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The major objective of working on a report like this is to gain knowledge as
to how problems are solved when they occur in large companies. We got the
opportunity of visiting the Ufone Regional office in Karachi, for the purpose
of getting information regarding our project and to enhance our knowledge
of practical research.
The Purpose of our study was to find means of improving the Market Share
of Ufone. For achieving this objective, the plan involved first determining
the characteristics and techniques of effective selling. This information then
will be used in improving Ufone’s market share.
There are various limitations that we have identified during the course of
this report. The nature of these problems is concerned directly with the
nature of our research and the methods that we have used during this report.
Some of limitations of our study are given below:
1. The chosen sample does not accurately reflect the responses that we may
obtain from wider geographical census.
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2. We cannot reach a specific conclusion as to the impact of each factor on
market share.
3. From the limitation given above we can deduce that an in depth research
into the factors affecting market share will require greater time and
resources as this is a very vast area of research. Therefore we faced time
and budget constraints.
4. The major limitation of our research study is that this topic is being
investigated for the first time. Therefore, we have not found any forms of
secondary data to support our findings.
The company commenced its operations, under the brand name of Ufone,
from Islamabad on January 29, 2001. Ufone services are offered to you by
Pakistan Telecom Mobile Ltd., which is a 100% owned independent
subsidiary of Pakistan Telecommunication Corporation Ltd. During the year,
as a consequence of PTCL’s privatization, 26% of its shares were acquired
by Emirates Telecommunication Corporation (Etisalat). Being part of PTCL,
the management of Ufone has also been handed over to Etisalat. Ufone has
been a highly successful venture. It gained around 150,000 subscribers in
less than six months of operation from January 2001 to June 2001 in their
first phase of operation. During the year Ufone successfully completed the
network expansion of Phase IV in existing as well as in new cities and towns
which amounted to more than US Dollar 170 million. As a result the asset
base of the Company has increased from Rs. 20 billion to Rs. 27 billion. [1]
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However with the accomplishment of the 4th phase the company has
only 21% of the total market share in its target market of Middle and
Lower Middle class customers. But due to certain reasons, it failed to
create an impression on upper and business class customers.
The head office of “UFONE” is situated in, F-7 Markaz, Islamabad. At
present Ufone is offering its services in over 2336+ key destinations.
[2]
Ufone provides service in all central cities of the regions South, Central and
North. For example, Lahore, Rawalpindi and Islamabad are being the major
cities of the central region and Karachi being the center in the South whereas
Peshawar plays the central point of the North region for this company. The
company has a goal to increase the number of cities. In this research study
we will be considering the various factors influencing the market share. We
will also be analyzing the factors hindering the management efforts in
increasing its market share.
Ufone is currently facing the problem of low market share. This is concluded
from the information provided by the management. We have learnt through
study and also asked the management about the reasons of low market share.
These reasons are low coverage area, stiff competition from the competitors
and introduction of new companies and narrow dealership. So now we can
define the problem area or issue as:
“To study whether low Coverage area, Stiff Competition, Introduction
of new companies and narrow dealership network are presently
affecting the market share of Ufone.”
As the problem has been defined, we will further explore whether low
market share is the result of the above mentioned variables or some other
factors that influence market share of Ufone.
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METHODOLOGY
The methodology used in the report was a descriptive study on Ufone. For
this purpose we visit the different customer centers of Ufone. We select 80
peoples who are using mobile phones. In the end we collect the information
about the Ufone.
Sources of data collection:
To accomplish our report of identifying the reasons contributing to Low
Market Share of Ufone, we have chosen the workers working in the Korangi
Industrial area. Our sample consists of workers who are presently living in
Karachi for earning and belong to various regions of Pakistan. The reason
for selecting these peoples is that they will give us more accurate and
realistic responses as most of them rely solely on mobile phone as a means
of communication with their relative.
Secondly these are the people most affected by factors such as coverage
area, price, and availability of Signals etc.
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Methods of Data Collection:
The interviewees were selected on random basis from the population to
avoid any biases in data collection and encourage a probabilistic response.
For the purpose of research study we can classify the method of data
collection that we have used as Simple Random Sampling.
Instruments of Data Collection:
Keeping in mind the nature of our study and the characteristics of the
population we ascertained that the best-suited instrument for our research is
the Questionnaire.
PREVIEW OF THE PRESENTATION
In the following pages, first comes the problem statement and theoretical
framework. Secondly analysis of the data which affects the market shares of
Ufone. Third is summary of findings and then conclusions drawn from the
study and then recommendations based on these conclusions.
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Theoretical Framework:
The variable of primary interest in this report is the Market Share and the
variance is to be explained by the four factors i.e. Coverage area,
Competition, Introduction of new companies and Narrow dealership.
Low Coverage area
Competition
Low Market
Share
Introduction of
New companies
Narrow dealership
Network
You can see the relationship between market shares and these above factors.
Now we would discuss the impact of these factors on the market shares of
Ufone.
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1. Low Coverage area
Coverage area implies that the greater the coverage area, the greater number
of customers can have the Ufone service otherwise they will have to switch
over to other cellular operators who are providing the services in the areas
where Ufone does not work. The simple example is Ufone is currently
providing service in 2336+ cities, towns, villages and highways, while
Mobilink provide service in 5000+ cities, towns, villages and highways.[3]
Coverage area is undoubtedly one of the major factors that is influencing
market share of Ufone. Ufone as a newer company then Mobilink is not able
to increase its coverage area at present because this requires large
investments, which Ufone does not have at present. They are thinking on
these lines to grasp greater market share.
2. Competition:
The second important factor that has been identified is that Ufone is facing
stiff competition especially from “Mobilink”. Mobilink was the market
leader at the time with 42% of market shares, Ufone has 22%, Warid and
Telenor both has 17% each and Paktel and Instaphone has 2% & 1%
respectively by June, 2007 with over 63 million subscribers. [4] When Ufone
entered in the market and they still have a considerable number of loyal
customers. This customer loyalty is coming in way of Ufone to grasp bigger
market share. It is obvious that it would be very difficult for any company to
completely rule out such an organization from the market. Ufone is facing
stiff competition in Pricing, Promotion, Placement, and Product innovation
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as well. It has been giving tough time to Ufone. Ufone faces consistent and
intense competition from its competitors through innovation and price
along with the variety of packages and services being offered. This results
in a continuous threat of the competitors grasping market share from Ufone.
3. Introduction of New Mobile Companies:
Third factor is introduction of new companies like an Abu Dhabi based
Warid Telecom in May 2005[5] and Norwegian based Telenor in March
2005.[6] They also capture market by investing money because of their
multinational status and they have funds to expand their network quickly.
4. Narrow Dealership Network:
The narrow dealership network is also one of the hindrances in the way of
management to grasp further market share. Their dealership is available only
in major cities. Through the questionnaire that was used to find out the
reasons of low market share, this has come to know that the connections of
Ufone are not easily available. This would be discussed in detail in the later
part of this study.
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Data analysis:
To understand the problem in a better way, we distributed questionnaires
among 80 different mobile users. Various responses were received, which
are analyzed as under:
Q#1
Table 1
Time Period
Frequency
Percentage.
Less than 6 year
49
61.25%
6 years
23
28.75%
More than 6 years.
8
10%
How long do you have mobile?
In response to the question “how
long have you have the mobile
Less than 6 year
6 years
More than 6
years.
Phone”, 61.25% said that they have it
less than 6 years while 28.75% said
that they bought mobile in 6 year
back and 10% said that they have
mobile phone for more than 6 years. So from these findings we can analyze
that after the launch of Ufone in January 2001, 90% of the respondents
bought mobile phone. This is mainly due to launch of Ufone, which attracted
the first time mobile users.
Q#2
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Table 2
Type of Connection
Frequency
Percentage.
Prepaid
71
88.75%
Post Paid
9
11.25%
From these responses we can
Type of Connection.
conclude that a majority of the
respondents
Prepaid
have
prepaid
Post Paid
connections. The reason is that it is
affordable and convenient way to
use the mobile service. Whenever you have the money buy the card and use
it for a specific period without tension. People avoid Post Paid Connections
due to implications of billing system.
Q#3
Table 3
Type of Service
Frequency
Percentage.
GSM
77
96%
Digital Amps
3
4%
The above table shows that 96% of
Type of Service
our respondents were using GSM
GSM
Digital Amps
service. Before the Ufone entered
in the market this trend was not
very high. People mostly use
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Amps service because it was cheaper than GSM service but when Ufone
started its operations in the country, it started providing cellular services at
very low and affordable price. So this is the major reason of increased GSM
service usage.
Q#4
Table 4
Preferred Company
Frequency
Percentage.
