Content area
T-Mobile Company is located in the United States of America. The head offices are based in Bellevue, Washington. T Mobile finds its rank as the third largest in the industry of wireless communications and has a high number of customers approximately seventy-four million. This case analysis addresses marketing strategies in the wireless service industry and we use Michael Porter 's five forces to evaluate the attractiveness of this industry. We conducted situation and industry analyses and provided strategic alternatives that are consistent with T-Mobile mission, goals and objectives. Despite the challenges that T-Mobile is currently facing, it is clear and beyond reasonable doubt that T-Mobile will still be operational for quite long time because it is well prepared in the financial reserves.
ABSTRACT
T-Mobile Company is located in the United States of America. The head offices are based in Bellevue, Washington. T Mobile finds its rank as the third largest in the industry of wireless communications and has a high number of customers approximately seventy-four million. This case analysis addresses marketing strategies in the wireless service industry and we use Michael Porter 's five forces to evaluate the attractiveness of this industry. We conducted situation and industry analyses and provided strategic alternatives that are consistent with T-Mobile mission, goals and objectives. Despite the challenges that T-Mobile is currently facing, it is clear and beyond reasonable doubt that T-Mobile will still be operational for quite long time because it is well prepared in the financial reserves.
Key words: T-Mobile, Marketing Strategies, Michael Porte's Five Forces
Introduction
T-Mobile Company is located in the United States of America. The head offices are based in Bellevue, Washington. It finds its rank as the third largest in the industry of wireless communications.it has a high number of customers approximately seventy-four million. That data is as per the first quarter of 2018. The following services are offered by t mobile in various places within the United States of America: Wireless and voice and voice data under the brand of T Mobile and Metro PCS, host network for many operators of virtual network (T-Mobile USA, 2002 Press Release).
The company has total revenues in every year valued at more than 4o billion us dollars.
The consumer reports evaluation of the wireless companies of 2015 indicated that T-Mobile was the leading wireless carrier in America. In addition, by 2017, it still maintained its ranks as the best in satisfying the needs of the consumers (T-Mobile USA, 2002 Press Release).
This report is a depiction of the analysis of the situation at t mobile. It further discusses the problems that may be observed in the operations of the mobile services company. This is important regardless of the many successes that have been observed in the firm since its inception. In the economic scope, the company was doing well. But due to the proposed merger with the A & T, various issues arose. These are explored in detail in this report.
In terms of competition mobile is trying to leverage with the market needs. This is evident in the variety of services that it offers. When we scrutinize what the competitors are offering, T -Mobile remains the best because it caters for almost all the consumer demands in the wireless communication industry.
Organizationally, T-Mobile is well structured and this conforms to the contemporary demands and requirements of an advanced telecommunications industry. This has ensured that the revenues remain intact and flat. The marketing department confirms that T-Mobile needs to keep on strengthening the brand awareness among the consumers in the United States (T-Mobile USA, 2002 Press Release). This is however expected to cover many parts of the North America, China and the commonwealth nations at large.
T-Mobile (NASDAQ:TMUS) has always been considered the underdog when compared to Verizon (NYSE:VZ) and AT&T (NYSET). While experiencing industry-leading growth, TMobile has millions fewer customers than the competition. Utilizing an aggressive marketing strategy, T-Mobile has managed to attract more customers at a faster pace than any of its competitors. By periodically offering customers more value through what it calls "Un-Carrier moves", they are driven solely by the voice of the customer: the ongoing frustrati ons and complaints of customers of the mobile technology industry. Being a great listener of the customer, and not their bottom line, they have been able to do "uncarrier" like actions such as unbundling smartphone devices from service plans, removing music and video streaming from data caps, switching to a single unlimited data plan, and including taxes and fees in its pricing and provide family plans with no credit checks.
T-Mobile, with nothing to lose from being aggressive, has put more of a burden on its larger competitors to match T-Mobile's pricing structure or risk losing their customer base. Verizon and AT&T have already seen service revenue fall as they lose more of their market share to T-Mobile every year for the last five years. However, these companies are making moves of their own through mergers and service offerings to turn this around. And now, T-Mobile is willing to be even more aggressive when it comes to pricing if it means because their ultimate goal is to build and maintain scale. Their competitors do not have to do this, they have the scale.
AT&T and Verizon, meanwhile, are forced to play catch-up with the moves T-Mobile makes. TMobile's aggressive pricing has put pricing pressure on its larger competitors, which have seen service revenue fall considerably since T-Mobile started this strategy about five years ago.
