The following write-up comprises parts of a marketing plan submitted around February 2011 in fulfillment of a requirement in our "TM 206: Technology Marketing and Commercialization" class. As usually, I'm only posting parts that I wrote myself (at least for now.)
3. Environmental Analysis
3.1 Macroenvironmental Factors
3.1.1. Demographic Profile
As of July 2010, the population of the Philippines is estimated at 99.9 million making it the 12th most populous country in the world. Sixty percent of the population fall between 15-64 years old, while thirty-five percent are under 15. Of those between 15-64, around half are estimated to be below 30; with the median age of the entire population being 22. These figures show that the Philippines has a very young population and that the youth (the segment of the population between 15-29) is a significant and lucrative market. Furthermore, with 35% of the population below 15, a product or service target that manages to capture the youth market can expect sustained, if not increased, demand over the next decade. These and other demographics data are summarized in following table.
Table __. Demographic Data (2010 est.)
Source: CIA Factbook, 2010
According to 2008 survey conducted by Nielsen Company and Yahoo, more than 40% of the youth are internet users. The survey revealed that internet users are likely to be early adopters, trend conscious, tech-enthusiasts and willing to pay for quality products. So on top of the segment's sheer size, its characteristics and values make it an ideal target for new technology-related products and services. The survey also revealed that internet use is skewed towards the upscale and well-educated (i.e. belongs the upper and upper middle class or the so-called ABC1 segment).
3.1.2 Economic Climate
3.1.2.1 Recent Economic Performance
Over the past several years, the Philippine economy has been growing significantly. In 2010, its GDP grew by 7.3%, the fastest in more than three decades. This is after it grew 7% in 2007, another multi-decade high at that time. In 2008 and 2009, when most of the world was in recession due to the global financial crisis, it grew by 3.7% and 1.1% respectively. These figures indicate a stable, healthy and growing economy.
The current Philippine economy is said to be consumption-driven, which implies two things: 1) the economy is less susceptible to international economic shocks, and 2) there is significant potential for higher economic growth (since if the economy is growing with little investment, it is expected to grow even faster with more). Both of which are good for firms delivering consumer products and services. With utilities already being treated as consumer products and with mobile internet fast becoming a utility, both will also be good for mobile internet providers.
A primary fuel of the Philippines' consumption-driven economy is OFW remittances, which has been reaching all-time highs for several years now. In 2010, OFW remittances grew by 8.2% reaching another all-time high at about $18.8 billion. The resilience of OFW remittances in the face of the recent global economic crisis demonstrated that OFW remittances provides a reliable support to the local economy. Another source of support is the fast-growing BPO industry, which has grown more than 30% annually since 2006. As of 2010, the Philippines overtook India as the leading call center destination in the world, making it 3rd overall in terms total BPO revenues. (It is worth nothing that majority of BPO employees are young professionals.) The year 2010 was not only good for the BPO industry but for entire business sector in general. Many publicly-listed companies achieved spectacular and even record earnings in 2010. These results have been reflected in the PSEi, the Philippine Stock Exchange's main index, which reached its all-time high in 2010. All these indicators point to a continuing trend and an opportunity that local firms cannot afford not to take advantage.
3.1.2.2. Future Prospects
As early as 2008, the Philippines has been identified by IMF as a newly industrialized country (NIC), placing it in the same league as Brazil, India, China, Mexico, Malaysia and Thailand (among others). Furthermore, Goldman Sachs has identified the Philippines as among the so-called "Next Eleven" (next to Brazil, Russia, India and China in having "a high potential in becoming the world's biggest economies in the 21st century.") It is projected that by 2050 (when China is the largest economy in the world), the Philippines will be the 17th richest country in the world (19th per capita) with a GDP of $3 trillion. The Philippines is also included in Citigroup's "3G" or "global growth generators". Due to the Philippines young population and sustained fast economic growth, Citigroup sees the the Philippines as one of 11 countries that will deliver high growth and profitable investment opportunities in the 21st century.
3.1.3. Technology
3.1.3.1. Global Trends
By 2014, mobile internet users is projected to outnumber desktop/fixed internet users in the world. Furthermore, mobile data traffic is expected to grow 26 times. On top of this, global shipments of smartphones and tablets is also expected to outnumber shipments of laptops and desktops as early as the end of 2011 and the former is expected to be almost twice of the later by the end of 2013. Social networks like Facebook, Twitter, Zynga and Groupon have been identified as a primary factor accelerating mobile internet growth.
3.1.3.2. Local Trends
In the Philippines, mobile internet is still in its infancy with a penetration rate of around 5-6% as of 2010. However, it is undergoing rapid growth as seen in the growth of mobile internet (or wireless broadband) revenue of Smart and Globe. As of the third quarter of 2010, Smart's wireless broadband revenues grew by 23% and Globe's nearly doubled. Furthermore, it is also projected that over the next 2 years, a large number of mobile phone users will shift to internet-capable smartphones. Like the rest of the world, social networks are considered a primary factor accelerating mobile internet growth in the Philippines. At 90% of total internet users as of 2010, social networking penetration in the Philippines is among the highest in world and the highest in Asia-Pacific. As the cost of mobile internet and internet-capable mobile devices become more affordable and available, the growth of mobile internet users is expected to accelerate even faster.
3.1.3.3. Convergence And Mobile-Internet
The advent of mobile internet has bough about the convergence of what used to be clearly distinct technology areas: telecommunication, broadcast media and information technology. Many things that we used to be able to do only with our TVs and computers in the past, we can already do with our mobile phones today. As the technologies converge even further, the utility of our mobile phones increases and the need for mobile internet becomes even more pronounced. The relationship between mobile internet and convergence forms a self-sustaining cycle (limited only by eventual market saturation). Thus, the trends discussed in the previous sections are not merely fads or short-term trends but are sustainable and long-term.
