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Marketing for Telecommunications

                     Operators Projects




Sergio Cruzes

MBA in Project Management and Technological Innovation – FIPE USP

MsC in Electrical Engineering – EESC USP

PMP certified
Table of Contents


Table of Contents ................................................................................................................ 2
1. INTRODUCTION ...................................................................................................... 3
2. CONTEXT .................................................................................................................. 4
3. END USERS ............................................................................................................... 5
4. BROADBAND OFFERINGS .................................................................................... 7
5. MACRO ENVIRONMENT........................................................................................ 8
  5.1 Social and Cultural environment .............................................................................. 8
  5.2 Demographic environment........................................................................................ 8
  5.3 Economic environment ............................................................................................. 9
  5.4 Technological environment .................................................................................... 9
  5.4 Political environment ............................................................................................ 11
6. INTERNAL MICRO ENVIRONMENT .................................................................. 12
7. KEY SUCCESSES FACTORS ................................................................................ 13
8. BUSINESS SUMMARY FRAMEWORK ............................................................... 14
9. BUSINESS CONCEPTION ..................................................................................... 15
  9.1 Business Plan Definition ......................................................................................... 15
  9.2 Strategic Planning ................................................................................................... 16
  9.3 Purpose of the Organization: Vision, Mission, Believes & Values, and Objectives
  ....................................................................................................................................... 18
  9.4 Generic Competitive Strategies .............................................................................. 19
  9.5 Marketing Strategy.................................................................................................. 20
      9.5.1 Marketing Plan Definition ............................................................................... 20
      9.5.2 Market Segmentation ....................................................................................... 21
      9.5.3 Marketing Mix ................................................................................................. 23
10.      REFERENCES ...................................................................................................... 25
Acronyms and Abbreviations

2G         Second-generation mobile network technology
3G         Third-generation mobile network technology
AAA        Authorization, Authentication and Accounting
ADSL/DSL   Asymmetric Digital Subscriber Line
ARPU       Average Revenue per User
BTS        Base Transceiver Station
BWA        Broadband Wireless Access
CAGR       Compound Average Growth Rate
Capex      Capital Expenditure
CDMA       Code Division Multiple Access
CPE        Customer Premises Equipment
CRM        Customer Relationship Management
DOCSIS     Data Over Cable Service Interface Specification (Cable Modem)
DSL        Digital Subscriber Line
EVDO       Evolution Data Only
FTTH       Fiber to the Home
Gbps       Gigabits per second
GSM        Global System for Mobile Communications
HSPA       High-Speed Packet Access
IBGE       Brazilian Institute of Geographic and Statistics
IEEE       Institute of Electrical and Electronics Engineers
IMS        IP Multimedia Subsystem
IP         Internet Protocol
IPC        Potential Index of Consumption
IPTV       Internet Protocol Television
LTE        Long Term Evolution
MIMO       Multiple-Input Multiple-Output
MMDS       Multichannel, Multipoint Distribution System
OFDM       Orthogonal Frequency Division Multiplexing
OPEX       Expended Costs
PC         Personal Computer
PMP        Price per Megahertz per Pop
QoS        Quality of Service
RAN        Radio Access Network
SLA        Service Level Agreement
VDSL       Very High Bit-rate Digital Subscriber Line
VoIP       Voice over IP
xDSL       any type of DSL
WBS        Work Breakdown Structure
WiMAX      Worldwide Interoperability for Microwave Access
1. INTRODUCTION

      This job consists in providing the factors that influence the marketing
activities concerned with new projects in Telecommunications Operators. It is
the marketing related to the strategic planning of the organization.

      The study begins with the analysis of the micro-environment followed by
macro-environment analysis. Other factor to be analyzed is the technological
environment that concerns with the availability of user devices.. On the legal-
political environment, aspects such as spectrum availability and restrictions
should be considered.

      Keywords: Marketing ♦ Strategic Plan




   2. CONTEXT

      The service growing rate of circuit switching telephone systems is starting
to decrease in Brazil and Latin America.

      So, Telcos are investing in fixed broadband access technologies which are
showing high growing rates.

      Also, Cellular operators are also noticing a decreasing on their growing
rates for voice services. At the same it is very difficult to provide differentiated
voice services. The price competition is one main drivers of the voice revenue
stagnation.

      For most cellular operators in the world, the mobile data revenue has
reached more than 30% of the service revenues while in Brazil there is still room
to grow.
3. END USERS

       For the end-user media consumer, the open TV main content provider in
Brazil. However it is beginning a trend to search for different forms to access
content , entertainment or information, at devices such as PCs and mobiles.

       The group of users that is constantly searching for information on different
channels other than TV, is composed of persons under 35-year old (Accenture
study published at Converge Magazine in 13/April/2009).

       A study done by Yankee Group and Ericsson shows that the 3G user in
Brazil is predominantly young (Teletime news, 29/July/2009).



      The social classes in Brazil are distributed as per Exhibit 5.1 (source:
Associação Brasileira de Pesquisas, 2009)


                    Family average income per month (Reals)

         16000    14400
         14000
         12000
         10000            8100
          8000
           6000                  4600
           4000                         2300 1400
           2000                                     950   620   440
              0
                   A1     A2     B1     B2   C1     C2    D     E


      Exhibit 3.1 – Social classes in Brazil and family income per month

      Based on a report of the Exame magazine (08/April/2009) about the
consumption of the Brazilian families and IBGE information, it can be derived that
the social classes in Brazil are distributed as per Exhibit 5.2.
30,00%
                                                                  25,40%
        25,00%                                           21,80%
                                                20,70%
        20,00%
                                        15,70%
        15,00%
                                                                                Percentagem Brasil
                                   8,90%
        10,00%
                           4,10%
         5,00%                                                      2,60%
                   0,90%
         0,00%
                   A1      A2      B1      B2    C1      C2   D       E



      Exhibit 3.2 – Social classes percentage in Brazil



      In order to better estimate the total potential users based on income salary,
the table 5.1 simplifies the number of classes. The total potential number in Brazil
is 15,789 thousand users.




                     Percentage of                    People          Wireless
                     the Brazilian               between 20 -         internet        Potential
         Classes     population                  30 years old         (potential)        users
         A and B                    29.60%                11,248              85%       9,560.8
         C                          42.50%                16,150              30%         4,845

         D and E                    28.00%                10,640              13%       1,383.2
       Table 3.1 – Potential internet users in Brazil based on the income salary
4. BROADBAND OFFERINGS

      The cable modem access reaches only 184 cities representing 74 million
people, or 40% of Brazilian population which represents 53% of total Brazilian
consumption in accordance to the IPC/Target.

      While the broadband competitiveness is so tough, the end user has few
choices. The leader subscription service is called Speedy (from Telefonica and it
is present only on the state of São Paulo).

      The exhibit 4.1 depicts the main fixed broadband offerings in 2009.


                    Fixed Broadband Operators (in thousand
                                 subscribers)

                     2460
           2500
                                  2120
           2000                              1920
                                                           1762
           1500                                                       1320

           1000

            500                                                                402
                                                                                       80
              0
                  Telefonica      NET        Oi     Brasil Telecom   CTBC     GVT     TVA




      Exhibit 4.1 – Fixed Broadband Operators in 2009


      An     analysis          done     by   IDC      in      July     2008   (published    at
www.puccamp.br/servicos em 06/07/2009), provides the broadband access
prices in Brazil. The average price of minimum throughput (128 Kbps) was US$
30. In Argentina, 512Kbps was US$ 27.05.
5. MACRO ENVIRONMENT

      As per KOTLER (1995, p. 49), the macro environment consists of the
forces that affect the whole micro environment: demographic, economic,
technological, natural, political and cultural.

