u.s
TRANSCRIPT
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A Marketing Analysis Of The U.S. And Poland Cell Phone
Industries
By:Christine Gehringer
Andy MohleukMelissa SchlosserMaceij PietrowiczLina Kasyouhanan
Dave Presley
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Project Overview
– Better understanding of the overall industry and environment in both the U.S. and Poland
• Market saturation
• Growth trends and opportunities
• Environmental factors
• SWOT analyses
– Be able to identify the major players in both the U.S. and Poland
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Project Overview
– Comparative analysis of U.S. marketing strategies and Poland marketing strategies
• Who are the target markets in each country?
• How do the two countries market differently?
– Understanding the 4 P’s in each country• How do product, price, place and promotion differ
between the U.S. and Poland?
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U.S. Industry Analysis
How it all started…– 1947 – Researchers investigate the use of small cells
with frequency reuse to increase the traffic capacity of mobile phones
– 1977 – AT&T and Bell Labs constructed a prototype cellular system
– 1981 – Motorola and American Radio started a 2nd U.S. cellular radio-telephone system
– 1982 – FCC authorized commercial cellular service– 1983 – Ameritech made the first American commercial
analog cellular service available
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U.S. Industry Analysis
MARKET SATURATION• Four major mobile telephony operators:
– AT&T Wireless– Sprint PCS– Verizon Wireless– Cingular Wireless
In 2001 over $65 billion in revenues was generated with apenetration rate of about 45%
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U.S. Market Share Data
AT&T14%
Nextel8%
Sprint12%
VoiceStream 6%
Alltel5%
Verizon22%
Smaller providers
17%
Cingular 16%
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U.S. Industry Analysis
GROWTH RATE– 1987 – Cellular telephone subscribers exceed 1 million
– 1999 – Spending on wireless communications services totaled $45.2 billion
– 2002 – 268 million people in the U.S. live in counties with access to 3 or more different operators
– 2003 – Spending projected increase to $75.6 billion
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U.S. Cell Phone Penetration2001-2005
66%
64%
61%
53%
45%
0% 10% 20% 30% 40% 50% 60% 70%
2005
2004
2003
2002
2001
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U.S. Industry Analysis
INFRASTRUCTURE– 3 major components
• Antennas• Base • Towers
– Semiconductor integrated-circuits & modems also important
– Valued at $100 billion in 2000– Fixed amount of radio frequency or wireless bandwidth– Vendors work to increase capacity, coverage, and call
quality with these set limitations
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U.S. Industry Analysis
TECHNOLOGY BARRIERS– Digital replacing analog
• Benefits – Improve service reliability– Expand capacity of voice systems significantly– Lowers maintenance requirements
• Problems – Poor voice quality– Difficult conversion for the cellular operators
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U.S. Industry Analysis
-Buyer power low-Favorable
-Threat of new entrants is high-Moderately unfavorable
-Supplier power high-Moderately unfavorable
-Threat of substitutes is high-Moderately unfavorable
-Rivalry is low to moderate-Moderately favorable
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Major Players in U.S.
• AT&T
• Verizon Wireless
• Cingular
• Sprint
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AT&T
• Competitive monthly fee
• Best home area coverage
• Best national coverage
• Unlimited night and weekend minutes
• Best rates international calling
• Good website – compared to Verizon
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Verizon
• Largest wireless provider
• Lowest monthly fee
• Good home area coverage
• Good national coverage
• Second best international calling
• Easy to navigate website/ well organized
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Cingular
• Second largest wireless supplier
• Average home area coverage
• No roaming charges from anywhere
• Expensive international calling
• Poor website/not easy to navigate
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Sprint
• Smallest of four companies
• Average monthly charges
• Higher priced phones
• Minimal home and national coverage
• Minimal/non-existent international calling
• Poor website – not easy to navigate and technical problems
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Major Players in U.S.
• Cellular Service Comparison
Cost Popular
Calling Plan
Number of Anytime Minutes
Number of Night/Wkend Minutes
Additional Minutes Roaming Charges
Home Area
CoverageNationwide Coverage
Phone functions Phone Cost
International Rates Co. Size Website
Verizon $40.00 600 4000 $0.40 - (outside of home area) + + = $29.99 $.65/min + (#1) +Cingular $49.99 500 3500 $0.35 + (None) - - = $19.99 $1.40/min - (#2) -Sprint $49.99 500 4500 $0.40 - (outside of home area) - - = 99.99* N/A -(#4) - -AT&T $49.99 600 Unlimited $0.35 - (outside of home area) ++ ++ = $39.99 $0.35/min -(#3) =
*$50 rebate
Note: since there are different international rates for each country we used Germany for a comparative basis.
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Competitive Advantages Summary
• AT&T - Best coverage, unlimited nights and weekends
• Verizon – Best monthly charges, good coverage, largest supplier
• Cingular – No roaming calling from anywhere
• Sprint - No competitive advantage noted in comparison
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U.S. Environmental Analysis
• The Demographic Environment– As of December 2001, 128.5 million subscribers
(45% of population)– 268 million people (94% of the total population)
have three different operators offering mobile phone service
– 229 million people (80 % of the population) live in countries with five or more mobile operators
– Nearly 58% of Americans 12 and older own a mobile phone
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U.S. Environmental Analysis
• The Demographic Environment (cont.)– Geographic: Rural Vs. Urban
• Virtually no difference in price• Usage is significantly different
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U.S. Environmental Analysis
• The Sociocultural Environment– “Cutting the Cord”—growing evidence proves
more people are canceling service from their home telephone provider
– Almost one in five mobile phone users regard their wireless phone as their primary phone
– Even though average pricing has been increasing since 1999, usage has increased to an average of 385 minutes. An increase of 51% from the prior year, during the same month
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U.S. Environmental Analysis
• The Economic Environment– The average cost per plan is $36.70– Continued rollout of differentiated plans
– The Americas (including Latin America) is the fastest-growing region with a compound annual growth rate of 73%
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U.S. Environmental Analysis
• The Political/Legal Environment– Deregulation of the Telecom industry– Spectrum licenses: Cellular, Broadband PCS,
and SMR
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U.S. Environmental Analysis
• The Technical Environment– The four main digital technologies used in the
U.S.: CDMA, GSM, Iden, and TDMA– Third Generation (3G): cdmq2000 1xRTT,
GPRS, and WCDMA– Mobile Satellite Services (MSS) in the U.S.
