1. Industry Overview-
The Australian internet industry has been following a trend of increase in growth for many years. In 2010 the Australian internet access market reached a value of $6.3 billion dollars and in the same year had 7.5 million users in Australia alone (Internet Access in Australia 2011, p.2). Predictions from the same source also indicate a continuing growth in this trend with the internet becoming an increasing part of private and personal use in Australia.
Product: It focuses that the right product should be developed for the market. The products may be a service, a good or can be both.
Place: It focuses on getting the appropriate product to the appropriate market. A product that is not available to the customer when it is needed is not of any much use to him. There may be many distribution channels through which the product reaches to its customers.
Promotion: It is concerned with promoting the product to the market. The ways include mass selling or personal selling. Promotion is basically the duty of the marketing manager.
Price: To decide the appropriate price for a product is also equally important as the above-mentioned 3P’s. Competition in the market must be taken into consideration while setting the price. Possible customer reactions to the set prices must also be taken into account. (The Marketing Mix 4 P’s, Web)
The customers of the internet access industry include both business and private households with three-quarters of Australian Households currently having internet access (Access in Australia 2011, p. 12). Australian business is increasingly using the internet with sectors such as online shopping increasing in Australia. The Australian Bureau of Statistics claimed that in 2008-09, 64% of people aged 15 years and over who accessed the Internet used it to make online purchases. This has had an increase from 2006-07 when only 61% of used the internet for online shopping (ABS 2011).
Competition in this market is increasing with cheaper and faster internet being sourced by the Australian Community. Increased technologies, overseas companies and increased access to the internet at home have all had an effect on the marketing of the internet. Some of the major companies to this date include Cynergic, iiNet Ltd and Telstra Corporation (Access in Australia 2011, p. 16), with companies like Optus and numerous overseas companies increasing advertising to increase their market shares.
2. Environmental analysis
Internet Service provision is one of the fastest growing industries within the telecommunication sector (Internet service Providers in Australia: Market Research Report’, 2011).
Understanding the customers perceptions and applications of the internet assist ISP’s and Internet Access Providers (IAP’s) in providing a balanced marketing mix. Due to the broad scope of applications of the internet there are endless market segments that can be identified in the development of the marketing plan. Research into internet activity highlights the customer markets using the internet and aid in developing a marketing plan that will reach the target market.
In The Australian Communication and Media Authority’s (ACMA) publication, the service market in the online environment 2011, it was found that a variety of factors can influence who uses the internet, how often and for what purpose. The findings include that the frequency of internet use increases with personal income, on average men use the internet slightly more than women, there appears to be a strong relationship between age and frequency of internet use with the 18-34 yr age group using the internet more frequently. ABS data adds further details in that “Social networking and online gaming was performed by 88% of internet users in the 15-17 years age group and 86% of internet users in the 18-24 years age group. (ABS 2010)
Another finding from the ACMA was that users in capital cities are more likely than those not living in capital cities to use the internet on a daily basis. This last finding coupled with the issues of increased costs for IAP’s to enable service provisions to regional areas where there are less customers to generate returns has seen a slow uptake of internet access across the regional areas of Australia.
One of the biggest influencing factors for Internet Access Providers is the political environment. Since the commencement of internet in Australia the Government has had a specific interest in the development of the internet and telecommunications industry. Government funding and decision making has often impacted the growth or decline of particular IAP’s and ISP’s and has intentionally and by default affected the development of internet infrastructure across the country.
The announcement of the National Broadband Network to address national internet coverage has brought debate over the economic and technical factors of achieving a sustainable and appropriate internet network to resource the countries growing population and growing aspirations in various innovation industries such as technology and telecommunications.
3. Marketing Strategy
Marketing is a strategy that puts together the marketing goals of an organization into a consistent whole. The marketing strategies may be distinguished depending on unique conditions of every business. Here are different types of the marketing strategies:
The different types of marketing strategies depend on a given company’s current position in the market.
If the company is already a leader, the strategies are called the Market Leader Strategies and they are:
1. Expanding total market,
2. Defending market share
3. Expanding market share
If the company is now a challenger to a larger company, the strategies are termed Market Challenger Strategies. They are
1. Defining strategic objectives and opponents,
2. Choosing an attack strategy
Here is a short list of specific strategies that can be employed to maximize results.
