Integrated Communication Plan - for the UK Mobile Phone Market

Table of contents

Executive Summary

List of Figures

List of Tables

1 Target Market Analysis
1.1 Socio-demographic Characteristics
1.2 Psychographic Analysis
1.3 Behavioural Aspects
1.4 Needs of the Target Audience
1.5 Market Development
1.6 Summary

2 Market Analysis
2.1 Payment Options
2.2 New Generation Models
2.3 Advertising and Promotion
2.4 Challenges
2.5 Corporate Assessment
2.6 Summary

3 Problem Identification
3.1 Sub-Problems

4 Problem Resolution: Marketing Strategy

5 IMC Drivers
5.1 Direct Marketing Mediums
5.2 Mobile-Marketing

6 Recommended IMC Strategy
6.1 Introduction to ‘Sie Mobile’
6.2 Evaluation Procedure
6.3 Flexibility

7 Pricing

8 Conclusions

9 Bibliography

Appendix

Executive Summary

This report outlines a new IMC strategy for the ‘Siemens Mobile’ brand, which, despite being a well recognised brand, has yet to make a strong impact within the 16-24 year old age group. It also contains an in depth analysis of the target market, and as well as a breakdown of the current position and image of Siemens Mobile.

The target market for this segment has many unique attributes, which make it unusual, but one which is potential very profitable. The 16-24 year old group is very fashionable, sociable, and concerned with social acceptance, but at the same time wishing to display a degree of ‘individualism’.

Siemens mobile is currently has an image of a focused, efficient, technologically advanced company with a reputation for quality engineering. They are currently positioned towards the ‘older’ business class clients, who value quality and engineering excellence.

In order to appeal to the 16-24 year old market, a re-branding and re-positioning of the ‘Siemens Mobile’ brand will need to occur. A new, fun, trendy, fashionable, energetic, and youthful brand of ‘Sie Mobile’ (pronounced ‘see-mobile’) will be introduced which will appeal to younger people. This new brand will be closely correlated to the attitudes and values identified within the 16-24 age group.

‘Sie Mobile’ will be introduced in several stages, based on the customer’s buying process (Holder and Watson’ pyramid model; IDM, 2004). It will utilise both established and new marketing techniques including television, radio, magazine, internet, SMS, and billboard campaigns. This strategy will emphasise the fun, fashionable, and technological features of the brand, and will cost approximately £8,750,000 to launch.

List of Figures

Figure number Name of Figure

Figure 5.1 Direct Marketing by Media.

Figure 5 Yearly totals of chargeable text messages, 1999-2003.

Figure 5.0.1 customer’s buying process pyramid.

List of Tables

Table 1.1.1 Population growth.

Table 1.1.2 Income statistics of the UK.

Table 1.1.3 Target market accommodation.

Table 1.3.1 Reasons for buying a mobile phone.

Table 2.1 Estimated mobile phone handset brand share, by volume, 2000-02.

Table 2.1.1 UK retail sales of mobile phones, by volume and type of package, 1999-2000.

Table 2.4.1 Total main monitored media advertising expenditure on the mobile phones market, by media type, 2001 and 2002.

Table 2.4.2 Top five advertisers - mobile phone handsets, 2001 and 2002.

Table 5.1 Information sources of the target audience.

Table 5.2 Telephone penetration among Mintel's sample of 15-29-year-olds, July 2000. Telephone penetration among Mintel's sample of 15-29-year-olds, July 2000.

1 Target Market Analysis

This section analyses the target market audience in regard to their socio-demographic, psychographic, and behavioural characteristics,. Furthermore, it considers the market development targeted at 16 to 24 years olds, In addition to their personal needs.

1.1 Socio-demographic Characteristics

The UK market for mobile phones has a market volume of approximately 3,400 million pounds in 2004 (Datamonitor, 2003). This relates to a population of 59.6 million people in 2003 (UK Statistics, 2004). The population accounts for 51.5 percent female compared to 48.5 percent male (Datamonitor, 2003). Mgain (2003) states that there is a difference between both genders in terms of mobile phone usage patterns, for example, females use the SMS function more often than males. The UK population is growing by approximately 0.4 percent per year (UK Statistics, 2004), and with it the mobile phone market. Table 1.1.1 abstracted from Mintel (2003) shows the population increase of the target market between the years of 1997 and 2007.

