Telecommunications Industry: Challenges And Opportunities In A Globalized Market
The role of telecommunications industry in global change
Question:
Discuss about the the Telecommunication Industry.
The telecommunications industry acts as a key driver of global change. It has succeeded in improving the consumer life and creating new opportunities for business organizations. By this, the telecommunications industry leads the worldwide digitization. As it could provide people around the world with access to real-time information, social programs and marketplaces. Also, it enabled investments in technology through the global economy. In spite of the global transformational change lead by the telecommunications industry, there are some challenges that have occurred represented in the inequality of access to telecommunications through different regions around the world. Also the excess flow of information has created the risk of data security and privacy. Business across different sectors face the challenge of changing customer needs, outdated regulation, cultural transformation and skill shortages (World Economic Forum 2).
In the B2B e-marketplaces, customers’ expectations change from time to time. Digital tools are used by operators to offer digital customer service and personalization. This process may worth 27 Bn. $ for the telecommunications industry (World Economic Forum 13). The B2B e-marketplaces have recently shifted to long-term transactions to establish strong relationships with the buyers and sellers and achieve cost savings. Organizations aim to produce high quality products and services and create an integration of various business processes (Janita 364-365).
A business buyer may buy a product or service to use in his production or he may buy it to resell it again. The core principle of B2B and B2C are similar, as both seek to solve a problem or to fulfill a need. They could be differentiated with regard to demand and market structure, the decision process and the nature of the buying unit. All of the business market buyers’ demand is mainly derived from the demand of the end user (Huong 12).
In the e-marketplaces, codes of ethics have to be established at the highest moral level. By this, organizations and customers can make them a reference. Codes of ethics can have a positive impact on the relationship between the organization and its stakeholders, can affect the employees themselves, also, they can affect the managerial decisions to be more ethical and they could be used to determine the minimum legal behavior (Dean, Payne and Landry 488-489).
Also, many laws come from the ethical believes of the society. There are laws that regulate the on-line behaviors to protect individuals and business privacy (Dean, Payne and Landry 492, 494).
Challenges faced by the telecommunications industry
Most of the leading operators have clear business strategies. Strategy formulation is easy, the strategy implementation is hard. Converting the organizational strategy into actions is challenging, as it requires an establishment of internal and external metrics to measure the progress of strategy (EY 21). Formulating a digital marketing strategy is essential to guide the marketing effort to the business. digital marketing strategy formulation requires good understanding of digital tools, critical analysis, and innovating decisions (Huong 26).
Market research is necessary to be done to update the organization with customer needs, competitors’ activities and market conditions. Recent market research in the telecommunication industry revealed that consumer behavior is sensitive to product and service prices. Men in the highest socio-economic group (18-24) years old, are more price sensitive than men in lower age group. Men in the higher socio-economic group (18-34) years old, use less phone data than men in a lower age group. Also, identifying the evaluation criteria of the customers acts as a trigger to possible churn consumer behavior (Deloitte 6).
Using the SWOT analysis assists in evaluating the strengths and weaknesses of the internal environment and allows for evaluating the opportunities and threats of the external environments. According to (Stork and Huong 46), the SWOT analysis of the B2B marketplace is as follows:
Strengths:
- Knowhow and patents
- Sounded brand names
- Good reputation in the market
- Low cost of production
- Access to multichannel distribution networks
- Professional staffs
- High quality products and services
- Adaptation to changing customer demand
Weaknesses:
- Heavy reliance on external expertise
- The organization does not have a website
- Low online presence on other media channels
- Low brand awareness
- Lack of financial resources
- Lack of knowledge about digital marketing tools
Opportunities:
- Low international trade barriers:
- Cross-selling
- Growing demand in market segments
- Growing levels of digitalization
Threats:
- Consumer is shifting away from the organization’s products or services
- Market penetration by new entrants
- New governmental
- Growing competition in digital marketing
As organizations approach their markets, they find that peoples’ needs are different and they have to formulate their strategy to satisfy the needs of the target groups. They start by segmenting, then it is followed by targeting and positioning.
Segmentation: refers to the criteria of classifying the market into segments, as customer within each segment respond similarly to specific marketing efforts (Huong 10).
Targeting and positioning: organization assesses the potential segments whose demand matches the organization’s capabilities. This process is called targeting. Positioning refers to the brand image, key features, benefits associated with the brand in the customer’s mind (Huong 10).