      5.1 Social and Cultural environment

      The cultural characteristics of the areas to be serviced by a wireless
broadband business are very non-homogeneous.                 The service should be
segmented during the implementation phase only. The final goal is to provide a
service that is not focused for specific population profiles .



      5.2 Demographic environment


       The demographic environment is a very important force since it consists of
the population profile in terms of its age, ethnics, immigration, education level,
lifestyle, etc.. As these trends are out of control of the company, it is important to
anticipate the movement of the trends, to develop scenarios and to provide a
constant adjustment on the market strategies.

      The observation of the demographic environment trends allow to develop
geographic, ethnics, income salary and age segmentation strategies.

      The     geographic     segmentation         is   extremely   important   for   a
Telecommunication Operator deployment project. It allows identifying areas with
great growth potential and low level of competition. It is on these areas that the
deployment should start.
5.3 Economic environment


      The main implications of future changes on the economic environment are
related to the demand. The demand is very sensitive to the variations of the
economic activity and any well defined plan may fail if it ignores the influence of
the economic environment.

      Brazil, which has the fifth greater population and the eighth consumer
market in the world, it is becoming one of the best options for business in the
world. The internal market growth and the continuous class C expansion have
boosted the consumption in Brazil.

      As per magazine Exame (08/April/2009), the Class C spends its income
salary as:

         •   21% at commercial establishments (supermarket, drugstores)

         •   11% with transport (bus, subway, gasoline, taxi)

         •   10% with food (restaurant, groceries, snack bars)

         •   8% with entertainment (gifts, sightseeing, internet)

         •   7% with basic services (telephone, light, water, house rent)

     Based on this scenario, it is expected a high demand of broadband services
     on the next years.




     5.4 Technological environment

      At highly competitive segments, the technology is a key determinant factor
for the business continuity.    The innovations which aggregate product and
service value affect the end user perception, creating a maximization of the cost
benefit and an increase on the competitive advantage.
The main deployed technological solutions to offer broadband services in
Brazil is the UMTS with its HSPA platform. Other mobile technologies that offer
wireless data are GPRS and EDGE from GSM networks and 1xRTT and
1xEVDO from CDMA networks. MMDS operators also offer wireless internet
(radio connection).

      The mobile broadband HSPA is the dominant technology. If we consider
the UMTS cellular phones        and 3G data devices, they represent 96% of 3G
accesses in Brazil (source: Teleco).

      Regard the fixed telephone market, the operators are updating their ADSL
networks with ADSL2, ADSL2+, VDSL and also are beginning to deploy the
FTTH technology.

      The Exhibit 5.1 depicts a performance comparison among different
technologies
                                               Peak Throuput
Access Technology             Mode             Downlink        Reach
WiMAX* 3,5 GHz - 5 MHz                                         <1.0 km
bandwidth FDD                 Wireless Fixed   15 Mbps         (urban area)
WiMAX* 2,5 GHz - 5 MHz        Wireless                         <1.25 km
bandwidth TDD                 mobile           10 Mbps         (urban area)
WiFi (802.11a/b/g)            Mobile           < 54 Mbps       < 0.1 km
ADSL                          Fixed            8 Mbps          3 km
ADSL2                         Fixed            12 Mbps         1.5 km
ADSL2+                        Fixed            24 Mbps         1.5 km
VDSL                          Fixed            50 - 100 Mbps   0.4 km
FTTP (BPON-ATM)               Fixed            622 Mbps        20 km
FTTP (EPON-Ethernet)          Fixed            1.250 Gbps      20 km
FTTP (GPON-Ethernet/GEM)      Fixed            1.244 Gbps      20 km
FTTP (GPON-Ethernet/GEM)      Fixed            2.488 Gbps      20 km
EVDO* rel A - 1.8/1.9 GHz -   Wireless
1.25 MHz bandwidth            mobile           3.1 Mbps        <1.7 km
HSPA* 1.8/1.9 GHz - 5 Mhz     Wireless
bandwidth                     mobile           14.4 Mbps       <1.7 km
HSPA+* 1.8/1.9 GHz - 5 MHz    Wireless
bandwidth                     mobile           28 Mbps         <1.7 km

Exhibit 5.1 – Technology performance comparison among different technologies

* Reach refers to a throughput that is less than the peak value
5.4 Political environment

     The political and legal environment is composed of laws, government
agencies and pressure groups that influence and restrict the actions of the
companies. The political environment provides great restriction over the
organizations and individuals.

     In July 2009, Anatel proposed a smoothly reduction on the TV operators
frequencies in the 2.5 GHz band. The proposal consists in reducing the available
spectrum from 190 MHz to 70 MHz in 2012 and from 70 MHz to 50 MHz in 2015.
To start a WiMAX operation, 50 MHz may be enough. But 50 MHz of spectrum
eliminates any possibility of expansion. It may be possible one or two operators
in the same region with 25 MHz of spectrum without considering the band guard
that may reach 5 MHz. In Portland, USA, Clearwire started its operation with 30
MHz of band and can increase the spectrum usage until 120 MHz (source:
Teletime magazine, August 2009).

     The great movement on this area was the TVA acquisition by Telefonica in
the cities of São Paulo, Rio de Janeiro, Curitiba and Porto Alegre. It is
commented that Telefonica paid between R$ 1 billion and R$ 1.6 billion and that
most part of this value was due to the acquisition of the spectrum which is
currently used by MMDS operation (2.5 GHz range).          Recently Telefonica
acquired Vivo which means that their interest on WiMAX may not exist anymore.

     Anatel intends to use the 2.5GHz spectrum with services such as LTE.

     The 3.5 GHz spectrum range is another band to be used for WiMAX.
There are few operators on this range such as Embratel (whole country license),
Brasil Telecom (license for 12 ANs), Grupo Sinos (AN RS1), Neovia (DirectNet)
in the state of São Paulo, and WKVE (6 ANs in the states of Minas Gerais,
Espírito Santo and Bahia).
6. INTERNAL MICRO ENVIRONMENT

     The internal micro environment considers the resources, capabilities and
the essential competencies of an organization which although they do not
provide an intrinsic value, they represent value when seen by the possibility of
generation of competitive advantage for the enterprise, providing return on
investment above the average (CECCONELO e AJZENTAL, 2008 p. 114).

     The deployment and operation of a Broadband network require diverse and
different competencies of human resources and also from the organization. The
competence of an organization represents the summation of the learning of all
groups of abilities both at personal level and organizational level (Hamel
ePrahalad (1995, p.233).

