Roshan Nepal

Nepal Telecom, Hattigaunda

ACCA , MBS

Market Leader(NTC) & Challenger Strategy analysis on

telecommunication services.
(Market leadership is not simple task. Other firms continually challenge the leaders strengths or try to take
advantages of its weaknesses. The leader firm might become weaker or old-fashioned against new entrants as
well as existing rival firms. Therefore, for maintaining market leader position it should evaluate what its
competitors strategies are and whats defensive strategies it could adopt.)

Successful companies study their competitors as closely as they do their customers. Analyzing
and evaluating competition helps management decide where to compete and how to position
against the competition in each market margin. The changing patterns of global competition
require continuous analysis of competing forces. Business and marketing strategies need to take
advantage of opportunities and to avoid threats. Market leaders and competitors cannot fulfill
their executive role unless customer needs and desires are understood and satisfied.

The marketing strategy is the most important part of telecommunications marketing plan, as it
shows the actual steps you intend to take. It should involve four elements: product, price, place
and promotions. For instance, if you sell bundled Internet, telephone and cable plans, a
description of this product is an important aspect of your product section. If you sell mobile
phones or mobile service for less than competitors, this is a fundamental aspect of your price
section. If you plan to open a store in a new development that promises high traffic and high-
quality customers, this is a matter of place. If you give away free mobile devices or offer a free
month of service to those who sign a year-long contract, this is something for the promotions
section.

Using liberalization policy and involving the private sector in a competitive environment for the
development and expansion of telecommunication sector in Nepal, the Government of Nepals
(cabinet) decision dated 2052/9/10 B.S. (December 25, 1995 A.D.) has initiated the involvement
of the private sector in the development of the telecommunication services.
TABLE I: MARKET LEADER, CHALLENGER AND NICHES

(Based on market share of telephone operators)

Companies % % Market %
(2011) (2016) Structure (2014)
NTC 51 48 Leader 44
NCELL 43 45 Challenger 49
UTL 4 2 Niche 2
Smart 1 4 Niche 4
Nepal 1 1 Niche This article only tries to provide some information and
1
Satellite
Total 100 100 100 guidelines for market Leader and Challenger. Some
examples of marketing strategies adopted by market challenger that change it into market leader during
2014 A.D in telecommunication industry are as follows:

1. Frontal attack. This is an attack at an enemy's strength. It utilizes and combines

instruments relating to marketing techniques, such as competing management
confrontations (the psychological), competing by heavy advertising, arranging of sales
promotion activities and the undercutting of prices.

2. Flank attack. An attack on a weak point of a competitor company when a chance can be
seen such as: (1) in the area of distribution, (2) in the area of prices, and (3) in the area of
products. The market challenger attacked on the weak point of products of the market
leader, by using brand strategy and advertising strategy. They segment market based on
demographic. Examples could be targeting youth segment by running many campaign
such as rock concert, street festivals where they distributed free SIM, special offer for
SLC pass-out students etc.

3. Encirclement attack:

Encirclement attack means, attacking the market leader or a competitor from all the fronts
simultaneously, it is the combination of both the frontal and the flank attack. Here, the
market challenger launches several offensive campaigns i.e. surrounds the competitor
with a varied brand and forcing the competitor to defend himself from all the sides
simultaneously. This strategy is adopted to enjoy the long-term market dominance.
Examples could be set such as Various data packages for night customers for low
income group ; bonus scheme for more recharge cards users groups etc.

4. By pass attack. The bypass attack is the indirect attack, wherein the market challenger
does not attack the leader directly, but broaden its market share by attacking the easier
markets. The challengers can bypass the leader by following any of the strategies viz.
 Expanding into the untapped markets, diversifying into the unrelated products,
modernizing the existing product with the invention of technology.

E.g. Pepsi adopted this strategy when it launched its mineral water brand Aquafina
very well before the Coca Colas mineral water brand.

5. Guerrilla Marketing-

This is an attack on competitors' markets by using a variety of strategies. Making small

but useful changes, which repeatedly puts your brand in the forefront, and slowly but
surely makes it a huge name in the market, is the crux of Guerrilla marketing. A small
brand, which wants to take on huge competitors, which first become famous in a local
market, then will introduce price discounts and trade discounts.

This strategy is called Ambient Advertising. So what happens is, many of us pass the
cable car station in Kurintar and since there aren't many significant visual appeals around
the highway that mostly contains green hills, highways and small towns, getting a
different visual stimulus strikes our minds and suddenly compels us to think about the
brand. Consider it as a kind of a visual bomb, which suddenly attacks our minds! One of
the best Guerrilla marketing of Kitkat can be seen here.

MARKET LEADER STRATEGIES: The strategies of the market leader are aimed at
maintaining market dominance and creating defensive techniques against future competitive
strikes. Defense strategies are employed by the market leader to avoid a reduction in their market
share.

Defense strategies to be employed are detailed below.

1. Position defense. It is one of the marketing warfare strategies wherein the brand or
company occupies the most desirable space in the minds of the customer and in no case
intends to divert from that position thus making the brand impregnable The Nepal
.

Telecommunications Authority (NTA) has approved Nepal Telecoms (NTs) application

to use its existing 1800MHz spectrum licences to offer 4G LTE services from 1 January
2017, which serves as better defence strategies against competitor for maintaining its
 brand. The market leader, forward thinking, planned in an extension of marketing to take
necessary corrective action immediately.

