AN EVALUATION OF MARKETING STRATEGIES OF MOBILE PHONE OPERATORS
CHAPTER TWO
REVIEW OF RELATED LITERATURE
2.1 OVERVIEW OF TELECOMMUNICATIONS SECTOR Telecommunications service were introduced into Nigeria in 1886 when the first cable link between Kaduna and the regional colonial headquarters in Britain provided communication channel with the home office in London for administrative purposes. In addition Cable and Wireless Company owned by the British Government provided link on attainment of political independence in 1960. From this period, telecommunications services in the country have progressed and witnessed remarkable expansion and modernization to date. Before 1960 for instance, there was a low telephone density of about 0.5 to 1000 that is, one exchange line per 2000 people, the objective of which was to allow the colonial administrators and foreign companies some level of administrative convenience in their daily activities. At this time, the responsibility for administering the limited telecommunication facilities was bestowed on the Public Work Department. The transmission system available then was mainly physical open wire used purely for telegraphy. The first trunk telephone service was between Itu and Calabar in 1923. Subsequent demand for more circuits or lines in 1946 necessitated the introduction of radio carrier system between Ibadan and Kaduna which later spread to other parts of the country. By 1950, Nigeria had 15,063 telephone instruments installed. Today, the story is completely a different one with the emergence of Nigerian Telecommunications Limited in 1985 and the subsequent improved and modern facilities, higher connectivity ratio, increase patronage and growing range of new services.
2.2 The Theory of Marketing of Products and Services
In recent years, marketing researchers, scholars and writers (Levitt, 1974, Wyckham, 1975, Gronroos, 1980, Booms 1982 etc) have been preoccupied with the issue of discussing whether the marketing of services (for example telecommunication services) is similar to or different from the marketing of physical goods.
A search of related works of others show that there are two different approaches (namely, the product based approach and the service based approach) with regards to the applicability of product marketing concepts and techniques termed the product based versus service based approaches.
According to the former school of thought, (Baker, 1985:450), services are not different from physical goods therefore the same concepts or marketing progammes and techniques used in goods marketing can be directly translated to service marketing.
Most of the arguments suggested by the adopters of this view center around the following two points:
a) That the claimed difference between goods and services are exaggerated and provide little insight to understanding either of them and
b) That the most important criterion to be considered when marketing any product (including physical goods, services, ideas etc) is the buyer‟s expectations.
Many commentators as shown above argued that, consumers are not buying goods or services for just the sake of buying but the value satisfaction of the offering. For this reason, it suggested that the process of marketing strategy formulation should start with product concept which recognizes the bundle of benefits, often including both tangible and intangible aspects of values as it is perceived by the potential buyers.
Baker (1985:451) there maintained that dissatisfaction with the product based approach leads many authors to take their thinking and imagination to the other extreme and call for a theory for marketing of services. According to the service based approach (Booms, 1982, Gronroos, 1980:42, Kalu, 1995:141) it is argued that services possess certain distinguishing features which make them fundamentally different from physical goods. Therefore, the suggestion advanced is that, service marketing must develop a unique process of marketing strategy formulation for services, which differs from the traditional one (i.e. the usual marketing mix of the 4Ps of product offering and/or services, pricing structure, physical distribution system and promotional activities).
The development of a service marketing theory or a frame of reference which guides the marketer‟s thinking and imaginations, deals with either the service area, that is its organizational aspects, consumer behavior, marketing mix activities or a specific aspect of it.
According to the service based approach, it is argued that the marketing of services is much more complex than the marketing of goods, due to the fundamental differences in the end product and the simultaneous production and consumption processes. And as such it suggested that service marketers need new tools, strategies and organization structure to carry out the process of marketing services effectively.
Gronroos (1980:42) suggested two functions to be performed in a service firm
a)The interactive marketing function – in order to manage all the resources involved in the buyer-seller interface (i.e. the physical/technical environment, the contact personnel and the customers) and
b)The internal marketing function, which is concerned with satisfying the employee as the first market of the service firm.
Interactive marketing programme means that firms must effectively train and motivate its customer contract employees as well as all the supporting service personnel to work as a team to provide complete customer satisfaction. Every one must have and practice a customer orientation else a high degree of consistent services will not be forthcoming.