     Basically the competencies required to deploy and operate a Broadband
network are:

         •     Knowledge and experience with radio-frequency engineering (it
               requires knowledge and experience with propagation, network
               design, antennas, etc). The challenge is to design a network to meet
               day one requirements as well as future requirements

         •     LTE technology knowledge on both access and core sides

         •     Cellular network deployment experience

         •     Experience in site acquisition and site sharing

         •     Technological group to evaluate infra-structure equipment as well as
               device hardware

         •     Experience in network operation,      CRM, IP, billing, security and
               services

         •     Marketing experience: coverage area segmentation and priorities,
               traffic estimation and growth prediction, business models, subscriber
               packages positioning, competitors knowledge
As already commented on this paper, the content is the crucial part of the
wireless broadband business. Users are not only interested on the broadband
pipe. They want the applications and services that the broadband can provide.
This means that the broadband provider needs to do partnerships with content
distributors and also brings to the market the more advanced end-user devices.




   7. KEY SUCCESSES FACTORS

      The business and competitor knowledge will allow determining the key
successes factors which are the minimum requirements that are necessary for a
enterprise to compete with possibilities of success.

      Based on literature, it is known that main success factors for a Broadband
network operation are the availability of Modems for fixed networks, laptops,
smartphones and tablets for wireless networks and also service price and the
cost of the backbone access to internet for any type of network.

      Regarding the project deployment, the main success factors are the choice
of an infra-structure provider totally engaged with the technology. Also, it is very
important to minimize the number of additional providers for IP network, BTS
backhaul, data servers, civil infra-structure, site acquisition. Other important
success factors are definition of site priorities; maximize site sharing options, and
a presence of a very skilled deployment team.
8. BUSINESS SUMMARY FRAMEWORK


     In accordance to CECCONELLO and AJZENTAL (2008, p. 134), it is
important to aggregate all related information that concerns to the business plan
in a table in order to make available a qualitative and quantitative summary about
the aspects that can and cannot interfere directly or not directly in the business
that is being proposed. The elaboration of this frame intends to bring to the table
an integrated view about different existent variables that are pertinent to the
proposed business, pertinent to the definition of the business and to the generic
and marketing strategies.
9. BUSINESS CONCEPTION

      The goal of this chapter is to provide a base foundation for, given the
opportunities analysis, to structure and develop a strategic proposal for , in the
sequence, to verify its viability.

      9.1 Business Plan Definition

      The business plan is a tool in which the entrepreneurs employs it in order
to detail their ideas in a concise way based in assumptions of quality where it is
demonstrated its viability and the probability of the business success.

      In accordance to Chiavenato (2005), the business plan consists of an
anticipated planning in which the entrepreneur, based in a collection of data and
information about a business, try to make it viable

      Business plans are needed at different scenarios. They can be used to
expand a manufacturer plant, to verify the viability in attending a new market, to
manufacture a new product, to offer a new service.

      This study will show a business plan for a new business. This plan has as
the first goal to dissolve doubts for a possible decision maker about the quality of
the plan

      In accordance to CECCONELLO and             AJZENTAL (2008, p. 146), the
challenge of every business plan is to identify precisely the reasons that suggest
its elaboration. The reasons can be understood as the characterization of a
problem motivated by the uncertainties about the viability of the business. The
economic- financial analysis will reflect the verification of the hypothesis and
variables concerned to the problem under study.

      In order to obtain a very trustful and solid economic-financial analysis, it
should be necessary to perform an exploratory research that connects trends
and correlations with the observed facts in the environment of the business.
9.2 Strategic Planning

      It is seen that there is a kind of difficulty to define the planning function in
the enterprise world, to define its real magnitude and reach (OLIVEIRA, 2007, p.
3). Steiner (1969, p. 12) defined five dimensions non-reciprocally exclusive and
without very defined borders of the planning:

      • Subject of interest: manufacturing, research, new products, finance,
marketing, installations, human resource, etc.

      • Planning elements: intents, objectives, strategies, politics, programs,
budget, standard, procedures, etc.

      • Time dimension: long-term, medium-term or short-term

      • Business unit: corporate planning, business unit strategy planning, affiliate
planning, functional groups planning, division planning, department planning,
product, services, etc..

      • Characteristic: complex or simple, quantity or quality strategic or tactic
planning, public or confidential, formal or informal, expensive or non expensive

      So, the planning is defined as a process based on the five shown
dimensions, done to reach a future scenario in more efficient and effective way,
using optimized efforts and resources from the organization.

      In accordance to SLACK et all, (2002 p. 87), strategy is the global standard
of decisions and actions that position the organization on its environment and
has the mission to make it reaches its objectives of long term run. These
decisions will take place before, during and after the elaboration and deployment
of the plan.

      The planning can be distinguished into three types: strategic, tactic and
operational.
According to OLIVEIRA, (2007, p. 17), the strategic planning is the
administrative process which provides marketing sustentation in order to
establish the best direction an organization should follow, aiming an optimized
level of interaction with the external factors - non manageable – and acting in an
innovative and differentiate way.

      According to FISCHMANN and ALMEIDA (1991, p. 25), strategic planning
is an administrative technique which based on the organization environment, it
creates the conscious      of the opportunities and threats, strengthens and
weaknesses of the organization for the accomplishment of its mission. Based
on this conscious, it is established the purpose of the direction that the
organization should follow in order to take advantage of the opportunities and
avoid risks.

      According to OLIVEIRA (2007, p. 18), the objective of the tactic planning is
to optimize the results of determined area of the organization. So, it works with
the decomposition of the objectives, strategies and politics that were established
in the strategic planning. It is developed by the intermediate management levels
of the organization.




      OLIVEIRA, (2007, p.19) defines operational planning as the formalization
of the methodologies of development and deployment of specific results to be
reached by the functional areas of the organization.

      The subject matter of this work is the supply of wireless broadband
services and contents with an objective of return on investment in seven years.

      The scenario that is expected for the next years (2011 – 2015) is
characterized by a sustainable economic growth (better than 4% a year). The
increase in the power consumption of the population will stimulate the
appearance of new services and increase the dispute among cellular operators,
internet via Cable Modem and ADSL service providers.
9.3 Purpose of the Organization: Vision, Mission, Believes &
      Values, and Objectives


      According to CECCONELLO and AJZENTAL, (2008, p. 149), the purpose
of one organization gathers vision, mission, believes & values, and objectives,
which help the arrangement of the organization. These aspects are important in
order for the entrepreneur to build the identity of its business, establishing the
organization climate, the standard of behaviors to be followed, what is really
being pursued on its business.

      According to OLIVEIRA, (2007, p.65), the vision is defined as the limits that
the owners and main executive people can visualize within a certain period of a
longer time and one wider approach. Within this context, the vision provides a
solid outline of the strategic planning to be developed and deployed by the
organization. The vision represents what the organization intends to be.

      According to OLIVEIRA, (2007, p.107), the mission is the reason of being
of the organization.    Therefore, it tries to find what is real business of the
organization, why it exists, what activities the organization will concentrate in the
future.

      According to OLIVEIRA, (2007, p.67), the values represent a set of
foundations and fundamental beliefs of an organization, and at the same time
they provide sustentation for all your main decisions. The values should have a
strong interaction with ethical and moral values of the organization.

      According to OLIVEIRA, (2007, p.141), the objective may be defined as a
state, situation or a future result that the executive intends to reach. It relates to
everything that implies in obtaining a final result. Objective is a target with a
defined execution deadline and assigned responsibilities.

      According to OLIVEIRA, (2007, p.141), the objective may be defined as a
state, situation or a future result that the executive intends to reach. It relates to
everything that implies in obtaining a final result. Objective is a target with a
defined execution deadline and assigned responsibilities.