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U.S. Environmental Analysis
• The Physical Environment– 276 million people, (97% of the total U.S.
Population) live in counties where operators offer digital services using CDMA, TDMA/GSM, or IDEN technologies. These counties make up 70% of the total land are of the U.S.
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U.S. SWOT Analysis
• Strengths– Lows prices/affordability– Variety of service providers and calling plans– Calling plan benefits
• free long distance
• wireless web
• PDA-like features
– Easy of use
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U.S. SWOT Analysis
• Weaknesses– Customer service– Service provider web sites
• not user friendly
– Mass marketing strategy • Need to market to different segments
• Need to differentiate from competitors
– Service contracts
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U.S. SWOT Analysis
• Opportunities– Wireless web– Bundling
• Bundle phone with accessories
– Business to Business market– Work on current weaknesses
• improve customer service
• practice differentiated marketing
• improve service provider web sites
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U.S. SWOT Analysis
• Threats– Satellite communication
• Current infrastructure would be rendered obsolete
– Two-way radios• Nextel
– Government regulations
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U.S. Threat Matrix
Low Probability
-Satellite communicationHigh Probability
Low ImpactHigh Impact
-Two-way radios
-Government regulation
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4 P’s in the U.S.
• Product
• Price
• Place
• Promotion
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4Ps: Product
• Voice & data products and services
• Text Messaging
• Wireless Internet
• Family/share plans
• Mobile-to-mobile
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4Ps: Price
• Competitive pricing– Dependant upon local or national plans &
number of minutes
• “Options” pricing sets companies apart
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4Ps: Place
• Internet sales & service
• Full service stores for sales & service
• Retail chains for activation
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4Ps: Promotion
• TV, Print, Radio, Direct Mailings, and in-store placement
• Sponsorships of Movies, TV, and events• Free services
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Poland’s Wireless Communications Industry
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Environmental Analysis
• Population 38 million
• Europa’s 7th largest market (by population)
• Geographics
• Economic situation
• Political situation
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Industry Analysis
73%67.30%
61.80%
42.20%30.80% 27%
0%
20%
40%
60%
80%
Cell Phone Market Saturation in Selected European Countries
Sweden UK Spain Chech Rep. Hungary Poland
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Industry Analysis
• Market potential Poland's population by age groups
in millions
7.15
27.70
4.79
0-1415-64over 65
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Industry Analysis
Poland's cell phone market structure
27%
38%
35%Centertel SA
Polska TelefoniaCyfrowa SAPolkomtel SA
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Major Players in Poland
• Centertel
• Polska Telefonia Cyfrowa
• Polkomtel
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Polska Telefonia Cyfrowa SA
• Financial Structure
• 4.0 million customers
• 98% signal coverage
• Roaming data unavailable
Polska Telefonia Cyfrowa SA
Financial Structure
28%51%
21%
Deutche Telecom
Electrim/Vivendi
Minority owners
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Polkomtel SA
• Financial Structure
• 3.6 million customers
• 96% signal coverage
• Roaming with 227 operators in 113 countries
Polkomtel SA Financial Structure
60%20%
20%
Polish Corporations
Vodafone
Tele Denmark
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Centertel SA
• Financial Structure
• 2.8 million customers
• 95% signal coverage
• Roaming with 220 operators
Centertel SA Financial Structure
34%
66%
France Telecom
Telekomunikacja Polska SA
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Polska Telefonia Cyfrowa SA
• Products
business individual prepaid
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Polkomtel SA
• Products
Business
Individualand prepaid
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Centertel SA
• Products
business individual prepaid
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Poland SWOT Analysis
• Strengths– High barriers of entry– Financial backing of international
companies– Newest technology comparable with biggest
foreign competitors
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Poland SWOT Analysis
• Weaknesses– Small market capitalization– Small customer base– Undifferentiated marketing
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Poland SWOT Analysis
• Opportunities– Low market saturation– E-banking and other PDA like
applications– Direct marketing via cell phone
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Poland SWOT Analysis
• Threats– Opening to the EU competition– Government deregulation– Satellite phone communication– Improvements in stationary phone
services
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Poland Threat Matrix
High Impact Low Impact
High Probability
-Market deregulation
-Improvements in stationary phone service
Low Probability- Satellite mobile phone service
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4 P’s in Poland
• Product– Voice and data transmission, SMS, MMS, news
and weather messaging, e-banking– Hardware
• Price– careful avoidance of direct price competition– prepaid, business and individual (postpaid)
pricing
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4 P’s in Poland
• Place– Three tiered distribution– Internet selling
• Promotion– Three target markets– Print, media, event advertising, direct
marketing
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Conclusion
US• Biggest national
market• Analog switching to
digital - 4 technologies• Focus on individual
users• “Cutting the cord”
Poland• Emerging market• Fully digital networks
1 technology• Focus on business and
prepaid users• “getting the phone”
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Conclusion
US• Trying to define niche
market• Price competitiveness• Increasing the market
share through price differentiation strategy
Poland• Three target markets• Avoidance of price
comparisons• Service and features
differentiation strategy