By adding an additional target market by acquiring MetroPCS and providing diversification to their services, T-Mobile has been able to maintain its revenue per user goal. They are also not afraid to delve into new markets and consider new merger opportunities to increase scale, even after being denied a previous opportunity in 2011 to join with AT&T. T-Mobile has shown the industry that they have nothing to lose from offering the lowest pricing, and to saying "yes" to everything the competition says "no" to. Besides being on the cusp of a Sprint merger, T -Mobile also just acquired Layer3TV to change the web TV industry and welcome a whole new set of competitors that include Netflix, a competitor that they have a partnership with), Hulu, and Amazon Prime.
Being the "uncarrier" comes with tremendous responsibility. T-Mobile needs to be able to maintain their share of the market, while continue to add customers, still continue to be innovative or not lose sight of the big picture, which is increasing their scale. This will require T-Mobile to always stay a step ahead of the competition, while still maintaining the mindset of the underdog.
Situation Analysis
Environment
Economic Conditions and Trends: The economic environment can be depicted by the small ranges on the services that are provided through the mobile services firms in the United States. Therefore, the wireless carriers are trying all the means to make sure that they charge small margins in the prices of the handsets. In addition, they offer subsidy in the handsets. But this is surely making them incur extra costs as the consumers are demanding high quality gadgets from the carriers (T-Mobile USA, 2002 Press Release). The telecommunication industry also entails expenses on the purchase of the spectrum. This is what enables them to broadcast information from one handset to another. Because of the price wars that are existing in the industry, the firms are feeling the pain of subsidizing the handsets, and this is inevitable. The economic situation in T-Mobile is not bad. The company has realized tremendous growth in the financial performance over the years. Up to the first quarter of 2018, it had recorded a successful translation of the consumer growth into the industry based revenue growth. This this makes the company to be strong on the basis of profitability margins.
In the year 2017, the month of December, T-Mobile's Board of directors encouraged the program which enables the purchase of the stock for amounts not exceeding 1.5 billion us dollars. This was branded the 'stock repurchase program.' This was a favorable approach to capture the market because it did not compel anyone willing to buy products from T-Mobile to be limited in the amount of purchases. The Board later proposed for an increase in the stock purchase to up to nine billion us dollars by April 2018.It is anticipated that the net additions from the consumers for the postpaid purchases of 2.6 and 3.3 billion US dollars in this year 2018. This is a considerable increment from the previously desired range of two and three billion US dollars (T-Mobile USA, 2002 Press Release).
Globally, mobile technologies and services generated 4.5% of GDP in 2017 and by 2022, this contribution is estimated to be 5% amounting to approximately $4.6 trillion of economic value added (www.gsmaintelligence.com). Mobile technology is increasing its impact by improving productivity and efficiency, it is used for disaster preparedness and response and addressing the challenges of access, cost and quality of service in key industries. The economy is experiencing substantial growth in the adoption of mobile-based tools and solutions. This will create the opportunity for systems, processes and interactions across several industries becoming digitized. Additionally, the future of the wireless market is going to be dominated by 5G networks and technologies. 5G is said to improve connectivity, increase data and improve reliability which will pave the way for advanced technological innovations. T-Mobile and Nokia Corporation have just successfully completed the nation's first bi-directional 5G data transmission test, on a new G Radio system while abiding by the 3GPP standards. This will help T-Mobile in expanding their customer coverage from 322 million people, (T-Mobile US, 2018).
Despite competition reaching unprecedented levels, T-Mobile USA, Inc. has been producing industry leading performance. In the first quarter of 2018, T -Mobile, recently reported an industryleading customer growth of 1.4 million of total customer net additions with a very low postpaid phone churn of 1.07% in the first quarter of 2018. In the quarter of 2018, T -Mobile reported strong financial performance, services revenues increased by 6.5% to $7.8 million, total revenues increased by 8.8% to 10.5 million, a net income of $671 million, an Adjusted EBITDA of $3.08 billion with a diluted EPS of $0.78, (T-Mobile US, 2018). T-Mobile's CEO, John Legere credits the acceleration of the T-Mobile performance to becoming a public company, the merge with MetroPCS five years ago and implementing customer-oriented strategy of removing two-year service contracts, punitive data overages and implementing unlimited rate plans and the compelling offers of T-Mobile ONE and Netflix on Us. T-Mobile's advancement in network technology and deployment of spectrum resources will aid in momentum the breadth and depth of its network as the industry moves towards 5G.
We are in a thumb and mobile culture where telecommunication determines how and where you do everything, it is a way of life, how we live, work, play, socialize, entertain, serve, study, teach, rest, heal, and protect. Telecommunications serves as a vital role in shaping our society and culture, as well as in shaping business and economics. In 2017, over 5 billion people are connected to mobile services, the global mobile industry will reach further milestones over the next eight years. By 2025, mobile subscribers will surpass 5.9 billion to 71% of the world's population (T -Mobile US, 2018). Growth will be driven by developing countries, particularly India, China, Pakistan, Indonesia and Bangladesh, as well as Sub-Saharan Africa and Latin America. Mobile internet adoption will increasingly become the key metric by which to measure the reach and value created by the mobile industry, including its contribution to the UN's Sustainable Development Goals (SDGs). It also contributes to developments in the wider digital ecosystem, as mobile internet users are the addressable market for e-commerce, "fintech", the new technology and innovation that aims to compete with traditional methods in the delivery of financial services, and a range of digitally delivered services and content.