      According to CECCONELLO and                AJZENTAL, (2008, p. 155), the
objectives show a more quantitative approach of the company goals, on the
revenue, market share and profitability sides.

      Four our business plan, there are:

      • Vision: innovate and offer entertainment, information and communication
at any place

      • Mission: provide excellence in content services

      • Main objective: reach 360 thousand subscribers within five years




       9.4 Generic Competitive Strategies


       According to OLIVEIRA (2007, p. 181), strategy is defined as a path, or
way, or a defined and appropriate action to reach, preferably in a differentiate
way, the goals, the challenges and established objectives, in a better positioning
of the company in front of its environment.. The strategies may be defined in
accordance with the situation of the company, it may be related to the survival of
the company, growing or development .

      Porter (1996) identified three generic competitive strategies which a firm
can face and tackle the competitive strengths of the industry in which the firm
acts: cost leadership strategy, level of differentiation, and scope of target market
or approach. These strategies are defined below:

      •        Cost Leadership: this strategy aims to obtain a cost structure that
is lower to the firm’s competitors, allowing it to obtain a great revenue volume.
The firms that adopt this strategy need to minimize costs            by controlling
administrative, marketing, distribution, research and development, human
resources costs etc..
•      Differentiation: the firm distinguishes its products in way that they
are noticed as unique on its industry. The differentiation may be in the offer of
products or services, on the deployed technology, on the delivery system, on the
market process, on the brand, style, performance, post-sale support, etc..

       •      Scope of target market: this strategy consists of concentrating the
efforts in a determined group of customers, in a product line segment or in a
specific market. This strategy is based on the assumption that a firm is different
when it better attends the needs of a specific market, or provide lower costs for
this specific market or both things.

       For the proposed business plan, intends to be:

       •      Cost leader when compared to 3G systems. The differentiation
will appear as a consequence of the business. If a fixed wireline operator deploys
this project, it will be the only company to offer fixed and mobile broadband
access at the same time.




       9.5 Marketing Strategy


       The marketing strategy should be elaborated with the aim of reaching the
purposes of the organization and or of the business.

       According to KOTLER & ARMSTRONG (1993, p. 367), the strategic plan
defines the mission and general objectives of the firm. Each business unit should
prepare its functional plans, including the marketing plan. If the business unit
consists of so many product lines, brands and markets, it may be necessary to
develop plans for each of them. The marketing plans may include product, brand
and market plans.




       9.5.1 Marketing Plan Definition
According to CECCONELLO and AJZENTAL (2008, p.161), the marketing
plan integrates the interdependent elements of the marketing such as sales,
product management, customer assistance, advertisement, merchandise, sales
promotion, lobby, public relations, brand and distribution.

       The marketing mix      defines the strategic position of a product in the
market. It includes the four main variables that a firm can administer in order to
implement its market strategy: Product, Place (distribution), Promotion and Price.

       According to CECCONELLO and AJZENTAL (2008, p.161), the marketing
plan should be specific for product line, by market and by region and must be
supported by the market research. The main objectives are to provide the
executive board a concise and complete financial and marketing summary report
containing the forecast result and objectives.

       The proposed business plan intends to provide:

       •       Executive summary: the broadband service will attend firstly the
urban areas where there are greatest fixed broadband subscriber density

       •       Current market situation is dominated by a great expansion of 3G
broadband subscribers. 3G system quality is still a issue (EXAME magazine
report, 15/July/2009 p. 91)

       •       As described in the beginning of this work, there will be a great
demand for broadband services on the next years. This is the great opportunity.




      9.5.2 Market Segmentation

      1. Segmentation

           Market segmentation consists of identifiable groups within a market:

           Benefit segmentation consists in dividing a market into groups based
           on the different benefits that consumers seek on a product or service
(people that seek for low prices, others that seek superior quality, and
          others that seek service quality).

          Demographic segmentation consists in dividing the market into
          groups based on age, sex, education, income, religion, etc..

          Occasion segmentation consists in dividing the market into groups
          according to the occasion when the consumers get the idea, purchase,
          use the product (e.g.: passengers traveling by business, by leisure or
          emergency reasons

          Usage rate segmentation means in grouping persons based on their
          usage rate: heavy, medium, light, and nonusers of a product. For
          instance, some people drink one cup of coffee per day (light users)
          while others drink five or more cups per day (heavy users).

          Life style segmentation       is a type of psychographic segmentation
          which consists in grouping persons or diving a market based on
          preferences of their lifestyle (for instance high class people which
          consume imported cigars and use sport cars, people that enjoy outdoor
          life, etc)

          According to KOTLER (2009, p. 45), the market professional can
          concentrate its efforts into one or two segments and which of them
          receiving the appropriate consideration.


     2.        Market Niche

     KOTLER (2009, p. 45) defines niches as a group of small customers which
show more defined characteristics, or a unique combination of needs. By
concentrating in attending a niche provides some advantages, including the
opportunity of knowing each customer in a more personal way, to face less
competitors and sell services and products with a superior margin once the
customers intend to pay more for the fact of having their specific needs attended.
3.        Local Market

     According to KOTLER (2009, p. 47), the firms may identify smaller
customer      groups     which   share   some    characteristics   and   offer    market
opportunities known as local market. Many companies provide customer
databases which contain information about demography, previous customer
purchase, preferences and other customer characteristics



      Our business plan intends to:

          •   Use demographic segmentation: the network rollout will start in the
              high income areas and reach the suburban areas in a later date.




     9.5.3 Marketing Mix


     The marketing mix, also know as the 4P’s - product, price, promotion, and
distribution (place) - translates into actions that should be performed in order to
influence the buyer.

     As per CECCONELLO and AJZENTAL (2008, p.163), and                           KOTLER
(2009, p. 126), the 4P’s are described as:

          •   Product: attributes of any good, service, idea, person, institution,
              etc., which potentially has an exchange value. It is featured by
              variety,    quality,   design,   brand,    package,    size,   warranty,
              reimbursement.

          •   Price: attributes that reflect the cost of the product to the consumer,
              as the price itself, payment conditions, acceptance or not of credit
              cards among others. It includes price list, discounts, licenses,
              payment deadline, credit conditions.
•    Distribution (Place): is everything that relates to the distribution,
              physical location and logistics to make the product arrives to the
              final consumer. It consists of channels, coverage, location, stock,
              transport.

         •    Promotion: is the active communication process of the attributes
              and benefits of a product for the intended target market. It is
              characterized by sales promotion, advertisement, sales force, public
              relations, direct marketing.



      KOTLER (2009, p. 127) considers the inclusion of two other P’s that are
very important for the global market: politics and public opinion.

      CECCONELLO and AJZENTAL (2008, p.164) state that when a service is
being offered, three more P’s may be added to the 4P’s:

         •    People: they are the individuals involved in the service delivery
              (how they are trained, how they behave in the service delivery, etc..)

         •    Processes: consist of the activities that the individuals perform to
              provide the service delivery

         •    Physical evidence: it is an element of the marketing mix which
              customers can actually experience or visualize when they use a
              service, and which contributes to the perceived quality of this
              service. It is the place where the service is delivered (airplane,
              doctor’s clinic, etc)

       Our business plan consists of:

          •    Product: wireless broadband and differentiated content

          •    Establish a process where the service subscription may be
               completed in five minutes
10.       REFERENCES

ALLEN, S. M.      “Business Case Assessments of a Wireless Broadband
Network Deployment”.