3.1.3.4. Technology Response
Two competing technologies have been developed to address the projected exponential increase in mobile internet demand and data traffic: WiMax and LTE, both of which are based on Orthogonal Frequency Division Multiplexing (OFDM). WiMax is an open standard, while LTE isn't. This means that it will be cheaper to develop equipments for WiMax. However, this mitigated by the common design of WiMax and LTE which means that about 85% of WiMax equipment design can be re-used for LTE. Furthermore, while WiMax is expected to be faster as it matures (at download rates of around 1Gbps compared to LTE's 100 Mbps), LTE is considered a more natural upgrade to existing GSM networks which means that for an existing GSM-network operator developing a WiMax network would be significantly costlier than developing an LTE network which is probably the reason why around 80% of worldwide carriers are expected to go with LTE. The table below summarizes the comparison between WiMax and LTE.
Table __ LTE vs WiMAX
In the local front, all four players (Smart, Globe, Sun and Liberty) have invested and built WiMax networks while only Smart and Globe are known to have conducted field tests on LTE.
3.1.4. Political Climate
The election of the current administration appears to have renewed consumer, business and investor confidence. Recent surveys conducted by SWS and Pulse Asia reveal higher public optimism. This renewed confidence has been reflected in the stock market as well, with its main index reaching an all-time high late last year due to the inflow of portfolio investments from both local and foreign sources. Record capital expenditure allotment from the likes of SM Group, Ayala Group, SMC, PLDT and Megaworld demonstrate unparalleled confidence in the current and future prospects of the country.
Despite encountering a few setbacks, the new administration, particularly the president, continue to enjoy record approval ratings. Its high political capital and proactive support for private-public partnership appear to have sparked the interest of the Philippines largest conglomerates like SMC, SM, PLDT/MPIC on putting their weight behind massive infrastructure projects like building highways, airports and railways.
3.1.5. Regulatory Matters
Recently, local telecommunication firms submitted a proposal to impose a cap on the volume of data a broadband subscriber can used. Due to opposition from consumer groups and general public, regulators have rejected the proposal. In response to this, local telecommunication firms have pushed for allocation of additional broadband frequencies. In addition, they have stressed the need to enforce a fair use policy to ensure that all subscriber are given a fair opportunity to access their services (i.e. to protect users from a few “abusive” users who hog broadband capacity.) NTC has yet to decide on both request.
Mobile broadband internet including LTE is heavily dependent on adequate spectrum. With a limited spectrum, future LTE performance will be adversely affected and will only be able accommodate limited traffic (that is below its theoretical capacity.) In the face of the exponential growth of mobile internet usage, spectrum availability will therefore become a limiting factor that mobile internet operators will have to contend with.
3.2. Microenvironmental Factors
3.2.1. Suppliers
The role of network and telecommunication suppliers is crucial to the rapid adoption of LTE. The suppliers can be group into two main categories: equipment suppliers and device suppliers. Equipment suppliers pertain to suppliers of back-end equipments that enable carriers or telecommunication firms to operate LTE networks, which range from single box level equipments to complete end-to-end solutions. In other words, these are the equipment suppliers of telecommunication firms. Nokia Siemens Networks, Alcatel-Lucent, Ericsson, Motorola, Huawei and ZTE belong to this category. Considering that 80% of worldwide carriers are expected to go with LTE and that there is only a small number of equipment suppliers on top of the fact that LTE is a relatively new technology, equipment suppliers can be expected to have a high bargaining power.
The second category pertains to suppliers of consumer devices such as LTE-capable mobile phones, USB modems or dongles and the likes. These are the firms that supply devices to end-users that will allow them to utilize the telecommunication firms' LTE networks. Several firms or related firms in the previous category such as Nokia, Ericsson, Mototrola for mobile phones and Huawei and ZTE for USB modems or dongles also belong in this category. In addition, this category also include big-brand firms like Samsung, Apple and HTC and small firms with little or no brand recognition like mobile phone manufacturers in China and India. The sheer number of device suppliers suggest that they have a low bargaining power. However, this is not entirely the case since in consumer electronics, brand significantly alter the dynamics of the relationship between suppliers and consumers. Nevertheless, the role of suppliers in this category is just as crucial for rapid adoption of LTE as of those in the first. As such, it can be expected that LTE-capable devices will be costly during the initial stages but can be expected to decline as suppliers ramp up production. The availability of many suppliers will also enable telecommunication firms to form partnership with them to develop devices under the telecommunication firms' brand to ensure the availability of such devices to the consumers (at lower prices) and encourage rapid adoption of LTE.
3.2.2. Competitors
Globe's main competitor, Smart, is also investing on LTE and has been conducting field test since the second half of 2010. It has worked with both Nokia Siemens Networks and Huawei Technologies for LTE field test in Manila, Cebu and Iloilo City. It claims to be the first in the Philippines to surpass the 100 Mbps mark in field tests. The company has stated its plans for pilot deployment this year.
Liberty Telecommunication has also signified its intention go into LTE. Though, it is not known if it has already started LTE trials and field tests. Sun Cellular, though it has not publicly signified its entry into LTE, has selected Ceragon Networks to expand its existing 2G/3G networks. Ceragon Networks is a known provider of high-capacity, LTE-ready wireless backhaul solutions. This could pave the way for Sun's entry into LTE as well.
