Orange Strategic Marketing Plan
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Based on the successful merger of Orange and T-Mobile, the company is one of the world's largest mobile operators and the second leading operator throughout Western Europe. The company has over 30M subscribers worldwide, with 10M on the more profitable and long-term post-paid plans and leads Europe with over 1.5M users subscribing to the GSM 3G speed class of performance (Orange Investor Relations, 2012). As of January, 2012 the company and its subsidiaries operate in 25 nations worldwide and has an aggregator market share of 40.4% and one of the highest consistent Average Revenue Per User (ARPU) levels of 31.6, netting an average minutes per user or subscriber of 190 minutes
(Orange Investor Relations, 2012). Despite these impressive statistics however, Orange is suffering for a very high level of customer churn in its core markets, is challenged with how to ramp up into the smart phone market globally (which could revolutionize their business if they succeed at it), and continual lean process improvements over time (Andlauer, Pouillot, 2011) (Orange Investor Relations, 2012). The continual consolidation of the European and global telecommunications provider industry as evidenced by rapid price declines (Benzoni, Deffains, Nguyen, Saleese, 2011) and the nationalization of telecommunications services by governments is increasing the intensity of competition (Clifton, Comin, Diaz-Fuentes, 2011). Amidst all of these challenges the potential of 3G networks and their high Average Revenue Per Unit (ARPU) levels offer considerable upside revenue potential for the company going forward (Orange Investor Relations, 2012).
As bundling of services has proven to be a highly effective strategy for minimizing churn, increasing ARPUs, and developing long-term customer lock-in, bundling text messaging, phone and broadband is a natural progression for Orange (Li, Jhang-Li, 2011). For Orange to compete effectively over the long-term, they need to consider how best to move into a bundled strategy rapidly that also sets the foundation from platform stability over the long-term. Creating a bundle of unlimited text messaging, local phone calls, intra- and internetwork calling and broadband gives Orange a very competitive strategy for stabilizing and growing ARPUs relative to competitors. For purposes of clarity in this analysis, these bundle of services will be referred to as the Value Bundle. It is critically important for Orange to make the Value Bundle successful and tie it back to their smartphone strategies to fuel future services growth.
For Orange to gain market share over the long-term, they need to embrace a platform-based strategy that includes smartphones and the high-margin services opportunities they represent. As the introductory bundle of unlimited text messaging, unlimited local and inter-network phone calls and broadband are designed to attract new customers, the smartphone strategy can be used for upselling them to more profitable services accessible on that platform. Orange must integrate their bundling and smartphone strategies for both to be successful and lead to long-term profitability by reducing churn and increasing ARPUs over the long-term. With the penetration rates of smartphones relatively low today yet the churn on the core services of the bundle relatively high, interlinking each will lead to significantly greater levels of revenue and predictability of profits.
With these strategic considerations in mind, the intent of this strategic marketing plan is to provide an audit of the company today, an assessment of their macroenvironment, market analysis, competitive overviews, market shares of competitors, profitability analysis and SWOT analysis of the Value Bundle and the long-term platform of the smartphone strategy for the company. The core strategy of the company will also be assessed. Marketing mix decisions and control points will also be provided as part of the analysis.
Marketing Audit
The intent of this Marketing Audit is to define where Orange is today, how they got there and where they are heading. An internal analysis of their marketing mix (the 4Ps) and an external analysis is provided. The primary focus of the external analysis is on Total Available Market (TAM) and its distribution by classification of subscriber.
Where Orange is Now
As of the close of calendar, 2011 the company has over 30M subscribers in total and over 10M on their highly profitable 3G service (Orange Investor Relations, 2012). Please see Figure 1 for a breakout of their subscriber trends by service.
Figure 1: Orange Subscriber Trends by Service
Source: (Orange Investor Relations, 2012) (Defraigne, de Streel, 2011)
Over the last nine financial quarters Orange...
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