Strat - Uniqlo Version 1.0

MGMT 102 - StrategyMay 20

2011In our strategy plan, we studied Uniqlo’s current business environment as well as their competitors. Strategy Evaluation - Uniqlo

Prepared For:Prof. Victor Goh

Prepared by: Bharath RANGANATHAN WONG Yu Zhen

MGMT 102 - Strategy

OUTLINE

Statement of the problem........................................................................................................2

Situational Analysis.................................................................................................................. 2

Market Analysis............................................................................................................3

Market Analysis................................................................................................3

Industry Factors (Porter’s 5 forces)..................................................................3

Synthesis of external analysis...........................................................................4

Internal analysis............................................................................................................6

Resource-based view........................................................................................6

Value chain analysis..........................................................................................7

Situational Anaysis............................................................................................7

Company Analysis (SWOT)...........................................................................................8

Competitor Analysis.....................................................................................................9

Appendix................................................................................................................................ 18

Bibliography........................................................................................................................... 36

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Prepared For:Prof. Victor Goh

Prepared by: Bharath RANGANATHAN WONG Yu Zhen

MGMT 102 - Strategy

INTRODUCTIONUNIQLO brand of casual wear is the Fast Retailing Group’s mainstay operation that offers high-quality casual wear

at affordable prices based on its SPA (Specialty store retailer of Private label Apparel) business model, which extends

across product design, manufacture, distribution and retail. The first UNIQLO store opened in 1984 and first ventured

into international markets in 2001. Since 2005, the Group has adopted the strategy to diversify its operational base

through acquisitions and expansion of its lineup of women’s wear.

By 2010, UNIQLO had 808 stores in Japan, an increase of 38 stores nationwide, and 136 stores overseas in the United

Kingdom, the United States, China, Hong Kong, South Korea, France, Singapore and Russia etc. At the end of fiscal

2010, UNIQLO reported net sales of 605.5 billions of yen, an increase of 12.5% from 2009. (UNIQLO (Fast Retailing

Group), 2010) Moving ahead, UNIQLO aims to attract new customers by opening large-scale stores in prime urban

locations in Japan.

SITUATION ANALYSISMARKET ANALYSIS

Foniq’s VoIP Callback offerings come in two forms - (1) through an iPhone application, and (2) through a call-back calling card. The iPhone offering currently has competitors such as Skype and Viber in the market and requires a short data connection to establish the call. The calling card service faces competition from other calling cards and direct-dial international calls.

MARKET SIZE

To date, Foniq has only actively targeted travel agencies and business travelers. However, we believe that it should not limit itself to these customer segments. The underlying needs targeted should be that of making convenient and affordable international calls. This drastically increases the targeted market size to almost anyone who needs to make an international call. Permanent Residents and foreigners in Singapore would likely have cause to make overseas calls either to friends or relatives, and these total 1.79 million people (Straits Times, 2010). Likewise, foreign students or businessmen who have relatives, friends or customers overseas would have incentive to use the callback service. According to Singstat, international calls made in 2009 amounted to more than 10 million call minutes. Although this excludes any electronic voice calls, it still represents part of the potential market size Foniq VoIP Callback can expect.

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MARKET SEGMENTS

The international voice market can be broadly segmented according to two variables – purpose of usage and attitude towards spending (Figure 1). Of the available segments, customers lying along the ‘bargain hunters’ scale would be the most likely adopters of VoIP usage. Thus we will

focus on the ‘corporate bargain hunters’ and the ‘retail bargain hunters’.

MARKET TRENDS (PEST ANALYSIS)

Political - Currently Singapore does not have any regulations restricting VoIP use, but there are countries that regulate VoIP services. Industry players would have to continually scan their business environment to ensure their business processes are not interrupted.

Economic - International VoIP is definitely a growing market in Singapore and throughout the world. International voice traffic for Singapore has been increasing steadily over the years (Trading Economics, 2010), hitting approximately 7 billion minutes in 2007. Of these traffic flows, we can expect the Singapore Market to replicate the trends of international markets, where VoIP can be seen to be capturing a larger share of the market over the years (Appendix B). Infonetics Research has recently released its report on VoIP growth, citing demand for “residential and business VoIP services continues to grow even as spending in other communication areas tightens” (VOIP biz-news, 2009).

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Figure 1: Market Segmentation for International Voice Market

Blah Blah

Blah Blah

Quality Seekers

Bargain Hunters

Retail Users

Corporate Users

MGMT 102 - Strategy

Sociocultural – With the rising affluence of Singaporeans, the number of smartphone owners has been increasing as well. With over a 100% penetration rate for mobile phones and 47% of them being 3G mobiles (BuddeComm, 2010), and the rise of the internet age, there is no shortage of potential VoIP users.

Technological - With increasing broadband speeds and WiFi coverage, the capability of offering better VoIP services also increases. This could be a chance for VoIP providers to improve on customer satisfaction levels by providing more dependable data flow, and by reaching out to customers through the internet.

INDUSTRY FACTORS (PORTER’S 5 FORCES)

Threat of New Entrants - Barriers to entry into the VoIP industry is extremely low as switching costs are almost non-existent, and distribution channels are easily established through the internet. As a result, the threat of new entrants is quite low.

Bargaining Power of Suppliers – There are two forms of suppliers here; suppliers of Wi-Fi services, and suppliers of telecommunications services. In both forms, suppliers are critical to the functionality of the VoIP operations. Thus supplier power is considered high.

Bargaining Power of Buyers – Buyers have extremely low switching costs, and VoIP services are normally not very differentiated, leading to high bargaining power of buyers.

Threat of Substitutes – International IDD cards offer comparable rates without the need for a Wi-Fi connection and 3G phone. Providers like Skype and Rebtel have established brand names. Coupled with the low switching costs for consumers, there is actually a high threat of substitutes.

