Executive summary
The objective of this study is to make a new loyalty program for customers to reduce the churn of T-mobile in the UK. The study also focuses on understanding the nature and complexity of direct and indirect marketing. This study gives the importance of direct marketing and evaluating its characteristics.
Introduction
This particular report will help us understand how UK consumers are well engaged and coped up with the upcoming media campaigning which promotes the mobile phone industry to a great extent. And have further added about the industry and the key strategies which uplift the objectives of the mobile phones and how it motivates the customers and ultimately increase their sales.
The mobile phone is a key ingredient that adds life to the people of the UK. It has proved to be the best source to reach the necessities of life. The value-added advantages of mobile phones make them the best among the media. One of the key components which makes it worthy is its role in the promotional strategy of direct marketing. Direct marketing is a technology or a process involved to cope up with the marketing trends in the global economy. It grows very rapidly, that its new technology develops completely different channels of distribution directly to its customers. T-Mobile serves over 86 million mobile customers worldwide and it proves to be the fourth largest mobile company in the world. Now the company is facing severe competition in the market. Customers are getting benefits due to this competition when each of the service providers is trying to offer the best to the customers that their competitors provide. Customer’s behaviorCustomer of switching over for better services is a common thing. T-Mobile needs to concentrate on keeping the existing customers and its marketing strategy must be framed accordingly. A bird in a cage is better than the behavior customer, bird in a bush.
“Direct marketing has played an important role for us, especially in growing mobile data use, which is higher in the UK than any other T-Mobile country. Rather than marketing to our entire customer base, we have only targeted people with mobile data phones. Our approach has been pragmatic, efficient and targeted”. (Curtis, 2003).
A comprehensive database drives the marketing programs of T-Mobile where the marketing data act as an integral part of its sales process. Some of the key variables which frame the decisions in the direct marketing programs include offer which indicates its products and services which grasps some specific creative involvement in the techniques. The media available in direct marketing are more controllable and include direct mail, telephone, and internet. The most excellent variable includes the service provided to its customers as it develops the growth by providing the most convenient and unique merchandising element for the demands of the management for its better accountability and effectiveness to the marketing efforts of T–Mobile.
The most desirable strategies used in the database of direct marketing enable its effectiveness and helps in reducing the costs of the communication process. The most appropriate strategies used by the T–Mobile makes the best among its competitors with a better manner of networks. T- Mobile has adopted a price drop strategy to “make the pricing more competitive in light of recent device launches”. (Heining, 2008).
Direct marketing is an effective marketing tool that consists of activities such a direct mail, telemarketing, email, mail order, direct response advertising. In direct marketing, it is possible to have direct contact with prospective customers, and for generating leads. Direct marketing tactics are operational and detailed and can change where necessary.
Advantages of direct marketing:
Improved targeting
Direct marketing helps to have flexible targeting. It helps to identify easily the well-defined targets by talking to them directly. Spending can be made wisely by choosing the potential buyers. It offers the opportunity for communicating with a wide group and thus the success rate of direct marketing can be increased without much cost. Once the idea is generated, it can be used and tested for various new customers and in different segments.
Long-term customer development
Direct marketing is an effective way of initiating and developing direct contacts with the customers and also helps to maintain a good relationship with retailers. Direct mail is more personal than any other commonly used advertisement. Email and ordinary mails from banks and telephone bills can be used for the advertisement of new plans and offers. That is direct marketing can be used in wide as well as narrowly targeted markets.
Measurable results
The success of direct marketing can be easily measured and helps introduce the best combination of marketing tools. Adjustments can be made quickly with the results. Direct marketing is effective and efficient as the details of the product can be explained attractively. It is very helpful in taking marketing decisions regarding time, message, offers, and combination proposition.
Aid in forecasting future action
Forecasting is an essential part of marketing activities and the decisions regarding important marketing planning are based on forecasting.
Historical and predictive management information: It offers to measure results exactly and is easy for management to take decisions. It offers control in marketing efforts than any other marketing method.