The telecommunication industry in Nigeria especially MTN has not taken over the concept of interactive marketing seriously to enable it compete effectively. It has not realized that the qualities of the various services are dependent on seller, buyer/service relation.
The internal marketing programme is more than less the marketing concept in action. Baker (1985:451) posits that, service like products are want satisfier and for its provider to successfully survive the competitive and turbulent market place the organization must determine the wants of the customers and what they may likely want in near future, once, these wants are identified, the organization must determine suitable output to satisfy the needs identified, must communicate the availability of the output and make them available for consumption. In other words, the organization is concerned with marketing research, new service development, promotion and possible distribution. In establishing our views and comments, it seems that, the differences between goods and services are more of emphasis than principles. As the theory of marketing has a universal application to all exchange relationships, it can be argued that the strategic level, the same principles and concepts should be of equal relevance to the marketing of telecommunications services as well as marketing of products.
2.3 The Relevance And Concept Of Marketing In Business
Marketing as a specialized course has in the past made a tremendous impact on every facets of human and business endeavour. It can rightly be claimed that marketing has reduced the level of risks borne by manufacturers, producers and consumers.
To the manufacturers, marketing has reduced the uncertainties surrounding the entire process, from product conception till the product or service is delivered, paid for and consumed, thus, affording to the producer to determine whether a market exist for a particular product, what consumers want, where, how and when they need it and how best to satisfy this need at a profit, thereby, revealing the optimal marketing mix that need be adopted by the manufacturer. On the other hand, marketing to the consumer has significantly reduced the uncertainties accompanying most purchase decision by ensuring that the consumer know what he wants, where and how to get it, the price of the purchase and benefits accruing from such purchase actions. Thanks to advertising and other promotional tools which foster awareness and knowledge about consumer needs.
Philip Kotler in an effort to support the above assertion emphasized on the depth of marketing thus, “Marketing is so basic that it cannot be considered a separate function, it is the whole business seen from that point of view of its final results that is from the customer‟s point of view”.
The question that readily comes to mind is what is marketing and marketing concept? In line with the above, various definitions have been advanced as the concept of marketing but that of the Institute of Marketing London is adopted for the purpose of this study because of its simplicity and wide coverage.
Stapleton (1975:9) defines marketing in line with the same conceptual framework with the Institute of Marketing London. According to them, marketing is the management function which organizes and directs all those business activities involved in assessing and converting customer purchasing power into effective demand for a specific product or service to the final consumer or user so as to achieve the profit targets or objectives set by the company” From the above definition, it is obvious that marketing comes into play long before a product or service conception and long after the sales has been consummated.
Borsch, (1957:30) defines the marketing concept as “a management orientation that holds the key task of the organization to determine the needs, wants and values of a target market and adopt the organization to achieving the desired satisfaction more effectively and efficiently than its competitors”. The foregoing definition suggests that all organizational planning and operations should be the goal of the firm and not just volume for the sake of volume alone. All marketing activities in a company should be organizationally coordinated.
2.4 The Nature And Characteristics Of MTN Services
According to Kotler (1980:477) a service is referred to as any intangible product involving a deed, a performance or an effort that cannot be physically possessed. It is worthy to note that only few services can be considered and classified as a pure service. For instance, when subscribers, purchase telephone lines with handsets or fax lines and machines, they take ownership of a physical item that provides messages or information via the network but the warranty associated with the purchase is a service.
A service cannot be dismantled to see its inner workings in the same way a product can. Experience of the service thus comes with us and if the service does not fulfill its promised benefits then satisfaction will not occur.
As already mentioned in 2.2 above, MTN provides a wide range of services. The aforementioned telecommunications service like other forms of services have four basic distinguishing characteristics namely:-
a) Intangibility
b) Inseparability of production and consumption
c) Perishability
d) Heterogeneity
Intangibility in this sense stems from the fact that telecommunications services are performance based. These services cannot be seen, touched, tasted nor can they be possessed. Intangibility also relates to the difficulty that subscribers may have in understanding Nigerian Telecommunications offerings.
Inseparability of production and consumption is closely related to intangibility. For instance, telecommunications services are normally produced at the same time they are consumed by subscribers. This means that MTN cannot perform her services efficiently without the presence and participation of the subscribers in the production process.
