University of California
Type of paper: Thesis/Dissertation Chapter
Vodacom Marketing Research Paper
The purpose of this memorandum is to analyze and explain the current brand positioning and target market of South African company, Vodacom, from previous commercial advertisements. After having analyzed the current target market and brand position we would recommend a new target market and position for Vodacom of South African’s age range, 15-55 (58.7 % of total population) and include the following segments within the market: white and black South Africans, business adults and corporations, while still including the younger more technologically friendly age group 15-24 (38.1 % of total population).
A detailed analysis on regulatory, political, social, international, and economic factors has resulted in many details that can affect Vodacom. We offer solutions to these factors below.
South Africa, despite it being the most developed country in Africa, is still divided by a number of different laws and regulations put in place decades before. As a result, many races and cultures within this country are segregated from one another. We found this is where Vodacom will encounter problems because of the many different communities that all have different interest. Our advice to Vodacom would be to have an assortment of advertisements that individually targets different segregated communities in order to maximize profitability.
The political situation within South Africa today supports a presidential representative democratic republic, where the president is both head of the government and multi party system. South Africa is ranked 69th out of 176 countries on Transparency International’s Corruption Perceptions Index 20125. 53% of South African Investment professionals are concerned about political instability in the coming year. Especially with the death of their former president Nelson Mandela, a South African icon. Corruption may affect Vodacom in terms of efficiency, resource allocation, development, and management. The inefficient allocation of resources and management are continuously harming the company. For example, allocating resources to pay off officials to benefit the business can result in short term aid, but long run harm. Development can also be a challenge due to the reputation companies receive when known for corruption. It is more difficult to find key investors when bribes and payoffs are involved, which proves to be a high factor in South Africa. I believe Vodacom would benefit (in long run) to try and stop the high corruption rate within the company. Vodacom could implement an anti-corruption policy that addresses corruption at a macro and micro level. The anti corruption policy must also apply to each section of Vodacom’s value chain, corporate level to suppliers and buyers of the company. This anti corruption policy will ensure that corporation does not create any liability that may damage sales and the reputation of Vodacom. Weak legal institutions and poor governance heighten the risk of investing. The high risks associated with investing in South Africa prove to be a problem for Vodacom, making it much harder for the corporation to grow and attract investors. A key component in any marketing/business plan is the investors, making this one of Vodacom’s more pressing issues. A solution to this problem can be locating key investors with substantial funding to benefit Vodacom even in a society with poor government. Involving key investors in promotional campaigns that would be mutually beneficial could do this.
South Africans constitute about 48,601,098 million residents according to CIA world fact book of a July 2013 census. The multiple races that make up South Africa are limited, with 79 % of Black Africans, 9.6% whites, 8.9% colored, and 2.5% Indian/Asian ethnicity (2001 census). There is an assortment of languages spoken within the country but the top three languages include: IsiZulu with 23.82%, IsiXhosa with 17.64%, and Afrikaans with 13.35% popularity and English at 8.2%. South Africa’s most widely found religion is Protestant at 36.6%. The proportion of S. Africans living in rural areas has fallen by 10% since 1994. Today, 62% of the population lives in urban areas, with a 1.21% annual rate of change. The remaining population that lives in rural areas could pose as a threat to the range in consumers. 38% of the population could lack the proper necessities to use Vodacom. Furthermore, this market also includes the highest assortment of segregated groups. A solution to this problem is to analyze what resources are available in the rural areas and if they have the proper technology to obtain Vodacom. Vodacom could then depict the largest target market within this group and try to better position their brand to meet these consumer wants. Vodacom does not want to limit the range of potential clients due to where certain clients live. Furthermore, Vodacom could maximize profits if it made its product available to use all of South Africa, regardless or rural or urban setting. Post-Apartheid South Africa remains divided. Amongst these dividing factors is gender, geographical location, and most noticeably is race. If any one of these groups is not properly targeted, Vodacom risks losing a large percentage of potential consumers. In order to avoid having this problem, Vodacom needs to universally market its product to all targeted consumers effectively. Because South Africa has so many dividing lines, it is important that Vodacom leave out any group in order to maximize profits.