Geographic targeting
Direct marketing is the most effective way to target any area of geographical location. It is a faster, cheaper, and effective way to communicate across geographical borders.
The mobile phone itself can be used as a direct marketing method. Mobile phones offer wider opportunities. Mobile phone users are increasing day by day and the number of people using landlines has started decreasing. The penetration level of mobile is more than any other media. Nowadays, mobile phones are used by some top branded companies for their market launching advertisements.
Direct Mail
Direct mail is one of the effective direct marketing models. Direct mail is the most dynamic and versatile marketing tool used in the advertising process which provides better knowledge of the products and services they provide with a better understanding of the products and services. “Direct mail is among the cheapest ways to attract a new customer”. (Why Use Advertising and Marketing. 2006).
Direct mail is the most promotional strategy used in the marketing management of T – Mobiles.
Direct mail can be used for generating immediate responses from customers. Direct mail to the targeted customer can generate profit easily. It is measurable and appropriate changes can be made at the right time. Changes can be made in the advertisements campaign with a sample testing of responses.
Telemarketing
A telemarketing executive or telemarketing agency can be used as a direct marketing method. Telemarketing executive is proved to be an effective method when properly controlled. It is a cost-effective method and can choose the targeted market before the promotion campaign. Responses of the prospective customers will be very high and are the best way to adopt changes wherever necessary. Telecommunication agencies can also be used for promotional activities.
Marketing strategy
Developing an appropriate marketing strategy is important due to the competitive market situation. Alternative marketing strategy is also needed to be planned to meet the changing consumer behavior. The marketing environment of the telecommunication industry is highly competitive. Appropriate marketing research tools and concepts must be developed to beat the competition. Competition in the targeted markets must be analyzed through the behavior analysis of customers. Appropriate methods should be adopted for product differentiation and identification. Market segmentation decisions should be made after studying the demands and appropriate product positioning can be made. Market segmentation is the process of dividing the market into various subgroups based on its characteristics and targeted return. The aim of the marketing strategy must be to meet the challenges and sustaining a competitive advantage. “Rapid growth of data usage after T-Mobile implemented 3G in their mobile network led to bottlenecks and performance problems in their existing core packet data network. T-Mobile’s leadership in mobile broadband is a key part of their strategy to attract new customers and build value-added services that rely on high-speed, reliable broadband data, so the user experience must be flawless”. (Man 2008).
Change is the factor that has influenced the US to elect Barack Obama as President. Obama has continuously pointed out change and that change is the expectation of citizens which prompted them to vote for him. Similarly, customers will go for a change in the mobile phone field. So the strategy should induce some changes in the traditional way of doing things.
Competition in the telecom industry is tough. By analyzing competition in the market by studying competitions in services, innovation, marketing strategy, many of the service providers are testing with innovative ideas. Some of the innovative strategies adopted by some competitors are loyalty rewards, coupons, celebrities, an increase in talk time schemes, etc. The main customers of the mobile phone industry are youth and some business groups. Mainly there are two segments in the mobile phone industry, that is, the youth and business class segment. Youth is the segment that is growing faster and faster and the company should target mostly youth. Low-cost schemes will attract more young customers and innovative strategies such as celebrity endorsement and talk schemes will attract youth and can be taken as a promotional strategies. Creative media advertisements will also attract young customers. Enhancing customer value by increasing mobile features and technology provides wide opportunities for business development.
T-Mobile marketing strategy
The main objective of the promotional strategies T-mobile marketing strategy is to reduce customer churn. T mobile has adopted the best customer relationship management and once it has proved as lowest customer churn in the industry. The effective method adopted for attaining this objective is the introduction of loyalty programs. Marketing strategy must be framed in such a manner that there are different marketing strategies for different segments. Evaluation of segment is the first stage in marketing segmentation. There are two categories of customers PAYG (Pay as you Go) and Pay monthly customers for T-mobile.