In addition, telecommunications services are also characterized by perishability. This means that unused service capacity in one time period cannot be stockpiled or inventorised for future time periods. Finally, because most telecommunications services (like IMARSAT, MMS, AVDC etc) are labour intensive they are susceptible to heterogeneity. Typically these services are performed by MTN staff who show inconsistency in the course of performance. This often times results in variation from one service to another within MTN.
Therefore, marketing of telecommunications services do not require a fundamental different approach that is used in marketing industrial goods or consumer goods. It means that the marketing mix elements must be combined in such a way to respond to the differing buying process and differing influences upon it. From the above therefore, different markets do not require different marketing philosophers. It is important that, companies move away from inward looking orientation of what they are selling or offering (marketing myopia) whether what is being sold is a consumer or industrial goods or a service and ask instead what benefit our product or service provides. As Levit suggested, people do not buy ¼” drills they buy ¼” holes, they do not buy video games, they buy excitement and entertainment, they do not buy insurance they buy security and freedom from worry, they do not buy cable television, they buy choice of entertainment.
2.5 Factors Impending the Marketing of Telecommunication Services
In an attempt to discuss the problems affecting the marketing of telecommunications service in Nigeria, an evaluation of the basic factors that have hindered provision of telecommunications services to the members of the public in Kaduna metropolis is required.
In 1978, Federal Government budget speech, the then Head of State General Olusegun Obasanjo identified insufficiency of telecommunication services in the country as a major set back in telecommunications development, thus, affecting service distribution to the teeming population of the country. To this, he said, “our unsatisfactory telecommunications system calls for comments. At the beginning of the current plan period, the nation could only boast of 52,000 telephone lines. The objective of the communication sector programmes in the third plan period is provision of about 700,000 additional telephone lines to the system as a means of making telephone services available in different parts of
the country”. The above comments by the Head of State, points out the problems experienced in service distribution to all parts of the country as a result of insufficiency of telephone service on the network.
The above assertion by the then Head of state was supported by the views of Lt. Col. Ahmed Abdulahi in 1985, the then Minister of Communication. He said at a conference in Kaduna that “… the country had about 290,000 lines at the end of the previous year as against 200,000 at the end of the year before it”. This remark by the Minister again reveals the level of inadequacy of telecommunications services in the country and government concern over the situation.
Government inconsistency on telecommunications policy and specification is identified as a major contributory factor affecting the development of telecommunications services in the country. This also made it very difficult for the communication sector to plan effectively on service provisions and distribution thus affecting the marketing programmes of the industry.
Maforland, in his contribution on Management Principles and Practices, defines policies as guides to the people in an organization. They are planned expressions of the organization‟s official attitudes towards the range of behaviour within which it will permit her employees to act.
Olurunshla supported the views of Alton in his contribution on telecommunications policy in Nigeria. This refereed to as a set of guidelines for meeting stated objectives on telecommunications subject to the constraint of available resources.
In addition the engineering policy guiding the technical decisions on the development of telecommunications services in the country was seriously criticized for lack of direction. Carew in his own contributions on engineering
policies on telecommunications services pin pointed that telephone services is both technology and capital intensive, and its equipments are expected to operate efficiently over a long period of ten to twenty years before replacement. However, the contrary is the case because of poor and inconsistent engineering policies of the telecommunications sector. He maintained that, sound engineering policy is a prerequisite to efficient service provision. He added that to achieve this, MTN as a limited liability company and a policy making entity should portray a Board of Director composed of men of proven educational background with the necessary ability, experience and integrity to make good policy decisions.
Appleby highlighted the need for sound strategic planning in his contribution on modern business administration, he revealed that forecasts make management of organizations think ahead and give a singleness of purpose to planning by concentrating attention to the future. He mentioned some of the factors affecting forecast as political stability, population trends, price levels, government control and fiscal policy, employment, productivity, sales and national income, planning is also affected by technical environment. Poor and inadequate planning was identified as constraints to the production of efficient services by telecommunication industry, thus, affecting the sector‟s ability to meet marketing programme.
Planning as we know is an important managerial tool, which enhances marketing efforts in sales and distribution of services. Therefore, the planning of telecommunication network is often preceded with survey and forecast of service demand in the affected area. This in effect takes us to market survey service, planning, production distribution, sales force management, sales promotion advertising and continuous market research for feed back and market
trend information. The effectiveness of the above mentioned marketing activities is dependent on good and effective plans.