Intensity of Rivalry – The industry currently is experiencing high growth rates and fixed costs are typically low, as such, even with the lack of differentiation, intensity is unlikely to be very high. Notwithstanding those factors, rivalry would likely become more intense once the industry starts to mature.

CUSTOMER ANALYSIS

COMPANY ANALYSIS

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Figure 3: SWOT Analysis of Foniq application

MGMT 102 - Strategy

From the SWOT analysis, we see that the main problem Foniq is facing is the lack of a coherent strategy to market its product. Their product, with its robust technology, should be able to capture a fair market share in the rapidly growing VoIP market. Of course, it would be contingent on Foniq being able to create a value proposition or target a segment its competitors are unable to compete on or not compete as effectively in. Next we will explore who their competitors are and what they are currently offering.

COMPETITOR ANALYSIS

There are many competitors offering VoIP services internationally, but we will be focusing on Foniq’s main competitors - Skype, Rebtel, Viber. The table below shows a summary of the strengths and weaknesses of each of their competitors (for more details refer to Appendix C), who are then introduced briefly in this section.

Company Strengths WeaknessesSkype - Competitive rates – 0.033 SGD/min

- Very established brand with strong brand recognition

- Marketing limited to website- A data connection to the internet is required for all calls

Rebtel - Leading independent mobile VoIP company- Can be used on any phone

- Every single contact must be registered through their website- Cumbersome process

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Strengths- Robust Technology from Foniq's nine years of experience in the field of information telecommunications systems- Parnership with Singtel ensures premium call qualities - Competitive pricing (as compared to the average competitor)

Weaknesses- There is no marketing program for the product as well as severe lack of brand awareness- Little or no experience in B2C businesses- Lack of differentiation- Requires Wi-Fi to initiate call

Opportunities- Rapidly growing market provides ample opportunities for entry- Current offerings of international calls are either expensive or inconvenient; Foniq would do well to cater to these needs

Threats- Many competitors already established and hold substantial market share, and thus are in a better position to capitalize on the market- Competitors may easily copy Foniq's value propositions if they chose to do so

Table 1: Strengths and Weaknesses of Foniq’s Competitors

MGMT 102 - Strategy

- Comprehensive website that is easy to understand- No Wi-Fi required

Viber - Completely free- Does not require registration or login

- Only available for iPhone users- Requires internet connection- Bad customer feedback regarding stability

International IDD Cards

- Can be used without an internet connection

- Drawn-out and lengthy dialing process- Rates not as competitive as SKYPE, Rebtel and Foniq

SKYPE

With a market share of 12% of all international calling minutes in 2009 (Wauters, 2010), and an established brand name, Skype is one of Foniq’s biggest competitors in the consumer VoIP market, if not the biggest. Their value proposition is that of a product that is simple and catered to the needs of the average consumer, and their simple, user-friendly, and focused website helps to market this (iThink, 2005). Skype moved into offering other value-added services on its website once it obtained brand recognition.

Anticipated Reactions - As Skype does not offer the same callback services as Foniq, and it is operating on a large international scale, it is unlikely they would be too concerned with Foniq’s entrance into the market.

REBTEL

Rebtel is the world’s leading independent mobile VoIP company, with an estimated 9 million callers and over 1 billion international call minutes logged, and a projected revenue of $75 million in 2011 (Drewniak, 2011). Rebtel offers a slightly different product from Foniq’s, but is still a main competitor for the international call dollar. Rebtel customers register each international number they wish to call and are assigned a local number for each contact. Customers are then charged the local rate to this number as well as a competitive price for the international part of the call.

Promotional Codes and Reward Schemes

Rebtel entices customers through promotional codes that reward first-time and regular users, as well as reward schemes. For example, the current scheme (March 2011) rewards Rebtel

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customers whose referral becomes a paying member with $10 credit, and rewards this new member with $5 credit.

Web and Print Ads

Besides relying on its website marketing like Skype, Rebtel also goes one step further by advertising its product through web and print advertisement. In 2008, Rebtel realized that many international customers were brought to its service by a need to connect with loved ones. It thus tried to reach out to ethnic consumers away from home by employing popular web comic strip, Doubtsourcing, to create 3 web and 2 print ad concepts which capitalized on the “Call Your Mum” tagline in a humorous way whilst also establishing Rebtel’s identity as a straightforward, straight-talking company (Drewniak, 2011).

Anticipated Reactions - Given the large existing market share, and the offering of their product over several operating systems, Rebtel is unlikely to be fazed by Foniq’s initial entrance into the market. But due to their market and resource commonality, Rebtel might choose to respond should Foniq become more successful.

VIBER

Viber is a strong direct competitor of Foniq, since they offer similar mobile VoIP application on the iPhone that allow convenient voice communication between all users, be it local or international. Since the launch of Viber in 2010, they have received more than 7 million downloads in the first month and quickly became the No. 1 free application on Apple App Store in several countries, including Singapore. With such tremendous hype and growth of Viber, many have been comparing it to Skype and anticipating the takeover of Skype’s dominance on the mobile calling market, largely due to its additional convenience and voice quality. Viber focuses on packaging its product to be reliable, cost-effective and caters to the needs of an average iPhone consumer, which is similar to that of Skype. The product is completely free at the moment and it is powered by the world’s top voice and video over IP Engines provider, SPIRIT DSP. On top of that, Viber heavily markets its competitive edge of being more convenient than Skype, since it does not require any registration or login prior to the use of application. Similar to Skype, once the brand is well established, Viber will move into value-added services to make revenue for the company.

Anticipated Reactions - Viber is currently designing compatible application for Blackberry and Android phones, which have Smartphone market shares of 19.8% and 9.6% respectively. Viber for Android will officially be launched at the end of March. Although Viber is more similar to

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Skype than Foniq, with their current emphasis on market expansion, it is likely that they would make tactical moves in response to competitive actions.

