Market Analysis and Strategic Recommendation
As a Marketing Consultant, my client, which operates in the Mobile phone and Network providers sector of the market and the organisation trades under the name of O2 has asked me to generate a report, including a full market analysis and a set of strategic recommendations. This is to help secure their short (1-3 years), medium (3-5 years) and long term (5 + years) future. I will be using relevant marketing theory and also recent market data to help complete this report. The report will include an organisation profile, outlining O2’s history, position in the market and many other factors, including product range. The report will then go on to market analysis, where it will concentrate on the impact that the market is having on the organisation. The two main elements of this component will be discussing both the ‘macro’ and ‘micro’ factors. The next stage will be using market intelligence to shape strategic decision making. This will be done using marketing models and frameworks from the data collected about O2. It will include the construction of a ‘SWOT’ diagram. The last component before the conclusion will be the strategic recommendations. Here, as the consultant, I will be offering O2 my opinion as to how they should proceed, firstly with the factors that need to be addressed immediately and then factors to concentrate on in the future. My recommendations will be based upon the analysis undertaken throughout the whole report. O2 was formed in 2001, following the demerger from British Telecom of its former mobile business; it is a provider of mobile communications services in Europe and also has a leading mobile Internet portal business. The company operates in the UK, Germany, Ireland and the Isle of Man, employing 25,000 people. It is headquartered in Berkshire, UK. The company recorded revenues of £6683 million during the fiscal year ended March 2005, an increase of 17.4% over 2004. The operating profit of the company during fiscal 2005 was £341 million, an increase of 115.8% over fiscal 2004. The net profit was £301 million during fiscal year 2005, an increase of 81.3% over 2004. By June 2008, O2 had 1,070 unbundled exchanges covering over 57% of the UK population and having a 25.6% market share of the total network subscribers. O2 is the largest company in terms of consumer penetration, with 13% of the market, due to having a very large number of national outlets. O2 has a wide product range, varying from basic mobile phones to the top quality, such as the iphone.
Source (datamonitor, o2)
The mobile phone industry began in the mid 1980's, however, due to the developments of the early 1990s, such as the introduction of digital networks and the introduction of additional service providers into the market it took off very quickly. This generated extra investment for the mobile industry to develop the technologically advanced mobile phones for consumers today. At this current time the mobile phone market is saturated; with 76 million subscribers in the UK in 2008 (Mintel 2009). Looking forward in time, it is thought by experts that volume growth should slow as penetration levels plateau and the growth will be focused more on the upgrading to more expensive phones once the economy shows signs of recovery. As o2’s marketing consultant I will be carrying out an analysis of the current market, concentrating on both the ‘macro’ and ‘micro’ elements. The macro environment includes all factors that can influence the organisation, but that are out of their direct control, including PEST analysis (political, economic, social and technological). A very important macro element is the economy and the economic situation, particularly the state of interest rates. If interest rates are high, individuals with mortgages will have less disposable income and therefore the concern for mobile phone retailers is that consumers may view a mobile phone contract as non-essential spending...
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