Abstract
In eighties and nineties there was a growing concern that as people in the rich world would receive access to computers and all possible communication technologies, people in the poor part of the world would find themselves on the other side of the so-called ‘digital divide”. This idea of digital divide lives on until the present day. Together with that, a number of opinions focus upon the idea that cell phone is a technology that influences the development more than any other factor. Economic benefits from the use of mobile connection are apparent even in the poorest countries. Cellular phones do not depend on the supply of electricity and can be used by people who don’t know how to read or write.
The Democratic republic of Congo is the subject of the current work since the paper will explore the issues of marketing and advertising a new cellular system in Lumbumbashi, one of the largest cities of the country.
The purpose of the paper is to understand the needs of the consumer base in Lumbumbashi and then to install a cellular telephone system that will be fully utilized. Thus, the paper will contain a research aimed at understanding demographics and the requirements of the local government to install a cellular system. The results of the research will be presented in the form of 3-page business plan outlining the process of installing the network, marketing and advertising this product in the country on the basis of the budget of 100K.
Executive summary
In eighties and nineties there was a growing concern that as people in the rich world would receive access to computers and all possible communication technologies, people in the poor part of the world would find themselves on the other side of the so-called ‘digital divide”. This idea of digital divide lives on until the present day. This issue is touched upon by international community: in March of this year the United Nations will establish “Digital Solidarity Fund” aimed at financing projects addressing “unequal distribution and use of new information and technologies” and enabling “people and countries excluded from the process of global communications to enter the novel era of information technologies”.
Together with that, a number of opinions focus upon the idea that cell phone is a technology that influences the development more than any other factor. Some findings assert that mobile phones raise long-term rates of growth and that additional ten phones in developing countries per 100 people impact on increasing GDP growth by 0.6 percent. Economic benefits from the use of mobile connection are apparent even in the poorest countries. Cellular phones do not depend on the supply of electricity and can be used by people who don’t know how to read or write.
Then, really serious digital divide takes place between those people who have access to mobile networks and those who don’t. The good news on the issue is that the gap is quickly closing. A new report from the World Bank states that nearly 77 percent of the globe’s population live within the access of mobile networks (The World Bank Report In The Democratic Republic Of Congo, 2004).
Of course, besides efforts of world’s political community, more measures can be done to promote the spread of mobile connection. Definitely, foreign investments into the developing countries are needed. The best thing that can be done by respective governments is to liberalize their markets of telecommunications, ban state monopolies and encourage competition. The examples from history show that the faster the competition is introduced into the telecommunications market, the faster mobile communications start to develop and spread in the relevant country. The Democratic Republic of Congo, subject of the current research, may serve a good example thereof. Along with Ethiopia, this country has average annual income per person of $100, but the number of mobile phones per 100 people is two in Congo, given that today there are six mobile networks in the country, and 0.13 in Ethiopia, where only one network operates.
The Democratic republic of Congo is the subject of the current work since the paper will explore the issues of marketing and advertising a new cellular system in Lumbumbashi, one of the largest cities of the country.
Purpose.Purpose of this paper is to understand the needs of the consumer base in Lumbumbashi and then to install a cellular telephone system that will be fully utilized. Thus, the paper will contain a research aimed at understanding demographics and the requirements of the local government to install a cellular system. The results of the research will be presented in the form of 3-page business plan outlining the process of installing the network, marketing and advertising this product in the country on the basis of the budget of 100K.
Background. The research is needed to be done for the needs of Colbert Communications Inc, a state of Maryland Corporation with offices in Clinton, Maryland, Paris, France, Kinshasa, DRC and Zurich, Switzerland. The company has a total of 106 full time employees and its business is to provide engineering and maintenance services in the cellular telephone industry to
customers in the countries were we have offices. Current research will pertain to CCI since it is interested to introduce itself on the African, Congolese market and install a cellular system in one of its cities. Thus, the benefits of the current research for CCI will be definition the needs of the consumer base, local requirements and regulations, analysis of the economic situation, costs and benefits of starting the business in the country and final decision on the best ways to enter the Congolese market and appropriate advertising and marketing policies.
The obstacle to the current undertaking is viewed by the author in the limits imposed on the budget of the business, which is only 100K, but the research will look into the ways of concise calculation of all necessary costs, and best solutions on using the given money.
Research and Theoretical Concepts
Workplace: CCI
Every business plan that looks into introducing some novel product or service on the market should include analysis and account of a number of essential elements (Perreault, McCarthy, 2002):
- Concept of the service: definition of the product or service which is to be introduced into the market, definition of its specifications, qualities, choosing the best variant of product and service from the list of possible solutions;
- Industry overview: insight into the industry offering such products and services, its nature, laws and specifications. This section also includes analysis of the target market, its volume, particularities, level of competition, level of difficulty of entering the market, number of substitutions, regulatory requirements pertaining to the service or product.
- Competition study: this section includes the overview of the competitors present on the target market, their specifications, areas of action, strengths and weaknesses, strategies and consumer base.
Competitive scenario of one’s target market: based on the information on the target market and competitors’ analysis, a strategy of entering the market, competing the market and gaining profit should be elaborated. The section should include analysis on the specifications of product or service necessary to compete with the rivals, strengths and weaknesses of our product or service compared to the those of competitors, and what strategy – cost leadership or differentiation generic strategy – it will pertain to win the market (Brush, Clemes, Gan, 1998).
Price strategies and Promotion strategies can be included in the section above but one can distinguish them to highlight the importance of these factors for developing competitive and successful product of the market.
The last section includes the calculation of investments necessary to launch the business and profits that the undertaking would bring.
So, the first thing to be considered is the concept of the service. The purpose of the paper is to install cellular telephone system in Lumbumbashi, Congo. For that, decision should be made on the kind of system to be installed and which mobile network will suit the needs of the current market best.
In cellular telecommunications system a portable or mobile radio receiver and transmitter, called telephone, is connected via microwave radio frequencies to base stations which serve both transmitter and receiver that either connect this user to the conventional phone network or process the communications on their own. Each region where there is a cellular connection is divided into cells. Each cell has a central base station and two set of assigned to the station frequencies of transmission: one to be used by the base station, another by mobile telephones. Often these networks are very economic, even when the customer base is rather small, since costs on mobile networks are mostly related to the volume of calls, while fixed lines reliy much more on subscriber related cost component. An operator of the mobile phone is a telephone company that provides mobile phone services. The process of becoming mobile operator usually starts with acquiring a radio spectrum license from the country’s government. The precise spectrum needed depends on the type of network technology that the operator intends to use. The question of mobile phone technology is very important and necessary to take into consideration while planning to start working as mobile operator.
There are definite technical differences between three predominant technologies which are used by the mobile operators – a system called CDMA, in America it is the most popular technology and is used by such mobile connection companies as Verizon Wireless, Sprint PCS and many others, iDEN technology, used by American operator Nextel, and GSM used not only by a number of American operators, such as AT&T Wireless, Cingular, T-Mobile and others, but the predominant part of the carriers in Europe, Asia and around the rest of the globe, accounting today for 80 percent of the global mobile communications. While for subscribers the only significance is that these technologies may be incompatible with each other, for operator the choice of technology is very important since it includes not only different technical characteristics, principles of work, structure and architecture of the network, but different cost on equipment and operating as well (White House Council of Economic Advisors' Study).
GSM has become the first in the world and for the time present the only genuinely global mobile standard. Today it is used by more than 500 global operators with licenses in 170 countries around the world. GSM accounts for 80 percent of the global market. In 1990, the number of mobile phone users reached only 10 million, by the middle 90s this number rose 10 times, in 2001 this amount surpassed 1milliard, which is the part of the all global telephone channels, and by the end of 2003 the number of only GSM network users accounted for 1 milliard. One of the peculiar features of GSM is its SMS function, absent with CDMA, iDEN, PDC or PHS standards. Therefore GSM operators are years ahead of their competitors, drawing considerable benefit ofrom their SMS services. Though CDMA operators are trying to repeat the success of SMS and only now are finding the way of text service development.
But at the same time it should be notds that narrow-band connection standards of GSM and D-AMPS concede in objective technical-economic indexes to broadband IS-95 standard (CDMA). Moreover, one traffic channel cost ratio of CDMA is lower that of other mobile standards. The price on CDMA network equipment, particularly in terms of organization of traffic, is two times cheaper than D-AMPS and three times less expensive than GSM. Moreover, the price varies even more, since the same network coverage zone requires less base station of CDMA network that GSM and other standards.
Thus, CDMA standard has the following advantages over other technologies:
- high quality of voice connection, comparable to the quality of voice transmission in digital landline networks;
- heightened confidentiality;
- the largest of all other networks carrying capacity which allows support of 70-90 simultaneous conversations in the cell of one base station. According to this index, CDMA is 5-7 times more efficient that GSM and 8-10 times more effective than D-AMPS;
- possibility of attaining large zone of radio coverage from one base station (radius up to 50 km). This allows to receive continuous radio coverage with less number of base stations (5-7 times less compared to GSM-900);
- less connection channel cost ratio in the system, which allows on the stage of installation and deployment to save considerable costs due to less investments into infrastructure;
- heightened ecological security of CDMA terminals.
- One of the main advantages of CDMA standard is its possibility to carry out smooth transition to the 3G networks – networks of the third generation (White paper on mobile infrastructure,2002).
From this analysis it is understood, that though GSM system is the most popular worldwide, deployment of CDMA technology would be more efficient and cost-saving, especially is there is a need to restrain the budget and investments on the amount of 100K. If the government of DRC gives permission to use the frequencies necessary for CDMA technologies, it would be the best choice possible as to the specifications of the service concerned.
In the process of preparation of current paper, the book “Essentials of Marketing” by William D. Perreault, Jr. and Jerome McCarthy was used. A number of informational resources on principles of marketing (such as Michael Porter. “Competitive Strategy: Techniques for Analysing Industries and Competitors”) demoraphics, political and economical situation of Democratic Republic of Congo (CIA World Factbook; ZAIRE - Overseas Business Report – by USDOC, International Trade Administration; Democratic Republic Of Congo Assessment 2001 by Country Information and Policy Unit; the report of The World Bank In The Democratic Republic Of Congo Compiled by Shannon Lawrence) on mobile communications and cellular network systems (White House Council of Economic Advisors' Study on the Economic Impact of Third-Generation Technology , article “The real digital divide” printed in Economist 20 March 2005), and a number of other sources. All these books, white papers and reports helped to draw a comprehensive picture on the state of mobile market in the world and in Congo particularly and possible ways of installing and promoting one’s telecommunication services in one of the cities of DRC.
Applied Research Project
Overview
This section contains analysis of Democratic Republic of Congo, particularly of its city of Lumbumbashi, from political, demographic, legal and economic, specifically communicational point of view and the advantages that the installation on mobile connection system might bring here. Also, all the phases of the process of installation will be explored, the components of the network will be reviewed and their average cost will be discussed for the purpose of elaborating a marketing plan which would include ways of advertising and marketing the product.
Methodology
This subsection contains an overview of methods used for the current research. The term methodology comprises not only a set of methods, but also a way of connecting the theoretical findings to the real-world situations and finding their efficient application. Thus, for the purpose of the current research, the following methods were applied: data collection, research and analysis, which pertain to the general philosophic family of methods, along with logical and dialectical. Also, the research used such general scientific methods, as documents study, modeling and systemic approach.
Part of the paper requires combination of approaches which rely on theory, which gives the opportunity of studying the essence, particular features and basic concepts of managerial science in connection to marketing aspect, and praxeology, which comprises the analysis of the process of preparation, adoption and bringing into life definite managerial decisions, in particular bringing to life the project of installation mobile network in Lumbumbashi, Africa.
Particular importance is attached to the systemic research method, which consists of complex analysis of the most important mechanisms of functioning of definite phenomena in the issue under consideration. The systematic method is based on the assumption that any object is viewed as a complex, relatively independent system characterized by the unity of plurality of its elements: structural, functional, genetic, objective and subjective. Together with that, the method of rational choice, which is generally contrasted to the systematic method, will be applied. According to this method, the conclusions on the research subject will be made on the basis of exploring and analyzing the factors influencing the choice of particular business entity. According to this approach, a decision that is to be made concerning presence of Colbert Communications in some African city with entirely new project, should be supported by multiple facts and factors. The science of management may be explored on three fundamental levels: the level of grand theory, middle theory level and case study level. Since the paper touches upon the issues of management in its practical dimension, current research pertains to the case study level. Case study consists of practical application of theoretical knowledge acquired due to such methods as data collection and research, documents study and others, to the real-world situations on the basis of definite case. In this particular case, the research will be carried out and applied to the case of Colbert Communications Inc. This method enables to receive results of the practicable value and efficiency of the theoretical findings. Finally, the method of contrast and synthesis was employed, since the theoretical as well as practical aspect of the paper examines different approaches, marketing and advertising tactics and techniques and how they can be combined to form a comprehensive unified synthetic knowledge.
Besides the abovementioned methods, which are common to almost all the works on management thematic, the current research will use the methodology of elaboration business and marketing plans, which pertains to different actions and stages of analysis, such as defining concept of the service or product, analysis of the industry, overview of the target market, its benefits and drawbacks, analysis of competitors on the market, elaboration of competitive scenario for current target market based on the findings, business growth evaluation, price strategies and promotion strategies, volumes of investments, cost of the business and calculated return on investments.
Research
Since concept of the service, the first element to be defined while preparation of the business plan, has already been reviewed, the next issues to focus the current research on are industry overview, the target market and analysis of competitors. To cover all these three questions, the analysis of Democratic Republic of Congo and its current situation in the sphere of economy, particularly in its communicational sector, should be addressed.
- Demograhics
Democratic republic of Congo is a country with total area of 2,345,410 sq km, which makes up nearly one third of the surface of the USA, and population of 58,317,930 people.
Due to African civil war, a conflict between seven African counties, in which more than 3.3 million people died, and which was finished not so long ago, the country experiences decline and destruction in economic, political and social dimensions (CIA World Factbook, 2005). - Local Government in Lumbumbashi
The state regime in DRC is defined as dictatorship. The country is ruled by the president Joseph Kabila, who is simultaneously the head of the government, the head of the state and the one who appoints members of Parliament (Today, due to difficult political situation, parliament is substituted with Transitional Constituent Assembly, which was established in August 2000). Joseph Kabila became President after the death of his father Laurent Kabila. Joseph Kabila proclaimed his intention to implement the Lusaka agreement, render internal politics open, improve the situation with the human rights and liberalize the economy in the country. Today, the territory of DRC hosts 550 UN military observers and nearly 8,700 military personnel who should ensure cease-fire and implementation of the Lusaka agreement (Democratic Republic Of Congo Assessment 2001).
The African civil war began in 1998, when Rwanda and Uganda sent their soldiers into DRC to help the forces of rebels oust President Laurent Kabila, who took power in 1997. The railroad line, which connected Lumbumbashi, the capital of Katanga Province, with the major communication points of the country, became the front line between armed troops of rebels and Congolese army. This resulted into destruction of the country’s infrastructure and major lines of communications. In 1997, Laurent Kabila overthrew the former president and dictator Mobutu, who was in power since independence of DRC in 1960, but his regime was also challenged by rebellion backed by Rwanda and Uganda, which unleashed in 1998. The Kinshasa regime received support from troops from Angola, Namibia, Zimbabwe, Chad and Sudan.
On 10 July 1999 the arties signed a cease-fire (CIA World Factbook, 2005), but sporadic fights all over the country continued. In October 2002, the President Joseph Kabila received success in getting Rwandan forces to withdraw from eastern part of the country, and two months later all remaining warring parties signed Pretoria accord with a view of setting up a government of national unity. In July 2003, transitional government was established, headed by the President Joseph Kabila, joined by four vice-presidents from the former rebel camps, former government and the political opposition. - Requirements
Due to such situation and lingering civil war, the economy of the country, having considerable potential wealth, has drastically declined since 1980s. The war drastically reduced government revenue and national output, raised external debt and resulted in multiple deaths and losses from the war and disease in the number of about 3,5 million people.
Because of the uncertainty of the war outcome and lack of necessary infrastructure and difficult business environment, foreign business ceased its operations in the country. The war gave rise to such problems as uncertain legal framework of business activities, inflation, corruption, unclearness of financial operations and economic governmental policy. Condition on Congolese market somewhat improved in 2002, when large percentage of invading foreign forces was withdrawn. Since then, several missions of IMF and World Bank (The World Bank Report, 2004) met with the government to aid it in developing an economic plan and President Kabila took to introducing economic and structural reforms in the country. Economic stability, with the help of foreign donors, improved noticeably in 2003. New mining contracts with foreign exporters have been approved, which promises to improve Kinshasa’s GDP growth and fiscal position.
All the major companies are located around two main industrial centers of Kinshasa and Lumbumbashi, and a little bit at Kisangani. While Kinshasa is the nation’s capital, Limbumbashi, capital of Kantaga Province, is one of the most powerful industrial center in Congo, which hosts a number of international firms and has second largest population in the country accounting to couple of millions.
Congo’s GDP per capita is estimated to make up $400, with agriculture possessing 59% of it, industry 15 % and services 26%. Income per capita is estimated to be at the level around $100 per person (CIA World Factbook, 2005).
As for the communications sector, it should be noted that communicational facilities of Congo, operated by state, are among worst in Africa. International lines are sketchy and very unreliable. Generally, telephone system is poor. There is a scarcely adequate wire and microvawe radio connections service in and among urban areas, and domestic satellite system comprising 14 earth stations (ZAIRE - Overseas Business Report). Though, there is a number of private satellite and mobile communications network companies which provide their services for government officials, businessmen, foreigners, foreign businessmen and other people who can afford these services. This list of consumers constitutes the major target market of Colbert Communications: businessmen, foreign investors, business people and rich people in Congo who can afford mobile communications services. The number of mobile subscribers today reached 1 million.
Daily management and administration of communications infrastructure of DRC is provided by ONPTZ – National Post and Telecommunications Office and OZRT – Zairean (now Congolese) Office of Radio and Television. These offices are located in different ministries – the Department of Post, Telephone and Telegraph for ONPTZ and Department of Information and Press for OZRT, which altogether decide on the country’s telecommunications policy (Democratic Republic Of Congo Assessment, 2001). Internationally, the country is linked through a Standard A earth station at N’Sele built by ITT, while internal communications are carried out by Standard B earth stations built by Britain’s IGTV, France’s Thompson and American company, scientific Atlanta. Reseaux Zairois des Telecommunications par Satellites (REZATELSAT), is a body which operates the network of the country’s earth station which today amount to 15.
The extensive telecommunications needs of Democratic Republic of Congo have been thoroughly studied. CCI should take into account that the government of DRC gives priority to reconstruction of international transmission earth station in N’Sele; rehabilitation of telephone system in Kinshasa’s four zones destroyed by war, with contracts with Italian, Japanese, French and Belgian Firms; and what is very important, the introduction of more American companies in cellular telephones and expansion of mobile communications systems to Goma and Lumbumbashi. This fact implies that the government is interested in attracting foreign investments and foreign companies which would install networks of mobile communications within the country.
The market of mobile communication is not virgin in Congo. There is a certain number of mobile subscribers, a bit surpassing 1 million, and, according to the latest information, six providers of mobile communication (The real digital divide, 2005). Some of them are very big and influential companies which not only posses solid financial resources, but enjoy international aid for their activities as well. Thus, in June 2003, IFC approved a loan in the amount of $20 million for the Celtel Congo Company (subsidiary of mobile systems international) directed to upgrade and expand mobile phone network in Congo. This is the fund’s third investment in telecom sector of this country, and the second loan for Celtel (The real digital divide, 2005). During the discussion of the project, IFC commended for its investments into frontier regions and counties.
Another solid potential competitor is Vodacom operator in Congo. Vodacom is a south-African society created with the aim of launching cellular network in the South Africa. The network was officially started in 1994 on GSM technology, and in November 1996, when Vodacom introduced its prepaid service, the system dramatically expanded. Vodacom took interest in Congo because of its analysis which indicated that Congo was supplied with only 100.000 telephones for 60 million of inhabitants. Vodaom invested considerable funds in Congo since the country represented a potential promising market. In Congo Vodacom was introduced in 2002 with the service staff of 62 persons. The assets of the company are divided between Vodacom International Limited (51%) and Congolese Wireless Network (49%). The Capital of Vodacom Congo amounts to $76,5 million. This is an important figure for consideration taking into account that CCI is planning to enter this market with the budget of 100K, which is very little for the complete implementation of the project, but acceptable sum if only advertising and marketing activities are counted. Though it should be noted that coverage of Vodacom Company enhances practically all the major cities of the country, while CCI initial project previews starting coverage of Lumbumbashi.
Besides abovementioned companies functioning on GSM standard, there is mobile operator which uses CDMA technology – Telecel SPRL.
After analyzing the market of competitors it becomes clear that mobile communications market in Congo is not saturated and novel mobile operator can easily enter it. For that, only the right strategy must be chosen – either of cost leadership or differentiation generic strategy Porter, 2000). The best strategies can be chosen after analyzing the cost of installation and maintenance of mobile networks o different technologies and standards.
The components of the process of installing network are as follows:- Mobile network consulting (expertise, consulting, supervision and design services, and logistics), engineering (network planning, design, and site design), and implementation (turnkey project management, procurement of equipment, construction of infrastructures, training and maintenance)
- Wireless communication infrastructures: network deployment (search and negotiation for acquisition of site, design technical files, equipment supply; execution (towers and masts mounting, connection to electrical networks, installation of radio equipment); maintenance (preventive - inspection and updating of sites; corrective – appropriate logistics for interventions any time a week); optimization (site safety and modification, equipment replacement and upgrade); technical buildings (engineering and building of Master Switching Center, hydraulic cooling systems for transmitters); alternative energy (systems of emergency power generation and switching (White paper on mobile infrastructure, 2002).
These are works and services that need to be done to install mobile communication network and infrastructure for its proper functioning. In regard of hardware to be installed on the process of launching the network, the following components must be purchased and brought into work: antennas, base station technologies and Signal Distribution; Billing, Mediation and OSS; Cables, wires and connectors; Electronic components; GSM gateways (in case of installation GSM technology), Fixed Cellular terminals and Least cost routers; Last mile access and Free space optics; Power supply and batteries and other components. Besides the hardware, the following services should be hired with the respective companies: installation, integration, optimization, maintenance, site selection and site survey.
Lessons Learned
The above studied material should be integrated into comprehensive system of understanding the problem, all aspects of the issue, elements of activities toward implementation of idea, and the cost of the project. For that, all above gathered information should be summed up and presented in the form of business marketing plan outlining the issue, the peculiarity of the service to be launched and requirements as to the marketing and advertising policy in regards of this service. For this purpose, a detailed marketing plan is presented below.
Concept of the service: mobile communications operator. It is possible to work using either of the two technologies: GSM or CDMS. GSM standard is more widespread in Europe and Asia, while CDMA is used predominantly by American operators. GSM being considered as current universal standard of communications, it might be more favored by foreign tourists (since they need to have roaming with their home networks, predominantly GSM), and foreign businessmen whose communications are connected to the European ones. Along with that, CDMA is a cheaper technology in terms of installation, transmission of data and support and has the possibility of smooth transition to 3G networks, networks of third generation, where CDMA, not GSM technologies are going to be predominant. The drawback of this technology is its weakness in text transmitting services, though the network is developing rapidly to invent something similar to GSM SMS service. Since SMS is considered today to be one of the cheapest and most favored, especially with youth, means of communication, this point should be taken into account.
Industry overview: In global terms, the industry of mobile communications is by far the most dynamic, promising and fastest developing industries. While in 1990 the number of mobile subscribers was no more than 10 million, in 2001 (!) the number of mobile customers surpasses 1 milliard – the most rapid rate of all the industries ever. Therefore, in the terms of global scope, mobile industry is highly competitive sector.
Target Market
But in terms of mobile communications in Africa, Congo in particular, the market is undeveloped and unsaturated and this situation contains both obstacles and advantages. Obstacles are viewed in political and economical instability of the country, uncertainty of political, social and economical situation in the country, absence of guarantees of economic activities and relevant legal protection, and extremely low income per capita - $100, which makes mobile connection affordable only to small percentage of the country’s population. Benefits are viewed in openness of the market, governmental policies towards inviting foreign communication and mobile companies into the county, large population and low saturation of the telecommunications market.
Competitors’ Analysis
The number of mobile subscribers in the country is a little bit more than one million. On Congolese market, there are 6 mobile operators, at least one of which works on CDMA technology. These operators are mostly daughter companies of big transnational telecommunications operators, such as Vodacom. Their budget is considerable and their zone of coverage extends to the largest cities of the country.
Competitive scenario of CCI Target Market
As it is seen from the analysis, the market is not closed and it is possible for CCI to enter this market and have its solid customer base. For that, according to Michael Porter (2000), the form should apply one (or both) of the two possible strategies: cost leadership or differentiation generic strategy. The idea of the first one concerns such strategy towards defining the price of the company’s product or service, which would make the service or product concerned the most attractive for the customers among its competitors. This implies usage of discounts, rebates, bounces, reward systems or simply setting the price lower than all other competitors for a definite period of time. This strategy is dealt by the advertising and marketing policy of the firm. The second, differentiation generic strategy, pertains to the need of inventing a unique service, which neither of the existing competitors has and which are especially attractive to customer. Since the existing operators in Congo already offer standard services of mobile communication starting from voice communication, SMS, prepaid services, the thing that could be used within this strategy is developing GPRS services (if within GSM network) and WAP access to the internet, which is still absent in Congo, or gradual development of networks of third generation (on the basis of CDMA) which imply a number of telecommunication, computer and high-technology high-speed internet services. Taking into account that the number of reach customers in Congo is not significant, such technology is not likely to receive wide propagation within the country for the time being, though might be useful for a limited number if VIP customers; moreover, elaboration of 3G networks is much more expensive than 2G or 2,5G.
Price strategies and Promotion Strategy
These two elements are heavily interlinked since they constitute the single strategy of the company’s policy: thus, marketing strategy of the firm can heavily rely on its price policy, if the company chooses to follow cost leadership strategy. To the author’s mind, the best marketing strategy to be chosen in this case and to win a large number of additional customers is cost leadership strategy. This means offering lower prices for its services than the competitors. There is a way to follow this strategy without loss of benefits from lowered prices, if the company chooses to operate on CDMA technology. Earlier in the report it was mentioned that CDMA technology brings in some aspects of hardware installation and support 4-7 times bigger economy than GSM standard. CCI can take use of this technology to save on its installations costs and to be able to offer comparatively law prices to its customers.
Cost of the project
It is hard to precisely calculate the cost of the project since the majority of mobile operators chose to keep the cost of their equipment in mystery. Though, the current research contains information from some respectable white papers on the issues of mobile networks hardware(White paper on mobile infrastruct,2002) which give the opportunity to attain comprehensive information on investments needed into launching the network. The average price of the network base station makes up nearly 120K. But it is fair to notice that base station can be large and small and therefore it is most relevantly to measure the cost of the network on per-subscriber basis. Cost for construction radio network of GSM standard (typical GSM base station equipped with 6 transceivers can host about 1200 users) makes up about 100 euro, or $140, per user. To this, additional costs should be added, which include backbone ($130 per user) and additional services, such as civil engineering (around $250 per user), the total cost of the network installation will be around $520 per user. Therefore, station built with investments of 100K in the GSM network is able to contain only 200 customers. If the network is built on CDMA standards, the number of customers can be increased up to 40-500 customers. Therefore it is understood that such investments for the project are very little, moreover, they are paltry. To be able to handle at least 50,000 customers, the project’s budget should make up not less than 10 million. However, if the budget cited is intended not to overall project, but covering the expenses of marketing and advertising campaigns, this money is sufficient to cover the cost of commercial and implement some rebates, bonuses or strategy of lowered cost.
Conclusion
The current research expected all the aspects of the issue of implementing mobile network in African environment and draws to conclusion that though Congo doesn’t have highly competitive market, the installation of mobile operator requires solid investments both in infrastructure and marketing activities. Though due to the peculiarity of the industry, such investments are justified.
References
CIA World Factbook < www.cia.gov/cia/publications/factbook/geos/cf.html >
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Perreault, W.D. Jr, McCarthy, J. Essentials of Marketing. 9th edition; McGraw-Hill, 2002.
Porter, M. Competitive Strategy: Techniques for Analysing Industries and Competitors. Princeton Hall, 2000
The real digital divide. Economist 20 March 2005 < http://www.economist.com/opinion/PrinterFriendly.cfm?Story_ID=3742817 >
The World Bank Report In The Democratic Republic Of Congo (DRC) February 2004. Worls Bank publications. Compiled by Shannon Lawrence, Environmental Defense
White House Council of Economic Advisors' Study on the Economic Impact of Third-Generation Technology < http://www.wireless.co.il/whitePapers/3geconomic.pdf >
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