Executive Summary
This paper evaluates Etisalat’s success in the UAE. Some of the issues evaluated in the paper relates to how the firm has managed to attain an efficient market position in UAE. Currently, the firm is the leader within the UAE telecommunication industry. An analysis of the firm is conducted through incorporation of the SWOT model.
Through this model, Etisalat’s strengths, weaknesses, opportunities and threats are identified and evaluated. Additionally, the paper illustrates how Etisalat has incorporated various marketing concepts and strategies. For example, the concept of market targeting and segmentation is used to illustrate how Etisalat has organized its target market.
Additionally, Etisalat’s marketing strategies are evaluated by incorporating the concept of marketing mix. The main strategies analyzed include the product, pricing, promotion and distsribution strategies. With regard to organization, the paper illustrates the organization structure adopted by Etisalat in its operation in UAE. Additionally, an evaluation criteria together with values incorporated in the firm’s operations are illustrated.
Introduction
Emirates Telecommunications (Etisalat) is a public limited company which operates within the telecommunication industry in the United Arabs Emirates. The firm was founded in 1976.
As a result of the regulatory and control powers awarded to Etisalat UAE over other firms by the UAE government, Etisalat was able to operate as a monopoly. Over the years it has been in operation, the firm has managed to venture into the international market. Its headquarters are based at Abu Dhabi. Etisalat has managed to establish itself as one of the largest firms within the telecommunication industry.
In order to understand the reasons for the success of the firm, the researcher sought to conduct a comprehensive analysis of Etisalat UAE by considering a number of issues.
SWOT Analysis
Strengths
- Financial stability- As a result of its international operations, the firm has managed to increase its profitability. For example, during its 2010 financial year, the firm experienced a 46% growth in its sales revenue compared to the 2009 financial year. During its 2010 financial year, Etisalat UAE experienced an increment in its net revenue with a margin of 2%. Its total net revenue during the year amounted to AED 31.9 billion. Etisalat’s financial stability enables the firm to undertake international investments effectively. Its financial stability has enabled the firm to be rated AA- by Standard and Poors which is equivalent to A+ by Fitch and Aa3 by Moody’s.
- Technological development- Etisalat has effectively positioned itself in the market with regard to technology. Over the years it has been in operation, Etisalat has been in the forefront with regard to introduction of emerging telecommunication technology in the local and the foreign market.
- Comprehensive telecommunication provider-The firm offers a wide range of telecommunication services to individual and corporate customers both in the local and the international market. Some of these services include data services, fixed-line voice services and mobile services.
- Strong management team- Etisalat UAE has a strong management team which has enabled the firm to be a leader with regard to telecom services provision. The firm’s management team is proactive with regard to strategy formulation. This is achieved through anticipation of market conditions thus enabling the firm to formulate and implement winning business strategies.
- Customer focus- The firm has a strong and wide network and coverage front which enables the firm to offer its customers the best-in-inline services in the country and also in the MENA region. For example, in order to serve its customers optimally, the firm has the widest roaming network, while its 3G network covers approximately ninety nine per cent of the country’s populated area.
Weaknesses
- Despite the firm’s success, Etisalat UAE has a problem with regard to its customer care service. The firm does not have sufficient customer care representatives to serve its customers. As a result, customers wait for a long time to be served.The firm formulated a strategy to deal with the challenge. However, its implementation has not been effective which is evident in the increase in the number of customer complaints over the long hours they are kept on hold.
Opportunities
- International investments-The firm’s long term expansion strategy with regard to international investments increases its potential to attain its profit maximization objective.
- Tariff prices- As result of Etisalat’s profitably, the firm has been able to offer some of its products at low prices compared to its competitors. For example, in 2009, the firm lowered the price of its internet broadband tariff with a margin of 40%. This is likely to enhance consumption of its services.
- Growth in population – UAE is experiencing a rapid growth in its population. This means that there is a high probability of the country witnessing an increment in the number of subscribers. Additionally, the country is witnessing an influx in the number of expatriates. This is an indicator for a growth in demand for international communication services.