Table 1.1.1: Population growth.

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Much is said about the concentrated marketing strategies on the young, particularly in an ageing society. However, in the short to medium term and based purely on head counts, this is not necessarily an ineffective strategy. The number of young adults aged 15-29 is set to rise by over half a million in the next five years, with all five-year bands in this group increasing. Given the fact that this sector of the population is often establishing lifelong consumer trends, or at least this is what marketers should set out to establish, Mintel (2003), believes that these 11.6 million consumers are well worth the effort.

However, Turnbull (2000) investigated the target audience of 16 to 24 year olds, and statistics showed a negative trend in the two decades, as the birth rates in the UK are falling. In around 20 years the population size of the target group will decline by approximately 10 percent. The target audience accounts for 29 percent of mobile users in the UK and show the highest grades of market knowledge.

Furthermore a Mintel (2003) study into educational status shows that 30% of the target audience is in full time education. The report also shows that 38% of the target audience are in full time employment and that 10% are in part-time employment. The report also suggests that men aged 15-29 are considerably more likely than women to be working full-time. Similarly, socio-economic groups, middle-earning C2 and C1 categories are most likely to be full-time workers. The least affluent E and affluent AB consumers are most likely unemployed. Table 1.1.2 illustrates the average income of the target market in full time employment.

Table 1.1.2 Income statistics of the UK.

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Source: Mintel 2003

Residential status of 16-24-year-olds is very important as this enables identification of the current disposable income of the target group. Mintel (2003), states that those youngsters living with their parents are likely to have a greater proportion of disposable income than those living elsewhere. Table 1.1.3 shows that 98% of 16-17 year olds live with their parents compared to the 21-24 year olds, where 55% do not live with their parents.

Table 1.1.3: Target market accommodation.

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Source: Mintel 2002

Mintel data 2002 also displays ownership of mobile phones; the results show that 66% of the target market has their own mobile and 4% share a mobile phone. The data also shown, that those who own their own mobile phone use the text messaging service and that 57% utilise their mobile phone to play games.

1.2 Psychographic Analysis

The Swiss government carried out a study to analyse the impact of social changes and trends on 15 to 24 year old (Swiss Government Report, 2003) as a consumer segment. Due to the common behaviour patterns across nations/cultures it is worthwhile considering these implications for the target market in the UK. One of the most important aspects commonly shared throughout today’s society is individualism. Another aspect is pluralism; the target group lives in a society, which has plural life styles, various scenes and cultural groupings, for example, different tastes of music such as Hip-Hop or Punk Rock. The society forms itself as a multi-option society, a society which offers multiple options of life styles, leisure activities, and experiences. Conversely, customers also have a heterogenic desire, which needs to be reflected by the communication strategy.

Newest trends focus on free style sports such as snowboarding, inline skating and surfing (Swiss Government Report, 2003). Football clubs still play an essential role with 35% of the target audience interested in this sport; however, new trends set the scene. For example, snowboarding had an effect on the clothing industry. The younger segment of the target audience (age range between 14 and 18) are often the so called trendsetter, which introduce new trends in society. For example, backpacks have been introduced by teenagers and are now even produced as mini-versions for women.

Leach (2002) suggests that the target audience has trust in themselves and their own ability to succeed. Their attitudes are described as been less idealistic and ideological, ‘but that you can change the world by doing it yourself’.

1.3 Behavioural Aspects

The behaviour of the 16-24 year old market is a key determinant in understanding the motivations and desires of this group. The youth of today has been hugely affected by the advent of new technologies, which has in turn affected not just the way they communicate with each other, but the way they behave. Mobile phones have been massively influential in this respect, with SMS messages enabling young people to meet fundamental emotional and social needs, in a way which is private, practical, and personalised (roar.org.uk, 2004).