CECCONELLO, Antônio Renato; AJZENTAL, Alberto. A construção do
plano de negócios – São Paulo: Ed. Saraiva, 1ª edição, 2008

CHIAVENATO, Idalberto. Empreendedorismo – Dando asas ao espírito
empreendedor–São Paulo: Ed. Saraiva, 1ª. Ed. 2005

HAMEL, Gary; PRAHALAD, C.K. Competindo pelo futuro. Riode Janeiro:
Campus , 1995.

Instituto Brasileiro de Geografia e Estatística – IBGE. Disponível em
www.ibge.gov.br

KOTLER, Philip; ARMSTRONG, Gary. Princípios de marketing. 5. ed. Rio
de Janeiro Prentice-Hall do Brasil Ltda., 1993.

KOTLER, Philip. Administração de marketing: análise, planejamento,
implementação e controle. 5. ed. São Paulo: Atlas, 1998.

KOTLER, Philip. Marketing para o século XXI: como criar, conquistar e
dominar mercados. 1. ed. São Paulo: Ediouro, 2009.

OLIVEIRA, Djalma de Pinho Rebouças de, Planejamento estratégico:
conceitos, metodologia e práticas – 24 ed. – São Paulo: Atlas, 2007.

PORTER,     Michael.   Competitive    advantage:   creating   and   sustaining
competitive performance. New York: The Free Press, 1985.

Revista Exame: www.exame.com.br edições de 15/07/2009, 08/04/2009.

Revista Teletime: www.teletime.com.br edições de Julho/2009, Agosto/2009.

RIEDEL, A.; FISCHER, T.; HOGREFE D. "OPTIMISING WIMAX BUSINESS
MODELS USING INCENTIVE ENGINEERING”.

Teleco: www.teleco.com.br
Teletime News online: www.teletime.com.br

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Marketing For Telecommunications Projects