- Undersea fiber optic cable- There is a high probability of the firm increasing its customer base by rolling out the undersea fiber optic cables. This is due to the fact that the firm will increase international data service access.
Threats
- Competition-The UAE telecommunication industry is increasingly becoming saturated. One of the markets which have been adversely affected is the mobile market. More investor is venturing into the industry thus reducing its profitability potential. For example, mobile penetration has reached more than 200% which means that there is a high probability of a decline in the growth of mobile subscribers.
- Changes in technology- Considering the high rate of technological innovation, the firm has to continuously upgrade its network to avoid its technologies being rendered obsolete.
Competitive analysis
For a number of years, Etisalat operated as a monopoly in the United Arabs Emirates landline, internet and mobile phone market. As a result, the firm was able to charge high prices to its customers. However, the entry of another firm, Du which offers mobile services in the UAE market led to emergence of competition. As a result, there is a high probability of Etisalat’s market share with regard to the television and internet market shrinking.
In addition to Du Company, Etisalat also faces intense competition from four other companies which include Orascom Telecommunication Holding S.A.E, Qatar Telecom, KSC, and Mobile Telecommunications Company. In its wireless market segment, the firm faces stiff competition from Orascom Telecommunication Holdings which has a well established mobile communication network both in the local and the international market.
Despite the fact that Foreign Direct Investment (FDI) within UAE’s telecommunication industry has been prohibited until 2015 through exclusion negotiated between the UAE government and the World Trade Organization (WTO), there is a high probability of the firm facing intense competition from the international market.
This arises from the fact that the firm has entered into a free trade agreement with the US and the European Union. As a result, the US and the EU members may insist that UAE should open up its market for their firms to access. This means that there is a likelihood of Etisalat facing intense competition.
Marketing objectives
In its operation, Etisalat UAE intends to achieve a number of objectives as outlined below.
- It is Etisalat’s objective to offer its customers high quality services at a standard price. The firm has achieved this by implementing an advanced network which is capable of catering for huge voice traffic.
- During its 2011 financial Etisalat intends to increase its market share with a margin of 15%.
- In its marketing operations, it aims to make it possible for a large number of customers in the country to enjoy the most modern telecommunication technologies which include television, internet as well as telephone.
- Considering the growth in technology, Etisalat UAE intends to expand its market operation through incorporation of new technologies. As a result, it will be possible for the firm to improve the level of its customer service in addition to enhancing the shareholder’s value.
- Etisalat intends to enhance business connections between large and small business enterprises. This will be achieved by eliminating limitations which arise as a result of distance. The resultant effect is that the firm will enable businesses in UAE to exploit new market opportunities presented.
- It is the objective of the firm to increase its customer base with a margin of 20%. Etisalat aims at attaining this by focusing on its internet users. The firm has developed a plan to improve its broadband access and bandwidth to its customers.
Target audience
In order to be profitable, Etisalat UAE targets the entire market. However, the firm has lays more emphasis on targeting customers who are mostly concerned with the quality of service. To be effective in its target marketing, Etisalat divided its market into a number of segments.
One of the variables which the firm incorporates in its market targeting is price. With regard to price, Etisalat UAE has developed a strategy which enables customers to call at a low price. This is usually possible during off peak hours. However, the customers are able to enjoy the same quality of service. The firm also targets international customers who require making cheap international calls during off peak hours.
The various segments which the firm has incorporated with regard to telecommunication includes casual callers, business callers, expatriates, late night international callers, mid night international callers, local callers, and office break callers. In order to be effective, the firm has developed a prepaid and a post paid plan.
The prepaid connection caters for casual callers and office break callers. On the other hand, the post paid connection caters for business callers. In addition, the post paid connection which is inclusive of a discount is also applicable to local callers. However, the amount of discount is dependent on the duration of each call. The long duration of the call, the high the discount received.