This growth in the mobile phone sector has strongly affected the way in which young people communicate with each other, with SMS messages being at the forefront of the change process. Shorthand and vernaculars and now common place in messages (roar.org.uk, 2004), which are often indecipherable to older generations. This has enabled young people to develop their own social rules and etiquette which are designed to fit in with their new methods of communications – so whilst parents may find it baffling that teenagers are happy to cancel engagements by SMS or break up over the phone, 15-24 years olds are generally accustomed to these practises, and crucially, they wouldn’t mind if the same was done to them (roar.org.uk, 2004).

Research conducted by Maddel & Muncer (2004) into the 11 to 16 year old age group has revealed a number of interesting trends about the behaviour of young people in relation to their mobile phones. Most significantly, 89.4% of those surveyed used their mobile phone for it’s SMS feature, and 91.9% used it for making calls. Research by Mintel (2003), found that 53% pay as you go against that of 12% who are on contract. The research also found that approximately 60% have their parents pay all the bills or the majority of the bills. Furthermore, the research shows that 48% of this target market are heavy/medium TV viewers.

It is worth pointing out that the ‘traditional’ use of the mobile phone has now almost been overtaken by SMS feature, which is indicative of its significance to young people. The research also revealed that the additional features of phones are less likely to be used by this age group, with functionality such as accessing the internet and playing games being used by just 13.1% and 14% respectively.

These behavioural activities are largely influenced by the need and desires of the market, and research into the reasons people gave for their purchase of a new phone suggests that - aside from lost or broken phones - people primarily purchase new phones in order to get a model that is smaller/lighter, and to obtain a better calling package.

Table 1.3.1 Reasons for buying a mobile phone.

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(Mintel, 2004)

Whilst a smaller model and better calling package are the most prominent reasons given, a significant number of respondent also cited wanting the latest model, new features, and to have a more fashionable model as reasons for purchase.

Finally, customer behaviour is strongly linked to customer loyalty. Research by Spakowski (2004) has shown that Nokia is the market leader in maintaining strong customer loyalty, which ranks the top 3 positions in the top 9 manufacturers. Siemens are placed in positions 4 and 5, but most significantly, they have a fairly low level of ‘loyal customers’ when compared to their rivals.

1.4 Needs of the Target Audience

The consumption of the target audience mainly satisfies their basic needs to receive social affiliation, to demonstrate prestige and/or for compensation (Governmental report, 2003). The needs of the target audience develop with their age. The younger target segment is developing personality and individualism, which grows to independence, for example, independence from significant others. However, the duration of this process has increased as pupils are studying longer, and therefore, enter the working life at a relatively late stage. A good marketer has also to recognise the values of its target audience. The main values are freedom, spare time, fun, friends, and family. Scenes have an increasing importance, peers who want to be a member of this specific scene have to listen to the right music, wear the appropriate clothes and have similar opinions. Whilst fear of damaging the health by using mobile phones stays very low (BMWA, 2004), the buying criteria of the target audience are primarily being trendy, fashionable and a strong brand image, the mobile phone mainly serves for social use (Turnbull, 2000).

1.5 Market Development

When considering the youth focused mobile phone market, it is important to consider how the market will develop in the future, for example, a market can become smaller, or it can change its values and interests. It is largely important to consider that mobile phone users are getting younger, which is evidenced by a recent survey conducted by the Mobile Research Group amongst young people in Russia. They found that the average age of mobile phone consumers was decreasing annually, and the price of phones being purchased was increasing.

This has implications for the future target market, as the possibilities for target customers becomes wider and wider as younger and younger children become interested in mobile phones. The dynamics of the 16-24 year old mobile phone market also need to be considered. It is clear that between the ages of 16 and 24, a person will go through a large personal period of change and development, and recognising this change may be key to controlling the young market. During these years, young people go from secondary school to higher education, from education to work, from living with families to living independently, and the transition to adult relationships (Fuston, 2004).