Distribution

Foniq currently has no distribution plans for the iPhone application aside from the listing on the App Store. Existing customers are ancillary to their B2B business and are not actively sought after. The B2B business is their primary source of revenue and has an active sales force pursuing the development of the business unlike its B2C arm. In the pursuit of a marketing strategy for their B2C business, Foniq would have to establish proper distribution channels (which will be covered in the Action Plan).

SELECTED MARKETING STRATEGYBased on our analysis, there are tremendous growth prospects for the VoIP market, although current players like Skype and Rebtel are already established internationally. Despite a sizeable number of mature players, we recognize the industry as still reasonably attractive, and successfully entering such a market would be possible with the right value proposition and strategy. Skype and Viber are both limited by Internet connections in order to work, and Rebtel is extremely troublesome to use (despite competitive rates). This means that so long as Foniq eliminates the need for Wi-Fi connection in their product, and is easy to use, a distinct competitive advantage can be attained.

We anticipate little or no action from competitors against Foniq’s small entrance into the market, as it would be more productive to direct their efforts towards more profitable current pursuits.

We recommend targeting the bargain hunters, particularly the foreign students (homesick youngsters), since this segment is not currently being focused on. As foreigners in an unfamiliar country, these homesick youngsters commonly lack the necessary support system to cope with stress that their local counterparts face (Sandhu & Asrabadi, 1998). Studies by Prieto (1995) have shown that what is needed for these individuals is more contact with people they are familiar with, as this contact will help soothe and encourage them. As such, we will tailor our marketing strategy to first create awareness of their as-of-yet-unknown underlying needs, and then to convey a sense of warmth and sincerity to fill this void. A completely new product branding is in order as ‘Foniq’ sounds too technical, cold and distant, and it has no prior brand equity to leverage on.

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Also, since homesick youngsters would typically be early adopters of technology, there would be less switching costs involved for them to embrace the application. We recommend starting with the Singapore market as well as Singaporean students overseas as this ties in with the closer-to-home warmth we are trying to achieve. To be even more specific, slightly more emphasis can be placed on Chinese or Indian students as calling rates for their home countries are amongst the lowest, and affordability is aligned with our image of sincerity and care.

While it may not be the cost leader, Foniq’s prices are competitive; while it may not have the clout that big players do, its image conveys a personal touch reminiscent of home.

ACTION PLANPRODUCT

Our competitor analysis shows that Rebtel is currently the strongest competitor since it is does not require data connections for the entire call, unlike Skype and Viber. However, like IDD cards, Rebtel can be inconvenient and user-unfriendly. Therefore, in order to get ahead, Foniq can make their product easier to use and more accessible.

We recommend renaming the product ‘Less Than Three’, or ‘<3’. In online messaging language, love is usually typed as ‘<3’ for short, which symbolizes a heart. Ideally, this would imply that with

‘<3’, customers’ underlying needs for support and love will always be met. An effective advertising campaign is necessary to build such an image, and it is imperative all aspects of the brand present a cohesive image.

Given the competitive environment of the VoIP services industry and the low switching costs, quality is of utmost importance. Hence, ‘<3’ needs to offer top-notch quality. In fact, clarity, cost and stability are the top 3 considerations amongst foreign students according to survey results (Appendix D). To achieve this, ‘<3’ should aim to eliminate the requirement of Wi-Fi connections, due to the inconsistent connection stability that could severely affect quality of their product, as well as the limitations this places on callers.

Another key aspect is to simplify downloading and calling procedures. The product must be of a seamless, one-touch-to-call quality. ‘<3’ might also offer similar perks offered by close competitors such as the complimentary Skype-to-Skype usage via Internet. To further build on its wholesome image of a sincere service provider, the application would also feature an additional display of total calling costs incurred at the end of every phone call, for greater transparency in

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billing. This would help ease concerns about hidden cost, and allow customers to focus on the quality, hassle-free service, and the benefits it has brought.

The website would be improved aesthetically and provide more information without being overly technical, as it is important the customer is not turned off by an overly technical or complicated appearance. Clear instructional videos would be posted, as visual representations are able to demonstrate such technologies in a more appealing and intuitive way than text. The website would also serve as a one-stop avenue for downloads, feedback, advice as well as payment services. Leveraging on a good website, ‘<3’ can increase awareness and adoption of its product. The website could even be integrated with social media such as Facebook and Twitter, to make use of Web 2.0

technologies to further carry out social media marketing. Applications should also be made for android and blackberry smartphones to greatly increase targeted market size, especially since the technology is versatile, as shared by a Foniq personnel.

PRICE

In coming to a pricing decision, we looked at ‘<3’’s objectives and strategy, the nature of its customers, and its competition’s product and pricing. There are three different pricing strategies available to ‘<3’:

1. Maintain its current pricing schedule, which is at a premium to Rebtel, but similar to charges on IDD calling cards. Doing so would require ‘<3’ to offer some premium service or customer value to justify the charges. Expected initial market share – 20%, market share growth – 5%.

2. Offer Rebtel competitive pricing, doing so would enable ‘<3’ to capture a larger market share, but reducing its current pricing structure would require ‘<3’ to have serious discussions with Singtel to work out better deals. Expected initial market share – 50%, market share growth – 2%.

3. Offer the cheapest price on the market. If ‘<3’ is able to be the cost-leader, a large majority of the market would definitely be theirs as long as the advertising campaign is

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successful. But this would once again require ‘<3’ to renegotiate their deals with Singtel. Expected initial market share – 70%, market share growth – 1%.

