Marketing Metrics; getting the right mix when the environment is moving and the product or market you are selling may not yet exist

 

Marketing Metrics; getting the right mix when the environment is moving and the product or market you are selling may not yet exist

October 3, 2016 / Mark Harding

Student ID: 215203034

In the telecommunications industry the change in technology and the speed that it becomes obsolete is causing investments being made on technology and allied services before a market is created. This means that marketing metrics can only give a guide to potential opportunities and risks. With the merging of technologies new major players are entering the market and services are being offered to differentiate the product supplied.

As a relatively new discipline and science, Marketing possess large opportunities and risks with the maturing of the sector. What makes something a science, is the ability to measure, evaluate, and replicate observations and experiments. In the telecommunication sector products are becoming more a complete entertainment package rather than just telephones which was the mainstay of the sectors up to the 1980’s. One example of the rapid change in the market is that the first apple iphone was released just over nine years ago (29th June 2007) with the latest release iphone 7 on 16th September 2016.

With the rapid growth in the performance of the iphones marketers are relying on the next purchase will be the latest model released, this is indicated by the industry having 2 year contracts, which allows for 2 model upgrades from the previous model being available. Figure1 shows the growth in memory capacity, which is required in the transition from a data and telephone environment to one that is now video rich environment. The local telecommunication carriers have had to provide infrastructure to support these services with multibillion dollar investments, these need to be supported by research on what will be required, when and where, the lead times on these investment are measured in years.

apple

Figure 1: Apple press release

For many years marketers believed they added value to a company’s bottom line for many years this was taken as a given, with little evidence to support or disprove the theory. Matt Palmquist referred in his article “What Can the Cola Wars Teach Us about Brand Loyalty?” refers to the Cola wars throughout the late 1990’s, with both Coca-Cola and Pepsi spending significant money on campaigns to differentiate their brands with little positive impact on market share or profitability. In fact, according to (Koschmann & Sheth) is that mature brands like Coca-Cola and Pepsi are better off trying to find new segments and new consumer groups through product innovation rather than trying to poach loyal customers from other mature brands.

In the Telecommunication this has been highlighted by AT&T purchasing DirecTV on the 24 July 2015 in the USA on the deal was aimed at increasing AT&T’s market share in the pay-TV sector; the purchase was reported by AT&T at US$48.5 Billion. This provides a differentiation to the opposition in the segment. New players in the segment include Google and Time Warner Cable each with differing product strengths and geographical reach.

Previously as demonstrated in the Cola Wars example, companies believed that all marketing was beneficial regardless of the type of marketing being applied, irrespective of the product, competition or environment. With a push for marketers to demonstrate accountability for their decisions (Mintz & Currim, 2013), marketers started to use metrics to measure and assess the effectiveness of marketing campaigns.

Big Data has become one of the tools of marketing metrics, Telecommunications can use information to track internet traffic to gather vast amounts of data for their own use or (once cleansed of identifying information) saleable to third parties. This data can be used to show return on investments in near real time management or for demonstrating return on marketing investment. The key to getting the right results relies on asking the right questions.

What are the Metrics?

In an industry like telecommunications large investments, require a large amount of data to be managed and interpreted in a timely manner. AT&T had the rights to the original iphone this allowed AT&T to build a large customer base of smartphone users. This allowed AT&T to have a large amount of Big Data to do analysis on all facets of business and marketing forecasting.   This allows a company’s planning on expenditure and marketing to be allowed and assessed.

A broad range of business and Marketing Metrics are used by companies to assess the performance of a marketing-mix decision according to Mintz & Currim.

Dashboards are also becoming a popular way for large amounts of data to be presented and track the performance of key metrics that a company has prioritised (Iacobucci, 2014 , pp. 218). Dashboard use has grown enormously and allow companies to track traffic use including longitudinal information to see changes over time for all aspects of business metrics including marketing.

dash

Figure 2: Example Dash Board

Do Metrics work?

Marketers have adopted the use of marketing metrics with the premise that they should be able to be accountable, both in terms of business metrics but also in the harder to define metric – improvement in Brand Equity (Ambler & Roberts (2008, p. 734).  Unfortunately many other academic works including theirs indicate that for marketers, there is no one size fits all metric for marketing and even for the same information the question can change as the environment changes.

For the metrics the product and the environment are paramount, a prime example of this is Blackberry who went from the dominant player in the mobile phone market to a bit player as the product and marketing could not keep up with the opposition.

bloomberg

Figure 3: Bloomberg

This is not to say that Marketing Metrics don’t work, it is simply that the metrics must match what is required to make the right strategic decision, that delivers alignment and insight of the effectiveness of marketing activities, and how it interacts with the business as a whole simply and that one obvious metric is suitable for all companies or even one campaign as the environment the data can be reviewed to provide insight into longitudinal studies as well as current insights to allow for appropriate marketing strategies.

