Marketing Strategies and Operations (Ayokunle)

MARKETING STRATEGIES AND

OPERATIONS

2015 MTNNIGERIA

Written report by: Ayokunle Bajulaiye

Student number: A4094870.

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Executive Summary

This report provides an analysis of the marketing and communication mix of MTN Nigeria

limited. Methods of analysis include the adoption of 7’Ps of marketing. Prior to that,

industry’s competitive forces were examined alongside the macro environment as well as the

micro environment of MTN Nigeria using Porter’s 5 forces, PESTEL and SWOT analysis.

Findings from the analysis shows that, overall, MTN’s marketing strategies have recorded a

significant amount of success given the increase level of subscriber base and the range of

subscriber groups recorded year in year out.

The report also recommends strategies through which MTN Nigeria improve its marketing

effort by leveraging on its strengths and opportunities to its own advantage through the use

offensive and the adaptive strategies.

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Contents

Executive Summary ................................................................................................................. 2 Contents ................................................................................................................................... 3 List of Tables ............................................................................................................................ 4 1.0 Introduction ........................................................................................................................ 5 2.0 Case background ............................................................................................................... 5

2.1 Company Background ................................................................................................... 5 2.2 Market ............................................................................................................................ 5

3.0 Key Findings ...................................................................................................................... 6 3.1 Nigeria’s Telecommunication Industry, MTN Nigeria and Michael Porter’s 5 Forces .... 6 3.2 Problems and Prospect of Nigeria’s Telecom Giant, MTN Nigeria ................................ 7

3.2.1 PESTEL Analysis .................................................................................................... 7 3.2.2 SWOT Analysis ....................................................................................................... 8

3.3 Current Marketing and Communication Mix at MTN Nigeria ......................................... 9 3.4 Alternative Strategies ................................................................................................... 10

3.4.1 Adaptive Strategy .................................................................................................. 10 3.4.1 Offensive Strategy ................................................................................................ 10

4.0 Conclusion ....................................................................................................................... 11 References ............................................................................................................................. 12 Appendices ............................................................................................................................ 13

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List of Tables

Table 1: Market of Share (%) of MTN Nigeria and other Operators……....................................5

Table 2: Findings of Porter’s Five Forces Analysis………………………………………………..7

Table 3: Findings of SWOT Analysis………………………………………………………………..8

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1.0 Introduction

This report is aimed to examine the marketing and communication strategies used by MTN

Nigeria to market its products and services to its target market. It examines certain strategy

subject areas like marketing mix using the 7P’s of marketing and how MTN Nigeria has been

able to utilize these techniques as well as the accompanying challenges. The report also

suggests strategies through which MTN Nigeria can leverage on its strengths and

opportunities to its own advantage.

2.0 Case background

2.1 Company Background

MTN Nigeria is a telecommunication company and a subsidiary of MTN Group Limited that

operates one of Nigeria’s GSM licenses and has been in full commercial operation since

2001. MTN Group is a multinational telecoms organisation with a mandate to provide world-

class cellular network access for both mobile and business solutions. The Group recorded

about 82 million subscriber base in 2009 in the Middle East and Africa (Rilwan, 2013). Since

it got the license to operate in Nigeria under the democratic regime of former President

Olusegun Obasanjo, the company has continued to spread across the 36 states of the

country including Lagos Nigeria where the company is headquartered.

2.2 Market

MTN Nigeria has a strong presence in the country with a subscriber base that has grown

and estimated to be over 62 million according to the NCC 2015 rating (see Table 1).

Mobile Telecoms in Nigeria MTN Nigeria Globacom Etisalat Airtel

No. of Subscribers 62,493,732 31,306,472 23,492,214 31,134,625

Percentage (%) 42 21 16 21

Table 1: Market of Share (%) of MTN Nigeria and other Operators (Source: NCC, 2015).

MTN Nigeria provides telecom services ranging from internet and broadband services, voice

communication services, SMS services to tracking services.

The firm remains the biggest telecom operator in Nigeria; although fact remains that the

company has been through keen competition, especially given the presence of other major

telecom players like Airtel, Etisalat and Glo Nigeria (NCC, 2015), the company has

continued to spread across the country whilst offering services to about 223 towns and cities

within the country and over 10,000 communities and villages – all totalling a network

coverage of about 88.8% of Nigeria’s land mass. Over the company has enjoyed a long

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overriding advantage and a strong market position being the first in the mobile telecom

business in Nigeria.

As earlier mentioned, this report aims at providing the current marketing and communication

mix of MTN Nigeria; but, in the sequence of strategic analysis, there is a need to first and

foremost examine the problems and prospects of the company/industry (micro and macro

environment) using the Porter’s Five Forces analysis as well as the SWOT analysis. To this I

turn my attention.