Political and Legal Issues: Currently, T-Mobile is not confronted with any political or legal issues that the public is aware of. However, the politics will always be a factor in how the company makes its decisions since it is regulated by a government agency, the Federal Communications Commission (FCC). The fact that they could be investigated and litigated by the Department of Justice is always a concern when as they implement their strategy. The regulated environments have facilitated the growth of the nation's mobile industry by generating the conditions that appeal to investors enabling widespread access to mobile services. However, to promote fair competition, market development and consumer welfare there should be modernized regulations and further policy developments in infrastructure, spectrum and economics. This will be monumental in realizing the full potential of the industry and economy as the mobile industry moves in the 5G era.
Cultural and Social Values and Trends: T-Mobile has promoted the ethical practices in the industry. It was recognized by Ethisphere Institute as the leading company in the advancement of ethics and morals. The community in which the company is located values the practice of ethical standards in the provision of telecommunication services. Therefore, this society has been assured of this expectation through the assessment carried out by the Ethisphere institute of ethics, which has seen T-Mobile lead for five times in a row. The institute offers a reliable method of quantifying the ethics framework quotient framework. T-Mobile complies with the ethics, corporate citizenship and responsibility and a culture of ethics. In addition, it promotes governance and reputation in the world. T-Mobile has deployed also the Un-carrier revolution. This has upheld the wireless communication to higher heights. This promotes the listening and hearing of the needs of the consumers and therefore offering the desired solutions. Indeed, much has not been reported about the company in terms of failure to listen and act to satisfy the customers. This trend has even made the competitors to uphold the interest of the customers because they are the crucial stake holders in their business. Briefly, all the social values have been promoted by the Un-carrier that was adopted by T-Mobile Company. Moreover, the company invented the sidekick this is a type of mobile phone that enables people to execute various tasks at the same time. For instance, this has favored a specific group in the society namely the youths. It provided unlimited access to the internet. The better part of it is that the competitors have not mimicked this product and therefore T-Mobile is the only supplier.
Environmental Opportunities and Threats: As the telecommunication industry continues to evolve, T-Mobile can leverage its growth through the following initiatives:
(1) Extension and integration into other industries. Home networking is a major arena that will create new markets for T-Mobile. T-Mobile One and Netflix with US collaboration has been successful. T-Mobile should aim to expand its product, content and features that would provide unprecedented opportunities for the "uncarrier".
(2) Development of new subscribers. The Internet of Things welcomes a new era of opportunities for T-Mobile. It is predicted by 2020, the ratio between human type communications and machine type communications will grow to 30 (Labbi, 2018).
(3) Development of new services. Further development of mobile broadband will open an ecological environment facilitating terminal, network and service. Mobile broadband is predicted to play a vital role in industry development\
(4) Exploring a new business model. Cloud computing is changing the traditional approach of business, software, hardware and media. Consumers are now buying services instead of products.
Consequently, there will be some disruptions that will affect T-Mobile and other mobile carriers as the market develops:
Security: Mobile carriers will be expected to be the guardian of the network fighting threats as they emerge. The "uncarrier" will be expected to continuously come up with technical and operational controls to ensure network security.
Mobility: As market penetration continues, the older population will be forced into adapting to the use of new technology which will consume more bandwidth. Fixed line connectivity will become obsolete.
IoT: This major trend will add billions of new connected data which will lead to an enormous growth in data volumes, growing from exabytes to zettabytes per year.
Integration with content service providers. If this continues then it is more than likely that one or more of the major telecommunication companies will be acquired by content companies.
Industry
T-Mobile is in the wireless telecommunications industry. This industry consists of companies that provide wireless communication services. T-Mobile is currently ranked the third largest wireless provider. They provide wireless voice and data services to the United States, Puerto Rico, and the U.S. Virgin Islands under the T-Mobile and Metro PCS brand which was acquired in 2013. TMobile also has a small hand in television through their recent acquisition of Layer3 TV (Levy, 2018).