  • 1. Marketing for Telecommunications Operators Projects Sergio Cruzes MBA in Project Management and Technological Innovation – FIPE USP MsC in Electrical Engineering – EESC USP PMP certified
  • 2. Table of Contents Table of Contents ................................................................................................................ 2 1. INTRODUCTION ...................................................................................................... 3 2. CONTEXT .................................................................................................................. 4 3. END USERS ............................................................................................................... 5 4. BROADBAND OFFERINGS .................................................................................... 7 5. MACRO ENVIRONMENT........................................................................................ 8 5.1 Social and Cultural environment .............................................................................. 8 5.2 Demographic environment........................................................................................ 8 5.3 Economic environment ............................................................................................. 9 5.4 Technological environment .................................................................................... 9 5.4 Political environment ............................................................................................ 11 6. INTERNAL MICRO ENVIRONMENT .................................................................. 12 7. KEY SUCCESSES FACTORS ................................................................................ 13 8. BUSINESS SUMMARY FRAMEWORK ............................................................... 14 9. BUSINESS CONCEPTION ..................................................................................... 15 9.1 Business Plan Definition ......................................................................................... 15 9.2 Strategic Planning ................................................................................................... 16 9.3 Purpose of the Organization: Vision, Mission, Believes & Values, and Objectives ....................................................................................................................................... 18 9.4 Generic Competitive Strategies .............................................................................. 19 9.5 Marketing Strategy.................................................................................................. 20 9.5.1 Marketing Plan Definition ............................................................................... 20 9.5.2 Market Segmentation ....................................................................................... 21 9.5.3 Marketing Mix ................................................................................................. 23 10. REFERENCES ...................................................................................................... 25
  • 3. Acronyms and Abbreviations 2G Second-generation mobile network technology 3G Third-generation mobile network technology AAA Authorization, Authentication and Accounting ADSL/DSL Asymmetric Digital Subscriber Line ARPU Average Revenue per User BTS Base Transceiver Station BWA Broadband Wireless Access CAGR Compound Average Growth Rate Capex Capital Expenditure CDMA Code Division Multiple Access CPE Customer Premises Equipment CRM Customer Relationship Management DOCSIS Data Over Cable Service Interface Specification (Cable Modem) DSL Digital Subscriber Line EVDO Evolution Data Only FTTH Fiber to the Home Gbps Gigabits per second GSM Global System for Mobile Communications HSPA High-Speed Packet Access IBGE Brazilian Institute of Geographic and Statistics IEEE Institute of Electrical and Electronics Engineers IMS IP Multimedia Subsystem IP Internet Protocol IPC Potential Index of Consumption IPTV Internet Protocol Television LTE Long Term Evolution MIMO Multiple-Input Multiple-Output MMDS Multichannel, Multipoint Distribution System OFDM Orthogonal Frequency Division Multiplexing OPEX Expended Costs PC Personal Computer PMP Price per Megahertz per Pop QoS Quality of Service RAN Radio Access Network SLA Service Level Agreement VDSL Very High Bit-rate Digital Subscriber Line VoIP Voice over IP xDSL any type of DSL WBS Work Breakdown Structure WiMAX Worldwide Interoperability for Microwave Access
  • 4. 1. INTRODUCTION This job consists in providing the factors that influence the marketing activities concerned with new projects in Telecommunications Operators. It is the marketing related to the strategic planning of the organization. The study begins with the analysis of the micro-environment followed by macro-environment analysis. Other factor to be analyzed is the technological environment that concerns with the availability of user devices.. On the legal- political environment, aspects such as spectrum availability and restrictions should be considered. Keywords: Marketing ♦ Strategic Plan 2. CONTEXT The service growing rate of circuit switching telephone systems is starting to decrease in Brazil and Latin America. So, Telcos are investing in fixed broadband access technologies which are showing high growing rates. Also, Cellular operators are also noticing a decreasing on their growing rates for voice services. At the same it is very difficult to provide differentiated voice services. The price competition is one main drivers of the voice revenue stagnation. For most cellular operators in the world, the mobile data revenue has reached more than 30% of the service revenues while in Brazil there is still room to grow.
  • 5. 3. END USERS For the end-user media consumer, the open TV main content provider in Brazil. However it is beginning a trend to search for different forms to access content , entertainment or information, at devices such as PCs and mobiles. The group of users that is constantly searching for information on different channels other than TV, is composed of persons under 35-year old (Accenture study published at Converge Magazine in 13/April/2009). A study done by Yankee Group and Ericsson shows that the 3G user in Brazil is predominantly young (Teletime news, 29/July/2009). The social classes in Brazil are distributed as per Exhibit 5.1 (source: Associação Brasileira de Pesquisas, 2009) Family average income per month (Reals) 16000 14400 14000 12000 10000 8100 8000 6000 4600 4000 2300 1400 2000 950 620 440 0 A1 A2 B1 B2 C1 C2 D E Exhibit 3.1 – Social classes in Brazil and family income per month Based on a report of the Exame magazine (08/April/2009) about the consumption of the Brazilian families and IBGE information, it can be derived that the social classes in Brazil are distributed as per Exhibit 5.2.
  • 6. 30,00% 25,40% 25,00% 21,80% 20,70% 20,00% 15,70% 15,00% Percentagem Brasil 8,90% 10,00% 4,10% 5,00% 2,60% 0,90% 0,00% A1 A2 B1 B2 C1 C2 D E Exhibit 3.2 – Social classes percentage in Brazil In order to better estimate the total potential users based on income salary, the table 5.1 simplifies the number of classes. The total potential number in Brazil is 15,789 thousand users. Percentage of People Wireless the Brazilian between 20 - internet Potential Classes population 30 years old (potential) users A and B 29.60% 11,248 85% 9,560.8 C 42.50% 16,150 30% 4,845 D and E 28.00% 10,640 13% 1,383.2 Table 3.1 – Potential internet users in Brazil based on the income salary
  • 7. 4. BROADBAND OFFERINGS The cable modem access reaches only 184 cities representing 74 million people, or 40% of Brazilian population which represents 53% of total Brazilian consumption in accordance to the IPC/Target. While the broadband competitiveness is so tough, the end user has few choices. The leader subscription service is called Speedy (from Telefonica and it is present only on the state of São Paulo). The exhibit 4.1 depicts the main fixed broadband offerings in 2009. Fixed Broadband Operators (in thousand subscribers) 2460 2500 2120 2000 1920 1762 1500 1320 1000 500 402 80 0 Telefonica NET Oi Brasil Telecom CTBC GVT TVA Exhibit 4.1 – Fixed Broadband Operators in 2009 An analysis done by IDC in July 2008 (published at www.puccamp.br/servicos em 06/07/2009), provides the broadband access prices in Brazil. The average price of minimum throughput (128 Kbps) was US$ 30. In Argentina, 512Kbps was US$ 27.05.
  • 8. 5. MACRO ENVIRONMENT As per KOTLER (1995, p. 49), the macro environment consists of the forces that affect the whole micro environment: demographic, economic, technological, natural, political and cultural. 5.1 Social and Cultural environment The cultural characteristics of the areas to be serviced by a wireless broadband business are very non-homogeneous. The service should be segmented during the implementation phase only. The final goal is to provide a service that is not focused for specific population profiles . 5.2 Demographic environment The demographic environment is a very important force since it consists of the population profile in terms of its age, ethnics, immigration, education level, lifestyle, etc.. As these trends are out of control of the company, it is important to anticipate the movement of the trends, to develop scenarios and to provide a constant adjustment on the market strategies. The observation of the demographic environment trends allow to develop geographic, ethnics, income salary and age segmentation strategies. The geographic segmentation is extremely important for a Telecommunication Operator deployment project. It allows identifying areas with great growth potential and low level of competition. It is on these areas that the deployment should start.
  • 9. 5.3 Economic environment The main implications of future changes on the economic environment are related to the demand. The demand is very sensitive to the variations of the economic activity and any well defined plan may fail if it ignores the influence of the economic environment. Brazil, which has the fifth greater population and the eighth consumer market in the world, it is becoming one of the best options for business in the world. The internal market growth and the continuous class C expansion have boosted the consumption in Brazil. As per magazine Exame (08/April/2009), the Class C spends its income salary as: • 21% at commercial establishments (supermarket, drugstores) • 11% with transport (bus, subway, gasoline, taxi) • 10% with food (restaurant, groceries, snack bars) • 8% with entertainment (gifts, sightseeing, internet) • 7% with basic services (telephone, light, water, house rent) Based on this scenario, it is expected a high demand of broadband services on the next years. 5.4 Technological environment At highly competitive segments, the technology is a key determinant factor for the business continuity. The innovations which aggregate product and service value affect the end user perception, creating a maximization of the cost benefit and an increase on the competitive advantage.
  • 10. The main deployed technological solutions to offer broadband services in Brazil is the UMTS with its HSPA platform. Other mobile technologies that offer wireless data are GPRS and EDGE from GSM networks and 1xRTT and 1xEVDO from CDMA networks. MMDS operators also offer wireless internet (radio connection). The mobile broadband HSPA is the dominant technology. If we consider the UMTS cellular phones and 3G data devices, they represent 96% of 3G accesses in Brazil (source: Teleco). Regard the fixed telephone market, the operators are updating their ADSL networks with ADSL2, ADSL2+, VDSL and also are beginning to deploy the FTTH technology. The Exhibit 5.1 depicts a performance comparison among different technologies Peak Throuput Access Technology Mode Downlink Reach WiMAX* 3,5 GHz - 5 MHz <1.0 km bandwidth FDD Wireless Fixed 15 Mbps (urban area) WiMAX* 2,5 GHz - 5 MHz Wireless <1.25 km bandwidth TDD mobile 10 Mbps (urban area) WiFi (802.11a/b/g) Mobile < 54 Mbps < 0.1 km ADSL Fixed 8 Mbps 3 km ADSL2 Fixed 12 Mbps 1.5 km ADSL2+ Fixed 24 Mbps 1.5 km VDSL Fixed 50 - 100 Mbps 0.4 km FTTP (BPON-ATM) Fixed 622 Mbps 20 km FTTP (EPON-Ethernet) Fixed 1.250 Gbps 20 km FTTP (GPON-Ethernet/GEM) Fixed 1.244 Gbps 20 km FTTP (GPON-Ethernet/GEM) Fixed 2.488 Gbps 20 km EVDO* rel A - 1.8/1.9 GHz - Wireless 1.25 MHz bandwidth mobile 3.1 Mbps <1.7 km HSPA* 1.8/1.9 GHz - 5 Mhz Wireless bandwidth mobile 14.4 Mbps <1.7 km HSPA+* 1.8/1.9 GHz - 5 MHz Wireless bandwidth mobile 28 Mbps <1.7 km Exhibit 5.1 – Technology performance comparison among different technologies * Reach refers to a throughput that is less than the peak value
  • 11. 5.4 Political environment The political and legal environment is composed of laws, government agencies and pressure groups that influence and restrict the actions of the companies. The political environment provides great restriction over the organizations and individuals. In July 2009, Anatel proposed a smoothly reduction on the TV operators frequencies in the 2.5 GHz band. The proposal consists in reducing the available spectrum from 190 MHz to 70 MHz in 2012 and from 70 MHz to 50 MHz in 2015. To start a WiMAX operation, 50 MHz may be enough. But 50 MHz of spectrum eliminates any possibility of expansion. It may be possible one or two operators in the same region with 25 MHz of spectrum without considering the band guard that may reach 5 MHz. In Portland, USA, Clearwire started its operation with 30 MHz of band and can increase the spectrum usage until 120 MHz (source: Teletime magazine, August 2009). The great movement on this area was the TVA acquisition by Telefonica in the cities of São Paulo, Rio de Janeiro, Curitiba and Porto Alegre. It is commented that Telefonica paid between R$ 1 billion and R$ 1.6 billion and that most part of this value was due to the acquisition of the spectrum which is currently used by MMDS operation (2.5 GHz range). Recently Telefonica acquired Vivo which means that their interest on WiMAX may not exist anymore. Anatel intends to use the 2.5GHz spectrum with services such as LTE. The 3.5 GHz spectrum range is another band to be used for WiMAX. There are few operators on this range such as Embratel (whole country license), Brasil Telecom (license for 12 ANs), Grupo Sinos (AN RS1), Neovia (DirectNet) in the state of São Paulo, and WKVE (6 ANs in the states of Minas Gerais, Espírito Santo and Bahia).
  • 12. 6. INTERNAL MICRO ENVIRONMENT The internal micro environment considers the resources, capabilities and the essential competencies of an organization which although they do not provide an intrinsic value, they represent value when seen by the possibility of generation of competitive advantage for the enterprise, providing return on investment above the average (CECCONELO e AJZENTAL, 2008 p. 114). The deployment and operation of a Broadband network require diverse and different competencies of human resources and also from the organization. The competence of an organization represents the summation of the learning of all groups of abilities both at personal level and organizational level (Hamel ePrahalad (1995, p.233). Basically the competencies required to deploy and operate a Broadband network are: • Knowledge and experience with radio-frequency engineering (it requires knowledge and experience with propagation, network design, antennas, etc). The challenge is to design a network to meet day one requirements as well as future requirements • LTE technology knowledge on both access and core sides • Cellular network deployment experience • Experience in site acquisition and site sharing • Technological group to evaluate infra-structure equipment as well as device hardware • Experience in network operation, CRM, IP, billing, security and services • Marketing experience: coverage area segmentation and priorities, traffic estimation and growth prediction, business models, subscriber packages positioning, competitors knowledge
  • 13. As already commented on this paper, the content is the crucial part of the wireless broadband business. Users are not only interested on the broadband pipe. They want the applications and services that the broadband can provide. This means that the broadband provider needs to do partnerships with content distributors and also brings to the market the more advanced end-user devices. 7. KEY SUCCESSES FACTORS The business and competitor knowledge will allow determining the key successes factors which are the minimum requirements that are necessary for a enterprise to compete with possibilities of success. Based on literature, it is known that main success factors for a Broadband network operation are the availability of Modems for fixed networks, laptops, smartphones and tablets for wireless networks and also service price and the cost of the backbone access to internet for any type of network. Regarding the project deployment, the main success factors are the choice of an infra-structure provider totally engaged with the technology. Also, it is very important to minimize the number of additional providers for IP network, BTS backhaul, data servers, civil infra-structure, site acquisition. Other important success factors are definition of site priorities; maximize site sharing options, and a presence of a very skilled deployment team.
  • 14. 8. BUSINESS SUMMARY FRAMEWORK In accordance to CECCONELLO and AJZENTAL (2008, p. 134), it is important to aggregate all related information that concerns to the business plan in a table in order to make available a qualitative and quantitative summary about the aspects that can and cannot interfere directly or not directly in the business that is being proposed. The elaboration of this frame intends to bring to the table an integrated view about different existent variables that are pertinent to the proposed business, pertinent to the definition of the business and to the generic and marketing strategies.
  • 15. 9. BUSINESS CONCEPTION The goal of this chapter is to provide a base foundation for, given the opportunities analysis, to structure and develop a strategic proposal for , in the sequence, to verify its viability. 9.1 Business Plan Definition The business plan is a tool in which the entrepreneurs employs it in order to detail their ideas in a concise way based in assumptions of quality where it is demonstrated its viability and the probability of the business success. In accordance to Chiavenato (2005), the business plan consists of an anticipated planning in which the entrepreneur, based in a collection of data and information about a business, try to make it viable Business plans are needed at different scenarios. They can be used to expand a manufacturer plant, to verify the viability in attending a new market, to manufacture a new product, to offer a new service. This study will show a business plan for a new business. This plan has as the first goal to dissolve doubts for a possible decision maker about the quality of the plan In accordance to CECCONELLO and AJZENTAL (2008, p. 146), the challenge of every business plan is to identify precisely the reasons that suggest its elaboration. The reasons can be understood as the characterization of a problem motivated by the uncertainties about the viability of the business. The economic- financial analysis will reflect the verification of the hypothesis and variables concerned to the problem under study. In order to obtain a very trustful and solid economic-financial analysis, it should be necessary to perform an exploratory research that connects trends and correlations with the observed facts in the environment of the business.
  • 16. 9.2 Strategic Planning It is seen that there is a kind of difficulty to define the planning function in the enterprise world, to define its real magnitude and reach (OLIVEIRA, 2007, p. 3). Steiner (1969, p. 12) defined five dimensions non-reciprocally exclusive and without very defined borders of the planning: • Subject of interest: manufacturing, research, new products, finance, marketing, installations, human resource, etc. • Planning elements: intents, objectives, strategies, politics, programs, budget, standard, procedures, etc. • Time dimension: long-term, medium-term or short-term • Business unit: corporate planning, business unit strategy planning, affiliate planning, functional groups planning, division planning, department planning, product, services, etc.. • Characteristic: complex or simple, quantity or quality strategic or tactic planning, public or confidential, formal or informal, expensive or non expensive So, the planning is defined as a process based on the five shown dimensions, done to reach a future scenario in more efficient and effective way, using optimized efforts and resources from the organization. In accordance to SLACK et all, (2002 p. 87), strategy is the global standard of decisions and actions that position the organization on its environment and has the mission to make it reaches its objectives of long term run. These decisions will take place before, during and after the elaboration and deployment of the plan. The planning can be distinguished into three types: strategic, tactic and operational.
  • 17. According to OLIVEIRA, (2007, p. 17), the strategic planning is the administrative process which provides marketing sustentation in order to establish the best direction an organization should follow, aiming an optimized level of interaction with the external factors - non manageable – and acting in an innovative and differentiate way. According to FISCHMANN and ALMEIDA (1991, p. 25), strategic planning is an administrative technique which based on the organization environment, it creates the conscious of the opportunities and threats, strengthens and weaknesses of the organization for the accomplishment of its mission. Based on this conscious, it is established the purpose of the direction that the organization should follow in order to take advantage of the opportunities and avoid risks. According to OLIVEIRA (2007, p. 18), the objective of the tactic planning is to optimize the results of determined area of the organization. So, it works with the decomposition of the objectives, strategies and politics that were established in the strategic planning. It is developed by the intermediate management levels of the organization. OLIVEIRA, (2007, p.19) defines operational planning as the formalization of the methodologies of development and deployment of specific results to be reached by the functional areas of the organization. The subject matter of this work is the supply of wireless broadband services and contents with an objective of return on investment in seven years. The scenario that is expected for the next years (2011 – 2015) is characterized by a sustainable economic growth (better than 4% a year). The increase in the power consumption of the population will stimulate the appearance of new services and increase the dispute among cellular operators, internet via Cable Modem and ADSL service providers.
