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Sample of assignment: Marketing strategies of SingTel
1. Situational analysis
1.1 Company and product background
1.1.1 Company introduction
As one of the leading major communication services providers in Asia covering fixed line, mobile, data, internet and TV, SingTel is still the largest telecommunication company in Singapore though the advantage over the other competitors has been continuously decreased by the hyper competition in the industry. With 8% growth in term of revenue in Singapore, this growth even didn’t match the consolidated revenue growth of 13% suggesting that the home market did not provide enough the momentum for the growth. But still as the figure below show, Singapore is still one of the major stable markets that provide large sum of revenue and cash inflow to the company as there is risks in the investment in other regional mobile markets such as India. So it would be of strategically importance to seize the opportunity provided by the new fiber network and continue to develop the Singapore market.
Figure 1.0 EBITDA by markets (Source: SingTel Annual report 2009-2010) (see also appendix)
1.1.2 Product introduction
The optical fiber broadband that SingTel currently provides initiates from the concept of building up Singapore’s Next Generation Nationwide Broadband Network (Next Gen NBN) since the middle of 2010 with the expectation to complete the infrastructure by 2012 and it is based on the high quality fiber platform operated by OpenNet Pte Ltd, a joint ventures by four partnership companies – Axia NetMedia (Axia), Singapore Telecommunications (SingTel), Singapore Press Holdings (SPH) and Singapore Power Telecommunications (SPT) (OpenNet.com.sg 2010). The major innovative feature that the fiber network has compared with the current prevailing network, ADSL or Cable broadband, is that it will upgrade the broadband speed up to one Gbps or even more which facilitates service such as Internet Protocol TV, telemedicine, real-time simulation game and so on.
1.2 Macro-environmental analysis
1.2.1 Political factors
The government is playing one of the key roles in helping Singapore to grow into a bustling center in term of finance, trade, technology and manufacturing with one of the most stable political environments (Christopher 2007, p175), the importance of the government role could also be found in promoting the Next Generation Nationwide Broadband Network. As early as 1981 with great effort from the Singapore government the NCB (National Computer Board) was set up to enhance the nation’s competitiveness by exploiting IT in an information age. And the Singapore One which was designed to link businesses, schools and home throughout the country by national wide broadband network is the key component of the national IT master plan- IT2000 initiated by the NCB (Unknown 2008, p165). Now when it comes to the Next Generation Nationwide Broadband Network (Next Gen NBN) the government is still playing a positive role in putting forward the upgrade of the national network system.
1.2.2 Economical factors
Source: TradingEconomics.com 2011
Chart 1.0 Singapore historical GDP Growth Rate
Being one of the Four Asian Tigers, Singapore’s success has close relationship with its highly developed free-market economy in term of a higher per capita GDP than most developed countries. As shown in the chart above, soon after the breakout of the US led economy crisis in a worldwide scale the economy of Singapore managed to return to normal and even outperform the major economy giants by keeping a high GDP growth rate and according to the latest available data Singapore had maintain a 6.9% GDP growth in the last quarter of year 2010. With a free healthy market economy and based on the strong demand of high speed network connection it is fair to say that Singapore has the matured economy condition to build up the optical fiber broadband network.
1.2.3 Social and cultural factors
When Singapore has the economy condition and a vivid government that is anxious to upgrade its national network system to take the lead again be the first country to possess such a national wide optical network connection to increase the country’s core competitiveness while the country lacks of some other resources such as natural resources, another problem arises that is do the Singaporean really want and need such high speed network connection against the expected added cost? In the middle of last year, Neil Montefiore, the CEO of StarHub, another national network service provider rather than SingTel expressed the similar concern during an interview. He was quoted as saying “five percent of StarHub’s 408,000 Internet subscribers signed up for its 100Mbps Internet service, the fastest that it offers…speed is not the only factor that the customers consider and price does matter…” And it is well know that the major of Singaporean are good at calculating cost they pay against the benefits they gain, it is sure that some of them may not be willing to pay more to enjoy the ultra speed fiber network, though there may be uncertainties in the family users but still the plan will go on as Neil Montefiore said, the biggest change be on the 24,000 commercial buildings that the current network has not covered (Networkworld.com 2010).
1.2.4 Technological factors
Since the enactment of the Singapore iN2015 Masterplan to upgrade the nation into an intelligent city by 2015, two major steps have been taken to build up the infrastructure for this vision: one is the Next Generation National Broadband Network (Next Gen NBN) and the other is [email protected], a plan that facilitate the Wireless Fidelity (WiFi) internet access throughout the city (Akhtar & Arinto 2009, p312). What’s more the upgrade of technological infrastructure is also on the way in other forms, for example the Singapore government will gradually migrate to IPv6 by 2010 to prepare for an ultra fiber broadband network national wide (Scholl 2010, p246).