These changes are strongly linked to the changing role of the phone, as with age, “the role of the phone changes from a sign of dependency… to a symbol of independence” (Fuston, 2004). And, as most of these groups are likely to keep using mobile phones for the rest of their lives, developing customer loyally becomes a strong objective.

Data monitor (2003) research shows that market value is set to increase year on year, with an average annual growth of 6% - meaning the value of the total mobile phone market in the UK will be valued at over £4,000 million by 2007.

1.6 Summary

The target market of 16-24 year olds can be summarised as very fashion aware, technologically at ease, highly social group. They value stylish phones with advanced functionality and new technologies. Furthermore, they want to be associated with brands that are seen to be ‘cool’ and have a strong image.

Whilst both males and females are equally present, females tend to make slightly higher use of social functions such as SMS messaging, whilst males show a marginally larger interest is technological advancements such as mp3 playback. The 16-24 year old group also displays increasing individualism, which is evident from the wide variety of the different taste in music but at the same time, they seek acceptance from their peers. This is a highly valuable and potentially lucrative market segment which is well suited (given the right marketing strategy) to the mobile products that Siemens can offer.

2 Market Analysis

Siemens has made a concerted effort in recent years to establish itself as one of the world’s leading handset providers. According to Mintel (2004), German manufacturer Siemens has succeeded in obtaining a sizeable share of the UK market up from 6% in 2000 to 11% in 2002, placing it in second place behind Nokia.

Table 2.1 presents Mintel’s estimate for mobile phone brand shares by volume and manufacturer for the period 2000-2002. It is important to note these estimates are based on feedback from key players within the industry, including retailers, manufacturers and network providers.

Table 2.1: Estimated mobile phone handset brand share, by volume, 2000-02.

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* Sony share incorporated into Ericsson to reflect Sony Ericsson joint venture established in 2001 Data may not equal totals due to rounding.

(Source: Mintel, 2003)

Siemens strategy has focussed on the UK market developing strong links with network operators and has raised its profile through advertising. However, Mintel estimates that the number of mobile phone manufacturers offering their products in the UK will decrease. This is based on the fact that the top 6 providers of mobile phone handsets were responsible for an estimated 92% of volume sales in 2002. Nokia remained the market leader with approximately 52% share of the UK market, whilst Siemens and Samsung made the greatest gains.

2.1 Payment Options

Research states that the range of handsets and payment options has prevented people upgrading their existing handset; thereby, this can be considered a barrier to customer life-time value optimisation. Market saturation has led to the industry encouraging customers to switch from pay-as-you-go to contract packages in order to gain higher profit margins.

Table 2.1.1: UK retail sales of mobile phones, by volume and type of package, 1999-2000.

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* includes annual pay-up-front contracts, Data may not equal totals due to rounding Source: (Mintel, 2003)

Table 2.1.1 illustrates the success of pre-pay options over contract packages, which accounted for 84% of annual phone sales in 2002, up from 75% in 1999. Customers are ‘persuaded’ to upgrade to contract deals by increases in the pay-as-you-go handsets, i.e. Vodafone increase by approximately £20 per handset.

However, the success of this strategy is unclear at present, as the swing back towards the contract option is likely to take time despite handsets offered with contract packages offering incentives such as a certain amount of free text messages, picture messages, or calls.

2.2 New Generation Models

Research indicates that the market for mobile phone handsets in the UK is nearing saturation point. In 2003, 76% of the UK adult population owned a handset (Mintel, 2003); and the driving force behind the industry is technological advancement. This has shift the focus from simply attracting new customers to encourage existing mobile phone users to upgrade to newer models.

A slowdown of market growth is believed to be the lack of technological innovation, however, the emergence of new technologies (i.e. 3G) is said to prompt the consumer to purchase a new mobile phone.

2.3 Advertising and Promotion

With the industry now focussing on encouraging customers to upgrade their existing phones, research (Nielsen Media Research/Mintel, 2003) suggests that there has been a shift in the type of media used to advertise the benefits of the latest handsets.

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