Telstra Corporation Limited Summary

This report has developed a sound marketing strategy for Telstra Corporation limited. The purpose of the report is providing a brief background of the organization along with a situational analysis. The key elements of marketing strategy have been used to develop suitable for the organization to success and sustain.

The largest telecommunication company in Australia is Telstra corporation limited.  Telstra has been present in Australia for decades and has been able to keep their competitive advantage in the market due to their products, services and strategies.

Telecommunication services in Australia and other had been under the control of PMG (Post Master’s General) (Telstra.com.au, 2018). However, in the year of 1975, PMG had been replaced by the Australian post commission and the Australian post had gone through several phases of restructuring to develop the Australian and Overseas Telecommunications Corporation (Telstra.com.au, 2018). The organization was renamed as Telstra in the year of 1993. The company was privatised in three stages namely T1, T2 and T3, and the government sold shares of the company in 1997,1999 and 2006. Initially one third of the company’s shares were sold, then 16% of the remaining shares were sold in 1999 which made the government having a share of 51% (Telstra.com.au, 2018). Finally, the government sold majority of the shares and reduced their own share to 17% which was placed in the Future Fund.  In the year of 2011, Future fund sold the remaining shares to complete of privatization which the organization was going through for more than a decade.

The headquarter of Telstra is at Melbourne, Australia and is known as the Telstra Corporate Centre.  The headquarter is an office skyscraper having 47 floors, out of which only 43 are used and the building is the world headquarter for the organization.  Telstra also runs a list of Telstra stores in Australia and other facilities all around Australia which shows their capabilities. The organization has huge line of products and contribute to make the life of the common people easy. Moreover, Telkomtelstra, Ooyala, Pacnet, Readify Pty Ltd and Foxtel are the subsidiaries owned by the company which depicts their infrastructure capabilities (Telstra.com.au, 2018).

In accordance to Telstra2022, four senior leaders have made their departure from the organization. Michael Ebeid will join the company to run the enterprise team and Brendon Riley will become the Chief Executive of Telstra InfraCo. Nikos Katinakis will join in the month of October to lead IT and Networks (Jenkin, 2018). David Burns will be leading the global enterprise services and Robyn Denholm will be joining the organization as the chief financial officer. Telstra2022 strategy will lead by Alex Badenoch and small units will be led by Vicki Brady and Carmel Mulhern. Andrew Penn is the chief executive of the organization who will be looking after the overall operation of the country.

Strengths

Weaknesses

· Telstra has a dominating position in the market and is the largest provider of fixed line services in Australia · They have used strategic differentiation to be the leader in this segment and provides 98% of 4G services in Australia · They are technologically superior and keep on investing in research and development to develop new technologies. They enabled the LTE switch on capability in 4G which allowed to broadcast high-quality video media cost effectively · They have also maintained a good relationship with the government and regulatory bodies where they have a regulatory affairs team for managing the relationship.

· There are inefficiencies in their operations and consumers have been unsatisfied with the service · The organization faces Latency issues when compared to the global competitors such as Optus and Vodafone · Moreover, they charge more than the other competitors in the market

Overview of ownership

Table 1: Strengths and Weaknesses

(Source: Telstra, 2018)

The product analysis section will describe the product portfolio of the organization consisting of the different products, their costs, sourcing, distribution and technology used in product development.

The product mix has determined the products based on four dimensions consistency, depth, length and breadth. When we consider the breadth of the products offered by Telstra, it has been divided into personal, small business and business and enterprise categories.  The next category is the length of the product mix and Telstra’s product mix length shows the number of items offered by the organization (Telstra.com.au, 2018). The product mix length consists of mobile phones, tablets, prepaid services, broadband, mobile broadband, nbn, tv, movies and music and smart home in the personal category, in the small business category mobile phones, bundles, tablets, fixed line telephone, sim only plans, broadband and nbn, and in the business and enterprise segment mobility, collaboration, cloud, network services, customer contact, support and internet of things are the offered products (Telstra.com.au, 2018).  The product depth shows that Telstra offers similar products for each segment but the plans are different such in the mobile phone segment, they offer iphone, Samsung and Oppo but the plans are customized as per the needs of the clients. The below image shows the depth of the organizational offerings based on the small business segment where the different plans of the sim only products have been shown. Similarly, for businesses and enterprises and personal category, different products plans have been offered and products are named differently depicting the diverse nature of use (Telstra.com.au, 2018).  The consistency of the product mix highlights that product mix are quite consistent and are closely related to each other. However, there is still differences in price ranges, production requirements, distribution requirements and advertising.