Considering the fact that UAE has a large population of expatriates, Etisalat UAE has capitalized on them by designing a favorite country plan. To be effective in capturing the market share for the expatriates, the firm offers different tariffs for the various countries. In an effort to encourage late night calling in its network, Etisalat UAE has developed an off-peak tariff called super off-peak hour. Calling rates at night are usually at a lower price.
Organization structure
Etisalat has adopted a hierarchical organizational structure. The management team has organized the firm into a number of departments depending on the various functions. The firm is headed by the General Manager Assisted by the Deputy General Manager. Employees in the various departments report to their respective vice presidents. The chart below illustrates the organization structure it has adopted in UAE.
In an effort to attain efficiency in its operation, Etisalat has integrated the concept of team work. Every department is organized into a number of teams. The teams are formed with the objective of attaining a certain goal. The various team members are assigned different roles in accordance with their skills and experience. Upon completion of the assigned task, the team is disbanded. Use of team approach has enabled the firm to be effective in attaining its goals.
Marketing Mix
In an effort to be effective in its marketing processes, Etisalat UAE has incorporated the concept of marketing mix. According to Ennew and Waite (2007, p.172), marketing mix enables a firm’s products and services to attain a competitive market position. By incorporating the concept of marketing mix, a firm is able to implement its marketing strategy.
Ennew and Waite (2007, p.172) further assert that the consumers do not have much interest on a firm’s strategy, however, their main interest is the utility they derive from a firm’s marketing mix. In line with this, Etisalat UAE has effectively integrated the concept of marketing mix. This has been achieved through incorporation of the 4Ps which include the product, promotion, place, and price.
Product strategy
Given that consumers have diverse products and services needs, Etisalat UAE has integrated the concept of product diversification. The firm has achieved this through formation of different business units. Its business units are dividend into two categories which include telecommunication and non-telecom business units.
With regard to its services, Etisalat UAE deals with a wide range of services. Over the years it has been in operation, Etisalat UAE has developed a portfolio of services which include telephone services, landline services and television services. In line with its telecommunication services, the firm deals with mobile communication devices such as iPhones. In 995, Etisalat UAE ventured into the internet market (Beltone, 2008, p. 34). Etisalat UAE has managed to attain a substantial market share with regard to telecommunication network.
In order to remain competitive in its domestic market, Etisalat has incorporated the concept of innovation. This has enabled the firm to develop new products and services. For example, upon the entry of Du in the UAE market, Etisalat has rolled out a number of new products and services.
The main objective of the firm in its new product innovation strategy is to attract additional subscribers. One of the new technologies which Etisalat UAE has adopted is the 3G and 3.5G technology. The 3G and 3.5G technology has enabled the customers to benefit from other value added services. Some of these services include launching of the high-speed mobile data modems, credit transfer, area info service, mobile map, mobile cam, mobile TV service, pushmail and BlackBerry service.
By adding value to its products and services through innovation, Etisalat UAE contributes towards its customers attaining a high level of satisfaction. For example, the high-speed mobile data modem has contributed towards an increase in internet connectivity. On the other hand, credit transfer service which is available to the firm’s mobile subscribers enables them to transfer money within Etisalat’s mobile network. This service is provided to the customers for free.
Pricing strategy
Pricing is an important component in the marketing of a product or service since it affects a firm’s product positioning. In order to be effective, it is important for a firm to evaluate the price of its competitors. This will aid in formulating a competitive consumer pricing strategy. Etisalat UAE has integrated a number of pricing strategies. The firm has incorporated the concept of product and service innovation.
In order to compensate for the additional value received by the customers, Etisalat UAE has adopted value-added pricing strategy. As a result, the prices of Etisalat UAE’s products are relatively high compared to those of its competitors. Value-added pricing strategy has mostly been used in products that have value-added features so as to make them different from other products from competitors.