As mentioned in a previous section, like Globe, all three of its competitors have operational WiMax networks. With the ongoing global trend of carriers going to LTE (driven by the projected exponential increase in demand as discussed previously), it is only a matter of time before all three go into LTE as well. It is therefore imperative for Globe to acquire consumer mind share and to be associated with LTE or high-speed mobile internet and innovative mobile services as early as now.
3.2.3. Customers
Filipino internet users are likely to be young (below 29 years old), single, upscale and well-educated. They value individualism and desire to stand out among the crowd. They are likely to be opinionated, early adopters, trend- and fashion- conscious and tech-savvy. Their primary online activities are search, instant messaging, email and social networking and their primary motivations for going online are entertainment (i.e. search for entertainment-related content like images, videos and music) and communication (i.e. stay in touch, send email, chat, let other people know what they're doing.) Of those who use mobile internet, 40% expect to spend more time in the future. For them, social networks are not merely sites but platforms to connect, communicate and be entertained.
As the number of mobile internet users and the time they spend on mobile internet grow, their demand for richer content and thus faster connection speeds are expected to grow as well. On top of their tech-savvy, trend- conscious and early adopter nature, their desire for more and richer content will become a strong motivator for their adoption of LTE-based mobile internet.
3.2.4. Competitive Strategy
The mode of competition in traditional cellular services (i.e. data / SMS and voice) has always revolved around price since these services are commoditized and there is little opportunity for differentiation. However, this won't be the case for high-speed mobile internet. Mobile internet enables or creates a host of other opportunities. It provides a platform for telecommunication firms to offer more value-added and bundled services that have a high potential of increasing their average revenue per user (ARPU). Among them are mobile advertising, m-commerce, mobile-content delivery and mobile gaming. Therefore, the group believes a combination of the first-mover strategy, niche-market strategy and product differentiation strategy would be the most effective strategy for Globe in launching LTE and achieving and sustaining market leadership.
As previously noted, despite having operational WiMax networks, it reasonable to assume that all three of Globe's competitors would also go into LTE (even in varying degrees) because the dominant design between WiMax and LTE has not yet been established (i.e. not preparing for LTE is a risk none of the players can afford to take). It is therefore imperative for Globe to be the first mover. Being the first mover will provide Globe with several advantages that it can later leverage as it expand beyond its initial target market; among these advantages are acquiring mind share not only of initial target market but of the entire population (which can be translated to market share later), controlling limited resources (like broadband spectrum) and establishing switching costs. By being associated with LTE or high-speed mobile internet, Globe will gain a consider advantage over its competitors. Its introduction of LTE against traditional wireless broadband and WiMax would be a differentiator in itself during the initial stages when it is the first and only LTE provider.
In terms of initial market selection, the group recommends a niche-market strategy. Demographic analysis and profiling of current internet users suggest that Globe will achieve the greatest impact (not to mention cost-effectiveness) if it focuses its initial efforts on young adults and young professionals belonging to the upper and upper-middle class.
Finally, for long-term, sustainable market leadership, the group believes that adopting a product differentiation strategy through innovative value-added and bundled services will be key. After it has successfully penetrated its initial target market and at a time when all of its competitor would have started their own LTE operations, Globe will be able to retain its customers and expand into a wider market by providing mobile internet-based services that the public needs. Among those that have a very high potential of becoming big businesses in themselves are mobile content-delivery (e.g. IPTV or TV-on-Phone, Video-on-Demand), m-commerce (e.g. mobile payment applications), mobile-gaming and context-aware services (e.g. location-based services.)
8. Controls
8.1. Implementation
The marketing plan will be implemented in three stages:
To ensure smooth implementation, each stage will have a set of objectives and a set of measures to determine if the objectives are being meet. Bi-weekly reviews will be conducted to monitor the progress at each stage and to formulate corrective action and counter-measures if necessary. Furthermore, market analysis will also be conducted on a regular basis through out the stages to identify trends and shifts in customer behavior.
8.1.1. Hype Stage
During the this stage, efforts would be focused on building customer awareness on Globe's LTE and informing potential customers of the benefits of adopting Globe's LTE. The primary objectives at the stage are to create excitement and anticipation around Globe's LTE offering and acquire precious mind share. The key measures that need to be monitored at this stage are customer awareness and customer excitement which can be acquired through various kinds of surveys. The performance targets at this stage are 90% awareness in the target market and 50% excitement.
8.1.2. Demo Stage
After sufficient awareness and excitement have been built up, the next stage is to conduct demo and free trials (note that this is distinct from field tests which is conducted to assess the performance of the technology and are conducted before the decision to acquire the technology is made). The primary objectives at this stage are to demonstrate benefits of Globe's LTE and to convince the target market that adopting Globe's LTE is good for them. The key measures that need to be monitored at this stage are the number of customers that participated in the demo, the number of customers that are satisfied with the demo and the number customers who signed-up or express interest in subscribing. The performance targets at this stage are the participation of 50,000 customers with 90% satisfaction rating and 50% subscription (or intention to subscribe) rate.
8.1.3. Launch Stage
After the demo goals have been meet, the next stage is the launch stage. The launch stage will include all activities in preparation of the launch such as customer-support training and marketing campaigns directed at acquiring subscribers. The primary objectives at this stage are to acquire subscribers and to maintain subscribers satisfaction. The key measures at this stage are the number of subscribers, customer satisfaction, sales and ARPU. The targeted subscriber satisfaction rating at this stage is 90%. The financial targets are detailed in financial sections of this paper. Furthermore, a sales analysis will be conducted to evaluate early financial performance and formulate action plans to improve future performance.