Lawson stressed the impact of good planning towards the realization of enhanced service marketing in support of Appleby‟s contributions. In his presentation on planning contribution for telecommunication in Nigeria highlighted the set backs on the disparity in forecasting between developed and developing environment. He maintained that forecasting in well developed telecommunication environment is based on historical information, whereas, historical based forecasting cannot apply in Nigeria with our nearly evolving infrastructural network system. In spite of these shortcomings, Lawson maintained that, forecasting must still be recognized as first step in the planning process. The general practice is to adopt a flexible forecast so that contingency situation could be taken care of, while, at the same time guiding against over provision.
The human factor emanating from unqualified and poorly trained personnel contributed in no small measure to the problems of telecommunications services marketing in Nigeria. This is clearly noticed in the recruitment and placement pattern of personnel in MTN (round pegs in square holes), which is immensely affected by service output and distribution, thus, resulting in inefficiency.
In realization of this situation, the late head of State, General Sani Abacha in his 1998 Budget speech said “I have always emphasized that, the anticipated improvement in living standard could only be realized with growth through investments and one possible avenue for enhanced resource mobilization and resourced utilization is privatization and commercialization of government enterprise, privatization and commercialization could also assist in addressing the problems of some of the key parastals”. He further mentioned that, this
exercise would be carried out in 1998 in consonance with the recommendations of the vision 2010 committee. Government enterprises to be privatized in the first phase of the programme are Telecommunication, Electricity, Petroleum refineries, Petrochemicals, Coal and Bitumen production and Tourism development. Specifically, government will in 1998 privatize MTN” “The remarks made by the Head of State was supported by the views of Owolabi in his contribution on innovation in telecommunication system rightly states that, the situation is far from being satisfactory in that the telecommunications services density (telephone for instance) in this country is far from the average expected and the efficiency of the existing system is below expectation, the need for efficient and reliable services provision was further stressed as inefficiency was identified as one of the basic factor contributing to poor service marketing in this sector. Professor Okoye, in his research work on Relevance of Basic Scientific Research for Telecommunication Development in Nigeria, maintained that if one of the aim of the Ministry of Communications as the supervising ministry to MTN Limited is to ensure that MTN provides efficient and reliable services, then not only must the country be furnished with a well designed system of telecommunications network, but the services must offer efficient fault prevention maintenance and rectification services.
The monopolistic status of MTN in the past could be attributed as contributing to the poor performance level of the organization in the distribution of her services. This status left MTN without any keen competitor in the telecommunications sector.
The absence of competition caused MTN to move at a pace dictated by her without showing seriousness in her operations. However, government pronouncement in 1997 and 1998 on commercialization and privatization and subsequent signing into law and granting operating licenses to the private sector have turned round the table. These developments have paved way for a new era
in the telecommunication industry. This is because such private telecommunications companies like Multilinks, Intercellular, Mobitel, Motorphone, or Hybera etc. have emerged, thus, stimulating competition within the industry. Lopsey (1990:26) maintained that, it is impossible for a firm to operate without any significant competition. It may have a complete monopoly of a particular product or service but every product or service has some substitutes that can provide more or less the same service.
Despite MTN status in the past as a complete monopolistic entity, (that is before the privatization trends) there are substitute services (though weak ones). Very poor quality of MTN services and or continued frustration of customers can drive customers to the “weak” substitute such as the mail services of NIPOST. Therefore, it can be argued that it is the realization of this fact that customers existence of any business concern and the continued existence of MTN in the business arena, thus, the subsequent shift to marketing orientation.
Corruption and illegality was identified as another vices hampering the activities of the telecommunications industry thus affecting the conduct of the marketing operations in the area of services, distribution, installation and maintenance activities. This is noticeable from the attitudes of the technical personnel especially technicians through illegal connection of lines which makes it difficult for the customer service section to maintain accurate records on subscriber and the number of service installed. For example in MTN, the engineers supervise the technicians who carry out the installation and maintenance of services.
In 1982, the Chief traffic commercial manager in the defunct post and Telecommunications department, Onyemuwa examined the relationship between the technical personnel and customers of the company in the
organizations journal. “The Telepost to this he said…” engineers should be more stringent in their supervision to avoid illegal connections of service lines”.