Since Foniq has refused to provide us with a breakdown of their costs structure, we can only base our computations on benchmarks. We assume price elasticity of demand for VoIP services to be elastic due to the low switching costs involved. In our simple analysis using the three pricing strategies mentioned (calculated in Appendix E), strategy 3 would breakeven the fastest because of the lower costs of implementation, but it is extremely contingent on Foniq being able to negotiate a better deal with Singtel or any other service provider. Thus we feel that although strategy 1 takes a longer time to breakeven, it requires less infrastructural changes, and is more coherent with our marketing strategy. Strategy 1 also offers the highest long-term returns. Pricing will be based on current charges offered by Foniq with discounts as described in our promotions section. At a 20% initial market capture rate and an annual 5% growth rate thereafter (very low estimate for a technology company), ‘<3’ can expect to breakeven by the third year.

PROMOTION

Promotions management will be essential for ‘<3’ in order to gain any sort of brand recognition in a market that has an almost perfect competition and little product differentiation. The two primary means to do so are advertising and sales promotions.

The two most common and cost-effective mechanisms of advertising (non-television based) are print ads and outdoor ads/campaigns. Print ads will be placed in youth-centric areas: primarily in university campuses as well as malls and cinema theatres. Possible advertisement efforts will cleverly play on the heart symbolism, witty word play (for example, a print ad of a phone keypad missing the numbers 1 and 2, with a question, “Something missing from your phone?” or “Can’t call home without <3?”) and emotional aspects that influence viewers to miss their loved ones but provide them with the solution in ‘<3’ (for example, for Christmas, ads might show happy families tucking into a thanksgiving meal while a student dines alone. Nonetheless, he looks content, as he is talking to loved ones over ‘<3’, depicted in the ad perhaps by a speech bubble with ‘<3’ in it).

Outdoor ads and campaigning might involve “mascots” wearing ‘<3’-insipired costumes interacting with potential customers, inviting them to a free trial. Positive and negative feedback can be collected immediately, which might yield results normal delayed feedback channels cannot capture. The advertising would work through peripheral processing of the elaboration likelihood model, allowing customers to be attracted by looks and feel of the product. Those who are unconvinced will be presented with the specifications of the product so that it caters to those who prefer a more cognitive approach in their purchasing behaviour.

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Since the product caters to a price-sensitive market – we believe that sales promotions will drive the company’s customer base in the short-run. The three types of consumer discounts that we propose are in the form of free samples, cash rebates and contests.

The application can be bundled with $2 of international calling so that consumers can ease into purchasing the product by getting a first-hand experience of the product. This will warrant an element of trust and credibility towards the company and product, as the consumer will feel secure towards the brand. Cash rebates and contests can also help boost customer loyalty. Firstly, we propose that the company offers a package such that the consumer gets one complimentary minute for every ten minutes of a single call made. Another ambitious plan is to offer a free flight ticket to a customer who has used the application for more than six thousand minutes in six months. This will be upheld to the destination to which the customer calls the most. The rationale is that there is not an overwhelming percentage of people who would call that much (based on surveys) in six months, but nonetheless, this provides an incentive to call with ‘<3’ rather than competitors’ products. International students, who travel to their home countries at least once a year, will be enticed by this offer.

We believe that there could also be promotions on alternate means of earning credit (balance required to make a phone call), given the tech-savvy nature of the target market. Currently, the application needs to be a regularly topped-up with currency through credit cards or PayPal. The company can capitalize on new trends in order to stay socially and culturally relevant and identifiable by adopting Facebook credits, (http://www.facebook.com/credits) allowing customers to top-up their balance through virtual currency. Although this system would initially require the traditional credit-card method to have balance in the system, subsequent balance can be earned through introducing friends to ‘<3’. This allows ‘<3’ to reach customers with minimal effort, and it has been seen that using such streams (Facebook, Twitter, etc.) to channel distribution generally gives a return of huge customer base (eg. Viber and WhatsApp).

PLACE

Foniq currently uses the iTunes store as its sole avenue for distribution of its iPhone application. However, this may not receive much attention, as there are over 350,000 independently designed applications for the iPhone (Apple, 2011).

Therefore, the company should use direct channels to effectively reach and cater to its target audience. As mentioned previously, the target audience includes international students who may not be familiar with the various VoIP options but have the need to make international phone calls. There are 3 potential channels of distribution that can be considered:

Before these international students begin their research on available options, ‘<3’ can push their product to them by collaborating with the universities’ office of admissions and office of exchange programs to recommend ‘<3’ when students register. This would be congruent with

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the school’s agenda to help students adapt to the foreign environment. International students who are looking for a cost-effective means to call their home country will find this useful and will not have to search for alternatives in the market. The key here is to approach customers before they research extensively and stumble upon the more established brands. Moreover, recommendations by the school will help vouch for Foniq’s credibility and compensate for its lack of established brand name as compared to its competitors.

‘<3’ could also place docking stations around schools, especially hostels and international student centres, where there is high traffic of international students, to allow for easy and convenient downloads. Payment can be made at docking stations at the end of the month, via methods like PayPal and NETS. Easy-to-understand brochures with relevant information like pricing, should also be placed at the stations.

Their website would also be an avenue for users to download the application as well as make payment at the end of the month. Relevant information about the application can also be made available on the website, and download should be seamless and easy.

OVERALL ASSESSMENTIn the planning of our marketing strategy, we recognized several problems which could undermine the success of our product.

Extreme reliance on advertising campaign to create brand image

If ‘<3’ is ineffective in establishing the sincere and homely product image that distinguishes it, it is all too possible for ‘<3’ to be lost amongst the millions of iPhone applications launched regularly. It is essential that awareness be cultivated well, and aspects which global competitors are unable to fully explore are capitalized on, for example a personal touch, or a ‘close to home’ feel.

Failure of good product introduction into the market

Due to the viral nature of internet feedback, Foniq would have to ensure that the product they push into the market is as close to flawless as possible to reduce negative dissonance. Any would quickly spread through word-of-mouth, and since the community of homesick youngsters in Singapore is not very large, the contagion effect would take root very quickly.