Analysis of Existing Competitors: Although there are many companies in the wireless telecommunications industry, there are four major US wireless carriers. These carriers are Verizon, AT&T, T-Mobile, and Sprint. With the recent announcements of T-Mobile's acquisition of Sprint there are truly only two main competitors. T-Mobile is currently ranked third behind AT&T, and Verizon with 72.6 million customers. Outside of AT&T and Verizon, T-Mobile considers Comcast, Google (project Fi), and Charter as competitors. Comcast recently launched Xfinity Mobile which is only for its internet and video service customers. Project Fi is a prepaid carrier that is operated by Google. The unique thing about Project Fi is that it operates off of T-Mobile, Sprint, and US Cellular services. Because of this fact, investors question how much of a threat this new carrier really is to T-Mobile. Charter, currently does not have a cell phone service but plan to follow in the footsteps of Comcast and launch one of their own later this year. Other lower level competitors in the industry include the mobile virtual network operators such as Cricket, Boost Mobile, Straight Talk, and Virgin Mobile (Petrov, 2018).
The rivalry in competition in the United States is very high. This is observed in both the prepaid and the postpaid portions of the wireless industry. The market participants are trying to outdo each other in order to win the loyalty of the buyers. Most people do not want to be overwhelmed with monthly bills on the use of mere use of the handsets by simply sending messages and making voice calls. In the prepaid scope, many companies are available. T-Mobile forms part of the competing forces (Beard, George, Lawrence, & Michael 2012). The strength of this company is that it is most known by many people that it offers the best straight up prepaid services. However, this service had been neglected by most people in the United States because some could not be able to foot the bills or they just had the poor credit scores that barred them from the grant of such services. Some of the claims that the credit can expire also contributed to the negative view or attitude of the resident of the United States towards the T-Mobile company. In the postpaid segment however, the anticipated competition is the value-added services in addition to the competition on the value of the value of the services offered to the customers. Moreover, it is critical to say that postpaid is the best deal. This outshines the prepaid service (Beard, George, Lawrence, & Michael 2012).
Threat Posed by New Entrants: The threat of new entrants into this industry is weak. New entrants will have difficulty coming into this industry and competing with T-Mobile because of the high cost of entry. Companies such as Comcast and Google had a better chance to enter and compete because they have the capital needed to establish competitive telecommunication infrastructures. After entering the industry, they will also face the struggle of getting customers to switch over from T-Mobile because of brand loyalty. In reality, the entry of the new players in the market of wireless services delivery is a tedious process. It requires the approval from FCC and many other processes needed to establish itself and offer the services comfortably. Moreover, they need to set up the huge buildings, high amount of capital and also deployment of equipment in order to be establish a good network for the resell of the services.
Threat Posed by Substitute Products: The threat posed by substitute products is low to medium. For T-Mobile, substitutes include other mobile competitors, land lines, and Wi-Fi compatible communication services such as Skype and WhatsApp. The reason this threat is low to medium is because of the moderate availability of substitutes, and the cost of switching over. In the wireless telecommunication industry, there is usually a significant correlation between quality level of services and price. A substitute for a cheaper mobile service will probably not have the same quality of performance as T-Mobile which could keep customers from switching.
Analysis of Suppliers: Suppliers post a moderate threat to telecommunication companies with their bargaining power. Because of the moderate population of suppliers and overall supply, they can exert a considerable amount of influence on the environment and companies in the industry. With this influence, T-Mobile and other companies in the industry must account for the suppliers bargaining power when coming up with their supply chain management strategy. For example, T - Mobile was the last major carrier in the US to get the iPhone on its network. T-Mobile had been losing customers to their competitors for years because they were not able to provide a 3G network that was compatible with the iPhone (Reardon, 2013).
Analysis of Buyers: Consumers have a moderate to high effect on the wireless telecommunications industry. They have accessibility to so much information regarding T-Mobile and their competitors, which allows them to compare and evaluate services. The consumer's importance of price also plays a pivotal factor in their bargaining power because of the price sensitivity. Consumers that are fixated on saving money and paying lower prices have more options to choose from because they are willing to use brands with lesser quality such as Virgin Mobile or Cricket to save money. On the other hand, consumers that care less about the price and evaluate on the quality of the services have less bargaining power. Brand loyalty and switching cost also play a role in the moderate effect consumers have in the industry.
Summary of Industry Opportunities and Threats: T-Mobile's size, financial stability, and rate of growth puts it in a great position for continued success and opportunity. With recent announcements of a merger with Sprint, T-Mobile will be able to capitalize on the limited competition. There also remains opportunity for T-Mobile to grow through technological advances such as increased 5G speed, and continuing their focus of providing a cell phone service that caters to the customer's desire. With the acquisition of Layer3 TV, there is also opportunity for T-Mobile to grow through diversification. Threats that remain constant for T-Mobile are the continued power and success of AT&T and Verizon. Despite T-Mobile's growth, they remain the third largest cell phone provider service. Lack of diversification and new entrants from successful companies such as Comcast and Google also pose a threat.
Implication of Strategy Development: The key for T-Mobile is to continue their approach of providing a service that caters to the desire of the customer. Through their lower prices, customer loyalty rewards, and continued growth from acquisition, T-Mobile will continue to have success in the future. To take the next step, T-Mobile will need to put more of a focus on innovation and diversification. AT&T and Verizon both provide a substantial amount of more services than TMobile which gives them an advantage through brand recognition and loyalty.