3.0 Key Findings

3.1 Nigeria’s Telecommunication Industry, MTN Nigeria and Michael Porter’s 5 Forces

There are already about 4 major companies in the Nigeria’s telecoms industry including MTN

Nigeria. Thus, as the market is growing, competition is getting stringent, and the individual

companies are getting new customers (subscribers) using different strategies including

coverage capacity.

Porter’s 5 forces provide information about this nature of competition. The model entails two

themes known as the horizontal competition and the vertical competition. The latter

comprises of the bargaining power of suppliers and the bargaining power of buyers while the

former entails the threat of new entrants, competitive rivalry within the industry and threat of

substitutes (see Appendix).

Noticed that as the telecoms market is growing in Nigeria since MTN gained its operational

license in 2001, the bargaining power of customers (i.e. vertical competition) seem to be

high due to high growth rate of market, desires of customers for new and competitive

services from operators including MTN Nigeria.

On the other hand, bargaining power of supplier has gone from high to low given the

increase number of telecom supplier. The presence of major competitors like Glo NG, Airtel

and Etisalat makes competition high. The increase number of suppliers, telecom industry

thus reduce the bargaining power of suppliers.

The presence of other service providers like Airtel or Etisalat in the Nigeria’s telecoms

market also makes high availability of substitute for MTN subscribers. Noteworthy is that

entry barrier is also low because the industry is still at a maturity stage in the country, hence,

it involves high investments and players looking to invest would need to consider the

economies of scale.

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Following the descriptions, we can present the findings of the porter’s five forces compare

with the telecom market in Nigeria in relation with MTN Nigeria.

Market forces Challenges

Bargaining power of buyer High

Bargaining power of supplier Low

Threat of substitute product Moderate

Competitive rivalry High

Entry barrier Low

Table 2: Findings of Porter’s Five Forces Analysis (Source: Author, 2015).

3.2 Problems and Prospect of Nigeria’s Telecom Giant, MTN Nigeria

Of a fact, problems and prospects of any company has to do with its strengths, weaknesses,

opportunities, threats (SWOT); as well as political, economical, socio-cultural, technological,

environmental and legal (PESTEL) issues of any nation and the organization. Though the

telecoms sector of Nigeria faces lots of problems, it’s also a prospective field till now.

3.2.1 PESTEL Analysis

The PESTEL tool (an acronym for Political, Economic, Social, Technology, Environmental

and Legal factors) is used in analysing some factors that affect the macro-environment of the

mobile telecommunication industry.

• Political Instability:

Government’s intervention in the industry through various policies including fiscal policy, tax

policies, privacy policies, trade and labour laws among others, can affect the mobile telecom

industry as it is expected of the telecom operators to abide by these laws and policies

imposed by the government.

• Economical Issues:

With global GDP of 3.6%, the global mobile telecom industry can be described as a key

player in the world economy. This growth is subject to economic factors like interest rates

and inflation. Hence, there is a likelihood that operators will increase tariffs in a period of

recession. Income tax associated to the importation of telecom equipment is also a great

problem for the industry to survive in the industry.

• Social Factor:

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Social factors relating to safety and effectiveness or functionalities have affected the telecom

industry. The increasing usage of mobile devices has led to an increase in the desire of

customers to utilize more improved phone features like conference calls, emails, instant

messaging, as well as faster connectivity through 3G and 4G.

• Technological Factor

As the demands of consumers grow, technology also grows. Hence, telecoms industry

players invest heavily in the industry so as to meet the demands of mobile phone and

internet users. The increasing demand for improved connection speed (e.g. 4G wireless

technologies like LTE), fibre technology as a replacement for ADSL (Asymmetric Digital

Subscriber Line) also calls for heavy investments (Albini, 2013). Hence, telecom players

spend more on Research and Development as well as innovation (Lee, 2012).

• Environmental Factors

One of the latest concern in the industry is environmental issues and climate change. The

wide spread of Nigeria’s telecom giant across the country and other telecom industries in the

country is creating an intense hike in the quantity amount of e-waste in the country.

• Legal Factors

Telecom industry is well regulated in the country. Like any other major industry, the industry

has enjoyed stringent regulation from the Nigerian Telecommunication industry.

3.2.2 SWOT Analysis

Strength - First in the market - Lots of freebies to customers - Excellent sales team - Good brand identity, and brand

awareness - Wider coverage compared to competitors

Weakness - Unstable government policies - Poor road and transportation network - Non-sustainable packages - Poor brand perception (perceived as

economic dominance/hegemony)

Opportunities - Opportunities to explore the lower price

imposition by NCC - More room for expansion - Increased demand for services and

internet bundles - Market leader

Threats - Government sanctions and policies - Fallen oil price - Tight competition - Insatiable demands of loyal customers - Increased cost of sustaining alternative

power supply

Table 3: Findings of SWOT Analysis (Source: Author, 2015).