Lack of support structure for ‘<3’

As a service oriented product, Foniq would have to ensure the best support pipelines possible. Customer service would be a critical function of the support process, and website serviceability

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crucial to the success of ‘<3’. The entire support process has to portray the same image of sincerity and warmth as the product, lest customers be discouraged by any negative experiences when dealing with ‘<3’.

Word Count: 4,926

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APPENDIX A: INTERNATIONAL TRAVELLERS AND CALL MINS STATISTICS

Actual *Forecasted

YEAR 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Air passenger arrival (thousands) 14,336 15,364 16,678 17,640 18,185 18,026 19,492

20,289

21,085

21,882

Air passenger departure (thousands) 14,270 15,356 16,690 17,582 18,103 18,063 19,487

20,290

21,093

21,896

International Travelers (TOTAL) 1,390,451 1,764,516

1,837,207

1,909,899

1,982,591

International Travelers (Business related) 220,498 279,817

291,345

302,872

314,400

International Call Mins ('000) 4,131 4,778 5,074 6,303 8,457 10,138 10,710

11,919

13,127

14,336

Mobile phones - 3G ('000) - 175 884 1,701 2,474 3,160 3946.8 4708.54 5444.4326193.5756

Source: Singstat – Yearbook of Statistics Singapore 2010 (Transport and Communications)

*Forecasted using simply trending analysis

APPENDIX B: INTERNATIONAL VOICE TRAFFIC GROWTH

International VoIP and switched traffic growth

Source: http://www.telegeography.com/ee/free_resources/figures/tg-01.php , accessed on February 20, 2011

http://www.telegeography.com/ee/free_resources/figures/tg-01.php

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APPENDIX C: STRENGTHS AND WEAKNESSES OF COMPETITORS

SKYPE

KEY STRENGTHS

Competitive Rates

Skype provides calls to over 30 countries at a competitive rate of 0.033 SGD per minute. Even including the small connection fee required under this pay per use scheme, this is a highly competitive price that undercuts many of Foniq’s rates.

Established Brand Recognition and Strong Following

Skype enjoys strong brand recognition and a strong following within the consumer-centric VoIP market, with a record of 29 million people online simultaneously(Skype, 2011) and an estimated 6.4 billion billing minutes(Brockmann, 2010).

KEY WEAKNESSES

Marketing Efforts Mainly Focused On Website

Skype’s main marketing vehicle has always been its website. While this has proven wildly successful, this does present other companies the window of opportunity to hook customers before they conduct the search for Skype and stumble upon its website.

Call Requirements

Skype calls require a Wi-Fi connection, a fixed internet connection, or a $99 monthly Verizon plan. This may prove inconvenient for users who need to make calls where such connections are unavailable, or require data plans, which are costly when overseas.

REBTEL

KEY STRENGTHS

Competitive Rates

Rebtel’s international rates to 196 destinations are comparable to or cheaper than Foniq’s, with no subscription or connection fee. Also, the free trial as well as promotional codes and reward schemes are attractive to consumers as this presents cost savings. Most enticing of all, Rebtel offers free international calls between 50 countries, in hopes of attracting customers to use its paid services when calling other countries.

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Available on Any Phone

Consumers can use Rebtel on any phone, be it a landline, mobile or smart phone. Rebtel makes it even simpler for customers with apps available for iPhone, Blackberry, and Android phones.

Comprehensive Website

Rebtel’s user-friendly website is attractive, simple and comprehensive. It contains useful how-to videos that explain potentially confusing procedures and is effective in packaging its product as simple and affordable.

KEY WEAKNESSES

Need to Register Contacts

The extra step of registering every contact one wishes to call may be cumbersome and inconvenient if the caller wishes to make the call straight away.

INTERNATIONAL IDD CARDS

Calling cards are the traditional means of calling internationally, and are readily available worldwide. Besides information that is readily available on the service provider’s websites, calling cards are normally advertised at payphones or in airports where travelers can purchase one on the spot. Singtel’s WorldCard can be purchased anywhere from convenience stores to Hello! Shops to atms and AXS stations and more.

ANTICIPATED REACTIONS

As consumers become more aware of better calling options available on the Internet, calling card companies will face stiff competition for their market share of international calls. While calling card providers will have to find a way to deal with such competition, it is unlikely that they will target Foniq specifically because it is a relatively small entrant. However, Foniq might be affected if these companies are effective in steering consumers back to the calling card and away from applications like Foniq’s product.

KEY STRENGTHS

Available without Internet

Calling cards preceded online VoIP solutions such as Skype or Foniq, and have for many years been available separate from the Internet. Users are able to register for an account

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without Internet access, which may be practical for travelers without Internet access, or for users who need an account on the spot.

KEY WEAKNESSES

Cumbersome Procedure

Calling procedure can be cumbersome, with multiple numbers to enter and options to choose from.

Less Than Competitive Rates

Often, the rates offered by calling cards are not as competitive as the newer online services such as Skype, Rebtel or even Foniq.

VIBER

KEY STRENGTHS

Service is completely free

Not only is the download of the Viber application free, all calls are completely free as long as both parties have the Viber application and 3G or Wi-Fi Internet connection on their iPhone. This includes calls that are made internationally, since it is able to bypass the use of any cellular voice minutes.

Convenience

Unlike Skype and Foniq, it does not require any registration or login prior to the use of the Viber application. Once the application is installed, Viber automatically syncs all contacts in the phone and indicates which are Viber-users. With Internet connection, this process allows calls to be made and received automatically without the login process, adding of contacts using usernames or IDs, and paying call minutes charges.