8.1.4. Sustaining Stage
The sustaining stage follows after the launch. The primary objectives at this stage is to increase the market share, maintain subscriber satisfaction and increase subscriber mobile internet activities. The key measures at this stage are market share, sales, profit, ARPU, ROI and subscriber satisfaction. The targeted subscriber satisfaction rating at this stage is 90%. The financial targets are detailed in financial sections of this paper. Furthermore, regular sales analysis will be conducted to evaluate financial performance and formulate action plans to improve future performance.
8.2. Marketing Organization
Marketing will be organized into three teams:
All three teams will have a team leader that will report directly to the Marketing department head. The team leaders will be responsible for keeping his team informed and updated. The three team leaders and the Marketing head will form a committee to keep the three teams in synch in terms of progress, actions and issues. The committee will also serve as the review and monitoring body to ensure that implementation is on track. It will be responsible for formulating and enacting corrective action and counter-measures with the assistance of all three teams.
8.2.1. External Marketing Team
The external marketing team will be responsible for all externally-directed marketing efforts. The team will be responsible for planning and implementing promotions, ad campaigns, demos and trials. The external marketing team will work closely with technical and engineering departments to ensure that the public is informed of the benefits of Globe's LTE and to ensure that demos and trials proceed smoothly. The team will also coordinate with sales, R&D and the market research team to determine what customers really want and whether promotion and demo campaigns are effective. Together with the internal marketing team, the external marketing will also organize the product launch.
8.2.2. Internal Marketing Team
The internal marketing team will be responsible for all internally-marketing effort. The team will be responsible for ensuring that employees are knowledgeable and believe in the product. The team will be responsible for organizing internal product briefings, technology demos and regular updates. To perform these activities effectively the internal marketing team is expected to coordinate with the technical and engineering departments along with the Market research team. The team will also be responsible for organizing personnel trainings in preparation for product launch.
8.2.3. Market Research Team
The market research team will be responsible for conducting market research and analysis. The team will be closely working with R&D, sales and the other marketing teams to ensure that efforts are aligned. The market research team will be responsible to gathering, organizing and analyzing data that will inform decisions of both the internal and external marketing team. It will also provide the committee with key performance measures that will enable it to evaluate the progress, performance and effectiveness of the overall marketing effort.
8.3. Contingency Plan
The contingency plan will identify and address various risk that may materialize in the process of implementing the marketing plan. The identified risks are as follows:
8.3.1. Competitor First-to-Market
In case one of Globe's competitor beats it to the market, Globe needs to adjust and implement a fast-follower strategy and take advantage of the free-rider effect. This implies cutting down effort and resources allocated to building customer awareness and to refocus the effort and resources to providing better performance and value-added services. It needs to reposition itself not only as provider high-speed internet but of innovative mobile internet services. In this case, product differentiation becomes key even prior to market entry.
8.3.2. Slow Adoption Rate
If customer are slow to adopt LTE, Globe needs to adjust its implementation schedule to correspond to adoption rate. This implies holding out on investments and major capital expenditure and scaling down LTE-related activities until the cause is of slow adoption is determined, the counter-measures have been enacted and the rate picks up. The key is to have the necessary checks and measures in place to recognize that the customers are not adopting the technology as fast as expected. It is also key to determine what is causing the slow adoption rate in order to enact the necessary counter measures. Is it because of low customer awareness? If it is, then there is a need to ramp up promotional campaigns. Is it because of performance? If it is, then there's a need to invest more on improving performance.
8.3.3. Lack of LTE-Capable Devices
This is related to the previous scenario. The lack of LTE-capable devices may be holding back customers from adopting LTE. The key in mitigating this risk is to realize it early on. If it can be projected that there might be a lack of LTE-capable devices, Globe can form partnership with device manufacturers to ensure that LTE-capable devices will be available when expected. For instance, it can subcontract manufacturing of LTE-capable mobile phones that will be marketed under its brand together with its LTE offering.
8.3.4. LTE Not the Dominant Design
It is possible that another technology, WiMAX for instance, will beat LTE to become the dominant 4G design. It is therefore important that Globe maintains and continue investing in its WiMAX network in parallel with its implementation of LTE. Phasing its implementation of LTE will also help mitigate this risk (so that it does not unnecessary invest huge sums of capital on technology that is yet to be proven.) Furthermore, Globe needs to be always on the look out for the emergence of new rival 4G technologies (i.e. through technology scouting for instance.) It must have the resources and capacity to take advantage of a “better” technology if and when it comes.