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3.3 Current Marketing and Communication Mix at MTN Nigeria

Communication is done side by side with marketing owing to the importance they provide

(Rilwan, 2013). Attaining an achievable target market and delivering the right product or

service at a reasonable price is the core principle of marketing (Rilwan, 2013). Marketing mix

however stands as the tool needed to achieve this core principle. This section of the report

examines the current communication and marketing mix of MTN Nigeria using the 7p’s

(recently upgraded from 4p’s). The 7p’s include: product, place (distribution and marketing

channel), promotion, price, process, people and physical evidence.

• Product

MTN offers both services and goods in form of SIM Cards, Internet Modems, and even

cellular and smart phones to its target market. The firm also offers consumer products and

individual/business products. Consumer products offered comprise of Internet and Bundle

Plans; while business products include the mobile numbers issued out to consumers which

usually begins with 0803, 0806, 0703, 0706, 0813, 0816 and in recent times, 0810 and

0903.

• Place

MTN Nigeria is to offer a reliable and sufficient channels of distribution from it organisation

unit to the final consumers of their product and service by creating more experience centre

(retail store) and making their recharge cards and others products and services to their

customers easily available.

• Promotion

Advertising is the tool used by MTN Nigeria in it is promotion strategy, which is more

preferable than another means of promotion strategy. Finally marketing activities enable

companies like MTN Nigeria to reach it final objectives and goals, which enable the MTN

Nigeria to satisfy its customers.

• Price

MTN Nigeria has adopted its pricing structure in diverse packages to generate the income

the organisation needed as a profit on the one hand and also to create a friendly and

affordable price for its subscribers. Some of these packages include the MTN magic number

that allows free calls for a day, MTN family and friend, which allows customers to make

cheaper calls to five family and friends; MTN zone and MTN extra connect, which allows

cheaper tariffs but not as cheap as family and friend.

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• Process

The flow of information and services to the target market is based on a number of

advertising and effective distribution chain.

• People

MTN Nigeria limited has leveraged on the diversity of the people to its advantage. The firm

also established a sound Customer Relationship Management with its customers as regards

the services they offer. MTN engages the people through sponsorship programs like #MTN

Project Fame,’ “Who Wants to be a Millionaire,” ‘MTN Family Challenge,’ just to mention a

few.

• Physical evidence

MTN Nigeria has a good number of experience centres (see Appendix) in the country with

well organised employees on uniformed wears. MTN Nigeria uses customer calling centres

as an activity which is relatively easier than an experience centre. Experience centres may

be some distance away from the location of some subscribers, it usually a phone call is

enough to resolve any claim (Rilwan, 2013).

3.4 Alternative Strategies

3.4.1 Adaptive Strategy

Adaptive strategy is a way of identifying a new approach to solving the ambiguity, problems,

uncertainty, complexities a business face. This strategy can be applied by exploiting

opportunities to tackle the firm’s weaknesses. Opportunities abound everywhere and the first

point of call is the potential customers who can patronize more services. Price reduction is a

promising way of attracting (not sustaining) potential customers. This can be used to

restructure MTN’s poor brand perception.

3.4.1 Offensive Strategy

In the corporate world, investment in Research and Development units as well as market

research is vital to organisational success. An offensive strategy can be beneficial to MTN

Nigeria in that it will go a long way in helping an organisation stay ahead of competitors. This

strategy entails the exploitation of both the strength and opportunities surrounding the firm

through a sound R&D in order not to be defeated as the market leader of the telecom

industry.

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4.0 Conclusion

Lastly, the marketing strategies of MTN Nigeria limited are well laid out and executed whilst

reflecting on how its activities improve the brand of the firm. Overall, findings showed that

the strategies have been successful as it has attracted more subscribers over the years than

any of its competitors in the industry. Going by the range of subscriber groups (0803, 0806,

etc.) and the significant growth in subscriber base over the years, it can be concluded that

MTN’s marketing activities have, to large extent, reached its goals and objectives.

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References

Albini, G. (2013). “An Analysis of the European Telecommunications Strategic Environment:

How Can Strategic Actions Be Defined to Adapt to the New Scenario? A Teleonica Case

Study”. International Master of Industrial Management, 8th Edition.

Lee, I. (2012). Mobile Services Industries, Technologies, and Applications in the Global

Economy. Hershey, IGI Global.

Nigerian Communication Commission (2015). Nigerian Communications Commission.

[Online]. Available at: http://www.ncc.gov.ng (Accessed 19 November 2015).

Rilwan, A. (2013). Marketing Activities and its Implications on Telecommunication Industry in

Nigeria: Case Study MTN Nigeria.

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Appendices

Showing Porter’s Five Forces (Source: David Braun, 2013)

PESTEL Tool (accessed from http://www.consultants-on-line.com)

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Showing MTN Experience Centre (Source: Rilwan, 2013)