High voice quality

Viber is powered by SPIRIT DSP, which is the world’s top voice and video over IP Engines provider. Other than Viber, they provide their services to recognized products like Apple, Microsoft, Oracle, and more than 250 others. They claim to “deliver superior quality and integrated voice and video over IP services for telecommunications, cable and mobile service providers, … and social networks.”1

1 http://finance.yahoo.com/news/Viber-Turns-to-SPIRIT-for-prnews-961063363.html?x=0&.v=1

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http://finance.yahoo.com/news/Viber-Turns-to-SPIRIT-for-prnews-961063363.html?x=0&.v=1

MGMT 102 - Strategy

SPIRIT provides advanced software to ensure “full-duplex, rich, wideband voice”2 for Viber users. They also provide technical services that addresses all network impairments that Viber faces, like bandwidth limitations, delays, spikes and so on. Hence, this helps Viber to ensure the high voice quality that is crucial to the satisfying its customers.

KEY WEAKNESSES

Limited to iPhone users

Despite its cost-efficiency and convenience, Viber is limited to iPhone users only, since it is an iPhone application. Currently, the global market share of iPhone in the Smartphone market is only 15.8%. Hence, consumers with similar needs are unable to enjoy the benefits of Viber if they do not own an iPhone.

Negative user feedback

From the customer reviews retrieved from the Apple Store, it shows that the connection of Viber is not stable as they claim. Users have reviewed that calls have been cut off when the connection is not stable.

APPENDIX D: SURVEY RESULTS

2 http://blog.tmcnet.com/blog/tom-keating/voip/why-spirit-dsp-powers-vibers-popular-hd-mobile-voip-app.asp

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http://blog.tmcnet.com/blog/tom-keating/voip/why-spirit-dsp-powers-vibers-popular-hd-mobile-voip-app.asp

http://blog.tmcnet.com/blog/tom-keating/voip/why-spirit-dsp-powers-vibers-popular-hd-mobile-voip-app.asp

MGMT 102 - Strategy

1. To which country (countries) do you make overseas calls?

# Answer Response

%

1 Malaysia 1 4%

2 China 1 4%

3 Philippines 0 0%

4 India 17 71%

5 Indonesia 2 8%

6 Others 9 38%

2. What is your primary purpose to call overseas?

# Answer Response %

1 Work (colleagues) 0 0%

2 Family 17 71%

3 Relationship 1 4%

4 Friends 6 25%

5 Others 0 0%

Total 24 100%

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Others

UK

Sri Lanka, England, Australia

Australia

None, only make overseas calls when i'm overseas. Call back to SG.

Thailand

KOrea

USA

Vietnam

Australia

Statistic Value

Min Value 1

Max Value 6

Total Responses 24

Statistic Value

Min Value 2

Max Value 4

Mean 2.54

Variance 0.78

Standard Deviation 0.88

Total Responses 24

MGMT 102 - Strategy

3. How often do you call overseas?

# Answer Response

%

1 Never 3 13%

2 Less than Once a Month 3 13%

3 Once a Month 0 0%

4 2-3 Times a Month 3 13%

5 Once a Week 2 8%

6 2-3 Times a Week 8 33%

7 Daily 5 21%

Total 24 100%

4. On average, what is the duration for each of these calls?

# Answer Response %

1 < 2 mins 2 8%

2 Between 2 and 5 mins 5 21%




6 > 45 mins 3 13%

Total 24 100%

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Statistic Value

Min Value 1

Max Value 7

Mean 4.75

Variance 4.54


Total Responses 24

MGMT 102 - Strategy

Statistic Value

Min Value 1

Max Value 6

Mean 3.58

Variance 2.34


Total Responses 24

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MGMT 102 - Strategy

5. Which is your preferred mode of contacting friends/family/others overseas?

# Answer Response %

1 Phone apps (e.g. BBM, WhatsApp, Viber) 9 38%

2Internet video conferencing (e.g. Skype, Google video) 11 46%

3 Google chat 7 29%

4 WhatsApp 2 8%

5 Facebook 7 29%

6 Phone call 14 58%

7 Calling card 8 33%

8 VoIP 1 4%

9 Others 2 8%

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MGMT 102 - Strategy

6. What do you like about the current mode of overseas communication you use?

Text Response

Its convenient

easy, cheap

It's fast and immediate :)

cheap, convenient and reliable

Easiest and most convenient. Not too expensive.

Not much. Really.

Its free for the most part with IDD. Whatsapp FTW!

It's convenient and allows me to make calls in line with my schedule, especially when I'm on the go.

It's cheap enough.

Convenient, reliable.

Phone is the most convenient

Convenience.

Skype. Its free and I am able to video call my friends.

Ease of use, inexpensive/free

It's very affordable.

Nothing, expensive

Its cheap.

It's free.

convenient. i love you bharath

I can use video on Skype, which allows me to see my family. Also Skype to Skype is free.

easy to access and use hassle free and can call using a callback card when internet signal is low

Statistic Value

Total Responses 21

25 | P a g e

Others

Email

callback card

Statistic Value

Min Value 1

Max Value 9

Total Responses 24

MGMT 102 - Strategy

7. Please rank the following in terms of importance for your overseas communication. 1 - most important 5 - least important

# Answer 1 2 3 4 5 Responses

1 Cost12 2 2 3 5 24

2 Clarity of call 1 13 5 4 1 24

3 Stability of call (not getting cut frequently) 2 3 13 6 0 24

4 Brand of the communication mode (eg. Particular type of calling card, etc.)

5 1 0 2 16 24

5 Convenience of making the call 4 5 4 9 2 24

Total 24

24 24 24 24 -

Statistic Cost

Clarity of call

Stability of call (not getting cut frequently)

Brand of the communication mode (eg. Particular type of

calling card, etc.)

