Understanding Marketing Myopia: Perspective of

Telecommunication Industry
Individual assignment by

2013/MBA/WE/90 R.M.R.S. Rathnayake

Course: MBA MK 610 Strategic Marketing

Lecturers: Professor Pradeep Randiwela, Dr. Bandara Wanninayake

Semester III Second Half

July 2015

Postgraduate & Mid- Career Development Unit

Faculty of Management & Finance
University of Colombo
Contents

1. Introduction to Mobitel ................................................................................................................... 2

2. Porters Five Forces Analysis for Mobitel ....................................................................................... 3

3. SWOT Analysis in Mobitel............................................................................................................. 6

4. PESTEL analysis for Mobitel ......................................................................................................... 7

5. Marketing Myopia and challengers to overcome in future ............................................................. 9

6. Conclusion .................................................................................................................................... 10
1. Introduction to Mobitel

Sri Lankas telecommunications sector has had to contend with a developing market in
the difficult context of a nearly two-decade-long conflict between the government and
separatist Tamil Tiger rebels. With the end of the war in 2009 has come the hope of an enduring
peace and a general improvement in the countrys social and economic well-being. This also
found the telecom sector well positioned for vigorous growth. There are a range of major
initiatives in place that should boost the building of national infrastructure and open the market
to more competition. The presence of foreign investors like Airtel and Etisalat has been a
positive factor in the growth in the market. In the meantime, fixed-line subscriber growth is
stagnant, with little chance of revival; and broadband internet is finally starting to grow strongly
from a low base. With among six other major foreign Telco service providers, Mobitel has been
stood up and keep doing their best to dominate the Telco sector which this case is going to
analyze further.

Mobitel (Pvt) Ltd, the national mobile telecommunication service provider started its
operation in year 1993. It was acquired by Sri Lanka Telecom Ltd in 2002, & Mobitel became
a fully owned subsidiary of Sri Lanka Telecom. Mobitel has successfully implemented Time
Division Multiple Access (TDMA) network in the country and launched its Global System for
Mobile communication (GSM) operations in January 2004 with the deployment of a fully-
fledged GSM network enabled and designed to operate on dual band. Mobitel launched its
super 3.5G network in December 2007 becoming the first in South Asia to implement a 3.5G
High Speed Packet Access (HSPA) network and also placed within the first ten in the world to
implement 3.5G HSPA. Mobitel is planning to launch its 4G network commercially in the
recent future, enable the customers to enjoy event faster data rates. In 2013, Mobitel achieved
the milestone of being Sri Lankas national mobile service provider for the period of 20 years.

Mobitel has performed splendidly in order to make its vision a success which is To
lead Sri Lanka towards an info-com and knowledge rich society through our service offerings
by introducing latest technologies, widening the coverage, providing amazing price plans &
products where customers can enjoy variety of services with an acceptable cost.
2. Porters Five Forces Analysis for Mobitel

The Porter's Five Forces tool is a simple but powerful tool for understanding where
power lies in a business situation. This is useful, because it helps you understand both the
strength of your current competitive position, and the strength of a position you're considering
moving into. This will direct to determine where the power of the company lies in the business
and thereby find and develop an edge over the rivals in the industry.

I. Bargaining Power of Customers

Their revenue for the first 9 months of time period in 2012 grew by 14% from 15.9
billion LKR to 18.2 billion LKR in comparison with same duration in year 2011 due to
augmentation in companys subscriber base cause of enhanced level of customer experience
Mobitel has to depend on local providers such as SLT (Sri Lanka Telecom) The supremacy of
customer is considered as a crucial factor since this cause to drive the prices down by exerting
pressure over the organization or uplifting the quality of the service for the same charge, and
therefore decrease the profitability of the business process. High degree of Brand Identity
Mobitel GSM is fixed to low price elasticity due to higher number of industry rivals and the
rate regulations of Telecommunication Regulatory Commission of Sri Lanka (TRCSL), which
makes the customers bargaining power into high over the company.

When it comes to broadband market Mobitels price elasticity is considerably in a

higher level as it has a fully fledge high speed broadband networking technology in the country
specially with better coverage than other service providers in the industry, which reduces or
mitigates the bargaining power of customers up to considerable stage.