Etisalat UAE has also incorporated the concept of psychological pricing especially in the marketing of its iPhones. This is a pricing strategy which is aimed a appealing the customers so as to influence their decision making processes (Sutherland & Canwell, 2008, p. 300).
The technique adopted entails setting odd pricing points for its iPhones. For example, in 2009 the firm has set the price of iPhone at AED 3,089. This price is inclusive of other features such as 125 free short messages, 500 MB of data and 125 minute talk time (Billing, 2009, para. 4). Through psychological pricing, consumers are developing a perception on the price of the product or service being fair.
Promotion strategy
The firm’s management team has appreciated the fact that the success of a firm is dependent on the extent of market awareness done by the firm. To retain its competiveness with regard to market awareness, Etisalat UAE has incorporated the concept of Integrated Marketing Communication.
This has been achieved through adoption of both traditional and emerging market communication techniques. Some of the traditional market awareness techniques that the firm has adopted include advertising, sales promotion and public relations. In its advertising strategy, Etisalat UAE utilizes different mediums which include the television and radio. Etisalat UAE also uses print media such as newspapers and magazines to post its adverts.
Additionally, the firm also makes use of outdoor advertising such as posting its advertisements on billboards and sign boards. The firm has designed different television and radio commercials according to its target customers. In its public relations campaigns, the firm organizes different events such as Quran Competition, social welfare, concerts, and sporting events such as cycling race. Through these events, the firm is able to develop a link with its customers.
Considering the growth in Information Communication Technology (ICT), Etisalat has incorporated electronic commerce in its marketing strategy. One of the ways through which the firm has achieved this is by integrating emerging social communication tools such as Facebook and Twitter (Etisalat UAE, 2010, para. 1).
Through these tools, the firm is able to inform its customers on its services more effectively. Etisalat UAE has managed to attract a number of followers. Additionally, the firm has also integrated other emerging social networking tools such as Blogs and Wikis. These tools have enabled the firm to create a strong relationship with its customers. This arises from the fact that the customers can be able to interact with the firm by raising their opinions and complaints regarding the firm and its products and services.
Place
In its operations, Etisalat UAE has effectively penetrated the domestic market. The firm has a number of outlets which are strategically located. Some of its outlets are located within malls, airports, and mobile service shops. In addition, it is also possible to recharge connection by purchasing vouchers at groceries, petro pumps, and tucks hops.
By ensuring convenient location of its products and services, Etisalat has enabled a large number of customers to subscribe to its services. To enhance its market penetration, the firm has also incorporated the concept of electronic commerce. This has been achieved by providing some of its services through the internet. For example, customers can be able to purchase their credit online for their phones and modems online.
Evaluation chart
In its operations, Etisalat UAE has managed to achieve a substantial performance compared to its competitors. The chart below illustrates Etisalats UAE’s performance relative to Du which is its core competitor in its domestic market.
Responsibilities
In its operation, Etisalat UAE is guided by a policy which advocates for values such as honest, fairness and openness (Global Village Partnership, 2011, para. 4).
The firm ensures that this policy is applicable to all its customers, employees and suppliers. The management team ensures that all the firm’s relationships with the various stakeholders are direct, clear and honest. The resultant effect is that the firm has created a friendly and sociable environment which is conducive for working. In addition, the firm has been able to promote its business dealings.
In order to ensure employee satisfaction, the firm has formulated an employee training program which enables them to attain their goals. In an effort to ensure flexibility amongst its customers, Etisalat UAE has developed the Favorite Country Plan. The plan enables its customers to call to their favorite countries at a discount. Individual and organizational customers can either subscribe to this plan through this single or multiple landlines. However, a minimum monthly charge of AED 20 is applicable.
Additionally, the Favorite Country Plan is also inclusive of a 20% discount which is applicable to its International Direct Dialing (IDD) rates (Hitek, 2010, para. 5). The plan gives the businesses liberty to call 3 of their favorite countries using their landline. The firm introduced this service after considering the current economic situation. This illustrates the degree of fairness in the firm’s operation with regard to economic situations.