  • 18. 9.3 Purpose of the Organization: Vision, Mission, Believes & Values, and Objectives According to CECCONELLO and AJZENTAL, (2008, p. 149), the purpose of one organization gathers vision, mission, believes & values, and objectives, which help the arrangement of the organization. These aspects are important in order for the entrepreneur to build the identity of its business, establishing the organization climate, the standard of behaviors to be followed, what is really being pursued on its business. According to OLIVEIRA, (2007, p.65), the vision is defined as the limits that the owners and main executive people can visualize within a certain period of a longer time and one wider approach. Within this context, the vision provides a solid outline of the strategic planning to be developed and deployed by the organization. The vision represents what the organization intends to be. According to OLIVEIRA, (2007, p.107), the mission is the reason of being of the organization. Therefore, it tries to find what is real business of the organization, why it exists, what activities the organization will concentrate in the future. According to OLIVEIRA, (2007, p.67), the values represent a set of foundations and fundamental beliefs of an organization, and at the same time they provide sustentation for all your main decisions. The values should have a strong interaction with ethical and moral values of the organization. According to OLIVEIRA, (2007, p.141), the objective may be defined as a state, situation or a future result that the executive intends to reach. It relates to everything that implies in obtaining a final result. Objective is a target with a defined execution deadline and assigned responsibilities. According to OLIVEIRA, (2007, p.141), the objective may be defined as a state, situation or a future result that the executive intends to reach. It relates to
  • 19. everything that implies in obtaining a final result. Objective is a target with a defined execution deadline and assigned responsibilities. According to CECCONELLO and AJZENTAL, (2008, p. 155), the objectives show a more quantitative approach of the company goals, on the revenue, market share and profitability sides. Four our business plan, there are: • Vision: innovate and offer entertainment, information and communication at any place • Mission: provide excellence in content services • Main objective: reach 360 thousand subscribers within five years 9.4 Generic Competitive Strategies According to OLIVEIRA (2007, p. 181), strategy is defined as a path, or way, or a defined and appropriate action to reach, preferably in a differentiate way, the goals, the challenges and established objectives, in a better positioning of the company in front of its environment.. The strategies may be defined in accordance with the situation of the company, it may be related to the survival of the company, growing or development . Porter (1996) identified three generic competitive strategies which a firm can face and tackle the competitive strengths of the industry in which the firm acts: cost leadership strategy, level of differentiation, and scope of target market or approach. These strategies are defined below: • Cost Leadership: this strategy aims to obtain a cost structure that is lower to the firm’s competitors, allowing it to obtain a great revenue volume. The firms that adopt this strategy need to minimize costs by controlling administrative, marketing, distribution, research and development, human resources costs etc..
  • 20. Differentiation: the firm distinguishes its products in way that they are noticed as unique on its industry. The differentiation may be in the offer of products or services, on the deployed technology, on the delivery system, on the market process, on the brand, style, performance, post-sale support, etc.. • Scope of target market: this strategy consists of concentrating the efforts in a determined group of customers, in a product line segment or in a specific market. This strategy is based on the assumption that a firm is different when it better attends the needs of a specific market, or provide lower costs for this specific market or both things. For the proposed business plan, intends to be: • Cost leader when compared to 3G systems. The differentiation will appear as a consequence of the business. If a fixed wireline operator deploys this project, it will be the only company to offer fixed and mobile broadband access at the same time. 9.5 Marketing Strategy The marketing strategy should be elaborated with the aim of reaching the purposes of the organization and or of the business. According to KOTLER & ARMSTRONG (1993, p. 367), the strategic plan defines the mission and general objectives of the firm. Each business unit should prepare its functional plans, including the marketing plan. If the business unit consists of so many product lines, brands and markets, it may be necessary to develop plans for each of them. The marketing plans may include product, brand and market plans. 9.5.1 Marketing Plan Definition
  • 21. According to CECCONELLO and AJZENTAL (2008, p.161), the marketing plan integrates the interdependent elements of the marketing such as sales, product management, customer assistance, advertisement, merchandise, sales promotion, lobby, public relations, brand and distribution. The marketing mix defines the strategic position of a product in the market. It includes the four main variables that a firm can administer in order to implement its market strategy: Product, Place (distribution), Promotion and Price. According to CECCONELLO and AJZENTAL (2008, p.161), the marketing plan should be specific for product line, by market and by region and must be supported by the market research. The main objectives are to provide the executive board a concise and complete financial and marketing summary report containing the forecast result and objectives. The proposed business plan intends to provide: • Executive summary: the broadband service will attend firstly the urban areas where there are greatest fixed broadband subscriber density • Current market situation is dominated by a great expansion of 3G broadband subscribers. 3G system quality is still a issue (EXAME magazine report, 15/July/2009 p. 91) • As described in the beginning of this work, there will be a great demand for broadband services on the next years. This is the great opportunity. 9.5.2 Market Segmentation 1. Segmentation Market segmentation consists of identifiable groups within a market: Benefit segmentation consists in dividing a market into groups based on the different benefits that consumers seek on a product or service
  • 22. (people that seek for low prices, others that seek superior quality, and others that seek service quality). Demographic segmentation consists in dividing the market into groups based on age, sex, education, income, religion, etc.. Occasion segmentation consists in dividing the market into groups according to the occasion when the consumers get the idea, purchase, use the product (e.g.: passengers traveling by business, by leisure or emergency reasons Usage rate segmentation means in grouping persons based on their usage rate: heavy, medium, light, and nonusers of a product. For instance, some people drink one cup of coffee per day (light users) while others drink five or more cups per day (heavy users). Life style segmentation is a type of psychographic segmentation which consists in grouping persons or diving a market based on preferences of their lifestyle (for instance high class people which consume imported cigars and use sport cars, people that enjoy outdoor life, etc) According to KOTLER (2009, p. 45), the market professional can concentrate its efforts into one or two segments and which of them receiving the appropriate consideration. 2. Market Niche KOTLER (2009, p. 45) defines niches as a group of small customers which show more defined characteristics, or a unique combination of needs. By concentrating in attending a niche provides some advantages, including the opportunity of knowing each customer in a more personal way, to face less competitors and sell services and products with a superior margin once the customers intend to pay more for the fact of having their specific needs attended.
  • 23. 3. Local Market According to KOTLER (2009, p. 47), the firms may identify smaller customer groups which share some characteristics and offer market opportunities known as local market. Many companies provide customer databases which contain information about demography, previous customer purchase, preferences and other customer characteristics Our business plan intends to: • Use demographic segmentation: the network rollout will start in the high income areas and reach the suburban areas in a later date. 9.5.3 Marketing Mix The marketing mix, also know as the 4P’s - product, price, promotion, and distribution (place) - translates into actions that should be performed in order to influence the buyer. As per CECCONELLO and AJZENTAL (2008, p.163), and KOTLER (2009, p. 126), the 4P’s are described as: • Product: attributes of any good, service, idea, person, institution, etc., which potentially has an exchange value. It is featured by variety, quality, design, brand, package, size, warranty, reimbursement. • Price: attributes that reflect the cost of the product to the consumer, as the price itself, payment conditions, acceptance or not of credit cards among others. It includes price list, discounts, licenses, payment deadline, credit conditions.
  • 24. Distribution (Place): is everything that relates to the distribution, physical location and logistics to make the product arrives to the final consumer. It consists of channels, coverage, location, stock, transport. • Promotion: is the active communication process of the attributes and benefits of a product for the intended target market. It is characterized by sales promotion, advertisement, sales force, public relations, direct marketing. KOTLER (2009, p. 127) considers the inclusion of two other P’s that are very important for the global market: politics and public opinion. CECCONELLO and AJZENTAL (2008, p.164) state that when a service is being offered, three more P’s may be added to the 4P’s: • People: they are the individuals involved in the service delivery (how they are trained, how they behave in the service delivery, etc..) • Processes: consist of the activities that the individuals perform to provide the service delivery • Physical evidence: it is an element of the marketing mix which customers can actually experience or visualize when they use a service, and which contributes to the perceived quality of this service. It is the place where the service is delivered (airplane, doctor’s clinic, etc) Our business plan consists of: • Product: wireless broadband and differentiated content • Establish a process where the service subscription may be completed in five minutes
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