Ogunfere (1957) in his contribution on marketing services and revenue generation highlighted the role of coin box telephones will play in the elimination of corruption in service distribution. He stressed that “it cannot be denied that our inability to meet customers demand for service contributes to corruption and other malpractices, since customers want the services at all costs”
Ojuri, (1985:13) on malpractices in public organization emphasizes that “to eliminate corruption and satisfy customers while offering telecommunications services. MTN has to engage honest, dedicated and skilled management staff to professionally operate and manage the network and MTN installations.
Many social science researchers in their contributions stressed the need for motivation. Poor reward for positive efforts is also identified as a major variable affecting marketing of telecommunications services. In MTN for example, staff particularly those marketing whose activities are regarded as supportive to the technical operations are poorly remunerated. This poor motivational attitude to the organization discouraged staff of this department from putting in their best thus affecting the activities of the department and the organization in entirety.
To this, Ubeku (1979:301) in his text, Personnel Management in Nigeria states the various social findings have revealed that people can give off their best if their needs are satisfied. This needs range from immediate ones such as hunger and thirst to the ones of recognition and self actualization.
Drucker (1975:290) also contributed on the importance of motivation as a means to improving service production and distribution. In his text, “The Practice of Management” he stated that to motivate a worker to peak
performance. It is equally important that management set and enforce on itself high standard for its own performance of those functions that determine the workers ability to perform. Without reducing the importance of other business functions, it is true to say that the quality of an enterprise‟s management team is what makes the differences between failure or mediocre, success and full success. It is through good management style that an organization progresses towards the success of its objectives.
Shortage of necessary spare parts for expansion maintenance and replacement purposes is also a major constraint in telecommunication services marketing. In addition, telecommunications parts are not sourced locally thus making it difficult for adequate stock spare parts to be maintained at every time. The lack of spare parts retards expansion works on telecommunications installation and maintenance. This also affects MTN in responding to subscribers‟ complaints.
Of telecommunication services in the country as a whole is virtually a new phenomena as far as Nigerian Telecommunication industry is concerned.
Majority of the materials reviewed reveal that Nigerian Telecommunications Limited (MTN) the sole provider of telecommunications services in the past years do not practice active marketing as is the case in the private sector. This revelation is buttressed with the facts that MTN has no marketing division in its structure, thus meaning that no personnel at the top echelon is responsible for marketing decisions with exception of a unit or section under the corporate planning department headed by an officer not higher than the rank of manager status, whose responsibility is limited to sales of telephone directories and planning and organizing MTN participation in Trade Exhibitions.
As earlier stated in this chapter the future of MTN and the telecommunications sector look very bright with government intentions to fully privatize the telecommunications industry. At present, MTN has been fully commercialized while the privatization decree is already made. Full privation will once and for all end government continued interference in appointment of personnel for MTN who she often times dictate for on how to run the entity.
Amona, (1983:9) of the Ministry of Communication in his presentation on telecommunications industrialization pol8icy for Nigeria stressed on the setback of shortage of necessary square parts in the provision of services and maintenance of faults. To this he states, “the shortage of spare parts was responsible for poor telecommunications services. The solution he remarked lies on the fabrication of spare parts locally.
On the solution to the shortage of maintenance of spare parts in the country, Ojuri (1985:13), supported Amona‟s views on local sourcing of spare parts so as to overcome the problem of spare parts shortage and thus, improve service provision and distribution. He made reference to Australia as an example. He stressed that Australians telecommunications Administration sent out their men to Sweden and other countries who were contractors to their telecommunications equipment supplies, to understudy their plants with a view to setting up a local plant in her country. This innovation later paved way for a joint venture agreement which resulted in the signing and establishment of a telecommunications spare part manufacturing plants in Australia between the Australia Telecommunication Administration and the Contractors.
2.6 Prospects of Telecommunications Services Marketing
The prospects of the telecommunication service marketing in Kaduna were also reviewed. Most of the materials references on this issue remark that the marketing
In addition the presence of many private telecommunications companies already licensed will stimulate competitions in this sector and force MTN to sit up and forestall efficiency in her operation and marketing activities.
All with the recent re-organization in the past one year, there has been emphasis on the need to market our services and a marketing department established with a General Manager in charge.