With the UK mobile phone market estimated at £1,105 million according to a recent Mintel report, and growth expected over the next few years, it is fundamental that Orange ultimately utilise the most effective working practices and operational procedures. With these industry trends continuing, and increased competition from existing, and new entrants expected, it is paramount that Orange conducts a thriving marketing strategy to ensure future profitability and success. Within this report, an interactive marketing strategy will be employed to initiate an enhanced database, better customer targeting, and improved promotional techniques. With Orange already occupying the market leader position, this report will create a strategy to transform its pay-as-you-go customers into the monthly payment scheme option. If the strategy is successful it will enhance brand loyalty, and ultimately improve customer relations, and service. Whilst conducting the report, the following model will be addressed:
1.1: Present Database Strategy
As Wilson (2003) defines “The customer database is a manual or computerised source of data relevant to marketing decision-making about an organisations customers” (p.4). According to Wilson’s definition it is undoubtedly the catalyst for producing a marketing strategy. Currently, the database utilised by Orange is very simplistic with only the minimum requirements produced by the company. The customer database currently consists of the following information: This information connected to Orange’s database is simply inadequate in relation to other multi-national corporations. As Kotler (2002) states, “A market has never bought things. Customers buy things. That’s why database marketing’s ability to target the individual customer in the crowded marketplace is so valuable” (p.790). In relation to Kotler’s comments, it is therefore paramount that Orange needs to broaden the database to enhance customer relationships.
1.1: Recommendations for Database Information
1.1.0: Types of Advancements
As discussed in the previous section, Orange needs to modify the current customer database in order to create better customer service, improved customer targeting, and enhanced market knowledge. The new modernised database needs the ability to analyse behavioural, lifestyle, demographic, and past promotional techniques. Types of additional information required for the database can be identified in the table below:
1.1.1: Lifestyle Information
The lifestyle information expressed within the box above can be utilised to analyse trends within Orange’s customers, initiate promotional strategies targeted at specific customers (2 for 1 deals), and to generally enhance customer profiles. As Reitman (1994) states, “The nature of direct marketing has become increasingly enhanced with the development of behavioural databases” (p.12). This quote by Reitman ultimately provides sufficient evidence that behavioural aspects of customers are becoming more prominent in marketing strategies. Therefore facts and figures relating to the lifestyle trends can categorize the mass market into target groupings in order to maximise marketing potential. The activation of lifestyle information can also provide comparative analysis to be utilised in connection with lifestyle trends in the UK mobile phone market, and against the UK population in general.
Demographics are another fundamental requirement for Orange to install into their database as this ultimately provides the company with valuable information on the potential purchasing habits. For example, customer’s socio-economic status, mosaic group and type, income levels, tenure status, and number of personnel in their household can ultimately provide stereotypical representations of the customers. Information concerning these areas can provide more efficient promotional techniques, such as direct mailing only to Mosaic Group A1 (Global Connections). This type of data is often referred to as geodemographic profiling data, and as Wilson (2003) adds, “Such data shows the profile of people within an area and is typically used for location planning and target marketing” (p.5). In general if this added information was present in the companies database, it could undoubtedly improve marketing communication, customer grouping, and behavioural trends.
1.1.3: Other Information
The other information classified in the box above can benefit marketing operations as this additional data can categorically target more precise and accurate searches for Orange’s customers. As Kotler (2003) highlights, “Armed with the information in their databases, these companies can identify small groups of customers to receive fine-tuned marketing offers and communications” (p.790). This improved database is therefore advantageous as it holds imperative research and customer knowledge to allow mass, regional, local, and more specific marketing approaches to be employed.
Orange will undoubtedly benefit from the additional data recommended, as it provides added personalisation to marketing communications, improved customer service, enables a better understanding of consumer behaviours, and it can assess the effectiveness of the organisations marketing and service activities. In general, the development of installing this new customer database will ultimately provide more information that can be utilised in marketing decision-making.