Loyalty program
For a better approach to direct marketing, loyalty programs should be used more effectively and efficiently which in turn uplifts the strategies of an organization that enables it to achieve its most desirable objectives. Before setting a loyalty program firstly it is essential to study the feedback of customers and the majority of the customers’ problems must be solved through loyalty programs. Benefits offered must be changed or modified according to the market situation and customers’ preferences. “Loyalty programs are often part and parcel of a comprehensive customer relationship strategy”. (Loyalty Programs. 2008).
New Loyalty program for T-mobile
Introduction of Loyalty Program needs acceptance by customers and suppliers as well as adequate resources. “For providers, increased customer churn has resulted in rising customer acquisition costs and lower average monthly billings”. (Customer Churn Management: Overview. 2008).
Loyalty programs must be rewarded to the target group and need to be communicated to the groups differently based on customer values. It is essential to make high rewarding packages to long-term customers and highly valued customers.
The loyalty program selected for T- mobile customers is the credit card. The credit card should be made available only to the long-term and high-valued pay monthly customers. The facility of this credit card is that customers will get three options to pay their bills – once in three months or once in six months or once in a year. This will relieve customers from monthly payments as it can be done on a quarterly, half-yearly, or yearly basis. It is similar to a credit card or bank. Customers can utilize the facility up to a certain limit and they need to pay within the stipulated time period. For adopting this loyalty program, it is essential to take some precautions to avoid non-payment of bills.
“Customer loyalty programs have been around for such a long time for a reason, and that’s because they work well. So take advantage of the technology, try something new, and watch the results as you reward your loyal customers – with a mobile twist”. (Customer Loyalty with a Mobile Twist. 2008).
The advantage of the New Loyalty program (credit card) is that it helps to get increased business by adding new customers and increasing the spending level of existing customers. Retention of customers is possible with loyalty programs.
Media plan
T-mobile can use mixed media for their advertisement. Targeted customers can be communicated through direct mail, that is, through snail mail, e-mail, SMS, MMS, and telecommunication. Direct marketing is highly beneficial to meet the targeted customers and getting feedback helps to make appropriate changes. Direct marketing, as well as indirect marketing, are essential to meet challenges in the competitive market. Indirect marketing such as television ads, newspaper ads, etc is essential to meet all segments of customers. Marketing through mobile SMS, MMS, etc is a new market approach for the service providers. However, this type of marketing is sometimes difficult to implement. “Marketing and advertising over mobile however are far more complex than TV, Radio, and even the Internet because of mobile handset diversity and the multitude of technologies used by different audiences”. (Bourke and Levy 2006).
Conclusion
The marketing strategy adopted should meet the needs of the customers and is the crucial factor that creates success or failure for the company. A loyalty program is introduced for adding new customers and retaining existing customers through the satisfaction of customers. A loyalty program is sometimes costly, but it is essential to introduce it, at least for a short duration, for making customers feel that they are considered by the company. A new loyalty program introduced is the credit card which offers flexibility in payment of their bills similar to the payment for insurance policies.
Bibliography
- BOURKE, Chris., and LEVY, Maurice. (2006). How to Develop a Mobile Marketing Strategy: Conclusions. [online]. Scribd. Web.
- Customer Churn Management: Overview. (2008). [online]. BNET: The Go To Place for Management.
- Customer Loyalty with a Mobile Twist. (2008). [online]. Websites and Marketing for Small Business.
- CURTIS, James. (2003). Marketing: Customer Relationship Management. [online]. Brand Republic.
- HEINING, Andrew. (2008). Horizon Blog: Price Drop. [online]. The Christian Science Monitor.
- Loyalty Programs. (2008). [online]. Crmtrends. Web.
- MAN, Wang. (2008). Cover Story Refresh From Heart T Mobile Solves 2G/3G Dat Puzzle and is Ready for 4G. [online]. HUAWEI.
- Why Use Advertising and Marketing. (2006). [online]. Newsletters Inc: Visibility is Everything.