1. Expanding total market;
a. Get new users- introduce a completely new goods or service to bring in new users.
b. Get new uses for existing goods- expand the number of uses for goods that are already being marketed.
c. Get more usage for existing goods/services- convince the user that it is good to use more of the goods/services.
2. Defending Market Share
a. Position Defence- this is initiated when being purely defensive may not work, therefore some offence should be used to counteract. E.g. expand the number of markets, enter new markets, and take over dependent markets. An IT company can for example defend its market by merging with electronics and marketing so that it suddenly becomes a mammoth rival for any other IT company trying to compete.
b. Flanking Defence- this is employed when guarding a specific territory may not be good enough. Therefore the company should extend its territory ‘from the side’, strengthen it with new concepts and try to improve on what they already have.
c. Pre-emptive Defence- in this one, the company decided to ‘attack’ before the rival does. For e.g. get a completely new idea and start to execute before the rival has any chance to retaliate.
d. Counter-offensive Defence- when attacked, market leaders will react with counterattack. For e.g. cut the price of goods or services, give more promotions or try to invade of sales-territory
e. Contraction Defence- this is when a company wisely withdraws from the competition, generally from the weaker territories in order to concentrate on other territories.
3. Expanding Market Share- profit naturally rise when market share is expanded with all other factors kept intact. But this is an option that should be taken with discretion since there are many factors to keep in mind.
Market Challenger Strategies.
The challenger should try a head-on attack at the leader only if
i. The leader is not satisfying the customer entirely.
ii. Both the challenger and the leader are similar in size of company (but challenger may be underfinanced for example.)
iii. There are a number of small and regional companies of which one of them is currently the leader.
The different attack strategies for a challenger are:
1. Frontal attack- this is a direct attack. According to the principle of force, the attacker has a 3:1 advantage. What the challenger does is try to match the leader in all the given areas.
2. Flank attack- this is when a challenger realizes that a leader has a certain weakness and concentrates on that very weakness.
3. Encirclement attack- when a challenger completely surrounds the leader and attacks, for example an attacker has to show the customer that it offers everything that the leader can offer, and with better qualities and attributes. So the attacker is drawing the customer by urging them to completely move away from the leader.
4. Bypass attack- when the challenger tries to attack indirectly usually aiming at the easier markets without drawing enmity.
5. Guerilla attack- when a company (usually much smaller and newer) tries to attack by harassment and demoralization of the leader company, to see what they can get out of it. It may not work out at all, but may be worth the try for a small company.
Role of niches:
In many ways niches have profound advantages over large-scale markets. For example, there are middlemen, being small-scale means their products may be much cheaper, also they know their customers better and more informally, so they can cater to the individual needs better.
Australian universities got the access to internet for the first time in 1989 through AAR Net. Soon after this, in mid-1990, the entire continent could use the dial-up Internet. Today, there are a number of technologies to access internet, such as, Coaxial Cable made of hybrid fiber, ISDN, Digital Subscriber Line or DSL, Satellite Internet and ISDN. By July, 2009, the government of Australia started rolling country-wide broadband network. The broadband connection in the Australian countries is very slow and is even costlier than the internet in almost all other countries that are industrialized. So, The Australian Government has been planning to the fiber optics internet so that the internet connection there becomes more reliable and faster. (The Core. 4th Edition, 2001)
The analysis of marketing strategy means to understand the environment in which the business operates. It will help us to identify the opportunities and threats that are linked with the business. This identification is done with the help of the PEST analysis. It is also very important to identify the internal weaknesses as well as strengths. For example, in a business, the important strengths can be a new product or efficient employees, and the weaknesses can be the limited resources or lack of customer. Thus, SWOT analysis is very helpful which analyses the strengths, weaknesses, opportunities and the threats associated to a business.
esLet us discuss the marketing mix strategy of McCain Foods, the largest producer of chips in the world that was founded in Canada in 1957. It is known for its manufacturing of potato products that are frozen. This food chain is famous for its potato products, still its product lines are very wide. It uses different strategies for pricing their products that also adds value to their money. For example, if a customer decides to buy an 'extra-fill' pack, he will get 30% extra product free. This keeps the regular buyers of that product happy. McCain has outsourced the transportation to deliver the products to its customers. It also aims at a better promotion. (Introduction to Marketing - Theory and Practice, 2004)
The business environment in Australia has changed a lot as the internet has developed. The internet fever has taken stock markets and industry by storm. The revolution of e-commerce in Australia has promised to provide even more efficient ways of handling the business. We can see that we can now easily buy the goods of our use from the comfort of our home 24 x 7. An important ingredient of the strategy of marketing mix of any firm is to own a website. It has been seen that the customers get immediate information on the services or products that they want to buy. In Japan, Sony managed to take pre-orders of famous Play station 2 just through internet. In just a few days, the number went up to 1 million. Advertisers are now moving their money to internet since the consumers like to spend most of their time online than merely watching TV. Some efficient ways to advertise a product through the internet are pop-ups and banners. (The Mind of the Strategist, 1982)
So, the above-mentioned examples of marketing-mix strategy clearly depict how important it can be for running a business.