Convenience of making the call

Min Value 1 1 1 1 1

Max Value 5 5 4 5 5

Mean 2.46 2.63 2.96 3.96 3.00

Variance 2.87 0.94 0.74 2.82 1.65

Standard Deviation 1.69 0.97 0.86 1.68 1.29

Total Responses 24 24 24 24 24

8. How much does your current mode of communication to overseas cost (monthly)?

# Answer Response

%

1 < 10 $ 12 50%

2 10 $ - 20 $

4 17%

321 $ - 35 $ 6 25%

4 36 $ - 50$ 1 4%

551 $ - 75 $

0 0%

6 > 75 $ 1 4%

Total 24 100%

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Statistic Value

Min Value 1

Max Value 6

Mean 2.00

Variance 1.65


Total Responses 24

MGMT 102 - Strategy

9. Are you familiar with the term VoIP? If yes, please name a few that you use.

# Answer

Response

%

1 Yes 8 33%

2 No 16 67%

Total 24 100%

10. In your opinion, which is the most important aspect you look for in a VoIP service?

# Answer Response %

1 Clarity of call 7 33%

2 Cost 5 24%

3 Stability of call 4 19%

4 Convenience 1 5%

5 Other 4 19%

Total 21 100%

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Statistic Value

Min Value 1

Max Value 2

Mean 1.67

Variance 0.23


Total Responses 24

Statistic Value

Min Value 1

Max Value 5

Mean 2.52

Variance 2.26


Total Responses 21

Other

No idea

not familiar dude

MGMT 102 - Strategy

11. Have you heard about FONIQ?

# Answer

Response

%

1 Yes 0 0%

2 No 24100%

Total 24 100%

12. What features would you like to see in an iPhone app that enables you to call other countries through VoIP?

Text Response

-

No idea :)

No, I use Blackberry. I want a Blackberry app.

Free & Easy, over 3G or Wi-Fi

Not an iPhone user.

Free video streaming

-

Good connection

I dun own iphone!

Free and very clear communication

stable. also who pays 10$ for an app?

Video.

ability to call phone for free - mobile and landline clarity of call even when using wifi not 3g data plan

28 | P a g e

Statistic Value

Min Value 2

Max Value 2

Mean 2.00

Variance 0.00


Total Responses 24

Statistic Value

Total Responses 13

MGMT 102 - Strategy

13. Which country are you from?

# Answer Response %

1 Singapore 8 33%

2 Malaysia 0 0%

3 China 0 0%

4Philippines 0 0%

5 India 11 46%

6 Indonesia 1 4%

7 Others 4 17%

Total 24 100%

14. How much would you be willing to pay for an iPhone app that would let you make unlimited calls on a monthly basis?

# Answer Response

%

1 < 10$ 20 83%

2 11$ - 15$ 4 17%

3 16$ - 20$ 0 0%

4 21$ - 30$ 0 0%

5 > 30$ 0 0%

Total 24 100%

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Others

Singapore PR - Indian Citizen

Sri Lanka

Thailand

Korea

Statistic Value

Min Value 1

Max Value 7

Mean 4.04

Variance 5.35


Total Responses 24

MGMT 102 - Strategy

Statistic Value

Min Value 1

Max Value 2

Mean 1.17

Variance 0.14


Total Responses 24

15. What is your monthly budget (excluding rent expense)?

# Answer Response %

1 Less than 200 2 9%

2 Above 200 to 500 7 30%

3 Above 500 to 1000 12 52%

4 Above 1000 to 2000 2 9%

5 Above 2000 to 3500 0 0%

6 More than 3500 0 0%

Total 23 100%

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Statistic Value

Min Value 1

Max Value 4

Mean 2.61

Variance 0.61


Total Responses 23

MGMT 102 - Strategy

16. Age

Text Response

21

20

21

19

20

21

21

24

23 OMG

21

22

22

22

23

22

20

20

22

23

24

24

34

21

22

17. Gender

# Answer Response %

1 Male 12 50%

2 Female 12 50%

Total 24 100%

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Statistic Value

Total Responses 24

Statistic Value

Min Value 1

Max Value 2

Mean 1.50

Variance 0.26


Total Responses 24

APPENDIX E: PRICING FORECASTS

PROFIT FORECASTS

Year 2009 2010 2011 2012 2013 2014 2015 2016 2017

Total Population (Singapore) 4,987,600 5,077,377 5,168,770 5,261,807 5,356,520 5,452,937 5,551,090 5,651,010 5,752,728

Number of foreign students 142,183 144,742 147,348 150,000 152,700 155,449 158,247 161,095 163,995

Total Amount of International Calls 10,000,000 10,180,000 10,363,240 10,549,778 10,739,674 10,932,988 11,129,782 11,330,118 11,534,060

Estimated calls from foreign students 285,073 290,204 295,428 300,746 306,159 311,670 317,280 322,991 328,805

VoIP users (assume 70% adoption) 199,551 203,143 206,800 210,522 214,311 218,169 222,096 226,094 230,164

Charge slightly higher than Rebtel. Current prices.Premium (expected customers 20%, 5% customer growth)

39,910

40,629

41,360

52,631

64,293

76,359

88,838

101,742

115,082

Revenue 4,069 4,143 4,217 5,366 6,556 7,786 9,058 10,374 11,734

Brand Awareness Campaign 6,000

Advertising Costs 2,200 1,000 1,000 1,000 1,000 1,000 1,000

Variable Costs 2,109 2,683 3,278 3,893 4,529 5,187 5,867

Profits (6,091) 1,683 2,278 2,893 3,529 4,187 4,867

Accumulated Profits (6,091) (4,408) (2,130) 762 4,292 8,479 13,346

Charge similar to Rebtel, competitive prices.Similar (expected customers 50%, 2% customer growth)