Over the past decade South Africa has reduced the number of tariffs. The result of reducing tariffs is more competition and reduced cost structure within the industry. Because Vodacom used the first mover advantage when entering the South African market, they can use the tariff changes as an advantage. If Vodacom can continue to make their product cheap and readily accessible the tariff reduction could just help the company maximize profits.
The CIA world database reports that South Africa is a middle-income, emerging market with an abundant supply of natural resources; well-developed financial, legal, communications, energy, and transport sectors and a stock exchange that is the 15th largest in the world. Even though the country possesses modern infrastructure that support a relatively efficient distribution of goods to major urban centers throughout the region, some components retard growth. GDP fell nearly 2% in 2009 but has recovered since then and is growing at a rate of 2.5%. Unemployment, poverty, and inequality remain a challenge, with official unemployment at nearly 25% of the work force. South Africa’s economic policy has focused on controlling inflation, however, the country has had significant budget deficits that restrict its ability to deal with pressing economic problems. As the economy declines it decreases the amount of business for the company, which directly affects Vodacom. Now, in the age group of 15-25 is a 49% unemployment rate, so they are not necessarily the bulk of the target market. This can affect Vodacom’s future sales. If youth under 25 is unemployed how will they be able to purchase products from Vodacom? There must be a wide range of products available to meet the needs of every viable customer option.
Current Target Market
From analyzing Vodacom’s commercials and demographics the current target market is the developed market, specifically the white South African adult in higher income groups age range 30-54. The first two commercials represent a campaign that relates to the rugby fans, which is especially popular among people of Afrikaan descent. These two commercials focus on player 23 and a rivalry between Elton and Jan. Using the Rugby sports ties in groups that would have otherwise been divided the boundaries. The language in these two commercials is also a key factor in analyzing the current target market. The Afrikaan language was 13.5% of the population in a 2011 census, Zulu comprised 22.7% and Xhosa comprised 16%. The second commercial appeals the older Afrikaan audience due to the Afrikaans singing sensation Robbie Wessels. Another factor that contributes to the target market is the third commercial. This commercial is two of the six commercials that features black South Africans. This commercial specifically makes note of the lack of innovation present in South Africa “we been having it!”. The commercial is centered around the black South African official believing he is up to date with technology and communication, when in actuality he is one step behind Vodacom, the leading cellular network. Furthermore, they specifically chose one of the most famous Kenyan actors Charles Bukeko. Having a widely known celebrity in their commercial brings much positive attention to their company. The white South African adult age 30-55 is the current target market of Vodacom, which only counts for 8.9% of South Africa. In my opinion this target market is much too small, leaving a large number of potential consumers to be attracted by competing cellular companies.
Current Brand Positioning
Vodacom is known in South Africa as the leading cellular company. The company also hopes to increase the number of 3G base stations within South Africa as a way to reclaim their unhappy customers and provide a more efficient service around the country. Vodacom is the leading service providing innovative and accessible products. On a lighter note, the rugby player 23 represent two opposing views uniting and riding of all prior conflicts due to a country wide sport. These campaigns provide a sense of understanding the local population, and provide trust and admiration from the local population and in return instill these qualities in Vodacom. Vodacom’s brand awareness is increasing from these tactics of appealing to the ultimate rugby fan. This is one of the many ways Vodacom has united the country in which they operate.