Organization
Objectives and Constraints: The objectives of T-Mobile are to be a disruptor in the telecommunications market. By listening to the customers in this industry and fixing their pain points, they seek to be the "uncarrier", a title they gave to themselves in 2013 which simply means 100% Customer Commitment. In order to be the uncarrier, T-Mobile's objective is tochange the game of the wireless industry, and look different than the industry leaders by giving customers a product that is based on their desires and not the desires of the company's bottom -line. Some of the ways that T-Mobile has accomplished this is by not locking customers into contracts, no data limits by providing unlimited talk, providing one bill with no hidden fees and including Netflix at no additional charge (Our Story, 2018).
T-Mobile has looked at the areas that frustrate customers but technology constraints prevent them from being able to address each one of these pain points with integrity. Government regulations and technological capacity that identify as constraints to other companies in this sphere area also a constraint for T-Mobile, yet there are times when they think that the constraint will not apply to them. For example, T-Mobile identified a common inconvenience that mobile customers have with their carriers around unlimited data. In other words, mobile users do not like to be capped on their data usage, and consider that to be a huge pain. So T-Mobile responded by promising their customers and potential customers that they would be able to use as much data as they needed at high speeds. However, the speeds for data users were being slowed down when they reached certain levels. As a result of a Federal Communications Commission (FCC) investigation after these claims were reported, T-Mobile settled with the FCC for $48M over claims that they misled their customers regarding unlimited data and thus, were forced to provide more transparency to their customers about the speed constraints and other key restrictions that they would experience with unlimited data (Lerman, 2017). Government constraints also stand in T-Mobile's way of being the carrier they hope to be one day. The Department of Justice blocked the carrier from joining with AT&T in 2011 because they would create too much of a monopoly.
Fiscal Condition
Overall, T-Mobile is a fiscally solid company. The fact that they are able to perform so well even while considering their place among their competition, third of four, speaks to how strong the industry is and T-Mobile's ability to hold on to their current customers and woo new ones through their service options. In 2017, T-Mobile was able to surpass $40B in total revenues and $30B in service revenues, while having 5.7M net customer additions. This has much to do with the 2800 new stores that opened during 2017 - of these new stores, 1500 were T-Mobile stores and 1300 were net new MetroPCS stores (News, 2018).
Management Philosophy: As described earlier, T-Mobile seeks to be the "uncarrier". Management seeks to be the leader in customer care and satisfaction because their number one goal is to create a service that will woo customers away from the competition to become lifelong T-Mobile customers. This goal has been sought in ways that have proved to be unethical for TMobile by making them a company that will make any claim in order to get customers to come their way. However, their innovation and diligence in seeking the customer's voice is a great model and has kept them afloat and able to rise about their fourth place competitor Sprint.
Organizational Structure and Culture: T-Mobile has been a subsidiary of the German holding company, Deutsche Telekom and T-Mobile International AG. T-Mobile was formed in 1994 as VoiceStream Wireless PCS, which was spun off from Western Wireless in 1999 and acquired by Deutsce Telekom AG in 2001, renamed T-Mobile USA, Inc. in 2002. In 2013, T-Mobile US, Inc. was formed through the business combination of T-Mobile USA and MetroPCS Communications, Inc. (MetroPCS). T-Mobile was considered the acquirer in this transaction.
Based in Bellevue, WA, T-Mobile has maintained its own corporate governance and is run by a board of directors and its executive team, which is made up of a chief executive officer, a chief operations officer, and a chief financial officer. Speaking of their board of directors, there is one person of color on the board of directors, none represented on the executive leadership team, but three female members out of 17 total senior executives. T-Mobile has a largely hierarchal organization chart (Bruscke, 2017). The CEO, John Legere, ditched the suit and tie to become the brand of T-Mobile whose company color is hot pink. Legere grew his hair to shoulder length to personify the exact opposite of the stuffy AT&T executive. Legere's aggressive and brusque nature have made him a ruthless mascot to represent the company's risk-taking image.