Organizations offering of telecommunication products and services adopt various business models, including mobile virtual network operators or enablers and branded resellers. Business models could be differentiated according to different aspects including, the level of control of the communication network or functional coverage of the value chain. The value chain begins with the technical software and hardware of communication networks. The business activities are classified into operations, production, maintenance and sales (Czarnecki and Dietze 3).
Technological innovations create new opportunities as the production of new digital devices. New innovations allow the telecommunication industry to enter new market segments and increase the level of competition. Media organizations are becoming telecommunications enterprises and vice versa. Organizations convert and compete for the same customers (Tiwari and Rao 3).
B2B e-marketplace and digital customer service
Telecommunications prices tend to decrease, but revenues tend to grow. The data revenue for the telecommunications sector grew to 128 Bn. $ in 2017 from 38 Bn. $ in 2013. The demand is mainly driven by smartphones and tablets usage and upgrades (Vodafone Group Plc 1-3). Prices decrease as a result of the growing competition and continoued deregulation of the market (Czarnecki and Dietze 22).
The establishment of a comprehensive marketing plan for the telecommunication sector, requires considering all of the communications channels. Monitoring the current market situation is important to plan for the future goals. Since 2013, a worrying trend for the telecommunication sector continues to exist. The sector suffers from negative growth in some world countries, for example the operators across Europe suffer from lower profits (Tiwari and Rao 3).
B2B selling depends on the type of the e-marketplaces. E-marketplaces are classified as vertical or horizontal. In the vertical e-marketplaces, products and services of a specific industrial sector are sold directly to the production process. In the horizontal e-marketplaces, products and services are sold to all industrial sectors. Another classification to e-marketplaces is in terms of the ownership. Partial e-marketplaces are created by either the buyer or the seller. The second type is the impartial e-markets, which are created by a third party (Janita 364-365).
B2B branding requires investments on modern technology, integration with other marketing efforts and increasing online brand awareness in order to sustain strong B2B brand relationships. Online awareness could utilize social media, search engines, website and email. Online marketing channels allow organizations greater reach, according to customers’ requirements (World Economic Forum 13).
Contemporary supply chains should manage multiple challenges from different market segments, including, increasing brand visibility, increasing marketing channels, allocation of indirect spend and making use of competitors. To meet those challenges, it is important to use information technology (IT) in strategy formulation. Researchers suggest that IT has made revolutionized change in the traditional supply chains to enable the organizations to achieve benefits as responsiveness and high efficiency (Gunasekaran, Subramanian and Papadopoulos 14).
Product distribution depends on the supply chain channel of the telecommunication organization. The adaptation of the supply chain to market needs enables the telecom products and services to evolve through the market distribution channels. Good presence of telecommunication products and services is a function of the organizational ability to design innovative products. Adaptation is considered as a dynamic ability that helps the organization to enjoy the advantage of being the first mover in the market place. IT is linked to the level of trademark applications, which increases the rate of telecom services and product introduction. Distribution channels through mass communication capabilities is a function of the new product development, the collaboration of the IT suppliers, the product design. To get the most benefit of the distribution channels and brand presence, telecom organization should examine marketing factors that influence IT investments in both developed and developing countries to realize how to achieve their productivity gains (Gunasekaran, Subramanian and Papadopoulos 15-25).
Integrated marketing communications (IMC) focus on building healthy communications with other business partners in the B2B e-marketplaces. Engagement of customers includes, providing them with the information they need on timely manner, building a community of customers’ lifestyles and sending customized promotions to customers according their activities through different communication channels (Tiwari and Rao 6)
Social media is used by business organizations as an effective marketing tool. The number of social media users is estimated to exceed the billion in 2011. Most of social media active users connect by using their mobile phones. The profile of users includes individuals, organizations and government entities. It is important to realize that social media faces regulatory or governmental policy challenges to make sure it will continue as a marketing channel or it may be suspended for security reasons (Czarnecki and Dietze 19).
Conclusions
The telecommunications industry if the transformational engine in the global marketplace. It has many contributions that could make people’s life much easier and allowed business organizations to reach new markets, target new consumers in various segments, reduce their costs, increase the efficiency of doing business and generate more revenues.
It is expected that the contribution of the telecommunications industry will increase in the long-run depending on the strength of network externalities. This will encourage the R&D investments in digitalization and increase the contribution of the telecommunications industry (Jerbashian 522).
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