2.0: Target Market
The commencement of a marketing strategy undoubtedly begins with identifying the perceived market that the company wants to attract, and target marketing. This stage is called market segmentation, as Thompson (2001) describes, “Market segmentation is the use of particular marketing strategies to target identified and defined groups of customers” (p.1126). In relation to the case study, the current key target market for the monthly subscription product is Orange’s existing pay-as-you-go customers. Reichheld’s hierarchy of targeting options explains Orange’s choice of target market:
As McCorkell (1997) supports, “Established customers are likely to be accorded a higher priority than new business” (p.197). With the industries rate of churn averaging at between 20-35%, it is fundamental that Orange aim to retain customer’s by transferring them from the pay as you go contract to the monthly scheme, as retention is a cost-effective alternative to acquisition. The retention of the consumers will be increasingly easier if the adoption of the direct and database marketing is produced.
A limitation however prevails with Mintel stating that monthly subscriptions are decreasing with only 39% of the UK market on this scheme in 2004, down from 41% in 2002. As categorically stated above, the broad target market for Orange is existing customers, however the need to segment the market further is crucial. Having researched statistics (Mintel, Keynote) it is highly evident that the most profitable market sector is the young adults i.e. between 15 and 24. The following graph supports this argument:
This age category (15-24) has been regarded in the mobile industry as the market core, which categorically provide prolonged profits, and sales. As the Mintel report establishes “The lengths to which network providers, as well as handset manufacturers, will go to align themselves both with youth culture and a certain sense of trend setting stylishness are currently ubiquitous, and should not be underestimated as a strong market driver” (p.17). As Orange is the market leader, the objective to promote our products to the biggest market size is certainly feasible. Therefore my target market is designed at promoting the monthly subscription to the 15-24 age group category, both at a local and national geographical perspective. As the Mintel report highlights, “Market growth is driven by the youth market, for whom a mobile phone has become a necessity” (p.11). In the remainder of the report a unique marketing communication strategy will try and pursued this targeted population to go from a frequent user (pay-as-you-go) to an advocate (monthly subscriber) on the loyalty ladder. Benefits of loyalty include:
It is therefore fundamental for Orange to implement the new database information discussed in chapter one in order to target this customer grouping in the future. Gadgetry appeals to this young age category, therefore the prospect of promoting sleek, and the most up-to-date mobile phones in the monthly package will be a key marketing technique. Other particular characteristics associated to my target audience will include the targeting of both male and female, all employment types, and no particular lifestyle will be pursued. As the market leader, we have the capabilities and budget to appeal to a mass market, but the promotional communication will be aimed at the younger age categories.
2.1: Communication Methods
There are various communication methods available to Orange within there £13 million budget. Advertising has been the preferred method in this industry since the early 1990’s, and I predict that this method is still beneficial to organisations within this distinct market. According to Mintel, over £300 million was spent on this industry in 2004, with the figures expected to rise during 2005. This approach is also participated by Orange’s competitors, with the figures below outlining advertising expenditure of the top brands.