Sources:
https://www.cia.gov/library/publications/the-world-factbook/geos/rp.html
http://www.cicred.org/Eng/Seminars/Details/Seminars/Popwaves/PopwavesGultiano.pdf
http://aboutmyrecovery.com/2009/03/26/yahoo-nielsen-first-ever-internet-habits-study-for-the-philippines/
http://technology.inquirer.net/infotech/infotech/view/20090412-198910/Filipinos-get-sucked-into-worldwide-web
http://www.apcontactcenters.com/artigos/Consumer%20Attitudes%20to%20Utility%20Products.pdf
http://www.abs-cbnnews.com/business/01/31/11/philippine-economy-grew-73-2010
http://www.mb.com.ph/articles/304529/2010-remittances-hit-1876-b-82
http://www.bworldonline.com/content.php?title=Philippine%20potential%20cited&id=26912
http://en.wikipedia.org/wiki/Business_process_outsourcing_in_the_Philippines
http://gigaom.com/2010/04/12/mary-meeker-mobile-internet-will-soon-overtake-fixed-internet/
http://techcrunch.com/2011/02/10/meeker-mobile-slides/
http://www.philstar.com/Article.aspx?articleId=661485&publicationSubCategoryId=66
http://www.abs-cbnnews.com/business/02/19/11/smart-prepares-network-next-gen-technologies
http://4g-wirelessevolution.tmcnet.com/topics/4g-wirelessevolution/articles/88618-phillipines-based-sun-cellular-selects-ceragon-networks.htm
http://www.slideshare.net/yuga/yahoonielsen-net-index-2010
http://www.abs-cbnnews.com/business/03/01/11/telcos-push-added-broadband-spectrum
3.1 Macroenvironmental Factors
3.1.1. Demographic Profile
As of July 2010, the population of the Philippines is estimated at 99.9 million making it the 12th most populous country in the world. Sixty percent of the population fall between 15-64 years old, while thirty-five percent are under 15. Of those between 15-64, around half are estimated to be below 30; with the median age of the entire population being 22. These figures show that the Philippines has a very young population and that the youth (the segment of the population between 15-29) is a significant and lucrative market. Furthermore, with 35% of the population below 15, a product or service target that manages to capture the youth market can expect sustained, if not increased, demand over the next decade. These and other demographics data are summarized in following table.
Table __. Demographic Data (2010 est.)
| Population | 99,900,177 |
| Age Structure 0-14 years 15-64 years 65 years and over | 35.2% (male 17,606,352/female 16,911,376) 60.6% (male 29,679,327/female 29,737,919) 4.1% (male 1,744,248/female 2,297,381) |
| Median age | total: 22.7 years male: 22.2 years female: 23.2 years |
| Population growth rate | 1.93% |
According to 2008 survey conducted by Nielsen Company and Yahoo, more than 40% of the youth are internet users. The survey revealed that internet users are likely to be early adopters, trend conscious, tech-enthusiasts and willing to pay for quality products. So on top of the segment's sheer size, its characteristics and values make it an ideal target for new technology-related products and services. The survey also revealed that internet use is skewed towards the upscale and well-educated (i.e. belongs the upper and upper middle class or the so-called ABC1 segment).
3.1.2 Economic Climate
3.1.2.1 Recent Economic Performance
Over the past several years, the Philippine economy has been growing significantly. In 2010, its GDP grew by 7.3%, the fastest in more than three decades. This is after it grew 7% in 2007, another multi-decade high at that time. In 2008 and 2009, when most of the world was in recession due to the global financial crisis, it grew by 3.7% and 1.1% respectively. These figures indicate a stable, healthy and growing economy.
The current Philippine economy is said to be consumption-driven, which implies two things: 1) the economy is less susceptible to international economic shocks, and 2) there is significant potential for higher economic growth (since if the economy is growing with little investment, it is expected to grow even faster with more). Both of which are good for firms delivering consumer products and services. With utilities already being treated as consumer products and with mobile internet fast becoming a utility, both will also be good for mobile internet providers.
A primary fuel of the Philippines' consumption-driven economy is OFW remittances, which has been reaching all-time highs for several years now. In 2010, OFW remittances grew by 8.2% reaching another all-time high at about $18.8 billion. The resilience of OFW remittances in the face of the recent global economic crisis demonstrated that OFW remittances provides a reliable support to the local economy. Another source of support is the fast-growing BPO industry, which has grown more than 30% annually since 2006. As of 2010, the Philippines overtook India as the leading call center destination in the world, making it 3rd overall in terms total BPO revenues. (It is worth nothing that majority of BPO employees are young professionals.) The year 2010 was not only good for the BPO industry but for entire business sector in general. Many publicly-listed companies achieved spectacular and even record earnings in 2010. These results have been reflected in the PSEi, the Philippine Stock Exchange's main index, which reached its all-time high in 2010. All these indicators point to a continuing trend and an opportunity that local firms cannot afford not to take advantage.
3.1.2.2. Future Prospects
As early as 2008, the Philippines has been identified by IMF as a newly industrialized country (NIC), placing it in the same league as Brazil, India, China, Mexico, Malaysia and Thailand (among others). Furthermore, Goldman Sachs has identified the Philippines as among the so-called "Next Eleven" (next to Brazil, Russia, India and China in having "a high potential in becoming the world's biggest economies in the 21st century.") It is projected that by 2050 (when China is the largest economy in the world), the Philippines will be the 17th richest country in the world (19th per capita) with a GDP of $3 trillion. The Philippines is also included in Citigroup's "3G" or "global growth generators". Due to the Philippines young population and sustained fast economic growth, Citigroup sees the the Philippines as one of 11 countries that will deliver high growth and profitable investment opportunities in the 21st century.
3.1.3. Technology
3.1.3.1. Global Trends
By 2014, mobile internet users is projected to outnumber desktop/fixed internet users in the world. Furthermore, mobile data traffic is expected to grow 26 times. On top of this, global shipments of smartphones and tablets is also expected to outnumber shipments of laptops and desktops as early as the end of 2011 and the former is expected to be almost twice of the later by the end of 2013. Social networks like Facebook, Twitter, Zynga and Groupon have been identified as a primary factor accelerating mobile internet growth.
3.1.3.2. Local Trends
In the Philippines, mobile internet is still in its infancy with a penetration rate of around 5-6% as of 2010. However, it is undergoing rapid growth as seen in the growth of mobile internet (or wireless broadband) revenue of Smart and Globe. As of the third quarter of 2010, Smart's wireless broadband revenues grew by 23% and Globe's nearly doubled. Furthermore, it is also projected that over the next 2 years, a large number of mobile phone users will shift to internet-capable smartphones. Like the rest of the world, social networks are considered a primary factor accelerating mobile internet growth in the Philippines. At 90% of total internet users as of 2010, social networking penetration in the Philippines is among the highest in world and the highest in Asia-Pacific. As the cost of mobile internet and internet-capable mobile devices become more affordable and available, the growth of mobile internet users is expected to accelerate even faster.