1.3 Competitive analysis
Competitive analysis could help to determine the current competitive condition of the collaborative network to see the anticipation of attractiveness, profit and collaboration of the selected industry (Camarinha-Matos, Afsarmanesh & Ortizp 2005, p349). One of the most famous and representative theories of competitive analysis is Michael E. Porter (1979)’s Five Forces Analysis which suggested that the competitiveness level of an industry could be jointly determined by five forces, i.e. the Competitive Rivalry within an industry, Bargaining Power of Suppliers, Bargaining Power of Customers, Threat of New Entrants and Threat of Substitute Products.
Figure 2.0 Michael E. Porter (1979)’s Five Forces Analysis
Table 1.0 Dial-up ISP providers
Source: (Ida.gov.sg 2011)
|SingTel||6 Mbit/s, 10 Mbit/s, 15 Mbit/s, 25 Mbit/s (only available on mio Plan)|
|StarHub||Various but only available to Business users in the CBD area|
|Pacnet||512 kbit/s, 1.5 Mbit/s (On-demand)|
|M1||5 Mbit/s, 8 Mbit/s|
Table 2.0 ADSL providers
Source: (Ida.gov.sg 2011)
|StarHub||3 Mbit/s, 6 Mbit/s, 16 Mbit/s, 30 Mbit/s, 100 Mbit/s|
|Pacnet||8 Mbit/s, 12 Mbit/s, 30 Mbit/s|
|M1||15 Mbit/s, 30 Mbit/s, 100 Mbit/s|
Table 3.0 Cable broadband providers
Source: (Ida.gov.sg 2011)
|Qmax||256 kbit/s 512 kbit/s, 1 Mbit/s, 1.5 Mbit/s|
|StarHub||2 Mbit/s, 7.2 Mbit/s, 21 Mbit/s|
|M1||1 Mbit/s, 2 Mbit/s, 4 Mbit/s, 7.2 Mbit/s, 21 Mbit/s|
|SingTel||1 Mbit/s, 2 Mbit/s, 7.2 Mbit/s, 14.4 Mbit/s|
Table 4.0 Mobile Broadband providers
Source: (Ida.gov.sg 2011)
|StarHub||Residential Plans: 100 Mbit/s, 150 Mbit/s, 200 Mbit/s, 1 Gbit/s) (Business Plans: 100 Mbit/s|
|M1||Residential Plans: 25 Mbit/s, 50 Mbit/s, 100 Mbit/s, 1 Gbit/s; Business Plans: 10 Mbit/s, 25 Mbit/s, 50 Mbit/s, 100 Mbit/s|
|SingTel||Residential Plans: 150 Mbit/s, 200 Mbit/s; Business Plans: 30 Mbit/s, 100 Mbit/s|
|LGA Telecom||Business Plan: 10 Mbit/s|
|SuperInternet||Residential Plan: 100 Mbit/s; Business Plan: 100 Mbit/s|
Table 5.0 Optical Fiber broadband providers
Source: (Ida.gov.sg 2011)
For the optical fiber industry, the bargaining power of the suppliers is unknown due to the limitation of the access to the relative resources and information, but the other four forces could be indentified and described. For the Bargaining Power of the Customers, as mentioned above, customers in Singapore too some extent could be very sensitive about the pricing of the new fiber network products. And for the threat of substitute products, customers who do not choose the fiber product could also turn to the other internet connection services but if customers demand for ultra internet speed than so far there is still no other substitute product that could provide such high speed. But for the competitive rivalry and the threat of new entrants, both forces do not add any attractiveness of the industry. On one hand as the tables above show, with the upgrade of the internet service, there is a trend of increasing number of retail service providers, and right now there are already several service providers for the fiber products, and on the other hand after more than 10 years of the liberalization of the telecommunication industry, the new fiber industry would certainly attract more retailers in the future.
1.4 Analysis on customers
Home to more than 7000 multinational corporations (MNCs) and 3.77 million residents and a total population of over 5 million after adding up the non-residents, Singapore has put its island city into one of the countries with the largest population density in the world. While the business users tend to be more rational, the analysis on the behavior of the customers should be focused on the family users who are more easily attempted by marketing tools such as promotional activities like an IPhone package. With various ethnic compositions of the resident population, Chinese, Malays, Indians and other ethics, it is important to have careful customer behavior analysis before enacting a final marketing plan. For example, fiber network as we know are more populous and welcomed by the young aged groups, especially those from 20s to 30s as according to Chang (1996) in her examination of the Singaporean Xers, she came to the conclusion that the island’s 20-to-30 year-olds have extraordinarily high expectations in term of career progression, remuneration and material possessions. Such kinds of characters make the users under this age range worth more attention from the marketers.