Therefore, the communication method of advertising will certainly be utilised in the future as it builds brand awareness, reaches a wide audience, and the repetition of product positioning helps to promote customer trust. Other benefits are shown in the box below:
Advertising is undoubtedly the communication technique utilised by multi-national’s to promote brand awareness to a mass audience. The UK mobile phone market is no different, with many pages spread over newspapers, magazines, websites, and radio adverts. Therefore Orange should continue to use advertising on a national level to promote its products and services, and endeavour to appeal to a wide audience. However, mass media advertising has its disadvantages, which consist of a non-personal touch, no persuasive element, expensive, and the risk of customers not reading the advert. Limitations to advertising are portrayed below:
Therefore, Orange must consider other promotional techniques such as direct mailing, exhibitions, sponsorship, and sales promotions. As Pepper’s and Rogers (1997) state “To manage your customers effectively, you will need to find ways to talk directly with your customers one at a time, rather than sending out commercial messages to broad audiences of customers and non-customers” (p.207). In respect to direct mailing, this method is very cost-effective, targeted to appropriate personnel, message personalisation, campaign effectiveness can be measured, involves active involvement, and the campaign is hidden from competitors. This technique would be very effective for Orange, as the company recognises the target market, and can easily communicate messages to the appropriate personnel either through the post, e-mails, face-to-face, telephone, or text messaging. Direct mailing does have its limitations, which are highlighted below:
This direct mailing will counteract the mass media technique of advertising, as it ultimately targets a specific source of the population i.e. the young market. These two sources of marketing described above will provide great promotion and awareness for Orange, however further marketing communication methods are essential. Other types of marketing communication that should be utilised include exhibitions, events, sponsorship, and sales promotion. Firstly, exhibitions are advantageous as they provide the chance of face-to-face communication with the customers, cost-effective, investigates the needs of the consumers, and produces on-the-spot sales. This marketing alternative offers Orange an ideal opportunity to spot the target market, and influence their behaviour whilst communicating directly to the customer grouping. The exhibition and events basically enable Orange sales consultants to attract young people to the stall by free goods, prize draws, and sales promotions. This is an exceptional use of resources as the target market (15-24 year olds) ultimately has time to spare, enjoy freebies, and like socialising. This strategic choice could work in conjunction with direct mailing (addresses from prize draw application forms), and advertising campaigns. Sponsorship is another viable option for Orange, with their fierce competitors (Vodafone) very successfully advertising on Manchester United shirts. Orange should follow this sponsorship technique by sponsoring an individual, team, or company that is portrayed by the young generation as trendy. Sales promotion is another feasible option for Orange, as existing customers are always interested in saving money, and retaining consumers is undoubtedly a cheaper and safer policy than acquisition.
2.2: Media Selection
Advertising will appear in all medium circles including television, newspapers, magazines, and the Internet. In relation to the target market (15-24 year olds), young and trendy newspapers such as the Sun, and the Mirror will be highly exploited. According to Neilsen Media Research, combined readership levels for these two publications are in excess of 14 million people, with www.nmauk.co.uk stating the total readership for the Sun Newspaper is just over 8 million people. The Sun therefore is an ideal medium to advertise, especially because 22.8% of the readers are between the ages of 15-24, therefore communicating with around 1.7 million of the target market. Other beneficial media circles include the television, when figures can rise to around 10million during peak times. However, considering our target group, advertising during shows such as Hollyoaks, Eastenders, and Big Brother would be the ideal scenario. Unfortunately advertising during these advert breaks would be very costly, and a full investigation into the expenditure/ sales ratio would need to be calculated before this marketing approach was employed. Popular websites such as www.google.com, www.bbcnews.co.uk, and www.skysports.com could also be advertised on, with the technique of a pay-per-click scheme. Also placing adverts onto university home pages, together with popular lifestyle choices of the young i.e. football clubs, pub guides, and radio station websites would assist in promoting the brand. In addition to the high volume of advertising that Orange should utilise, the company needs to promote their brand by other marketing strategies in order to transfer the existing customers to a monthly scheme. One aspect of the promotional mix that Orange should employ is mail shots to the targeted customer base. Orange should possess the relevant customer information (name, address, age category) on their database of existing pay-as-you-go to enable this effective strategy to be utilised. This direct mailing is an extremely competent marketing tool as there is direct contact between the company and prospective consumer. The mailing should include information of promotions, the products and services offered, and the steps of completion from pay-as-you-go to a monthly subscription. Other direct mailing campaigns could include student pigeonholes, marketing lists from brokers, or material issued by companies such as Experian. In addition to the two proposed marketing communication methods explained above, Orange should also offer various other options in order to maintain their market leadership position. Other ideas include exhibitions such as in phone stores, student unions, shopping malls, cinemas, and other related places where the target market would visit. These exhibition stands must entail tangible effects that can ‘pull in the target market’, such as free gifts, people magnet’s, colourful and imaginative stand, and a powerful promotional phrase or logo. Other ideas for Orange entail the sponsorship of clubs, individuals, or businesses either on a local or national scale that contain a majority of the representative group i.e. university sports team, cinema screens, night clubs, football teams, or graduate schemes. This sponsorship idea will undoubtedly target the specific grouping whilst portraying a positive brand image, and improving word-of-mouth within the youth generation. Other promotional techniques could include jazzy outdoor posters, ambient media techniques (advertising on the back of train/ bus/cinema/sport tickets), and text messages.