Recommended Target Market and Brand Positioning
From a concentrated analysis of the current target market and brand positioning we recommend to alter both the target market and brand positioning. My recommendations will expand the target market in order to extend potential outreach and profitability. The current brand positioning offered essential Vodacom brand strengths, but we recommend more key factors for a more appropriate brand positioning. The new target market is South Africans ages 15-55. We also recommend three specific target segments within this target market. First, Vodacom should target white and black South Africans. Second, the company should also target business adults and companies, ages 25-55. Lastly, we recommend targeting the young adults, specifically technologically savvy youth, ages 15-24. The previous Target Market was focusing on a small percentage of South Africa. Vodacom should take full advantage of the diversity within South Africa, broadening their target market in order to maximize the full potential of the company and its profits. Targeting such a small percent of the population gives way for factors, such as high unemployment in the younger generation, to make an incremental difference in profitability and success. Furthermore, black Africans account for 79% of the total population, and even though a larger potion of this percentage represents the lower class, there is still an undeniable amount of market potential within this segment. Vodacom should branch out its current target market from the upper class, which is significantly Caucasians at around 10% of the population, to the different sectors found in the developed and developing ones as well. Specifically, in the developed sector we recommend Vodacom target institutions and corporations alike thus taking advantage of this untapped market by offering special “corporate” deals to those eligible. The developed market consists of high-end business adults that incorporate the innovative individuals that are involved in current societal trends. Lastly, the tech savvy youth can potentially be a large target market for Vodacom. The tech savvy youth from ages 15-24 comprises 20.6% of South Africa’s population. Although nearly 50% of this category is unemployed, the remaining 50% give opportunity for Vodacom to build a life-long customer/supplier relationship. This target market is innovative and ready for the latest technology to emerge. The current target market should be expanded to the developing, developed and youth tech savvy markets to reach full potential and profitability.
Brand Positioning is the second category that needs to branch out from Vodacom’s current positioning. The current branding position needs a little adjustment adding global brand as a main factor in brand positioning. Having a strong global brand creates a competitive advantage and most importantly a strong and positive brand image. Vodacom needs to focus on letting the customer know what and who they are: “South Africa’s leading cellular network, with innovative, affordable, and accessible products, tailored to the needs of any one South African consumer.” Next, Vodacom must deliver this message through the right channels, which will be the following: Sunday Times, Daily Suns, and Rapport. Another channel should be advertisements on buses that travel in Cape Town, the following should be used: Algoa bus company, Baz Bus, and Greyhound. A third channel that should be used is popular airports throughout South Africa: Voted top 3 in popularity I recommend Johannesburg/Tambo International Airport, Cape Town International Airport, and H F Verwoerd Airport. The above channels will simultaneously and effectively target the developed, developing, and technologically savvy youth. Another key factors needed to reshape Vodacom’s brand positioning is the way customers view their products affordability. We recommend that Vodacom make it easily known and accessible to the public that they offer a variety of product options with an array of prices that can be tailored to the needs and means of any one customer. We recommend Vodacom promote this to the public by incorporating the flexibility in prices in advertisements.
Product Vodacom must have top of the line and most technologically advanced, yet accessible products. This product must have features that provide opportunities to communicate. Such features include: long distance calling, chat opportunities, group texting, video calling, picture/video messaging, internet, and good 4G. Due to the 3 target segments (developed, developing, and technologically savvy), Vodacom must provide a line of products that meet the needs of each market. The line of cell phones must consist of basic operating for low cost and less technologically advanced consumers to innovative cell phones for the technologically savvy consumers. First, the basic phone product line, this line will be tailored to the Black South African. We recommend targeting this product for this segment because these consumers are not looking for a high-tech cell phone. Generally, this sector needs a basic, affordable, product that can satisfy day-to-day needs. The basic phone line will include the following phones: Samsung A107, Nokia 7020, and LG Revere. The intermediate package will be targeted to the developed sector in South Africa. This will include cell phones that are more technologically advanced, yet are predominantly standard products, such as: Samsung Odyssey and the Blackberry Curve 8530. Finally, the last category will target the technologically savvy youth. This product line will be the newest and best product available such as the Apple iPhone, Samsung Galaxy, and Android. The products must also provide service plans that accommodate each target market, which is range in prices. The service plans must assist the range of market. The service plans include the following: prepaid options; basic coverage and data usage; moderate coverage and data usage; unlimited coverage and data usage; and corporate level data usage. These coverage and data services plans are catered to the target markets and each segment.
Vodacom needs to be accessible and affordable to the target market. Due to the range in the target market, the product line must offer a range of price structures to accommodate each segment. I recommend Vodacom aggressively restructure their prices and the packages offered in order to gain full customer potential. The pricing will follow the range in products from basic being lowest cost, and most advanced product being higher costs. This range of product pricing attracts a wide range of customers from different demographics. The basic phone line products will range between 180.00 – 470.00 rands (19.00-48.00 US dollars). The moderate phone line will range between 480.00-760.00 rands (58.00-77.00 US dollars). The advanced phone line prices will range between 770.00-1800.00 rands (80.00-180 US dollars). By having multiple flexible price packages offered to the customer, Vodacom gains a sustainable competitive advantage.