2. Flank defense. The market leader had to protect its market share from the in surge of
competitors, by getting rid of weak points completely. Such as check the attack of
competitors through product innovation, attractive public campaigns, road shows and
public relations .In general terms, its kind of preemptive defense strategy where
attacking an enemy before the enemy could attack you. Within the marketing realm, its a
defensive strategy wherein companies target the competition before they could become
the target. The market leader must cement the solidity of its marketing. A requirement is
the construction of a strong wall to prevent competition, and devising an aggressive
defense by attacking a competitor prior to being challenged. As for NTC network
upgrade and on demand data speed packages are to be optimized now through 4G
network before competitors can. Also others FTTH (Fiber-To The home) program need
to be focused more considering competitors price and offers.

3. Counter offensive defense. The market leader concentrated on satisfying its customer
base. Improvement of product quality, sales promotions and discounts were aimed at
preventing competitors intrusion. This is a strategy of identifying a weakness in an
attacker and aggressively going after that market niche so as to cause the competitor to
pull back its efforts to defend its own territory .When a leader is attacked, he may base
his counterattack in the attackers territory. The attacker has to deploy resources to this
territory for defence.

4. Mobile defense. The market leader has to be aware of market movement and change at
all times. It is sometimes needed to use an aggressive defense to protect a market share of
its own. This strategy involves the leader broadening and expanding its territories to new
market areas by diversifying. The leader takes innovation works in both these directions.
For instance, a five-star hotel can become a foreign exchange dealer, inbound and
outbound tour operator, flouriest and so on. Such diversification into related areas comes
under mobile defence strategies. NTC has usually using defence from long ago, through
extending its territories through introduction of ADSL, CDMA, Wi-max services, FTTH
services etc.

5. Contraction defense. The market leader may fear fighting in the pattern of
confrontation, because it may be defeated. The market leader will wait and seek data for
an analysis of a competitor's strategies meticulously and carefully. In the case of having a
chance, the market leader will attack promptly, by selecting to use an appropriate and a
highly efficient strategy. This strategy involves retrenching into areas of strength and is often
used in later stages of a product life cycle or when the firm has been under considerable attack.
 For example, HUL decided to concentrate on its core business areas, that is, soaps and
detergents, and has emerged as the clear leader in the toilet industry.

Defensive Marketing Strategy

First be clear on which product-markets you want to defend, which you want to grow and which
you will allow to be taken from you without a serious fight.

The growth-share matrix from the Boston Consulting Group may help as it looks across the
market growth rates and your market share to create four categories:

Stars growing market, high share

Cash cows stable or shrinking market, high share

Dogs stable or shrinking market, low market share

Question marks/Problem Child growing market, low market share

Stars (high share and high growth)

Star products all have rapid growth and dominant market share. This means that star products
can be seen as market leading products. These products will need a lot of investment to retain
their position, to support further growth as well as to maintain its lead over competing products.
This being said, star products will also be generating a lot of income due to the strength they
have in the market. Star product can become Cash Cows as the market growth starts to decline if
they keep their high market share. In case of NTC PSTN landline used to be Star as it have high
market share and growth related. But as mobile phones grows into market, Landline products has
change its product to cash cows as most of the talks are based now through mobiles. As, on today
market Mobile phones , Internet services seems to be stars so more focus is usually through
defending these markets areas from competitors as if not considered they may turn into cash
cow or even be vanished from market. As new FTTH(Fiber to home packages through various
cables operators are being introduced, ADSL may seem now to be little shaky. So NTC FTTH
needs to be more optimized through house to house service and cost analysis is to be taken
seriously before competitors take away market share.
Cash Cows (high share, low growth)
Cash cows dont need the same level of support as before. This is due to less competitive
pressures with a low growth market and they usually enjoy a dominant position that has been
generated from economies of scale. Cash cows are still generating a significant level of income
but is not costing the organisation much to maintain. These products can be milked to fund
Star products. Examples as set above is Pstn Landiline telephone services provided by NTC.

Dogs (low share, low growth)

Product classified as dogs always have a weak market share in a low growth market. These
products are very likely making a loss or a very low profit at best. These products can be a big
drain on management time and resources. The question for managers are whether the investment
currently being spent on keeping these products alive, could be spent on making something that
would be more profitable. The answer to this question is usually yes. Examples could be on NTC
CDMA Fixed phones.

Problem Child (low share, high growth)

Also sometime referred to as Question Marks, these products prove to be tricky ones for product
managers. These products are in a high growth market but does not seem to have a high share of
the market. The could be reason for this such as a very new product to the market. If this is not
the case, then some questions need to be asked. What is the organisation doing wrong? What is
competitors doing right? It could be that these products just need more investment behind them
to become Stars.
Examples could be on NTC be given on Wi-max service, FTTH service. For optimum market
growth relative price fixation strategies with flexibility in data packages should be provided.
Some of internet and cable provider have merged to provide better service, for example Vianet.
Market leader should always be one step ahead. So, why not provide FTTH service through
collaborating with cable operators and providing internet plus voice service through one
bundling? That should be before competitors take over the product.
Therefore, it states the fact that consumers are the ultimate responser for any company to go
fruitful or not. So, Market leader should always try to response to customers demand.

References:
http://www.nta.gov.np/en/mis-reports
World Academy of Science, Engineering and Technology 19 2008 ,A Study of the Beer Market
Leader, Challengers and Niche Strategies