Ufone
17
21.25%
Mobilink
35
43.75%
Warid Telecom
13
16.25%
Telenor
11
13.75%
Paktel
3
3.75%
Instaphone
1
1.25%
From the above table we can see
Preferrence chart of cellular
Companies.
that
Ufone
majority
of
respondents
preferred Mobilink (43.75% of the
Mobilink
warid
Telenor
Paktel
Instaphone
respondents chosen this option).
One reason for preferring Mobilink
is that its coverage area is greater
than Ufone. Another reason is that there are no dealership problems. The
connections of Mobilink are relatively easily available in the market.
Mobilink has been operating for more than nine years in the country so it has
considerable number of loyal customers.
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Q#5
Table 5(a)
Prefer Ufone due to
Frequency
Percentage
Low Cost
53
66.25%
Attractive Packages
27
33.75%
Frequency
Percentage
Low coverage
48
60%
Signals Problem
20
25%
Availability Problem
9
15%
Why Prefer Ufone?
Low Cost
Attractive
Packages
Table 5 (b)
Do not Prefer Ufone
due to
Why not prefer Ufone?
Low coverage
Signals
Problem
Availability
Problem
In
response
to
this
open-ended
question, various reasons came in
front on the basis of which respondent
prefer or don’t prefer Ufone.
First taking why people prefer Ufone 66.25% of the respondents said that the
reason for preferring Ufone is low cost. 33.75% of the respondents said that
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they preferred Ufone due to its attractive packages such as GPRS, Global
SMS, and Picture Messaging etc.
Now why they don’t prefer Ufone? Three major factors were spotlighted
here, Low coverage, signals problem and availability of Ufone connection
problem. Out of the total sampled population, 60% said that they don’t
prefer Ufone due to low coverage, 25% due to signals problem and 15% due
to availability problem. They said that Ufone connections are not regularly
available.
Q#6
Table 6
Frequency
Percentage
Yes
72
90%
No
8
10%
From the above table, it is clearly
Are connection charges of Ufone
Reasonable?
shown that there is no problem with
the connection charges of Ufone as
Yes
90% of the respondents thinks that
No
these are reasonable.
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Q#7
Table 7
Frequency
Percentage
Yes
56
70%
No
24
30%
From this table, we can deduce that
Are connections easily available?
availability of connections can be
one of the reasons of low market
share.
Yes
No
Although
majority
of
respondents said that connections of
Ufone are easily available but 30%
of the respondents also said that
connections of Ufone are not easily available.
Q#8
Table 8
Advertisements
Frequency
Percentage.
Less than 10
4
5%
10
16
20%
More than 10
60
75%
This table reflects that promotion is
How advertisements do You see in a
week?
not the factor for low market share
of Ufone as 95% of the respondents
Less than 10
10
More than 10
see ten or more advertisements of
Ufone on television, newspapers,
billboards, etc.
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Q#9
Table 9
Frequency
Percentage.
Yes
48
60%
No
32
40%
Are you satisfied w ith the No. of
Dealers in the country?
This table clearly reflects that most of
respondents (about 40%) think that
Ufone has a narrower dealership
Yes
networks.
No
Ufone
has
only
five
authorized dealers in city like Karachi.
So from these responses we can
conclude that narrower dealership network in the country is one of the
reasons of low market share of Ufone.
Q#10
Table 10
Frequency
Percentage.
Yes
64
80%
No
16
20%
Ufone entered in the market with a
Has Ufone attracted first tim e Mobile
Users?
bang and attracted the majority of first
time mobile users. This can be
Yes
No
supported by the results of responses
given by the respondents in this
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regard. About 80% of the respondents think that Ufone has attracted first
time mobile users because of Low cost, attractive packages and extensive
advertisements on television, radio, newspapers etc. So we can say that
Ufone initially grasped a major portion of untapped potential market. But it
could not convert the competitor’s users in Ufone users. Since that initial
phase, the market share of Ufone is not increasing with the same pace.
Q#11
Table 11
Frequency
Percentage.
Yes
48
60%
No
32
40%
The above table shows that 60% of
Has Ufone improved the standard of
Cellular services?
the respondents were of the view
that
Yes
Ufone
has
improved
the
standard of cellular services in the
No
country. The reason, which they put
forward, is that it has increased
competition in the cellular industry in general and specifically in GSM
mobile service. So with the increase in competition, it is very difficult for
Ufone to acquire greater market share in the industry.
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Q#12
Table 12
Responses
Frequency
Percentage.
Increasing Coverage
32
40%
Making availability of
8
10%
Expanding dealership Network
12
15%
Improving Voice Quality
16
20%
Making Packages more
4
5%
8
10%
Connections easy.
attractive.