As a result of utilizing the Favorite Country Plan, customers are able to save approximately 55% of their total calling cost to their selected countries. This plan is even make better by the existence of the off-peak rates. Through this, plan, Etisalat UAE has managed to give business owners peace of mind when interacting with their customers, suppliers, and employees in different countries.
In an effort to develop its customer loyalty, the firm has incorporated a number of strategies. One of these strategies relates to ensuring security of the consumer’s data stored in their mobile phones. The firm has achieved this through development of a Data Backup service through which the consumer can keep copies of their data such as contacts, photos, messages, ringtones and music (Etisalat UAE, 2010, para. 4).
Customers can be able to store data automatically at certain intervals. In the event that the mobile phone is stolen, lost or accidentally damaged, the customers can be able to restore their data in their new mobiles quickly and easily. Additionally, the Data Backup service enables the customers to protect their mobile phones by locking. This means that the device will be of no use to the thief.
Conclusion
The analysis indicates that Etisalat UAE’s success has arisen from a number of reasons. One of these reasons relates to the effectiveness with which the management team formulates and implements its operational strategies such as marketing strategies. For example, the firm is effective in targeting the various categories of customers in UAE.
The resultant effect is that the firm has managed to increase its customer base and hence its sales revenue. Additionally, the firm has incorporated the concept of product and service diversification thus meeting the diverse telecommunication needs of the customers.
Integration of the concept of marketing mix has enabled the firm to be effective in formulating and implementing its marketing strategies. For example, the firm has integrated the concept of new product innovation. The resultant effect is that the firm is in a position to adjust to market changes through new product development.
On the other result, the firm has been effective in creating market awareness through incorporation of integrated marketing communication. The customers’ access to the firm’s products and services has been enhanced through adoption of a comprehensive distribution network. This has contributed towards the firm attaining an optimal market position in UAE.
The firm has also adopted an organization structure which ensures that there is a high level of efficiency in the operation of the firm. Additionally, the management team of Etisalat UAE has also ensured that the firm operates in a responsible manner.
This has been achieved through implementation of a policy which advocates for fairness, openness and honesty in the operation of the firm. Additionally, flexibility in the consumers’ consumption patterns has also been enhanced through development of plans which suit the customers for example the Favorite Country Plan.
How this project topic relates to introduction to public administration
Prior to entrance of Du into the telecommunication industry, Etisalat had been the sole provider of telecommunication services in UAE as illustrated in the introduction. As a result, Etisalat was charged with the responsibility of ensuring that the citizens are satisfied with regard to telecommunication services being offered. This indicates that there is a strong link between Etisalat and public administration. Matei and Dinu (p.172,), assert that public administration is aimed at serving the public.
According to Nedelea (2006, p.1) firm’s executives are under an obligation to guide the organization’s marketing activity towards improving the quality of public service. Considering the fact that the success of the firm is dependent on the society in which it operates, Etisalat should be focused at improving the social life of the society. One of the ways through which this can be attained is by being customer oriented.
Reference List
Beltone, 2008. Emirates Telecommunication Corporation (Etisalat). Cairo: Etisalat Incorporation.
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Ennew, C. & Waite, N., 2007. Financial services marketing: an international guide to principles and practice. Amsterdam: Butterworth-Heinemann.
Etisalat UAE, 2010. Mobile data backup service. Web.
Global Village Partnership, 2011. Etisalat Dubai in UAE. Web.
Hitek, 2010. Etisalat enables UAE businesses to reach out to their favorite countries at up to 55% discounted calling rates. Web.
Matei, L. & Dinu, T., 2002. Regulation and best practices in public and non profit marketing. London: Matei Lucica.
Nedelea, A., 2006. The concept of marketing in the public administration. Suceava: University of Suceava.
Sutherland, J. & Canwell, R., 2008. Essential business studies for Aqa As Le. London: Folens Ltd.