99,776

101,572

103,400

109,471

115,728

122,175

128,816

135,656

142,701

Revenue 3,9

64 4,0

36 4,1

08 4,3

50 4,5

98 4,8

55 5,1

18 5,3

90 5,6

70

Brand Awareness Campaign 3,000

Advertising Costs 2,200 1,000 1000 1,000 1,000 1,000 1,000

Fixed Costs 2,054 2,175 2,299 2,427 2,559 2,695 2,835

Profits (3,146) 1,175 1,299 1,427 1,559 1,695 1,835

MGMT 102 - Strategy

Accumulated Profits (3,146) (1,971) (672) 756 2,315 4,010 5,845

Charge less than Rebtel, cost leader (10% discount to Rebtel).Cost Leader (expected customers 70%, 1% customer growth)

139,686

142,200

144,760

149,471

154,304

159,263

164,351

169,570

174,924

Revenue 4,9

95 5,0

85 5,1

77 5,3

45 5,5

18 5,6

95 5,8

77 6,0

64 6,2

55

Brand Awareness Campaign 3000

Advertising Costs 2200 1000 1000 1000 1000 1000 1000

Fixed Costs 2,588 2,673 2,759 2,848 2,939 3,032 3,128

Profits (2,612) 1,673 1,759 1,848 1,939 2,032 2,128

Accumulated Profits (2,612) (939) 820 2,668 4,606 6,638 8,766

33 | P a g e

COSTS FORECASTS

Premium Competitive Cost-Leader Remarks

Awareness campaign (Outdoor)

3,000

- -

To promote brand awareness and increase

brand equity, only necessary for premium

strategy

Infrastructure costs (Ipod docks)

450

450

450

Ipod docks costs around 150 each, install in each of

the Universities for easy access for international

students

Advertising (Magazine) 1,200

1,200

1,200

Sales promotions and continual advertising can be

done through school magazines in the initial year

Advertising (Online, yearly) 1,000

1,000

1,000

Yearly advertising online to keep customers aware

*Source: www.iesmallbusiness.com/resources/Major_Media_Types.doc

Newspapers – $1,300 per week for 2” x 2” ad

Television – $200,000 for one 30-second commercial (during prime-time)

Direct Mail - $1,500 for 1,000 4x6 postcards (includes postage)

Radio - $90 to $120 per week on a rotator (prices higher if time slots for ad are selective)

Magazines - $1,200 to $5,000 per month or per issue (depends on ad size and demographics)

Outdoor (billboard) - $3,000 to do artwork and install media on billboard; rates depend on impress level, ranges from $5,000 to $500,000 (the higher the qualify of the artwork and the larger the demographic group, the higher the price); minimum contract is 16 weeks

Online - $0.60 pay-per-click or $1,200 - $1,800 a month for aggressive campaigns (does not include search engine optimization) or $200 to $1,200 per year per banner ad on websites

Rebtel Calling Rates US$

Singapore to China 0.019

Singapore to India 0.0179

Singapore to Indonesia 0.0576

Average Charges 0.0315

Foniq Charges S$

MGMT 102 - Strategy

Singapore to India0.1000

0

Singapore to China0.0400

0

Singapore to Indonesia0.1658

9

Average Charges0.1019

6

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BIBLIOGRAPHY

Apple. (2011 22-Janurary). Apple Store. Retrieved 2011 13-February from Apple: http://www.apple.com/pr/library/2011/01/22appstore.html

Brockmann, P. (2010 12-08). Skype Statistics 1H2010. Retrieved 2011 08-03 from Brockmann & Company: http://www.brockmann.com/communications/voip/2112-skype-statistics-1h2010

BuddeComm. (2010 07-April). Reports: BuddeComm, Singapore - Telecoms, Mobile and Broadband. Retrieved 2011 25-February from BuddeComm Reports: http://www.budde.com.au/Research

Department of Statistics Singapore. (2010). Singapore in Figures. Singapore.

Drewniak, A. (2011 14-01). Rebel Launches Free International Calling App for Blackberry. Retrieved 2011 08-03 from Rebtel Social Newsroom: http://newsroom.rebtel.com/rebtel-launches-free-international-calling-app-for-blackberry/

iThink. (2005 21-11). Skype - Marketing Brilliance and Use of Website. Retrieved 2011 08-03 from ithink - Online Marketing Simplified: http://www.ithink.in/skype-marketing-brilliance-and-use-of-website/

Sandhu, D. S., & Asrabadi, B. R. (1998). An acculturative stress scale for international students: A practical approach to stress measurement. In C. P. Zalaquett, & R. J. Wood, Evaluating stress: A book of resources, V.2 (pp. 1-33). Scarecrow Press.

Skype. (2011 22-02). Skype - The Big Blog - 29 Million People Online On Skype. Retrieved 2011 08-03 from Skype - The Big Blog: http://blogs.skype.com/en/2011/02/29_million_people_online.html

TeleGeography. (2007). Free Resource: TeleGeography. Retrieved 2011 26-February from A TeleGeography Web site: http://www.telegeography.com

TeleGeography. (2011). TeleGeography: Report and Database: Voice Traffic: Publications: TeleGeography Research. Retrieved 2011 05-03 from TeleGeography: www.telegeography.com

Trading Economics. (2010). International voice traffic (minutes per person) in Singapore. Retrieved 2011 26-February from Trading Economics: http://www.tradingeconomics.com

Vector InfoTech. (2005). Corporate Profile. Retrieved 2011 04-03 from Vector InfoTech: www.vectorinfotech.net

VOIP biz-news. (2009 11-November). VOIP biz-news. Retrieved 2011 1-March from VOIP: Market Data: http://voip.biz-news.com/news/2009/11/11/0004

Wauters, R. (2010 19-01). Report: Skype Now Accounts For 12% Of All International Calling Minutes. Retrieved 2011 йил 06-03 from TechCrunch: www.techcrunch.com/2010/01/19/skype-international-calling-minutes-share/

Wikipedia. (2010). Demographics of Singapore. Retrieved 2011 26-February from http://en.wikipedia.org/wiki/Demographics_of_Singapore

Documents

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