Increasing mobifone 3g market share in hochiminh city

Together with the success in 2010 as the competitors, Mobifone has developed 25.822 subscribers using Fast Connect service and accessing internet on mobile phone... Besides, Mobifone is

HO CHI MINH CITY OPEN UNIVERSITY SOLVAY BRUSSELS SCHOOL

MBMM5

PHAN DINH PHI LONG

INCREASING MOBIFONE 3G MARKET SHARE IN

HOCHIMINH CITY

MASTER PROJECT MASTER IN BUSINESS & MARKETING MANAGEMENT

Prof Dr LE NGUYEN HAU

Ho Chi Minh City

(2012)

I declare that this final project contains no material that has been accepted for the award of any degree of diploma in any universities or other institution and contains no material previously published or written by another person, except where due reference is made

I undertake that this is the project of my own Figures and result which are mentioned

in this project are righteous

Project Author

PHAN DINH PHI LONG

To fulfill this MBA program and final project, I own a debt of gratitude to many people who helped me complete this thesis First and foremost, I would like to express my deepest acknowledgement to my supervisor, Prof Dr Le Nguyen Hau from Ho Chi Minh City University of Technology (HCMUT), who has supported me throughout my thesis with his patience, knowledge, valuable advice and recommendations

Special thanks are extended to my colleagues at Customer Care, Planning & Sales department of VMS Center 2, Value Added Services Center in Ho Chi Minh City – who supported me valuable information to this thesis

I would like to acknowledge all professors from Solvay Business School, HCMC Open University staffs, my classmates for their assistance and co-operation during my two-year’s time at the MBMM program

Finally, I remain indebted to my family - my mother, my wife and children for their unceasing support, encouragement throughout all my studies

Contents Pages

2.5.4 Threats 32

CHAPTER III: MARKETING PLAN FOR MOBIFONE 3G

SERVICES AND ACTION PLAN

ABBREVIATIONS MEANING

VMS : Vietnam Mobile Telecommunication Services VNPT : Vietnam Post & Telecommunications

ICT : Information and Communications Technology

MIC : Ministry of Information and Communications

EXECUTIVE SUMMARY

Together with the development of telecommunication technology in the world, mobile telecommunication operators in Vietnam have applied and exploited 3G technology from 2009

3G is the third generation of wireless technologies 3G is mostly used with mobile phones and handsets as a means to connect the phone to the Internet or other IP networks in order to make voice and video calls, to download and upload data and to surf net 3G technologies enabled faster data-transmission speeds, greater network capacity and more advanced network services The services on 3G are contributing to increase revenue of telecom enterprises Beside normal voice calls, it brings utility for entertainment, work to users such as: transferring and receiving data, multimedia services as: high qualified music, video (qualified image) and digital TV; global positioning services (GPS); e-mail; video streaming; high-ends games

A severe competition between 3G telecommunication operators at present impulses a growth of mobile telecommunication market and integrate into the world telecom However, after one and half years launching 3G in Vietnam, Mobifone mobile internet 3G market share has increased insignificant comparing with competitors Mobifone managers need to analyze current status to find out the cause in order to propose appropriate actions to improve this situation

By many kinds of analyses, SWOT is one of the ways help to find strengths & weaknesses of Mobifone 3G to create a suitable marketing plan This marketing plan will help increase Mobifone mobile internet 3G market share by brand awareness

activities and giving competitive advantages compared to competitors Making customers be aware well with the name of data services such as Mobile Internet, Fast Connect and taking on trial

Simultaneously, expanding distribution channels (a main job as well) and doing promotion are the ways to increase sales volume market share Marketing mix including 4Ps – Products, Price, Place and Promotion is focused on this marketing plan The marketing plan will be implemented in 3 years from 2012 to 2014 with the timetable as follow:

In the first period, 2012, carrying out animated advertising campaign to draw customers’ attention in the services and give them a chance for trial

In the second period, 2013 – 2014, stepping up sales volume by promotion and distribution channel reinforcement

CHAPTER 1: INTRODUCTION

1.1 BACKGROUND:

The third generation (3G) mobile telecommunications is a generation of standards for mobile phones and mobile telecommunication services fulfilling the International Mobile Telecommunications-2000 (IMT-2000) specifications by the International Telecommunication Union Application services include wide-area wireless voice telephone, mobile internet access, video calls and mobile TV, all in a mobile environment To meet the IMT-2000 standards, a system is required to provide peak data rates of at least 200kbit/s Recent 3G releases often denoted 3.5G and 3.75G, also provide mobile broadband access of several Mbit/s to Smartphone and mobile modems

in laptop computers [1]

The strong points of 3G comparing to 2G or 2.5G are to allow transmitting, receiving data faster, high qualified sound & video clip for either immobile or mobile users The operators supply the users multimedia services: high qualified music & video, digital

TV, global positioning services (GPS), email, video streaming, high-ends games on 3G

3G was launched in the first years of 2000 in Japan and European countries and then until 2009 in Vietnam There are currently four 3G licenses in the country: Mobifone, Vinaphone, Viettel and a consortium comprising CDMA player EVN Telecom (E-Mobile) and Vietnam Mobile Vinaphone, a subsidiary of state-owned incumbent VNPT, was the first of the blocks launching a commercial 3G service in October 2009, initially in key metro areas such as Hanoi Mobifone launched 3G services two months later (December 2009), followed by Viettel in March 2010 and Vietnamobile/EVN Telecom in June 2010

After 18 months of launching (up to June 2011), there are 30.334 3G BTS of 4 networks established covering national wide The covering density of BTS according to population is from 54.71% to 93.68% depends on different zones, total amount of 3G subscribers in Vietnam is over 8 million at present, maximum speed of accessing internet reaches to 7.2Mb/s at this time (*) USB 3G for accessing mobile internet contributes bringing internet not only to urban but also to suburban where there isn’t any means of internet connection, bringing utility to users such as: browsing internet, email checking & responding faster no matter where you are, taking a flexible approach to work, falling back on internet connection goes down

The appearance of 3G has been giving impulse the growth of Vietnam telecom market, integrate into telecom of the world speedily Moreover, contributing to shorten the digital gap between urban and suburban improving the quality of life for people Together with the success in 2010 as the competitors, Mobifone has developed 25.822 subscribers using Fast Connect service and accessing internet on mobile phone This

amount is not as many as Viettel with D-com 3G service for accessing internet (as Fast Connect of MobiFone)

1.2 MOBIFONE INTRODUCTION:

1.2.1 Vietnam Mobile Telecommunication Services Corporation (VMS):

Vietnam Mobile Telecom Services Corporation (VMS) is a state-owned company under Vietnam Posts and Telecommunications Corporation in the brand name MobiFone It was the first comer in Mobile telecom service market in Vietnam and was founded in April 16th 1993 MobiFone specializes in building, developing network and providing mobile telephony services on the technologies: 2G and 3G and newer G in the future The main services of Mobifone are voice calls including 5 packages: MobiGold (business), MobiCard (low cost users), Mobi365 (for workers, farmers), MobiQ (for Student), Mobizone (for in-zone call) Besides, Mobifone is providing many added value services such as: SMS, Voice SMS, Funring, SMS Locator, LiveInfo, Services on 3G: Video Call, Mobile TV, Mobile Internet, Fast Connect (Accessing mobile broadband internet) …

Mobifone Subscription Growth from 1993 to 2010:

According to 2010 statistics, MobiFone was the biggest mobile service provider in Ho Chi Minh city with 55,6% market share and the second in Vietnam with 29% market share

Source: Ministry of Information and Communications of Vietnam

The contingent of 3.000 MobiFone staff in ready to effectively meet every demand of customers MobiFone is the first and exclusive mobile telephony services provider in Vietnam which is selected as of the best mobile operator in three consecutive years (from 2005-2008) in the Vietnam Mobile Awards Ceremony organized by E-chip Mobile Magazine, Especially in 2009, MobiFone was honored to receive the Excellent Operator 2008 granted by Vietnam Ministry of Information and Communications Six consecutive years (2005 – 2010), MobiFone was the most popular of Mobile Telephony Services in Vietnam voted by Vietnamnet readers[3]

1.2.2 Distribution Channels:

VMS has 6 managing centers located in 6 big cities The one in Ho Chi Minh city is called Center II It is the biggest market in Vietnam in general and biggest market share of VMS in particular MobiFone distributes its products to the mass market through retailers country wide It is the most effective channel to reach customers The distribution system of MobiFone includes 112 showrooms, 12 general agents and over 56,000 retailers covered from unban to suburban in which 15 showrooms, 2 general agents and over 8,000 retailers in Ho Chi Minh city

Besides, website is also a good distribution channel It helps to introduces and supplies information relating to MobiFone services and news to customers Customers can register value added services online via Mobifone wap portal

Although business environment is still affected by global financial crisis, Mobifone has been regularly increasing turnover and margin every year (turnover: 2009: 19,600 billion VND = 1.05 billion USD; 2010: 24,700 billion VND = 1.3 billion USD; 2011: 29,400 billion VND = 1,400 million USD) This achievement was a proof for tireless efforts of Mobifone employees Mobifone is a beloved brand in many consecutive years and is considered as a fashionable and hi-tech brand in Vietnam Its mass customers are from middle to high income focusing in big cities 3G services has been developing in the recent period make up more than 0.95% turnover in 2010 and 3.6%

in 2011 achieved 34.7% market share by quantity in December 2011 (source: VMS internal report) The mission of Mobifone at present is try to gain 3G market share as competitor Viettel and become the top of mind in supplying high quality 3G in Vietnam especially in Ho Chi Minh city

1.3 PROBLEM STATEMENT:

Vietnam mobile telephony market has been increasing yearly In 2010 turnover achieved 9.4 billion USD, increased 37% versus 2009 in which internet services make

up 4.15 % by amount

Figure 1.3.1 Total revenue of Vietnam Telecom in recent years[2]

Figure 1.3.2 Total revenue of Vietnam Internet Service in recent years[2]

Billion USD

Year

Billion USD

Year

The Vietnam mobile telephony market has more and more competition among top 3 brands: Mobifone, Vinaphone and Viettel especially 3G market in Ho Chi Minh city

3G MARKET SHARE IN VIETNAM UP TO SEPTEMBER 2011 [4]

The subscribers using 3G of Mobifone in Ho Chi Minh city has increased 130% in six months of 2011 against the hole year of 2010 [4] The majority of these users is accessing mobile broadband internet on 3G on mobile phone, PC (laptop, desktop) or tablet (Ipad, Galary Samsung, …)

Ho Chi Minh city is known as a dynamic city with over 69% people using internet everyday [5] The number of mobile workers and freelancer is rising day by day causing high growth of need for using mobile internet The speed and quality of 3G services is useful for people who move frequently not subsidiary to WIFI points They can check and update their work when out of office or they can relax by chatting, reading news, playing game … whenever or wherever they are In Ho Chi Minh city, the trend in using 3G for accessing internet is increasing daily because of its convenience and acceptable price

To increase Mobifone revenue and its market share in Ho Chi Minh city, Mobifone needs to push on developing the services on 3G at present in this city The following questions need to be addressed:

- What are the opportunities, threats, strengths and weaknesses of Mobifone

to get more customers in Ho Chi Minh market?

- What Mobifone needs to do for increasing 3G market share in Ho Chi Minh city?

The framework analysis of marketing plan will base on 4 steps as follow:

- Beginning by SLEPT model: External analysis will find out the opportunities and threats; internal analysis will give us competitive advantage to receive strengths and weakness

- Then, SWOT will be established

- After fixing the marketing targets and strategies, the project will come to marketing mix analysis

- The last step is marketing controlling

1.7 STRUCTURE OF STUDY:

The structure of the study is as follows:

The first chapter presents the overall introduction of the study including overall background, company description, problem statement, objectives and scope of works, methodology and structure of study

The second chapter analyzes in depth of current situation of business environment, market analysis, competitor analysis and organization assets and skills in Ho Chi Minh city that helps identify opportunities and threats and then point out the strengths and weaknesses for Mobifone The marketing plan 2012 – 2014 and action plan for Mobifone as well as marketing program is presented in Chapter III

Finally, the conclusion chapter will sum up what is analyzed and discussed in the study and make final conclusion on the topic

CHAPTER II ENVIRONMENTAL ANALYSIS

1.1 EXTERNAL ENVIRONMENT FACTORS:

1.1.1 Macro level: SLEPT Model Analysis

There are many factors in the macro-environment that will impact on MobiFone and its marketing strategy for 3G services These factors are Social, Legal, Economic, Political, Technological factor (SLEPT)

Social factors:

Vietnam population at present is over 90 million people, 2/3 of which are under 30 years old and 30.17% people live in urban, 69.83% lives in suburban In Ho Chi Minh city, there are 7.396 million people, in which 6,157.6 million people live in urban [6] Ho Chi Minh city has a plentiful young human resource with high education The country records in continued improvement in key human development indicators such as high literacy rates of above 90% education, health improvement, life expectancy and impressive poverty reduction The workforce is highly motivated, adaptable, and has strong work ethic

Figure 2.1: Vietnam Population Pyramid[7]

The groups of customers from 20-39 years old are Mobifone’s target customers using Mobile internet services occupied 31.2% the population In particular in Ho Chi Minh city, there are 57% young people who are potential for using Mobile Internet on 3G Besides, there are a large and powerful group of people who are under 20 years old make up 19,9% of population be ready to use this service in the near future equivalent over 17 million people Next generation customer is so huge for this market This is an opportunity for Mobifone to have more customers using services on 3G in the near future

However, the resolution No 02/NQ-CP of Government on key measure of direction and implementation plans for economic – society development in 2011, the State Bank

of Vietnam has decided to adjust official exchange rate applied on 11th Feb 2011 from 18,932 to 20,693 VND/USD This adjust may affect the price of related equipment such

as mobile phone, computer: desk top, laptop, tablet, USB 3G… because all of them in Vietnam are imported This affect may be a threat for the market because of decreasing purchasing power The user will consider carefully about buying equipment such as new phone with 3G or laptop, USB 3G … for using 3G services[9]

Economic factors:

With the incredible rise of the economic growth rate, especially after The US Government decided to lift the embargo toward Vietnam in 1994, the living standard of Vietnam has also been improved and the demands of people become higher This was the time that telecommunication and technology started to be changed and developed

to a new horizon

Nearly 10 recent years, Vietnam economy has been growing continuously, emerging as

a major hub in the region with strong and consistent growth over 8% during 2005 –

2007 When the world fell into the crisis years, Vietnam was partly affected and GDP slid 6.2% in 2008, 5.23% in 2009 due to the global financial crisis, but it has started to raise to 6.7% in 2010[10] and 5.76% up to September 2011[9] and may increase to 6.3%

at the end of the year [11] This is a sign to prove that Vietnam has been starting recover after crisis It may be an opportunity to the market because customers may earn more and expenditure will be increased more

Besides, according to General Statistic Office, the number of internet subscribers in Vietnam is estimated about 4.1 million to the end of September 2011, increasing 18% comparing with the same period of last year The total number of people using internet

at this time (September 2011) is 31.7 million users, raising 23% comparing with the same period of last year 2010 Moreover, Vietnam is now on the Top Ten Countries in Asia which have high number of Internet users, rank 7th in 2009 That is a good token for any firm supplying internet services

Number of mobile phone subscribers from 2006 to 2010

Revenue of Internet Service inVietnam from 2006 to 2010:[2]

But, CPI is increasing gradually 18,16% from early of the year to September 2011 comparing with the same period of last year 2010 on the average This may not be an ominous sign for expenditure [6]

With the above economic situations, there are both opportunity and threat to affect the expenditure of customer

Year Million USD

Political factors:

In 2007, Vietnam was officially joined in WTO Four years after Vietnam’s admission

to the World Trade Organization (WTO), the country has successfully grasped opportunities to overcome challenges thanks to its implementation of international commitments

Vietnam’s investment environment has improved remarkably by implementing investment commitments and renewing its legal system and policies on foreign investment in recent years

Besides, taxation reduction roadmap is implementing, in 2011 tax for electronics group and accessories including mobile phone, computer products (laptop, desk top, Tablet ….) decreased from 1% - 3% compared with 2010 tariff This is an opportunity because Vietnamese have a chance to buy these products at cheaper price than before This is

an opportunity for internet supplying networks since there are more people using equipment with internet function

Technical factors:

The Government considers the improvement of technology as one of the priority duties for developing country in recent years The appearance of mobile phone services in

1993 had marked a progress of applying technology for telecommunication in Vietnam

by supplying mobile telecommunication services After 16 years, Vietnam had updated new technology for mobile network from 2G to 3G This opens new opportunity for using high qualified services with new hi-tech, especially for using mobile internet

Moreover, day by day there are many new trends in using internet services for different targets such as relaxing by listening music or watching video clip, chatting, connecting to community network as Facebook, updating information by reading news

or searching data, or mobile work becomes popular in developing society

These factors are good chances for Mobifone in exploitation services on 3G

2.2 MARKET ANALYSIS:

Vietnam is a developing country, the need of using hi-tech is rising up day by day including internet Up to September of 2011, the amount of nationwide internet subscribers estimated around 4.1 million, more than 18% in comparison with the same period of last year The amount of internet users attained to 31.7 million people, increasing 23% against last year The total revenue of Vietnam Post and Telecommunication sector in 2010 got 5,9 million USD, over 23.6% in comparison with the same period of last year (including revenue on internet) Besides, the number of mobile phone subscribers estimated about 114.2 million increasing 5.1% [12]

According to the Internet World Statistic from 2000 to May 2010, the internet users in Vietnam has increased incredibly from 200,000 in 2000 to 29, 268,606 in 2011, the chart of Figure 2.2 shows that, Vietnam is now on the top ten countries in Asia which has a large amount of internet users, rank 7th in March, 2011 This is an opportunity for any firm which supplies internet services[13]

Internet users from 2003 to 2010

In Vietnam, there are 12 cooperation supplying internet services in which VNPT has a big market share and Mobifone belongs to VNPT which supplies Internet service by mobile network on 3G technology This chart shows that the advantage on internet market share leans to VNPT with 66.95% up to September, 2011[2]

Internet market share in Vietnam - 2011 (N0 of users)

Since Mobifone provides internet service by mobile network on 3G technology from late 2009, so the amount of subscribers up to September 2011 is few over total of VNPT, about 4 million all over the country using internet on 3G and about 700.000 subscribers in Ho Chi Minh city The speed of internet service on 3G growth of Mobifone and other competitors is rising day by day

Together with the rising of using internet in Vietnam, there are many kinds of related hi-tech equipments appeared and developed such as Smartphone, laptop, tablet … Rapid adoption of Smartphone is driving a mobile Internet boom in Vietnam, only 18 months since the country's operators switched on their first 3G networks According to the latest Wireless Intelligence estimates, 3G connections in Vietnam surpassed 20 million in Q2 2011, representing around 18 percent of the total base This has been achieved despite carriers operating in a price-sensitive market where the vast majority

of subscribers (over 85 percent) are prepaid

According to IDC, there was 7 million of mobile phone imported into Vietnam in quarter 3, increasing 43% compared with last quarter and raising the total amount of mobile phone up to 18 million in 3 quarters Smartphone segment has been rising up to 48%

Laptop segment is pushing complete Vietnam market of PC rising up 13.1% against the same period of last quarter and increasing up to 68% in comparison with against the same period of last year (source: from IDC) The amount of tablet in Vietnam rising up 26% in the third quarter against last quarter and attained 30,000 units

These are good signs for developing internet services in Vietnam in general and 3G services in particular

Distribution channel:

There is a trend in movement from traditional channel to modern channel in big cities The products of mobile phone are present everywhere from professional shops to small groceries or roadside stalls … There are about 50,000 shops selling mobile phone products such as: phone, SIM, Scratch card …in Vietnam in which there are over 8,430 shops in Ho Chi Minh city [4] Mobifone products have been appearing all over the distribution system The image of MobiFone has covered all of this system by sign board, poster, banner, display….as well This is an advantage for Mobifone to deploy selling its products on the market

Besides, IT shops become bigger and bigger, more and more, day by day such as Phong

Vu, Hoang Long, Nguyen Kim, The gioi di dong, Vien Thong A, Phuoc Lap Mobile, FPT… This channel is very important for cooperation between mobile networks and IT shops in 3G promotion If there is a good relationship with these channels, there will have a good opportunity to increase 3G services

Market analysis is very essential for understanding the target market, customer and customer’s need in that market Mobifone 3G services have a lot of opportunities in Vietnam market in general and in Ho Chi Minh city in particular since many factors which are analyzed above

2.3 Competitors Analysis:

The purpose of this analysis is to increasing the understand of competitive environment

in which the enterprise will act in the market For 3G services market, there are 2 main competitors of MobiFone participating in: Vinaphone, Viettel in which Mobifone

occupied 34.7% market share (including using internet on the phone and computer), Viettel is 45.3% and Vinaphone is 19.8% The main competitor of Mobifone in Vietnam in general and Ho Chi Minh city in particular is Viettel at present that Mobifone has to focus on

3G MARKET SHARE IN VIETNAM UP TO SEPTEMBER 2011 [4]

3G MARKET SHARE IN H.C.M CITY UP TO SEPTEMBER 2011[4]

In Ho Chi Minh city, Viettel makes up 43.2% of 3G market share and is bigger than MobiFone and Vinaphone The strong point of Viettel is the coverage and this is a decisive factor to gain customers Although MobiFone has launched 3G services before Viettel, the number of base transceiver stations (BTS) are less than Viettel in Ho Chi

Minh city and other provinces till June 2011 (Mobifone 4,000 BTS vs Viettel 17,000 BTS) In Ho Chi Minh: Mobifone has 1.375 BTSs, Viettel has 1.750 BTSs, occupied 95.2% BTS of 3G/2G MobiFone’s customers cannot use 3G services in some places in

Ho Chi Minh city and suburban especially in far zones This is a very weak point that Mobifone could not draw the customers in using this service

of customers want to buy a SIM and USB 3G, they only ask D-com 3G to any shop owners even when they come to Mobifone or Vinaphone shops, they really do not know D-com 3G is a service of Mobifone, Vinaphone or Viettel

Viettel 3G services and the price of each package are nearly the same with Mobifone Viettel Services on 3G include Video Call, Mobile TV, Mobile Internet, D-com 3G The packages of Mobile Internet and D-com 3G are not much different from Mobifone

on package price and free data volume

Viettel: Dcom 3G charging fee [14]

N0 Packs

Subscription fee (VND/

month)

Free Volume

Excess Free Volume Fee (VND/MB)

Maximum fee / month

Volume for using maximum speed (GB)

Viettel: Mobile Internet charging fee [14]

(VND) (MB) (VND/10 KB)

1 MI 0

30 days

N

Usage Period

Subscriptio

n fee (VND)

Free Volume (GB)

Excess Free Volume Fee (VND/MB)

1 FCU

7,2 Mbps till 2GB, after 2GB the speed is 512Kbps

Mobifone: Mobile internet charging fee[3]

No Packs Speed period Usage

Subscription Fee (VND)

Free volume

Excess Free Volume Fee

Viettel strategy is consistent in taking 3G market share in Ho Chi Minh city by Dcom 3G To support this strategy, Viettel has increased 3G BTSs and focused on mass media for D-com 3G This was impressive by customers who want to use internet replacing WIFI or ADSL Besides, message for this strategy is very clear and easy to understand for customers who know or do not know English: “D-com 3G – Internet cho mọi người và mọi nhà”

The message for Tet 2010 promotion: “Cùng D-com 3G về quê ăn Tết” was advertised

on online and offline boisterously and known by many people from urban to suburban who come back country side for Tet Holiday 2010 and affected till now