Overcoming Signals problem.
How Ufone can increase its market
share?
Increasing Coverage
Making availability of
Connections easy.
Expanding dealership
Network
Improving Voice
Quality
Through
our
questionnaire
various recommendations came
in front of us. 40% of the
respondents recommended that
by
increasing
coverage,
Making Packages more
attractive.
customer satisfaction could be
Overcoming Signals
problem.
increased. 10% recommended
making
availability
of
connections easy would help Ufone to increase its market share. 15% say
that by increasing dealership network market share can be improved. 20%
recommended improving voice quality for increasing market share. 5%
recommended making packages more attractive for increasing market share.
And 10% percent recommended overcoming signal problems would lead
Ufone to increase its market share.
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Summary of Findings:
The data analysis that is given above can be summarized as follows:
 Even though a large number of mobile users were present in the industry
before the entry of Ufone, the penetration of Ufone has resulted in a
greater number of new mobile customers. We can say that Ufone has
attracted both the existing customers, and to a larger extent, has captured
the market segment that was previously not using mobiles.
 People generally prefer prepaid connections.
 Ufone has increased the number of the GSM users.
 Even though a large portion of the sample responded that they preferred
Ufone there is still a portion advocating “better” cellular services. The
major reasons for not preferring Ufone are low coverage area and lack of
availability due to a small number of authorized dealers.
 Most people are satisfied with the current level of prices that Ufone is
offering. In fact, prices are the major reason why people prefer Ufone.
Other than price customers also prefer Ufone because of the variety of
packages that it offers and the continuous innovations that it has been
offering since its inception.
 As perceived by the customers of the mobile industry, Ufone is the
second most popular service in the industry.
 Most of the findings show that the major problem faced by Ufone is
coverage area.
 Even though Ufone does advertising on a campaign basis, the gap
between promotional campaigns is not contributing to the reasons for low
market share.
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 Our results show that the general perception is that Ufone has improved
the standard of Cellular Telecommunication within the country. However
there are still some major areas in which Ufone needs to improve its own
standards along with that of the industry.
Our research study was based on the reasons why market share of Ufone is
low even though it is one of the fastest growing cellular companies. We
defined the problem, identified factors in the theoretical framework. We
collected data relating to our research study via questionnaires and also
visited Ufone regional office and came to know that there are several
reasons for low market share. The major reasons are, low coverage area,
narrow dealership network, Tough Competition against well established
competitors etc.
Concluding the whole report, Ufone has immense potential to increase its
market share by expanding its coverage area. It should try to reach those
areas where its competitors have not reached. It can also increase the market
share by offering innovative and better services, making its signals better,
and expanding dealership network to ensure convenience in getting
connections.
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Ufone is one of the fast growing cellular companies in the country. It
grasped around 12.48 millions customers till April 2007. Ufone grasped
75% of 12.48 millions customers within 4 years after being launched in
January, 2001. But after that, the customer base of Ufone is not increasing at
the rapid pace as it was in the beginning. We conducted our research study
to find out the reasons for low market share. Our findings of the research
study are given above. Now we would like to give some recommendations
that are as under:
1.
First of all, Ufone must increase its coverage area in order to increase
its market share because it has been highlighted one of the major reasons for
low market share through our report.
2.
Secondly, Ufone needs to expand its dealership network because there
is a problem with the availability of connections. Ufone has very few
numbers of authorized dealers, so people face difficulty in getting Ufone
connections. Overcoming this problem would definitely increase it market
share.
3.
Innovations are the key factor for constant growth of any business.
They have been excellent in this regard. But they should not leave it rather
they should continue exploring new customers, new market segments and try
to attract the customers of its competitors. Though it’s difficult to grasp the
customers of well established competitors but they have to adopt such
strategies to convert competitor’s customers into Ufone customers.
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Independent Subsidiary: It means that subsidiary company works on its
own and doesn’t take any support from Parent company.
Market Share: Percentage of the total customers that company has in the
market.
Market: Market is a place where prospective buyers and sellers meet to buy
and sell goods or services.
Business class customers: The customers who are engaged in sort of
business like trading, manufacturing etc.
Sample: It is the part of population, which is selected for testing purposes.
Census: Studying the population elements is called census.
Budget Constraints: Shortage of funds/resources.
Primary Data: The data that are collected for the first time, it is called
Primary data.
Secondary Data: The data that is available from any published or
unpublished sources.
Competitors: All those sellers in the market who are offering same products
or services.
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