References

Apple Inc. (2004-2016). Press Release Library. Retrieved September 29, 2016.

Bloomberg

http://assets.bwbx.io/images/users/iqjWHBFdfxIU/ivivda7R0N48/v1/-1x-1.jpg Retrieved September 29, 2016.

Iacobucci, D., 2014 . Marketing Management (MM4). Mason: South-Western, Cengage Learning.

Koschmann, A. & Sheth, J. N., n.d. Do Brands Compete or Coexist? Evidence from the Cola Wars. Kilts Booth Marketing series, 2(051), p. 22.

Mintz, O. & Currim, I. S., 2013. What Drives Managerial Use of Marketing and Financial Metrics and Does Metric Use Affect Performance of Marketing-Mix Activities?. Journal of Marketing, 77(March), pp. 17-40.

strategy+business: Corporate Strategies and News Articles on Global Business, M. C. a. M., 2016. What Can the Cola Wars Teach Us about Brand Loyalty?. [Online] A http://www.strategy-business.com/blog/What-Can-the-Cola-Wars-Teach-Us-about-Brand-Loyalty?gko=e8aae Retrieved September 29, 2016

 

 

Telstra – The evolution of a product a brand and a service

Telstra – The evolution of a product a brand and a service

29 August 2016

Mark Ronald Harding

ID: 215203034

 

I started my working life on the first day of February 1983, working for Telecom Australia the government owned Telephone Company as an Apprentice Telecommunications Technician. During the next 30 years Telecom Australia has become Telstra, was became a private company and moved from a telephone provider with rotary telephones to an information, internet and video company. Telstra is a product, a brand and a service operating as a minor player on the global stage while being the dominant provider in Australia.

With the rapid change in the telecommunications industry Telstra is set up to face the challenges that will come as technology changes and usage moves to more video and data usage into the future.

The Product

Telstra is Australia’s largest telecommunications and information services company, offering a full range of communications services and competing in all telecommunications markets.

 

Telstra provides the network infrastructure to allow services to:

17.2 million mobile services,

7.0 million fixed voice services and

3.4 million retail fixed broadband services.

It also has an international presence in 22 countries

Main switch room, Central Telephone Exhange.png

Main switch room, Central Telephone Exchange, Wills Street 1908 – Telstra.com

The Brand

Telstra’s origins date back to 1901, and Australian Federation, when the Postmaster-General’s Department (PMG) was established by the Commonwealth Government to manage all domestic telephone, telegraph and postal services. For generations the PMG, Telecom, and now Telstra has been synonymous with the provision of telecommunications services, and products. You were obligated to use their telephones and services, with no options on cost or products. With the opening up of the Australian network to competition with the sale of AUSAT and a second license, this became OPTUS who is the second largest provider in Australia.

Telstra provides a full suite of services across Australia and has the largest Mobile network coverage of any network.

Telstra has had 7 major network outages in the first 6 months of 2016, this has damaged the Telstra brand, In an article on ABC news a spokesman from Choice, Tom Godfrey said an analysis of 280 telecommunications plans revealed some Telstra customers were paying up to 92 per cent more than other consumers for their home broadband internet and up to 35 per cent more for their mobile plan.

The telecommunications ombudsman indicated that in the first quarter there were a total of 31,297 complaints during the quarter, an increase of 5.6 per cent during the same period in 2015.

The premium service brand has been damaged and some will question whether Telstra can maintain the premium rates when the network is not as sturdy as it is claiming to be.

As seen below the network coverage is best with Telstra but due to Telstra’s premium status the expectations are higher and the satisfaction is lower. Also Virgin uses the Optus network but due to better branding has a higher satisfaction result.

Telstra

The Future

Currently the Australian government is rolling out a national fibre network to improve the access for every Australian to have the opportunity to access fast internet and other telecommunications services. This will mean that Telstra’s copper network will become redundant (or at least owned by NBN) and all the competition will not be required to provide a national infrastructure, this will allow for new players both local and international to be able to quickly and easily enter the market. America’s AT&T is currently retraining is 280,000 staff for the new products and services that will be available in 2020(ATT). Telstra does not have the size or capability to match the products being rolled out so will have to be agile in its branding but must have a very reliable service to offer customers.

The next 4 years will see more changes in the telecommunication industry than has ben seen in the last 32, and will continue to accelerate in speed and need for consistent service levels and agile operators to take advantage of any opportunities, whether Telstra will be left behind, time will tell… Watch this space……

References: