AbstractMarketing strategies are the main drives for promoting a company’s products to increase its sales and to build its brand. With regards to competition, a company needs to strengthen their marketing strategies to stay competitive. With the intense competition in the telecommunication industry, marketing is an important element in Telstra to build its presence in the community. This report seeks to analyse Telstra’s marketing strategies and identify critiques help to point out the areas of development for Telstra.
IntroductionFormed in 1901, Telstra is Australia’s oldest and largest telecommunication service provider, with a market share of 74.5%. Telstra was partially privatized by the Commonwealth Government in two public offerings in 1997 and 1999. Due to government deregulations September 2002, Telstra has begun to open itself to more competition and the company’s business has turned to be more transparent.
Its current principle activities include a wide array of telecommunication and information products and services. As Telstra services a wide demographic of customers, their products are segmented according to different target markets.
Market SegmentationUnder the management of its new CEO, Sol Trujillo, Telstra is aimed towards understanding and satisfying its customer needs (Shanahan 2006). New market research is to be conducted to satisfy different customer segments who had demonstrated different needs from the broader telecommunications industry. He mentions that, ‘when the market research had been completed, Telstra would have interviewed over 90,000 consumer customers and created a small business ‘panel’ of 16,000 businesses’. This thorough market research is being conducted as it was shown that there is a reducing market in the mobile segment (Corner, 2006).
Marketing Strategy AnalysisAs Telstra is involved in the telecommunications and information services industry, the marketing strategies will be divided and analysed according to their respective industries.
Telecommunication IndustryProductTelstra provides various products and services in the telecommunications industry. Among them are landlines, mobile phones and the internet.
LandlinesTelstra owns and manages most public switched telephone network (PSTN) services. Most of Telstra’s revenues are generated from fixed-line services. However, its revenue from its fixed-line services has been declining due to the reduced number of local calls made. Among the fixed line products and services offered by Telstra are the business line plans, fixed and rental phones.
Mobile PhonesTelstra has two core services in mobile phone communication – post-paid and pre-paid mobile phone plans. The company provides products such as mobile phones. As these mobile phone sales are a relatively small part of the total revenue these phones are to be viewed as a means to sell more plans. As Telstra emphasises on providing the latest technology in the industry, it has recently introduced its Next G network, which claims to be the largest, fastest mobile broadband network. Their mobile phone plans work as a base for beneficial segmentation. The casual plan allows for more flexibility for change, while the phone plans offers the added benefit of including a handset.
InternetTelstra has a wide variety of Internet services, which is offered to a wide demographic of customers. Among the products offered are: dial-up, cable internet, ADSL, wireless, and satellite. Telstra brands its Internet service as Bigpond. With Bigpond Broadband, the internet is provided at a blisteringly fast speed. For more traditional Internet services, Telstra also offers dial-up and ISDN services. With these services, Telstra has segmented each service through pre-paid and business group plans. Its ISDN service is targeted to people with limited broadband availability.
CritiquesTelstra seeks to increase its customer experience and satisfaction through reward programs and product bundling. Telstra has designed telecommunication plans that offer more options, value and control to meet the customer’s needs. One such example is that it offers the latest fixed
phones that take some of the best features from mobile phones, such as address book and caller ID.
Through product bundling, Telstra is able to package a combination of these services into one large offering and single bill service, which makes its mobile products more attractive for consumers.
Although Telstra boasts on having a stable and reliable internet connection, its internet speed has been observed to perform poorly. According to ACCC chairman Graeme Samuel, “Telstra’s competitors have been offering ADSL2+ since 2005, but until now Telstra’s fastest DSL offering was a mere 1.5 megabits per second (mbps)”. It’s reluctance to switch to ADSL2+ has been based on the fear that the Australian Competition and Consumer Commission would “declare” it, thereby giving competitors access to ADSL2+ at controlled prices (Barker, 2006).
Telstra does not use much of traditional advertising for fixed-line products and services such as billboards, banners and digital banners, but rather it spends most of its advertising on new products and services such as BigPond Broadband and the Next G network. This is made possible as Telstra monopolizes the landlines in Australia, and people would still use its fixed-line products and services. Telstra should continue doing this and to continue to spend more in marketing its new products and services to meet the demand of the emerging market. Given this, Telstra is gaining the demands for both its fixed-line and new products and services.
PriceTelstra is focused on product line pricing, where products within the same product range are priced differently, depending on its features and benefits. This price discrimination is to assist Telstra in maximising their turnover and profit.
LandlinesBusiness line plans are priced at $99.90 per month (including monthly Line Rental), where the customer can get unlimited local and STD calls and valued rates on calls to mobiles. For fixed home phones, the price ranges from $60 to $500. The average pricing for rental phones includes the provisioning fee of $20 plus $3.00 per month for rental.
Mobile PhonesTelstra’s mobile services are priced according to mobile phone plans, with the model of the phone being the main determinant of their price, where the greater the features of the phone, the dearer the price. As Telstra is by large a service oriented company, they emphasise on communicating more on the benefits of their services, such as covering most parts of Australia and its supplementary services and network stability.
InternetThe Bigpond Internet is priced according to the type of infrastructure used. For example, it’s prepaid dial-up lines have a fee range of $2 to $19.95 for a validity of up to 45 days, while their wireless service price ranges from $29.95 to $199.95 on a 12 month contract.
CritiquesA comparison of the pricing component of Telstra’s marketing strategy with offerings from competitors such as Virgin and Optus reveals that Telstra does not always have the lowest rates. For example, Optus offers a cable connection of 20GB for $79.95, where as Telstra offers it for $99.95. Comparing the plans Optus has a better price in almost every internet product than Telstra. In addition to that, Optus provides free initial time for one or two months on a variety of their internet connections which lacks in Telstra. Telstra also has a slow internet speed compared to Optus. From Telstra’s mobile plans, its 24 month long phone plans provide the lowest call rates out of Telstra’s offerings while the two shorter member- and casual plans have more expensive call rates. Due to its wide network coverage, Telstra emphasizes on this feature, rather than pushing their price as their primary selling point.
On the other hand, the company is trying to attract price conscious consumers with its money back promotion for pre-paid mobile plans. In mid-July 2005, Telstra launched a major advertising campaign, where they promote the benefit of gaining credit for doing nothing but talk. Customers can gain up to an extra $50 in call credit each month, 5 cent extra for each incoming minute and 1 cent extra for every outgoing minute. This promotion campaigns are created to outdo the competition from Optus and Vodafone. They engaged in price war in order to offer the best options. Here, customers are benefiting from lower prices, but unfortunately it is not likewise for these companies. Here, the government’s implementation of the ceiling and floor price for telecommunications regulation is significant to avoid further price war.
PlaceTelstra’s telecommunications products and services are widely available throughout Australia. Telstra has 115 owned Telstra branded stores and 153 licensed shops, with two of its largest licensors being the mobile phone chain Crazy John’s and Australia Post. In addition, the company also has a compelling web presence with a complete online shop for the purchasing of mobile phone plans, pre-paid refills, handsets and supplementary services such as ring tones and games. Telstra boasts of a strong internet presence, with its network covering almost 98% of the population, providing internet service to even the remotest area in Australia.
CritiquesTelstra shops and dealers are strategically located across Australia. It attends to the need of the people in their respective area. Apart from its own dealers and shops, it also has Crazy John as its exclusive mobile phone dealers which are very reputable and successful dealers. Telstra definitely has the edge over its competitors in terms of numbers and locations.
PromotionTelstra promotes its products through media, out-of home billboards and also through their in-store value-added product offerings. For example, the promotion of the Bigpond is done in variety of ways, such as using humor and celebrities through their advertisements and electronic billboards in train stations, advertisements on trams, and also on their website. Telstra also promotes their products and services through providing value-added components to attract customers and promote customer loyalty. For example, Telstra uses loyalty programs such as ‘Telstra Rewards’ for landlines. This loyalty program entitles eligible customers to receive a 5% or 10% discount off eligible calls and charges.
It is also observed that product bundling is commonly used in Telstra as a means of attracting customers to sign up for their products and services at
a cheaper price. For example, product bundling is targeted to families, where families are given the option of combining their Telstra bills at a cheaper price. Telstra also provides discounted Bluetooth headsets with selected fixed phones in its product offering. Telstra promotes heavily on its mobile phone offering through service improvements, such as covering 96 percent of Australia with its GSM network and 98 percent with its CDMA network.
CritiquesTelstra is one of the country’s largest investor in out-of-home advertising, spending more than $A9 million during the first six months of 2005. Despite being one of the largest spenders on advertising, Telstra has to be wary of Optus, its close competitor in fixed-line service. Although revenue from its fixed-line services have been declining due to the increased dependence of mobile phones and the internet, little has been done to promote Telstra’s fixed line services. Again this is because more emphasize is being put into promoting its new products and services, and also the fact that fixed-line is declining in demand. Telstra billboards were located in the heart of the cities and traffic for people’s easy access.
PeoplePeople are greatest asset for Telstra. In selling and marketing, Telstra aims to attract the best people by keeping them contented and encouraging them to grow and improve. Telstra develops their staff through a sophisticated development framework, including online development courses, frontline manager and leadership programs, and a comprehensive range of options that develop technical and interpersonal skills. Telstra strives to build a culture that respects and harnesses the individual differences that all people bring to an organization. Through the Telstra Business Principles and the Code of Conduct standards of appropriate business and ethical behaviors are valued and expected from all employees.
CritiquesThrough mystery shopping and observation, the sales staffs are good at communicating. They are knowledgeable about the products and services featured. Telstra has a diversity of staff consisting from various non-English speaking backgrounds. This portrays Telstra’s success in maintaining its image as a company that values diverse workforce in order to meet the customers’ needs.
ProcessThe process of applying for Telstra’s telecommunication products and services are relatively easy, where customers can go through Telstra shops and dealers and also through the Internet. The process involves interacting with Telstra’s sales team and providing relevant documents when applying for their products.
However, the mystery shopping revealed that the processes of the new users’ application for the latest technology next G network took a longer time to be completed which is due to unfamiliarity with the new product.
Physical EvidenceProducts such as telephones, mobile phones and Internet hardware such as modems and routers are provided by Telstra. These products are often offered as value-added components to their service for customers when signing up with Telstra. Being a large establishment in this industry, Telstra has a strong 24 hour customer support, which provides assurance to consumers that Telstra are reliable.
2.Information servicesBeing a telecommunications provider, Telstra complements this service with a directory service, through Yellow Pages, White Pages and the Trading Post. Due to the increasing dependence on the internet, Telstra has designed Sensis as a search engine to bring together listed businesses in the directory under one umbrella.
Product/ServiceTelstra’s information services operate under the brand name Sensis. Sensis is designed as a search engine for Australians, bringing together businesses listed in the Yellow Pages, White Pages and Trading Post under one search engine. It acts as a platform that brings together businesses and customers. Sensis has a large network partner, which includes some of Australia’s more popular websites, such as CitySearch and Whereis.
CritiquesSensis should be commended on trying to build a reliable circle of trust through their partner networks. With these alliances, Sensis is able to build up its brand through popular websites and establish a high standard of reliability.
PriceSensis has its own unique pricing strategy, with BidSmart, which acts as a method that determines the priority of each business listed in a particular search. A company/business with a higher bid for listing in sensis.com.au will appear first compared to other businesses that have a lower bid with the same search phrase. At the end of the month, the price paid by each business is determined according to the number of ‘hits’ the websites get from search traffics.
CritiquesThis pricing strategy is suitable for Sensis. Being a pioneer in providing directory services through the Internet, Sensis is able to create value for its advertisers, by allowing them to pay according to the number of ‘hits’ obtained. This is a good establishment for Sensis as it is able to attract more businesses to advertise with them without burdening the businesses with a fixed price as they continue to build the Sensis brand to attract more searches.
PlaceSensis is available on the internet and is linked with their network partners. Recent collaborations with carshowroom.com.au are aimed to increase its recognition and customer traffic through the website.
CritiquesTransferring Yellow Pages and White Pages to the internet under Sensis is a good move as people are now depending on the internet for faster information. In addition to that, people are not burdened with the hassle of the printed version of these two directories which are bulky and time-consuming when searching for information.
PromotionSensis promotes itself by collaborating with websites such as carshowroom.com.au to increase its presence in the marketplace. Sensis’ public relations have also helped gain recognition through press releases and conferences. In addition, Sensis has published a book, Small Business, Big Opportunity and a new website for small businesses to aid Australian businesses to optimize their marketing and advertising skills.
CritiquesAlthough Sensis does not focus on marketing through billboards and media advertisements, their logo can be found on Telstra websites and also on their partner network websites that aims to provide a level of interaction between their partners and Sensis.
PeopleSensis is recognized as one of Australia’s leading employers, who strongly encourage an environment of learning, innovation and enjoyable. Behind these employees is a strong support system – its board of directors and executive team leaders who overlook the direction of the business.
CritiquesThrough a phone interview enquiring Sensis’ service, the customer service staff was knowledgeable regarding the processes required to sign up for their services and was also friendly and helpful in providing advice on how to advertise on Sensis.
ProcessThe process of signing up to advertise on Sensis is relatively straightforward with a step-by-step process. Businesses/advertisers would need to register with Sensis before submitting their advertisement to the Sensis search engine. These clients are given the option of choosing among 3 advertising packages to aid in their advertisement presentation. Other websites can form partnerships with Sensis through inserting a Sensis link onto their website. This can be done by downloading a program which integrates the link onto the website.
CritiquesThis strategy is good as it provides a level of flexibility and control for clients. With the three types of packages, Sensis is able to attract a wider demographic of businesses to advertise with them as they will be able to address different business needs.
Physical EvidenceSensis is available on the Internet, with approximately 100,000 searches per day. According to statistics, Sensis serves almost 13 million users every month and about 150,000 online advertising customers advertise with Sensis.
CritiquesAlthough Telstra aims to make Sensis one of Australia’s premier search engine, many people are unaware of the existence of Sensis as it has only been advertised through the Telstra website and their partner network search engines. Consumers are not aware of the significance of the Sensis logo on these websites, hence decreasing internet hits. Market research shows that Sensis is the 5th visited local search engine in Australia, with 0.39% market share. Although launched in 2004, Sensis has yet to make a big impact in the Australian internet scene. Due to the transition of White Pages onto Sensis, search engine results have been quite inaccurate, affecting its reliability and popularity (Jones, 2006).
ConclusionAs the report progresses with the information about Telstra’s main products and services under two main industries; 1) Telecommunication industry and 2) Information services, Telstra’s marketing strategies are being critiqued using the marketing tool, the 7 P’s framework.
In the telecommunication industry, Telstra’s marketing is more on media, billboards and value-added components. Also, it engages more in promoting its new products and services to capture the emerging market.
Also, Sensis has helped Telstra to increase customer usage of the directory, thus the Telstra website which leads to a comprehensive information. In essence, the marketing strategies in its telecommunication industry is currently in good practice but its information service needs further promotion to create more reliability and data accurateness.
Barker G. 2006, Telco finally gets on ADSL2+ bandwagon, The Age, viewed 11 December 2006, Corner S. 2006, Telstra’s grand plan to know and serve its customers, ITWIRE, viewed 13 January 2007, Jones M. 2006, Sensis revs engine but Google still rules, Australian Financial Review, viewed 2 January 2007, Government Introduces Laws to Boost Telstra Competition, The Age.com.au, 26 September 2002, viewed on 20 December 2006,Optus, viewed 9 January 2007 Shanahan J. 2006, Consumer-centricity: An idea whose Time Has Come, Australian Marketing Institute, viewed on 5 December 2006, Sensis, viewed 10 January 2007, Telstra, viewed 9 January 2007