Summary of Firm's Strengths and Weaknesses
T-Mobile's strengths are as follows:
*Fastest growing carrier
*Fastest nationwide 4G LTE upload and download speeds in the United States for 16 consecutive quarters
*Recent acquisition of Layer3TV
*Award-winning customer call centers
*Acquired MetroPCS: added an additional market segment
*46,000 retail and operations employees
*2200 stores added since 2015
*72.6M customers in the postpaid, prepaid and wholesale markets
*#3 behind AT&T and Verizon
T-Mobile's weaknesses are as follows:
*#3 behind AT&T and Verizon
*Lack of diversity in senior executive board and Board of Directors
*Lack of transparency
*Unfavorable outcomes of past and existing litigation
*Learning how to effectively manage network quality
*Credibility
Source: 2017 T-Mobile US Annual Report
Marketing Strategy
Objective and Constraints: In the past six years, T-Mobile has created a culture that has allowed it to become the fastest growing cell phone carrier in the United States. Their marketing strategy has been consistent and focused around catering to the customers' needs with their Un-carrier Movement (Feloni, 2016). T-Mobile set out to "change wireless for good" and did so by revolutionizing the industry. From forcing the industry to get rid of 2 year service contracts, to developing the fastest 4G LTE, T-Mobile has focused their marketing strategy on innovation that benefits the customer. They plan to continue their customer focused innovation by building 5G network in 30 cities this year. By 2020, T-Mobile plans to have 5G covered nationwide. This strategy will be possible because of the merger with Sprint which will allow the new T-Mobile to be the only wireless provider capable of true nationwide 5G (Winkleman, 2018). T-Mobile's merger with Sprint will put them at over 126 million customers, which is closely behind the market leaders Verizon and AT&T. Some challenges and constraints T-Mobile has faced are its lack of free cash flow. Because of T-Mobile's aggressive strategy for customer satisfaction through their Un-Carrier Movement; their EBITDA had been well below AT&T and Verizon (Levy, 2017). TMobile's CFO, Braxton Carter was quoted saying "Our disadvantage all along has been scale, and to achieve the margins that are possible to be achieved in the U.S., we have to have that scale". Progress for this objective has been made with substantial growth in the past year, and will only improve with the merger with Sprint. T-Mobile is also drastically behind their main competitors in terms of enterprise customers; which is a segment they need to put more focus on.
Analysis of Sales, Profits and Market Share: T-Mobile has seen a steady growth in the last five years in terms of sales. They experience increases of up to 15% every year during that time, with an 8.31% increase from FY2016 to FY2017. Sales from FY17 were $40.6B (TMUS Company Financials, 2018).
T-Mobile currently enjoys 17% of the mobile industry's market, following behind the leader of pack, Verizon with 35% and AT&T at 33%. Once the merger is completed with Sprint, T-Mobile will be above the pack with 39% of the market (Rewers, 2018).
Analysis of Target Market: T-Mobile's target market consists of cell phone service consumers from multiple demographics, with an emphasis on family. They strive to provide high value and cheaper prices, which naturally attracts families. This is enhanced through plans such as T -Mobile Family One, which provides subscribers with a free Netflix subscription when they have two or more qualifying lines on their plan. Age Demographic for T-Mobile (Paonessa, 2017): 18-34 years old (28%); 35-54 years old (47%); and 55 and older ((25%). T-Mobile is continuously implementing new ways to appeal to each age demographic and gain more customers. Recently they have put a major emphasis on appealing to millennials through customer benefits such as TMobile Tuesdays, no hidden benefits, and free Netflix. T-Mobile recognizes the importance of millennials because their behavior might predict future trends and, their potential to purchase goods and services (Dano, 2018). If T-Mobile continues to build brand loyalty with millennials through their low prices and Un-Carrier movement; they will have continued success in the future. Other strategies used to appeal to different demographics includes T-Mobile One Military, which gives discounts to people in the military and their families. As well as their fifty-five and over deal which gives customers over the age of fifty-five a discount when they pay for two lines through auto pay. The segment where T-Mobile has a huge opportunity for growth is the enterprise market. They currently only have a 3% share of the market (Dano, 2018).
Analysis of Marketing Mix Variables.
Product: T-Mobile offer a wide range of services for customers' convenience and optimal satisfaction and to gain a competitive advantage in the marketplace. These services are categorized into service plans which cater to consumers according to their needs and preferences (www.phonedog.com). The service plans offered to the general consumer are T-Mobile One, TMobile Unlimited, T-Mobile One Plus, T-Mobile One Plus International, T-Mobile Family Plans, T-Mobile Jump. T-Mobile also caters to businesses with over 13 lines under the T-Mobile for Business plan. T-Mobile also offers in home coverage with four different solutions that will improve residential coverage (T-Mobile US, 2018). Additionally, T-Mobile offers all handsets with Wi-Fi-built in to facilitate mobility. Each plan comes with 3G tethering for your tablet and one hour of inflight Wi-fi with GOGO (T-Mobile US, 2018). The Uncarrier also collaborated with Netflix to offer free streaming of movies to its customers. T-Mobile does its market research and listens to its customers by providing services to satisfy their wants and needs, while gaining a competitive advantage, (T-Mobile US, 2018).