3.1.3.3. Convergence And Mobile-Internet
The advent of mobile internet has bough about the convergence of what used to be clearly distinct technology areas: telecommunication, broadcast media and information technology. Many things that we used to be able to do only with our TVs and computers in the past, we can already do with our mobile phones today. As the technologies converge even further, the utility of our mobile phones increases and the need for mobile internet becomes even more pronounced. The relationship between mobile internet and convergence forms a self-sustaining cycle (limited only by eventual market saturation). Thus, the trends discussed in the previous sections are not merely fads or short-term trends but are sustainable and long-term.
3.1.3.4. Technology Response
Two competing technologies have been developed to address the projected exponential increase in mobile internet demand and data traffic: WiMax and LTE, both of which are based on Orthogonal Frequency Division Multiplexing (OFDM). WiMax is an open standard, while LTE isn't. This means that it will be cheaper to develop equipments for WiMax. However, this mitigated by the common design of WiMax and LTE which means that about 85% of WiMax equipment design can be re-used for LTE. Furthermore, while WiMax is expected to be faster as it matures (at download rates of around 1Gbps compared to LTE's 100 Mbps), LTE is considered a more natural upgrade to existing GSM networks which means that for an existing GSM-network operator developing a WiMax network would be significantly costlier than developing an LTE network which is probably the reason why around 80% of worldwide carriers are expected to go with LTE. The table below summarizes the comparison between WiMax and LTE.
Table __ LTE vs WiMAX
LTE
|
WiMAX
|
|
|
In the local front, all four players (Smart, Globe, Sun and Liberty) have invested and built WiMax networks while only Smart and Globe are known to have conducted field tests on LTE.
3.1.4. Political Climate
The election of the current administration appears to have renewed consumer, business and investor confidence. Recent surveys conducted by SWS and Pulse Asia reveal higher public optimism. This renewed confidence has been reflected in the stock market as well, with its main index reaching an all-time high late last year due to the inflow of portfolio investments from both local and foreign sources. Record capital expenditure allotment from the likes of SM Group, Ayala Group, SMC, PLDT and Megaworld demonstrate unparalleled confidence in the current and future prospects of the country.
Despite encountering a few setbacks, the new administration, particularly the president, continue to enjoy record approval ratings. Its high political capital and proactive support for private-public partnership appear to have sparked the interest of the Philippines largest conglomerates like SMC, SM, PLDT/MPIC on putting their weight behind massive infrastructure projects like building highways, airports and railways.
3.1.5. Regulatory Matters
Recently, local telecommunication firms submitted a proposal to impose a cap on the volume of data a broadband subscriber can used. Due to opposition from consumer groups and general public, regulators have rejected the proposal. In response to this, local telecommunication firms have pushed for allocation of additional broadband frequencies. In addition, they have stressed the need to enforce a fair use policy to ensure that all subscriber are given a fair opportunity to access their services (i.e. to protect users from a few “abusive” users who hog broadband capacity.) NTC has yet to decide on both request.
Mobile broadband internet including LTE is heavily dependent on adequate spectrum. With a limited spectrum, future LTE performance will be adversely affected and will only be able accommodate limited traffic (that is below its theoretical capacity.) In the face of the exponential growth of mobile internet usage, spectrum availability will therefore become a limiting factor that mobile internet operators will have to contend with.
3.2. Microenvironmental Factors
3.2.1. Suppliers
The role of network and telecommunication suppliers is crucial to the rapid adoption of LTE. The suppliers can be group into two main categories: equipment suppliers and device suppliers. Equipment suppliers pertain to suppliers of back-end equipments that enable carriers or telecommunication firms to operate LTE networks, which range from single box level equipments to complete end-to-end solutions. In other words, these are the equipment suppliers of telecommunication firms. Nokia Siemens Networks, Alcatel-Lucent, Ericsson, Motorola, Huawei and ZTE belong to this category. Considering that 80% of worldwide carriers are expected to go with LTE and that there is only a small number of equipment suppliers on top of the fact that LTE is a relatively new technology, equipment suppliers can be expected to have a high bargaining power.
The second category pertains to suppliers of consumer devices such as LTE-capable mobile phones, USB modems or dongles and the likes. These are the firms that supply devices to end-users that will allow them to utilize the telecommunication firms' LTE networks. Several firms or related firms in the previous category such as Nokia, Ericsson, Mototrola for mobile phones and Huawei and ZTE for USB modems or dongles also belong in this category. In addition, this category also include big-brand firms like Samsung, Apple and HTC and small firms with little or no brand recognition like mobile phone manufacturers in China and India. The sheer number of device suppliers suggest that they have a low bargaining power. However, this is not entirely the case since in consumer electronics, brand significantly alter the dynamics of the relationship between suppliers and consumers. Nevertheless, the role of suppliers in this category is just as crucial for rapid adoption of LTE as of those in the first. As such, it can be expected that LTE-capable devices will be costly during the initial stages but can be expected to decline as suppliers ramp up production. The availability of many suppliers will also enable telecommunication firms to form partnership with them to develop devices under the telecommunication firms' brand to ensure the availability of such devices to the consumers (at lower prices) and encourage rapid adoption of LTE.