1.5 Distribution analysis
While the fiber broadband internet service is distributed through the infrastructure and facility developed, operated and managed by OpenNet, distribution of the service seems not a problem to the retail service providers like SingTel. But some distribution issue may still appear like what happened in the current Singnet Broadband (SNBB) product. The problem happened in the distribution of the premium gift which usually exists in the packages but the they didn’t happen in the delivery as in a tiny country like Singapore with highly developed transportation infrastructure, a regular mail just take 2 working days to process, the real problem happen in the stocks. For example, some customers did get very angry when they signed up the two years contract with SingTel under the Apple Mac Book Premium Package eyeing for a free Apple Mac Book but they were told to wait because there were not enough of stocks. So distribution issues still need to be considered to foresee all the possible problems that may arise.
1.6 SWOT analysis
SWOT analysis is a simple but still a useful and logical planning tool, and its value is usually underestimated. SWOT analysis could be a viable mechanism for the development of the marketing plan (Ferrell & Hartline 2008, p717). Below a careful SWOT analysis will be carried out aiming at providing the basic fact describing the position of SingTel in offering and marketing the new fiber products against other competitors.
² SingTel, as the oldest telecommunication service provider with good word of mouth, has a large number of old and loyal users who are willing to continue to use the SingTel new services.
² SingTel is one of the four major shareholders of OpenNet, the company in charge of the build up and management of the optical fiber infrastructure, by promoting the new fiber product SingTel will be adding revenue for both SingTel and OpenNet.
² As the Mio TV service and some other mobile services are right now combined with the fiber product, both provided by SingTel, such combined quality service could add up the advantages that SingTel has in promoting the new fiber products.
² The increase of the fiber user will probably comes at the cost of the decrease of number of users currently using other internet connections such as the SingNet Broadband which is also under SingTel.
² With a number of ISPs that are operating in the new fiber internet products and want to occupy the market with a strategic consideration, the pricing of the fiber product could be lower than expected which will lead to long return circle of investment.
² The development of the new product and new market could bring new profit growth to the group that has found its home market grows in a slower pace than other regional markets.
² As the plan of net fiber product is also under contract which is usually in two years term, SingTel with the current high control over the old users through media exposure and frequent communication such as mailing, it could penetrate and occupy the new market through promotion or advertising and thus take the lead in the net product marketing campaign.
² As the current largest (Internet Service Provider) ISP, the promotion of the fiber internet service will reshape the ISP configuration which may reduce the market share of SingTel.
² With such high speed internet service, some customers may find it unnecessary to pay for the MioTV, a number of pay TV channel service that SingTel is currently providing to the customers.
² Another threat comes from the uncertainties of the consumer behaviors of the targeted consumers which has been mentioned above, they may simply do not see it is necessary to have such an ultra internet speed up to 1 Gbps compared to the current 10 or 15 Mbps internet service when not all of them will be interested.
With the simple SWOT analysis we have above, the advantages of the new product is obvious while the potential threat to the new product is also worrying to SingTel. But it is the truth that SingTel has to take the strategic change to keep its lead in the industry and some adaptations based on the analysis could also be applied in the marketing plan to avoid or reduce the impact of the some threat and weakness to achieve as much benefits as possible.
2.1 Company vision, mission and core values
As clearly stated in the official website, SingTel has set its vision to be Asia Pacific’s best multimedia solution group and its mission as to enable communication by breaking barriers and building bonds and create and deliver value to customers, employees and shareholders. In term of core values, SingTel has its core values come together with the aspiration to promote a performance-based culture which is innovative and open. Several key words are selected to describe the core values of the company in detail: Customer Focus, Challenger Spirit, Teamwork, Integrity and Personal Excellence (Singtel.com 2010).
2.2 Marketing objectives
As the marketing plan is in a three years term from 2011 to 2013, below a number of targets will be set for the marketing objectives in a corporate level and a product level regarding the fiber product that has been discussed in this study. In the corporate level, with the help of the promotion of the new product, the growth of revenue is expected to reach 10% compared to the 8% in the Singapore market in the last financial year. And in term of EBITDA contribution, because of the large scale of investment in the new product in term of marketing activities, the target of the Singapore market will be to maintain its proportionate contribution of around 27%, the same digit as the last year. And in the product level the most critical indicator is market share of the new product in the next important three years. The goal set for the new product according some analysis that we have above, the market share in the end of 2013 by SingTel in the optical fiber internet is anticipated to reach around 35% after the consideration of the hyper competition in the new market. But certainly these goals need to be divided into gradual goals for each year and each month in the detailed marketing plan.