Price: The pricing strategy of T-Mobile accommodates all consumers by giving them the opportunity to choose how they pay. T-Mobile offers the Prepaid Plan where consumers can top up as they please or not. The Uncarrier categorized it services in over 7 plans, as mentioned above, to allow consumers to choose the service they want and to pay only for what they use. T-Mobile avoids surprises or confusion on monthly bills using flat rates with taxes and fees included. TMobile continues to add many benefits or perks to consumers service plans including unlimited texting and data in over 140 countries and destinations and recently free Netflix (T-Mobile US, 2018).
Place: T-Mobile's coverage is widely distributed nationally, internationally and with the deployment of 600 MHz with spectrum, T-Mobile will be able provide better coverage to more cities nationwide. T-Mobile customers have access to its products through retailers, online and over the phone. If customers have technical problems, they have the option to make a call to the customer care center, do an online case submission or a visit to one of the T-Mobile stores.
Promotion. The T-Mobile brand is optimally positioned in the marketplace. T-Mobile advertises heavily and offers several discounts and benefits to appeal to new and existing customers. TMobile also offers special discounts to military and veterans. T-Mobile implemented a program rewards program for its customers and participants receive a T-Mobile Advantage card which can be used in stores towards device or accessory purchases or it can be applied to their bills. T-Mobile uses social media, billboards, promotion events and internet ads to advertise their services and products. T-Mobile's promotion strategies prove to be very effective as can be seen from the recent net additions of customers and industry leading performance, (T-Mobile, 2018).
Summary of Marketing Strategy's Strengths and Weaknesses: The strengths and weaknesses of the marketing strategy are as follows: Strengths: customer-focused marketing strategy; appeal to various demographics; Ability to maintain momentum; First to innovate, even when last place. Weaknesses: Lack of free cash flow; Scale; Lack of presence in the enterprise market
Implications for Strategy Development: T-Mobile continues to grow in depth and breadth as it continuously designs and develop new services to satisfy the telecommunication and entertainment wants and desires of its customers. T-Mobile is one of the largest reputable brands in the telecommunication industry (www.portablesunlimited.com). T-Mobile has been the first Uncarrier for several new network innovations including VoLTE, HD Voice, worldwide Wi-Fi-Calling, Enhanced Voice Services, 4G LTE Cell Spots and Rich Communication Services, (T-Mobile, 2018). The implementation of 5G and the deployment of the spectrum resources will assist TMobile in further market penetration and saturation in the industry. However, competition, government regulation, reduction in traditional revenues and network security will continue to be a concern for T-Mobile in the future as the industry continues to evolve to the 5G era. T-Mobile will need to invest more in other industries such as content industry, cloud computing as well as creating new opportunities to foster continuous growth and development of its brand. The investment of a new market research in network security will create new opportunities for TMobile as the industry prepares for the 5G network.
Problems Found in Situational Analysis
The late entry in the third-generation connectivity platform, has placed T-Mobile in worse position compared to the competitors who have a large customer base.The other problem is the smaller market share due to disadvantages arising due to the stiff competition that T-Mobile is facing in the world of wireless communications. It has a few carriers for the network nationally compared to other companies like OpenNet. Building the scale that T-Mobile lacks while continuing to grow their customer base is a challenge. Gaining the majority of the market share of the wireless telecommunications industry is the priority to becoming the leader in this market.
Strategic Alternatives for Problem Solving
Alternative 1: Slow and steady
Regardless of the marketing and the competition that is associated with 3G connection, many buyers do not have an essence for the services that 3G offers. In many scenarios, people are reluctant to upgrade the hardware components of the devices most often. Therefore, many people take long time periods to have compatible devices that are concurrent with the technology. The strategy entails T-Mobile pressing on for the marketing strategies slowly and highlight he technological aspects that are proven. This will offer significant and substantial support to the consumers of T-Mobile products and services. Benefits of alternative 1: It will work within the scope of the current capabilities of T-Mobile. Therefore, it offers a lot of convenience to the company. It does not stretch any finances in the company. But in comparison with the competitors, to achieve this it will costly. Disadvantages of the alternative 1: It offers no chances of development for the company. In addition, it does not guarantee that the customers will stay within their market scope, in case they fail to adopt the new technology in broadband connection.
Alternative 2: Mergers and Acquisitions
To grow the market share, T-Mobile will consider many acquisitions. It will there join with Alltel or simply buy the company. This is ranked position five in terms of size in the United States of America. Benefits of alternative 2: In practice, they are many advantages that will accrue to TMobile if they acquire Alltel. To begin with, the large customer base of Alltel will be captured easily. As noted earlier, the customers in the wireless industry do not fluctuate. It just a matter of taking over the existing market share in case on company is disbanded, on which depended for services (Joseph & Carl 2001). In addition, T-Mobile will develop he GSM capacity in the places within the united states that lack this type of connectivity. This is practical because it is observed that Alltel has already established AMPS and CDMA connection capability. They have already implemented Verizon, Sprint and also Cingular among their customers. Moreover, Alltel deals in airtime across all its connections spectrums. Costs and disadvantages of alternative 2: The extent of uncertainties accompanied here is not accounted for. Due to the authority and regulation on the nature of spectrum allocated, it seems impossible to accommodate all the customers of Alltel. This is a real problem because being ranked fourth and five respectively for T-Mobile and Alltel is not a guarantee that they will overcrowd. Instead some of them will opt for the other wireless companies in the market (Joseph & Carl 2001).