3.2.2. Competitors
Globe's main competitor, Smart, is also investing on LTE and has been conducting field test since the second half of 2010. It has worked with both Nokia Siemens Networks and Huawei Technologies for LTE field test in Manila, Cebu and Iloilo City. It claims to be the first in the Philippines to surpass the 100 Mbps mark in field tests. The company has stated its plans for pilot deployment this year.
Liberty Telecommunication has also signified its intention go into LTE. Though, it is not known if it has already started LTE trials and field tests. Sun Cellular, though it has not publicly signified its entry into LTE, has selected Ceragon Networks to expand its existing 2G/3G networks. Ceragon Networks is a known provider of high-capacity, LTE-ready wireless backhaul solutions. This could pave the way for Sun's entry into LTE as well.
As mentioned in a previous section, like Globe, all three of its competitors have operational WiMax networks. With the ongoing global trend of carriers going to LTE (driven by the projected exponential increase in demand as discussed previously), it is only a matter of time before all three go into LTE as well. It is therefore imperative for Globe to acquire consumer mind share and to be associated with LTE or high-speed mobile internet and innovative mobile services as early as now.
3.2.3. Customers
Filipino internet users are likely to be young (below 29 years old), single, upscale and well-educated. They value individualism and desire to stand out among the crowd. They are likely to be opinionated, early adopters, trend- and fashion- conscious and tech-savvy. Their primary online activities are search, instant messaging, email and social networking and their primary motivations for going online are entertainment (i.e. search for entertainment-related content like images, videos and music) and communication (i.e. stay in touch, send email, chat, let other people know what they're doing.) Of those who use mobile internet, 40% expect to spend more time in the future. For them, social networks are not merely sites but platforms to connect, communicate and be entertained.
As the number of mobile internet users and the time they spend on mobile internet grow, their demand for richer content and thus faster connection speeds are expected to grow as well. On top of their tech-savvy, trend- conscious and early adopter nature, their desire for more and richer content will become a strong motivator for their adoption of LTE-based mobile internet.
3.2.4. Competitive Strategy
The mode of competition in traditional cellular services (i.e. data / SMS and voice) has always revolved around price since these services are commoditized and there is little opportunity for differentiation. However, this won't be the case for high-speed mobile internet. Mobile internet enables or creates a host of other opportunities. It provides a platform for telecommunication firms to offer more value-added and bundled services that have a high potential of increasing their average revenue per user (ARPU). Among them are mobile advertising, m-commerce, mobile-content delivery and mobile gaming. Therefore, the group believes a combination of the first-mover strategy, niche-market strategy and product differentiation strategy would be the most effective strategy for Globe in launching LTE and achieving and sustaining market leadership.
As previously noted, despite having operational WiMax networks, it reasonable to assume that all three of Globe's competitors would also go into LTE (even in varying degrees) because the dominant design between WiMax and LTE has not yet been established (i.e. not preparing for LTE is a risk none of the players can afford to take). It is therefore imperative for Globe to be the first mover. Being the first mover will provide Globe with several advantages that it can later leverage as it expand beyond its initial target market; among these advantages are acquiring mind share not only of initial target market but of the entire population (which can be translated to market share later), controlling limited resources (like broadband spectrum) and establishing switching costs. By being associated with LTE or high-speed mobile internet, Globe will gain a consider advantage over its competitors. Its introduction of LTE against traditional wireless broadband and WiMax would be a differentiator in itself during the initial stages when it is the first and only LTE provider.
In terms of initial market selection, the group recommends a niche-market strategy. Demographic analysis and profiling of current internet users suggest that Globe will achieve the greatest impact (not to mention cost-effectiveness) if it focuses its initial efforts on young adults and young professionals belonging to the upper and upper-middle class.
Finally, for long-term, sustainable market leadership, the group believes that adopting a product differentiation strategy through innovative value-added and bundled services will be key. After it has successfully penetrated its initial target market and at a time when all of its competitor would have started their own LTE operations, Globe will be able to retain its customers and expand into a wider market by providing mobile internet-based services that the public needs. Among those that have a very high potential of becoming big businesses in themselves are mobile content-delivery (e.g. IPTV or TV-on-Phone, Video-on-Demand), m-commerce (e.g. mobile payment applications), mobile-gaming and context-aware services (e.g. location-based services.)
8. Controls
8.1. Implementation
The marketing plan will be implemented in three stages:
- Hype Stage
- Demo Stage
- Launch Stage
- Sustaining Stage
To ensure smooth implementation, each stage will have a set of objectives and a set of measures to determine if the objectives are being meet. Bi-weekly reviews will be conducted to monitor the progress at each stage and to formulate corrective action and counter-measures if necessary. Furthermore, market analysis will also be conducted on a regular basis through out the stages to identify trends and shifts in customer behavior.
8.1.1. Hype Stage
During the this stage, efforts would be focused on building customer awareness on Globe's LTE and informing potential customers of the benefits of adopting Globe's LTE. The primary objectives at the stage are to create excitement and anticipation around Globe's LTE offering and acquire precious mind share. The key measures that need to be monitored at this stage are customer awareness and customer excitement which can be acquired through various kinds of surveys. The performance targets at this stage are 90% awareness in the target market and 50% excitement.
8.1.2. Demo Stage
After sufficient awareness and excitement have been built up, the next stage is to conduct demo and free trials (note that this is distinct from field tests which is conducted to assess the performance of the technology and are conducted before the decision to acquire the technology is made). The primary objectives at this stage are to demonstrate benefits of Globe's LTE and to convince the target market that adopting Globe's LTE is good for them. The key measures that need to be monitored at this stage are the number of customers that participated in the demo, the number of customers that are satisfied with the demo and the number customers who signed-up or express interest in subscribing. The performance targets at this stage are the participation of 50,000 customers with 90% satisfaction rating and 50% subscription (or intention to subscribe) rate.