The Australian Internet Access Industry is facing a period in which anticipated growth over the next five years is 10.8% per annum (McMillan, 2011). As there are more than 425 businesses in the industry of providing internet access to consumers there is strong competition for market share and to remain profitable these businesses need to conduct carefully planned and executed marketing strategies.
According to the Department of Broadband, Communications and the Digital Economy (2012), the completion of the National Broadband Network (NBN) will provide high speed fibre optic cable access to 93% of Australian households. Access to the infrastructure funded by the Australian Government will be sold by NBN CO at wholesale prices to retail internet providers for on selling to end users. This is a large structural change which moves the industry away from needing to buy wholesale access from Telstra, the company that has owned and controlled most of the existing infrastructure. Once the NBN rollout is complete retail providers will need to develope products in the form of internet packages to attract and keep consumers.
The internet access industry and individual companies can use the four Ps marketing mix, a strategic set of tools used by organisations to engender responses from identified groups of customers which consists of the concepts of product, price, promotion and place (Solomon et al. 2009) to developed and focus strategies to improve their marketing performance over the next three years..
The first component of the marketing mix is Product and internet service providers (ISPs) can continue to remain competitive by researching their target consumers and developing internet packages which incorporate new technology and are designed to suit the different categories of consumers. A major competitor of fixed internet access is the growing popularity of mobile internet access (McMillan, 2011) and ISPs need to provide flexibility and convenience to consumers by providing bundled packages that combine all of a customer’s telecommunication requirements. As Coleman and McCombs (2007) state younger generations tend to use the internet more than older people, therefore major ISPs such as Optus and Dodo direct marketing messages regarding the internet towards younger people (youcompare.com.au, 2012).
Secondly ISPs can continue to retain customers and attract new ones and remain financially viable by using the Price component of the marketing mix, which has been defined as the value that consumers give in exchange for a product (Solomon et al. 2009). ISPs need to set prices that consumers perceive give them a satisfactory experience as well as ensuring that the ISP receives sufficient income to remain in operation (Solomon et al. 2009). Telstra has had an advantage in setting price because it was able to offer its retail customers the wholesale access price it was charging other ISPs for access to Telstra’s infrastructure (McMillan, 2011), however with Optus developing its own cable system and with the NBN rollout this advantage is no longer be available to Telstra and the increased competition that will result from a more level playing field will result in lower prices being offered to customers (O’Sullivan, 2011).
As the external or macro environment in which ISPs operate changes, ISPs will need to become increasingly able to differentiate their products whilst promoting their services and products. McMillan (2011) states that internet use has expanded because of more sophisticated applications and increased access speeds and that the internet is used for diverse activities which range from business and governmental operations to social networking, email, entertainment and on-line shopping. Each of these activities attracts different demographics and psychographics and ISPs will need to tailor their promotional activities to target each segment with the products developed specifically for them. Currently Telstra promotes Bigpond as Australia’s largest ISP with award winning support and a range of options with the implication of reliability, Optus promotes not only its range of internet services but also other telecommunication services to indicate convenient one stop service provision and Dodo uses humour to explain that it needed to restructure to become the best ISP (youcompare.com.au, 2012). As internet access speeds become more uniform across Australia the ability to identify and target products for specific consumers and to create brand awareness will be essential to the economic survival of every ISP.
The final component of the marketing mix that of place, will assume less importance as the NBN rollout proceeds because it is anticipated that 93% of all Australians will have access to the NBN and the remainder will be able to access enhanced wireless or satellite services (Department of Broadband, Communications and the Digital Economy, 2012). However ISPs who will retail access to the NBN may use regional placement and access via shopfronts to provide physical contact between themselves and potential customers in order to ensure that their brand is placed in a way that will enable maximum exposure and accessibility.
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