Being South Africa’s largest cellular network the corporation has the resources needed to to focus on having accessibility for consumers. The product must be placed accessibly in each target markets region. First, the corporate office of Vodacom should be located in Cape Town and the warehouse within South Africa due to tariffs and taxes that can cause additional costs for Vodacom. For the developing nation the Vodacom dealers must be located near the communities centers the company developed to increase brand awareness. Strategically placing products near/at targeted customers work and social environment will inevitably increase consumer brand awareness. For example, I recommend the product stations to be located in highly populated urban areas including Cape Town and Johannesburg. Shopping centers and University Campuses in these two cities is another place Vodacom should have their products in order to reach the most consumers. These areas are often visited by the projected target consumer and offer a way for them to get to know the product before deciding to purchase it. Lastly, for the growing tech savvy age group, these interactive storerooms will be located near universities, primary and secondary schools. A few universities and schools Vodacom can place products are the following: University of Cape Town, University of Western Cape. Specifically, University of Cape Town is best known as student neighborhood as well as the presence of an international population. By strategically placing their product Vodacom should be able to increase their market size and potential.
Advertising is the key promotional method Vodacom will use to effectively reach the target market. First, because sports are highly idolized by South African citizens, I encourage that Vodacom continue to use major sports figures as brand representatives. Vodacom should start a promotional campaign that focuses on having South African celebrity spokespersons, such as: Siphiwe Tshabalala famous football player, Olympic bronze medalist, Llewellyn Herbet, Charlize Theron actress, and Candace Swanepol Victoria Secret Model. I would look into using Olympic and rugby athletes in future commercials, as well as the Victoria Secret model Candace. Doing this would continue to unify the country under common variables. This would further reinforce the brand image of “unity” that Vodacom has worked so hard to achieve. Second, I would like to see Vodacom focus on promoting their restricted flexible packaged price plan. Vodacom needs to gain customers that would otherwise go to different cell phone carriers by making it not only the best cell phone carrier, but an affordable one as well.
Advertisement #1 Caucasian female in backgroun and African descent male and female taking a on their iphone’s. This advertisement will target the younger segment ages 15-25 that are technologically savvy. Having a white and black person in the commercial will make sure that both races are targeted. This advertisement will be aired in Aafrikan and English
Advertisement #2 Any one of South Africa’s best rugby players– Stefan Bason, Kabamba Floors, Ryno Benjamin, Fabian Juries and Danwel Demas could play the part in this advertisement, in addition to Candace Swanepol. In this advertisement, I would like to see one of the players checking game scores on their smart phone, just before getting on a flight with their hot South African supermodel. Key to this advertisement is uniting all the target markets through a common South African celebrity. This advertisement will target the developed segment that is on-the-go and professional. language Aafrikan and English.
Advertisement #3 Set in a rural environment, a woman is walking with others on dirt road. The woman gets an urgent phone call resulting in saving her farm. I recommend Vodacom make this advertisement a priority, as it targets the largely untapped population in rural South Africa. The cell phone of choice is a flip phone, which signifies a less wealthy target market. The setting is important because the phone call could be made even in a remote area (good cell phone service). Finally, it shows the importance of having a cell phone through Vodacom, because without having received her phone call something bad could have happened to her farm.
We propose some changes in Vodacom’s target market. We would recommend expanding the current target market from ages 30-55 to 15-55. By doing so, Vodacom will be targeting an up-and-coming generation that is technologically advanced and furthermore has potential of growing. I would also recommend that they target not only the developed market, but the developing market in South Africa as well. This is a vastly untapped market that Vodacom would highly profit from by taking advantage of this opportunity. We also recommend that by re-positioning the brand, Vodacom can increase sales and profitability. In conclusion, the new marketing mix provides a more accurate product, price, place and promotion in order to gain a more competitive advantage and become more successful within the industry.