8.1.3. Launch Stage
After the demo goals have been meet, the next stage is the launch stage. The launch stage will include all activities in preparation of the launch such as customer-support training and marketing campaigns directed at acquiring subscribers. The primary objectives at this stage are to acquire subscribers and to maintain subscribers satisfaction. The key measures at this stage are the number of subscribers, customer satisfaction, sales and ARPU. The targeted subscriber satisfaction rating at this stage is 90%. The financial targets are detailed in financial sections of this paper. Furthermore, a sales analysis will be conducted to evaluate early financial performance and formulate action plans to improve future performance.
8.1.4. Sustaining Stage
The sustaining stage follows after the launch. The primary objectives at this stage is to increase the market share, maintain subscriber satisfaction and increase subscriber mobile internet activities. The key measures at this stage are market share, sales, profit, ARPU, ROI and subscriber satisfaction. The targeted subscriber satisfaction rating at this stage is 90%. The financial targets are detailed in financial sections of this paper. Furthermore, regular sales analysis will be conducted to evaluate financial performance and formulate action plans to improve future performance.
8.2. Marketing Organization
Marketing will be organized into three teams:
- External Marketing Team
- Internal Marketing Team
- Market Research Team
All three teams will have a team leader that will report directly to the Marketing department head. The team leaders will be responsible for keeping his team informed and updated. The three team leaders and the Marketing head will form a committee to keep the three teams in synch in terms of progress, actions and issues. The committee will also serve as the review and monitoring body to ensure that implementation is on track. It will be responsible for formulating and enacting corrective action and counter-measures with the assistance of all three teams.
8.2.1. External Marketing Team
The external marketing team will be responsible for all externally-directed marketing efforts. The team will be responsible for planning and implementing promotions, ad campaigns, demos and trials. The external marketing team will work closely with technical and engineering departments to ensure that the public is informed of the benefits of Globe's LTE and to ensure that demos and trials proceed smoothly. The team will also coordinate with sales, R&D and the market research team to determine what customers really want and whether promotion and demo campaigns are effective. Together with the internal marketing team, the external marketing will also organize the product launch.
8.2.2. Internal Marketing Team
The internal marketing team will be responsible for all internally-marketing effort. The team will be responsible for ensuring that employees are knowledgeable and believe in the product. The team will be responsible for organizing internal product briefings, technology demos and regular updates. To perform these activities effectively the internal marketing team is expected to coordinate with the technical and engineering departments along with the Market research team. The team will also be responsible for organizing personnel trainings in preparation for product launch.
8.2.3. Market Research Team
The market research team will be responsible for conducting market research and analysis. The team will be closely working with R&D, sales and the other marketing teams to ensure that efforts are aligned. The market research team will be responsible to gathering, organizing and analyzing data that will inform decisions of both the internal and external marketing team. It will also provide the committee with key performance measures that will enable it to evaluate the progress, performance and effectiveness of the overall marketing effort.
8.3. Contingency Plan
The contingency plan will identify and address various risk that may materialize in the process of implementing the marketing plan. The identified risks are as follows:
- Competitor gets to the market first
- Customers are slow to adopt LTE
- Lack of LTE-capable consumer devices
- LTE does not become dominant design
8.3.1. Competitor First-to-Market
In case one of Globe's competitor beats it to the market, Globe needs to adjust and implement a fast-follower strategy and take advantage of the free-rider effect. This implies cutting down effort and resources allocated to building customer awareness and to refocus the effort and resources to providing better performance and value-added services. It needs to reposition itself not only as provider high-speed internet but of innovative mobile internet services. In this case, product differentiation becomes key even prior to market entry.
8.3.2. Slow Adoption Rate
If customer are slow to adopt LTE, Globe needs to adjust its implementation schedule to correspond to adoption rate. This implies holding out on investments and major capital expenditure and scaling down LTE-related activities until the cause is of slow adoption is determined, the counter-measures have been enacted and the rate picks up. The key is to have the necessary checks and measures in place to recognize that the customers are not adopting the technology as fast as expected. It is also key to determine what is causing the slow adoption rate in order to enact the necessary counter measures. Is it because of low customer awareness? If it is, then there is a need to ramp up promotional campaigns. Is it because of performance? If it is, then there's a need to invest more on improving performance.
8.3.3. Lack of LTE-Capable Devices
This is related to the previous scenario. The lack of LTE-capable devices may be holding back customers from adopting LTE. The key in mitigating this risk is to realize it early on. If it can be projected that there might be a lack of LTE-capable devices, Globe can form partnership with device manufacturers to ensure that LTE-capable devices will be available when expected. For instance, it can subcontract manufacturing of LTE-capable mobile phones that will be marketed under its brand together with its LTE offering.
8.3.4. LTE Not the Dominant Design
It is possible that another technology, WiMAX for instance, will beat LTE to become the dominant 4G design. It is therefore important that Globe maintains and continue investing in its WiMAX network in parallel with its implementation of LTE. Phasing its implementation of LTE will also help mitigate this risk (so that it does not unnecessary invest huge sums of capital on technology that is yet to be proven.) Furthermore, Globe needs to be always on the look out for the emergence of new rival 4G technologies (i.e. through technology scouting for instance.) It must have the resources and capacity to take advantage of a “better” technology if and when it comes.
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