Alternative 3: Expansion of the Scope of Wi-Fi.
Most persons in the United States rely on the cellular connection offered by T-Mobile. But not all of them focus on the Wi-Fi aspect that brings about the Wi-Fi hotspots. The T-Mobile company is focusing on the expansion of the Wi-Fi connections throughout the municipality. This suits the demand in the cities whereby they are opting for the wireless fidelity connectivity in their operations. T-Mobile can deploy this fully since it has the requisite expertise and experience. Benefits of alternative 3: T-Mobile is already established with the wireless hotspots. However, the main concern is that they have not been looked into by many people. They will reap many revenues from the municipalities due the sale of their services to those businesses in the towns and districts. In addition, because of the UMA initiative, T-Mobile will be getting an access to the infrastructure in the industry which is free of charge but still increase the area covered and in the end betterment of the services offered to the customers will be realize. Demerits of alternative 3 and its associated costs: It will face stiff competition from the other companies that have already taken roots in the industry. Therefore, a lot of expenses will be incurred in order to promote their products. This is unbearable to some extent but it will require the willingness to take the risks and move on to advertise the commodities offered by the company. In addition to that demerit, even if it strives to provide the municipality with the products especially Wi-Fi, it is not obvious that they will accommodate UMA in it.
Alternative 4: Combination of both Mergers and Segment Expansion
It would be wise for t mobile to choose the expansion of the services offers. This incorporates both alternative two and three. Benefits of alternative 4: Increase buying power; Gain competitive advantage; Better pricing from suppliers; and Lower production costs. The company will reap in terms of public awareness because this choice involves a wide range of customer base both from Alltel and T-Mobile itself. The revenue for advertising will be earned also through this alternative. Demerits of alternative 4: The culture and the nature of the quality of services offered will be calamitous. This discourages some of the customers. The youth network will be affected because some of their demands will not be catered for in the course of expansion. This will lead to the loss of the youth share of the market. Costs for this alternative may be the most costly choice, using the Sprint merger as an example at $85B.
Alternative 5: Implement a Diversification Strategy through Innovation and Exploration.
The benefits of this alternative are: Minimized risk of loss - all of the eggs are not in one basket; helps to preserve capital while allowing you to exhibit some risky behavior; not reliant on one service for generating income. Costs for this alternative may not be as much as other alternatives, but will still be a sacrifice
Selection of Strategic Alternative Implementation
A suitable alternative that this company need to implement is the one concerning the acquisitions and the expansion of Wi-Fi. This will encompass the mergers and acquisition of the Alltel Company. In addition to this, it will include the increase in the areas that are covered by the WiFi network in addition to the existing cellular connectivity in those regions. Justification for the selection of the strategy: This strategy is justifying the quest to bring radical development in the operations of the T-Mobile Corporation. This is due to the following reasons: One of the competing forces will have left the market implying a reduced competition. Moreover, it presents more opportunities to increase the share in the market as there will be only three firms in the wireless connection industry. T-Mobile also plans to maintain their current businesses and to be somewhat innovative in this new business, which has a mobile technology foundation. This service will be targeted toward a new, more dynamic environment: attracting enterprise customers.
Summary and Conclusion
The customers of T-Mobile have enjoyed the fastest 4G LTE network for over two years and counting, (T-Mobile US, 2018). In recent year, T-Mobile added nearly 1 million square miles of LTE coverage which is destined to reach more of the population in America. T-Mobile's Extended Range LTE and Wideband LTE carries two times farther signals and increased data speeds and capacity over the top 10 markets nationwide, (T-Mobile US, 2018). T-Mobile designed the fastest, densest, and highest capacity network infrastructure in the industry. T-Mobile currently offers the most spectrum per customer and nearly 50% more data per customer than the industry average. TMobile is advancing faster than its competitors in the industry, T-Mobile US, 2018. For instance, T-Mobile partnered with Nokia Corporation just successfully completed Data Transmission Testing for 5G. As the industry prepares for the 5G network, T-Mobile needs to research and expand into new industries and to acquire more profitable business opportunities. One such opportunity exists in network security. As technology evolves, more demand for data protection and network security controls will be inevitable, customers will expect the guardians of the network to provide these controls. T-Mobile just reported industry leading performance and will continue to grow and advance as the Uncarrier continues to seek new viable innovations and developments to meet and exceed their customer's expectations while targeting new markets.
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