3. Marketing strategies
3.1 Porter’s generic strategy (1980)
Figure 3.0 Porter’s generic strategy options (source: WordPress.com 2008)
Michael E. Porter (1980) in his famous book “Competitive Strategy” listed out three major generic strategy options for businesses to create and maintain their competitive advantages based on two dimensions: strategic scope (Broad Market VS Narrow market position) and strategic strength (Uniqueness VS Low Cost competency) as shown in the figure above. Porter claimed that the selection of any of the three generic strategy options could be effective in helping the companies to achieve competitive advantage depending on actual situations.
As in the case of SingTel, it is advisable that the company take the differentiation strategy option to maintain its competitive advantages. On one hand in term of strategic scope, as the largest internet service provider in Singapore, SingTel could not focus in a small market because it used to cover the majority of the business and family users, if the company this time focuses on a small market then many customers will be disappointed and turn to other internet service providers. On the other hand in term of strategic strength, cost leadership is not a good option to the company because like other competitors, SingTel is just a retailer of the optical fiber product. It is not possible that SingTel could get a lower buying in price though it is one of the four major shareholders in OpenNet.
Market segmentation could be defined as the process of identifying different groups of users within a market who could possibly be targeted with separate products or marketing programmers (Croft 1994, p1). Market segmentation could help improve a company’s competitive position as marketing is concerned with matching the company’s resources to the user groups. According to the property of the customers, users could be segmented as business users and personal users; and based on the speed of the fiber internet service, customers can be dived into high speed (from 500Mbps to 1Gbps) users and medium speed (50 Mbps to 500 Mbps ) users. Based on these two basic dimensions, the users of the new fiber products could be segmented in four groups as illustrated in the table below:
|Business Users demand for High speed connection||Business Users satisfied with medium speed connection|
|Personal Users demand for High speed connection||Personal Users satisfied with medium speed connection|
Table 6.0 Market segmentation for fiber product
As analyzed above, it is advisable that SingTel adopts the differentiation generic strategy to maintain its competitive advantage, so as for the selection of marketing segments SingTel also needs to cover the majority of users. But in consideration of the operating cost and further differentiation strategy by combining other SingTel services with the new fiber product in term of package, it is practical need that SingTel give up the high end market, i.e. the high speed connection market. So for the positioning strategy, SingTel has chosen the two types of segments: Business Users satisfied with medium speed connection and Personal Users satisfied with medium speed connection.
3.4 Marketing mix
Marketing mix consists of marketing strategies that companies used to persuade and manipulate the market and marketing mix is most popularly represented by the 4Ps (Baker & Hart 2008, p463). Below the marketing plan will be unfolded using the 4Ps framework.
3.4.1 Product decisions
Based on the conclusions we have above, the new fiber product will use the differentiation generic strategy and focus on the users who are satisfied with the medium speed. Several product decisions could thus been made to describe the features of the new product. Firstly, the new product should have its own product name to differentiate itself from other product that SingTel provides and the competitors provide to make it standing out; secondly, the new product will be released into the market in term of a package rather than a standalone form to avoid direct competition with other fiber internet service providers and create differentiations. SingTel could provide various plans that consist of different SingTel products, for example, a “exPress 50” that consists of 50Mbps fiber speed, home line and basic Mio TV services is the basic plan and “exPlore Home 50” will based on the previous plan and add more services such as mobile line and more TV channels, likewise “exPress 100” “exPlore Home 200” plans could also be provided to customers; thirdly, all plans should be under at the two years contract aiming at sustaining more customers and avoid frequent change of users.
3.4.2 Pricing mix
Several factors need to be considered and leveraged carefully before pricing the fiber products: cost, competition level, and company’s strategy to occupy the market and achieve profitability at the same time, product strategy to differentiate the products. To address all these concerns regarding the company’s strategic considerations, generally the company could price its new products in a medium level with the help of the following pricing strategies. The first is Product Bundle Pricing which set a price for several products that are combined in a package; this is in accordance with the bundle product strategy that just mentioned. As the products are combined together, SingTel could set a competitive price compared to the values it provides to the customers in the package to achieve both objectives of occupying the market and sound profit; another pricing strategy that could be used is Promotional Pricing as promotional activities will be of great importance to the marketing of the new product which will be explained in detail in the coming part of this study, and using a promotional pricing strategy to provide lower and attractive price will help the company to obtain more contract signed for the new product in a short period of time. One more pricing tactic that could be used is Psychological Pricing, as mentioned above there are various ethnics groups in Singapore but Chinese is the largest one in Singapore account for around 70% of the population, so some lucky and magical number such as 8 could be a good idea to attract more potential Chinese customers. For example, the monthly subscription of the bundle plan could be set as $ 88.8.