II. Bargaining Power of Suppliers (Supplier Power)

The ability of suppliers of the company to influence the setting of prices to capture more
industry profit, and the company should able to control its suppliers to wield more power
against the market rivalry. Since Mobitel doesnt own one which are authorized to have the
direct access to the national telecommunication backbone, Local Telecommunication
Providers: Therefore, the above mentioned suppliers have an upper hand and they are having
more supplier bargaining power over the company
 Mobitel is concerned as a subsidiary of Sri Lanka Telecom (SLT) supplier bargaining
power is comparatively in a lower level than other market rivals. Comparatively with other
countries, the amount of users who are using data/voice is in a lower level in Sri Lanka, hence
low traffic generated. Incremental factor of supplier bargaining power as the suppliers such as
ISPs, content providers for value added services and the peering partners are in a position to
influence the company business process.

III. Threats of New Entrants

Telecommunication industry due to higher amount of industrial profitability, the

probability of attracting new business firms for the industry is comparatively high. That directly
impacts to all the current telecommunication operators in the market by making their business
profitability in to risk as they may have to experience profit reductions with newer firm
introductions.

Recently with the entrance of Bharti Airtel which could able to achieve one million of
customer base in Sri Lanka within 171 days of the launch of its services in Sri Lanka impact
all Telco operators. Numerous level of value added services plus low price package
introductions for different age categories Airtel could able to grab the customer base of other
mobile telecommunication operators in the industry aggressively. However currently the
rivalry caused by new entrance with attractive lower service charges was controlled by Tariff
Regulation policy of Telecommunication Regulatory Commission of Sri Lanka (TRCSL).

But it is not easy to enter the business like Telecommunication with the higher
investment that needed to putting in and it is highly technology sensitive industry where as a
service provider you need to constantly update it with the upcoming new technology.

IV. Threats of New Substitutes

A crucial factor which affects a companys stability in the market by significantly

influencing to the profit acquiring process of the company. This factor activates when the price
fluctuations of substitute products which may leads to degrade the customer base of the
company by allowing customers to move for substitutes.
 More substitute opportunities in the telecommunication industry will diminish the
demand for the Mobitel as some services of which it provides become inflexible for the
customers due to more customer perspective flexible opportunities in substitute service.
Threats of New substitutes like Skype, Viber technology is few examples make high impact by
capturing the roaming telecommunication segment. Skype also made a high impact on local
telecommunication fields too by providing seamless technological advancement such as free
video conferencing plus capturing mobility technological advancements as well by using
upgraded solutions such as by introducing flexible Skype solutions for mobile platforms. But
the positive side of this was it create high demand on the data usage with higher usage of mobile
application.

Sri Lanka Telecom (SLT), Lanka Bell, and Dialog who were awarded with CDMA
technological license also affected the mobile connection business. While concerning on fixed
line operators awarded with CDMA technologys targeted market segment is corporate
customer base and home usages without serving advance mobility. But this will not make
higher level of impact on Mobitels telecommunication process comparatively to Skype
technology.

V. Rivalry among Competing Firms

Due to higher amount of competency in Sri Lankan mobile service industry each and
every operator has to experience, maximum level of industry rivalry to stabilize in the market.
Rivalry among Competing Firms VAS (Value added Services) gives Mobitel the edge they
need to overtake their rivals. While Mobitel compete on the VAS such as Location tracking,
Missed Call Alerts, Availability Alters and the other services, most other operators tend to
compete only on the coverage and the rates in mobile service industry.
3. SWOT Analysis in Mobitel
The business is the aggregate of all conditions, events and influences that surround and
affect a business firm. Business environment generally refers to the external factors affecting
either positively or negatively, the operation of the firm. A SWOT analysis help to evaluate the
Mobitel business through four major variables where Strength and Weaknesses are internal
factors and Opportunity and Threats are external factors to the organization.

Strengths Weakness
Over 6 million customer base
High pricing for roaming
Market leader of prepaid customer base
Having low postpaid customer base compare
A young, vibrant and motivated workforce.
to prepaid base
Government support
Less focus on corporate customer base
Strong public relationship that has been build
Less Roaming coverage
up since 1993
Not having Mobitel own premises
Only national mobile operator currently
operate
Strong network coverage
Aggressive advertising and promotion
Large value added service base
Wide product range

Opportunity Threats
Increase of the mobile phone usage Constant change in technology
Increase the laptop usage Rapid change in Law and regulation
Smart phone usage increasing rapidly Government instability
Increase mCash customer base Higher tax rates
mTicketing service getting popular among Other operators development of new services
customers Dialog easy Cash service
Suntel, Dialog and Lanka Bell CDMA market
base
Increasing popularity of Skype, Viber VOIP
application
4. PESTEL analysis for Mobitel
Environmental framework helping to understand external factors impacting
organization. Mainly it used to identify current state of the industry as well future state.