2.3: Sales Message
As the customer grouping Orange are targeting consist of the younger generation, a precise and forceful sales message has to be employed. The message portrayed by Orange must adopt the following stages: Ultimately, our target customers have characteristics related to fashion, money, and technology to which the new products and services must appeal. Therefore a strong emphasis on these characteristics must be portrayed within the sales message as this will enhance their interest, and consequently improve the likelihood of a purchase. Orange should implement messages that portray offerings such as 12 months for the price of 9, no line rental for 3 months, or buy a 12-month contract and pay later. The messages contained in all the marketing techniques (advertising, direct mailing, exhibitions) should aim to communicate with the target audience by primarily getting the customers interested. Colourful layout of adverts, price offerings, celebrity icons, and new gadgets are all strategies that could be utilised. The message needs to contain the relevant information for the target market, whilst portraying Orange’s brand values; straightforward, refreshing, dynamic, honest, and restless energy. Within the message, important customer preferences such as humour, sexiness, fashionable gadgets, and celebrity-endorsed phones could be utilised to persuade the target audience to purchase the monthly payment scheme. Services including video calling, conference calling, postcards, sports news, stock prices, horoscopes, news updates, 3G, WAP-enabled, and Internet connection should all provide Orange with an enhanced selling instrument. This information, which will attract existing customers to the monthly scheme, should also portray certain language and wording. This content should indicate innovation, visionary, excellent customer service, and energy from the Orange brand. In conclusion, the message needs to implement specific selling points such as sales promotions, excellent wording, sexy images, and new up-to-date gadgetry information in order to connect, hold interest, arouse desire, and obtain action from the target market. Given the range of products offered by Orange (network anytime, orange premier, any network anytime direct plan, student exclusive), they should portray slightly different messages for each product. Another unique selling point that Orange can install within their sales message is the offer of customer retention, and loyalty i.e. similar to the no claims bonus in motor insurance, Orange can promise to reduce prices after certain time scales. This encouragement of improved service, cheaper deals, and enhanced information should provide the Orange brand with increased brand loyalty within the future.
As the market leader with a projected budget of £13 million for the marketing communication strategy, it is apparent that the frequency of campaigns, and promotional techniques will be very high. The methods of promotion identified in the previous sections will be utilised at differing times of the year. As the UK mobile phone market doesn’t experience trade cycles or seasonality, the marketing programme will demonstrate consistency throughout the year. Mass media advertising will remain the primary source of marketing offered by Orange. These distinct adverts should be placed into the identified media sources (The Sun/The Mirror) on a daily basis, with a quarter page spread in each edition highlighting the benefits of the monthly subscription package. In relation to TV adverts, I would suggest that these are aired frequently during popular programmes associated with the younger generation. Television advertising is very expensive, and airtime would need to be cut to a minimum, however given Orange’s budget, I would recommend at least daily adverts during shows such as Hollyoaks, and Eastenders. The direct mailing campaigns should be an ongoing project with promotional offers constantly sent to existing customers. As Orange has got such a large customer database it is impossible to send documents to all of the customers, therefore monthly deals should be posted to a random selection, or if the database was improved a more carefully selected and targeted audience. As for exhibitions, university promotion should be conducted on a weekly basis, with Orange representatives visiting different campuses each day in order to promote the products and services on offer. In terms of other exhibitions and trade shows, this is basically dependent on the schedule of the events. So in conclusion, Orange needs to continuously utilise all of its marketing techniques in order to maximise its brand awareness, profitability, and to meet their objectives. Advertising should be provided on a daily basis, direct mailing is an ongoing scheme however monthly campaigns should be offered, and university visits should be carried out daily.