangement, enhancement of quality and capacity of mobile communication networks, enhancing coverage with high quality and high bandwidth access - To complete and expand the system of providing broadband access services, to concentrate investment in value-added mobile services, fixed broadband and data services and multimedia services - Focus and prioritize resources for the development of integrated telecommunication services - IT, telecom integration, television, cloud, IT services, multimedia services for customer groups 52 - Develop principles and criteria for prioritizing the implementation of investment projects, allocating and balancing investment capital sources, increasing decentralization, decentralization, enhancing the monitoring and evaluation of investment efficiency 5.2.7 Measure to improve management and operation performance 5.2.7.1 Structural adjustments First, MobiFone is to improve and stabilize its managerial structure and its internal managerial mechanism so as to improve the efficiency of the operation Additional units should be created to fulfill the requirements of inspection and supervision MobiFone must adjust, supplement, and enhance the systems of operations procedures/processes as well as administrative processes in accordance with the current MIC’s regulative conditions and market competitive development 5.2.7.2 Information security policy Second, the information security policy of MobiFone should be enhanced to help potential customers believe their privacy are well protected Customers would give high credit to a firm which help them hiding online purchase habits, Internet sites visited, etc The privacy - a fundamental motivator for security - isdefined by the International Telecommunication Union as “the right of individuals to control or influence what information related to them may be collected and stored and by whom and to whom that information may be disclosed” (ITU, 2003, p 2) To enforce Privacy,MobiFone need technical means (e.g cryptography) to ensure that information flows between parties is not disclosed to any one other than the intended parties Data confidentiality is also critical, relating to the protection against unauthorized access to data contents Encryption, access control lists, and file permissions are methods often used to providedata confidentiality Being highly dependent to IT solution, MobiFone is surely facing vulnerabilities, threats, and risks MobiFone should get focus on implementing the most advantageous IT solutions (i.e., latest and greatest web applications, servers and databases) to protect the information held by those assets Any data compromises/leaked should be addressed quickly with unique ability and responsibility 53 5.2.7.3 The Value of Big Data for Telecom Companies Third, analyzing big data of customersto understand their behavior to search for upselling or cross-selling is important as well Being an technology firm, MobiFone has well advantage of taking detail information about customers, from their age, gender, location According to McKinsey Quarterly Report 20152 and a Delloite Report, the Telecommunication companies are using big data for many reasons, including: i searching for potential new products; ii segmenting customer and studying customer behavior; iii Gaining marketing agility with smart promotions; iv understanding and improving customer experiences; v improving customer service; vi combating fraud; vii forecasting network capacity and demand; and so on According to McKinsey Quarterly Report 2015(McKinsey, 2015), a survey revealed that out of the 80 companies, a few telecom companies have found big data have a sizable impact on profits, exceeding 10 percent Many had incremental profits of to percent In order to get the most out of data, MobiFone must improve the quality of data Currently, the poor quality of data, the lack of staffs able to analyze data, the lack of manager commitment to manage big data make strategic use of data not effective and efficient Increasing managing big-data to levelshigher should be a strategic priority 5.3 Conclusions Mobile data would grow double-digit in coming years The upgrade network infrastructure to the 4G level is inavoidable to keep the network capacity on part with the higher demands of customers MobiFone should take the opportunities to grow with the market https://www.mckinsey.com/industries/telecommunications/our-insights/telcos-the-untappedpromise-of-big-data 54 55 THANKS! 56 LIST OF REFERENCES Cisco (2017, 7) VNI Mobile Forecast Highlights, 2016-2021 Retrieved from cisco: http://www.cisco.com/assets/sol/sp/vni/forecast_highlights_mobile/index.html# ~Country GSMA (2015) GSMA - Mobile Spectrum Data demand explained GSMA ITU (2003) Security in Telecommunications and Information Technology ITU Lichtenberg, S (2011) Evaluating Telecommunications Service Quality: Can Consumers Really "Vote With Their Feet" Or Do We Need Regulatory Oversight? Washington D.C.: NRRI McKinsey (2015) mckinsey Retrieved from Telcos: The untapped promise of big data: https://www.mckinsey.com/industries/telecommunications/our-insights/telcosthe-untapped-promise-of-big-data MobiFone (2015) PLAN FOR BUSINESS PRODUCTION AND DEVELOPMENT INVESTMENT 05 YEARS Hanoi: MobiFone MobiFone (2016) Business, Productions, and Investment Planning Hanoi MobiFone (2017) MobiFone Retrieved from MobiFone: http://www.mobifone.vn Tuan, T M (2011) Broadband in Vietnam infoDev The World Bank's Global ICT Department (2014) Telecommunications Sector Current status and future paths Wahsington DC: The World Bank VnExpress (2016 a, 10 15) he race of 4G wireless services officially begins in Vietnam Retrieved from VnExpress: http://e.vnexpress.net/news/business/therace-of-4g-wireless-services-officially-begins-in-vietnam-3484071.html Wireless Intelligence (2010, 11) Vietnam makes solid start in 3G Retrieved from Wireless Intelligence: 57 https://www.wirelessintelligence.com/analysis/2010/11/vietnam-makes-solidstart-in-3g/ 58 APPENDIX Questionnaire Yếu tố tác động đến dịch vụ 4G MobiFone Factors driving the 4G-related service sales performance * Required Giá dịch vụ tác động đến việc khách hàng sử dụng dịch vụ 4G | How the affordability of 4G services influences customers' usage? * Rất | Very little Rất nhiều | Very high Sự linh hoạt gói giá cước dịch vụ tác động đến việc khách hàng sử dụng dịch vụ 4G | How the pricing flexibility of service influence your 4G usage? * Rất | Very little Rất nhiều | Very high Giá thành thiết bị 4G | Affordability of 4G capable mobile devices * Rất | Very little Rất nhiều | Very high Sự phổ biến thiết bị 4G | Availability of 4G capable mobile devices * Rất | Very little Rất nhiều | Very high Tác động biện pháp Marketing | Influence of the marketing campains * Rất | Very little 59 Rất nhiều | Very high Tác động biện pháp chăm sóc khách hàng | Influence of the Customer Relationship Management program * Rất | Very little Rất nhiều | Very high Nhu cầu phải dùng ứng dụng sử dụng nhiều liệu qua internet (youtube, facebook video, v.v.) | Customer demand for high data rate applications * Rất | Very little Rất nhiều | Very high Sự cạnh tranh thị trường liệu di động 4G | Competition in the 4G mobile data market * Rất | Very little Rất nhiều | Very high Tình hình chung kinh tế quốc dân giới | The status of the national and international economy * Rất | Very little Rất nhiều | Very high Sự phổ biến Wi-Fi miễn phí | The availability of Free Wi-Fi Access Points * Rất | Very little Rất nhiều | Very high Thu nhập người dùng tác động đến nhu cầu sử dụng dịch vụ 4G | The personal income drive the your demands of 4G service Rất | Very little 60 Rất nhiều | Very high 61 ... driving the 4G- related service sales performance - analysis and implication to the MobiFone" aims to study the waysto provide 4G servicesin the current MobiFone platform that responds to the requirements... Board This is to certify that the Master’s Degree Examinations Board has approved the thesis Factors driving the 4G- related service sales performance - Analysis and Implication to the MobiFonepublished... Keywords? ?Sales performance, telecommunication, This thesis is dedicated to study factors driving sales performance of MobiFone? ??s 4Grelated services The survey findings showa number of factors The