3.4.3 Promotional mix
The promotional mix that used to increase the exposure of the new product and persuade the potential customers into buying behaviors will be of critical strategic importance in consideration of the company’s strategic goal to occupy the market in the marketing plan in the next three years. In term of budgeting, the promotional activities would take up a large proportion of the budget which will be reflected in the budgeting later for its importance in the marketing plan. And in term of promotional channels SingTel could use the following channels to unfold its promotional activities: direct mailing, sale promotion, personal selling, advertising, telephone sale. Among these techniques, advertising and sale promotion is of no doubt will be very important but the direct mailing is also very effective in SingTel’s case as the company is the largest internet service providers in Singapore and its majority of users will check their mailbox at least on a month basis to get their bill of the SingTel services, so sending the promotional information through direct mailing could be an effective method under such circumstances.
3.4.4 Place mix
When the place mix is the least concerned P among the 4Ps concept, it is not the least important to be considered. In contrast, it is the source of competitiveness to SingTel, a company that earn the customers’ royalty by its well known quality service. For the place mix, several suggestions could be provided to the company to keep up its quality service as it promised. Firstly, the installation and activation period must be reduced largely. Currently, as a new product, the fiber internet connection could take up 4 to 9 week to activate which is not acceptable compared to it’s the promise of quality service though it is new products. Secondly, as mentioned earlier, there had been cases customers were very unsatisfied as they signed up the contract eying for the premium gifts but were later told that there were not enough of stocks, so this time SingTel should avoid these cases from happening again. And to achieve this, a well estimation of the number of premium gifts needed and closed careful management of the stocks will playing important role to avoid such cases from happening again and if the stock is running out then the new customers who are about to sign the contract should be told in advance about the possible delay of the delivery of the premium gifts.
4. Implementation and budgeting
Due to the limit of the access to the actual digits and data regarding the budgeting of the marketing plan even in term of approximate digits, the budgeting will be served in the reference purpose.
|Sale force stimulation||×||×||×||×||300|
|Sale force training||×||×||×||200|
|Distribution channel maintenance||×||×||×||150|
In thousands (SGD)
Chart 2.0 SingTel marketing actions and budget Gantt chart for 2011 (Fiber division)
|Sale force stimulation||×||×||×||×||400|
|Sale force training||×||×||×||300|
|Distribution channel maintenance||×||×||×||250|
In thousands (SGD)
Chart 3.0 SingTel marketing actions and budget Gantt chart for 2012 (Fiber division)
|Sale force stimulation||×||×||×||×||400|
|Sale force training||×||×||×||400|
|Distribution channel maintenance||×||×||×||350|
In thousands (SGD)
Chart 4.0 SingTel marketing actions and budget Gantt chart for 2013 (Fiber division)
As shown in the three charts above, the promotional and advertisement effort will be increase in the first two years, but in the third years, the budgeting will be reduced as the product is expected to be accepted and commercialized by the market. So the budgeting is reduced in the third years in consideration of the cost control.
5. Sale forecast
The sale forecast is also very approximate and discrepancies could even be very large to the actual digits due to the limited access to the company’s data.
|Sale revenue (after tax)||300,000||400,000||600,000||750,000|
In thousands (SGD)
Table 7 Projected profit and loss statement (fiber product division)
Please be noted that the growth of revenue and profit is more than 10% which has been previously set by the marketing objective in a corporate level, but since this is only about the fiber product division, the growth rate is even higher which acceptable in common understanding.
6. Control and feedback collection system
When the marketing plan is under implementation, the company should focus on the control and feedback collection effort to closely monitor the implementation of the marketing plan, in this regards several tools could be used such as market share analysis, profitability analysis and sale force efficiency monitoring. For example the market share is expected to reach 35% in the end of the three year plan, but the company should divide the target into smaller targets on a year or month basis to ensure that the marketing effort could achieve the target in the end of the 2013. What’s more in term of feedback collection, the customer center (call center) could help monitor the feedback from the customers. For example, the company could calculate the number of calls that customers called in to complain the company’s services and products regarding the fiber internet service.
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Appendix Financial highlights in 2009-2010 annual report