I. Political
Sri Lanka has very positive foreign investment policies with the newly appointed
government and their policies. However though Sri Lanka identified importance of
liberalization early as in 1977, due to political interventions bureaucratic attitudes inherited
from colonial reign and poor governance, the country as a whole and specifically the industry
has not grown as it was foreseen at the time of liberalization. During the past three decades,
terrorist activities have remained constant as well.

II. Economical

Unstable macro-economic environment and trade policy regime has a negative impact
on the industry. At the same time increase of exchange rate over the years happened on a
gradual pace which have affected negatively when it comes to imports new Telco equipment.
Same time with new government change and the introduction of new tax rates on the
telecommunication sector badly affect the whole Telco industry.

III. Socio-Cultural

Lifestyles and buying habits of the local crowd is changing where high amount of
money now spent over smart phones and internet is a positive factor. Same time middle income
earners growth rate also tends to improve also positively affect the Telco industry.

IV. Technological

Sri Lanka depends on technology transfers from foreign direct investments. However
TRCSL encourages local research and development. The country comparatively has not
performed well enough to adapt certain technological changes on a timely manner. For example
the shift from analogue to digital and the adoption of CDMA technology materialized in a slow
pace. Same time with the high use of hand held mobile device among younger generation
positively affect to the industry.
 V. Ecological & Legal

TRCSL the regulatory body takes up multidimensional roles. It ensures fair

enforcement of Govt. policy, hold operators accountable for performance, address consumer
issues, monitor changing industry needs and provide feedback to the policy making units.
5. Marketing Myopia and challengers to overcome in future
One of the misbelief is that growth is assured by an expanding and more affluent
population where most of the time develop products in such a way that assuming the market
will absorb the product with increase of the population.

Specially after launching mCash with investing huge capital by following Dialog
easyCash product currently Mobitel is struggling to cover the initial investment with the
estimation timeframe. Initially Mobitel product planning thought with the new expanding local
customer base and Dialog easy cash promotion they do also have the same advantage on the
mobile money sector with the mCash product.

Same time currently the main competitor Dialog have the upper hand especially on the
postpaid customer base which is slowly acquired by the Mobitel. But on the other hand even
Mobitel had the largest prepaid customer base now dialog is in the process of capturing the
crowd with their attractive advertising campaigns and new free bundle offers with tight to new
prepaid packages.

Another fundamental concept to take away from marketing myopia is that a business
will survive and perform better if it focuses on satisfying customer needs rather than selling
specific products like mCash. Same time not like ten decades ago now the Telco industry is
more saturated market segment where they need to capitalize on current infrastructure and
introduce other services to expand the business to increase the profit margin. For example
Mobitel can give services to Telco providers - towers and network coverage with a premium
price to expand others Telcos coverage by getting mutual benefit for each others.

As mentioned in the industry analysis, there is a high possibility of new entrants and
substitutes being offered by the promotion of FDI with the new government policies. Same
time global major players have enough capacity to invest in huge amount to new products to
capture the current market base. So it is important to going par with the current development
of new technology and identifying and catering the customer need rather introducing so many
product with less useful features to the customers.
6. Conclusion
Marketing myopia is the phenomenon that occurs when companies focus more on the
products they sell than the dynamic forces of the market. Large corporations are the most
susceptible to this colossal circumstance.

When introducing new technology or product as long as provide consumers with better
solution that serve their needs, consumers will happily move to these new products. So it is
vital to identify real customer need and cater those by combining new technology will give you
the extra edge over your opponent to grab the market.

Just because a tactic has worked wonderfully in the past for your competitor should not
warrant the automatic assumption that it will work same for you again. Be mindful of new
trends and chances to diversify your portfolio.

Same time business should never be afraid to compete with itself for more market share.
By doing so, they are stealing market share from themselves in one area but are also gaining it
in fresh frontiers. So better redefine your product with the new look to capture the new market
while not losing the existing customer base.
Reference

diva2:636858/[Link]. (n.d.). Retrieved from [Link]: [Link]

[Link]/smash/get/diva2:636858/[Link]

marketing-myopia. (n.d.). Retrieved from [Link]: [Link]