Image 1: Product Depth (sim only plans)

Source:

Telstra deals with 4800 suppliers on an annual basis while making purchase of the raw materials and other goods and services (Telstra.com.au, 2018). The organization follows sustainable supply chain management and follows particular supplier selection criteria before forming a relationship.

In terms of talking of distribution, the organizations use their superior technological advancements to partner with other organizations in different sectors to provide them ICT solutions (Telstra.com.au, 2018).  They use Global Media networks for integration of fibre networks and satellites which increases the speed and reliability of the distribution.

Telstra has formed partnership with Microsoft have developed new range of services and offerings (Telstra.com.au, 2018). The organization spends huge amount of funds on technological development and the company has opened up an innovation centre recently in the year of 2018 for developing 5G technology and other technologies that are suited to the needs of the consumers in Australia (Telstra.com.au, 2018). This facility is located in the Southport Exchange on the Gold Coast which promises to develop next generation technologies. This shows the commitment of the organization towards continuous development and innovation.

Macro Environmental Factors 

Political	The government in Australia have been pushing for reforming the regulations and the government has been developing reforms in accordance to the Universal Service Obligation. This has reduced the entry barriers significantly in the market. The relationship that the Australian government maintains with other countries is cordial and has resulted in better trade opportunities between different countries.
Economic	The GDP of Australia has been subdued in the past year and this directly affects the disposable income of the general population. The decrease in the demand of the Australian products will also affect the telecom industry.
Social	People from abroad have migrated into the country and increase in foreign population and diversity which will drive the growth of the telecom industry in Australia.
Technological	Technologically the country has progressed immensely where digitization has been implemented to improve customer experience and service offerings. Network and telecom infrastructure leasing has also been implemented.
Legal	ACCC has made regulatory changes that would affect the operations of Telstra and other companies in the telecom industry.
Environmental	Australia is rich and blessed with flora and fauna where tourism contributes heavily to the GDP of the country. Government has maintained regulatory measures for keeping the organization in alignment to using sustainable measures and promote use of eco-friendly battery segments for storage.

Table 2: Pestle analysis

Source: (Prnewswire.com, 2018)

Market Segmentation 

Demographic variables

Telstra is known for tending more towards the crafting of their marketing strategies by means of focus on income, age and gender. Their consumers are grouped into different groups based on these variables of income, age, gender, occupation and so on. For them, it is very important to determine and effectuate all the requirements both in terms of communication and technology across all age groups. For instance, their special unlimited data deal is for attracting the younger generation who have a tendency of streaming videos or uploading files on their social media accounts (Bedo, 2018). Income is a very important factor in the pattern of any person’s spending habits. Telstra has special prepaid mobile services for the teenagers who are looking more flexibility in the matter of investing money per month. At the same time, who don’t have any qualms about extra expenditure have the option of opting for high speed data transmission plans. It is also widely known that men and women focus on different things in terms of all aspects of their lives. Women pays more attention towards tiny details, like design of their phone, whereas, men are more focused on its features. Keeping this in mind Telstra has different services up their sleeves to fulfil all the different types of needs. They tie up with different mobile brands to offer a wide range of packages.

Geographic variables

Telstra provides their services all across Australia, dividing their consumers as per states and cities. While taking this variable into consideration at the time of structuring marketing strategies, a lot of factors come into play. In a specific geographical area, a certain age, religion or race group might be more prevalent. For instance, Melbourne is a metropolitan state that boasts of booming business, along with well-developed local public areas. The population consists of a large number of working individuals (Schlegelmilch, 2016). On the other hand, a small district like Albany portrays a completely different demographic trait. Due to this diversity, Telstra has introduced diverse business and marketing strategies, like their 4G network services to major cities.

Psychographic variable

Psychographic variable is completely dependent on grouping different customers together on the basis of their personality, social stature or lifestyles. This is very evident in their past marketing campaigns where they are portraying different groups of people and their different lifestyles (Bruwer & Li, 2017). In their advertisements they have shown people who are into messaging, people who want good value for money services, high achievers, and family-oriented people.

Management Team

Behaviouristic variable

This variable groups customer as per their response, product usage and knowledge. Organizations like Telstra market their products or services on the basis of this variable, via several points like usage rate, benefit segmentation, user status, loyalty status or occasion segmentation (Schlegelmilch, 2016). Telstra specifically focuses on usage rate and user status. They have different promotional programs for maintaining their loyal customer base. Additionally, Telstra has carried out their market segmentation as per the usage rate, dividing it into low usage and big spenders.

Industry trends 

The telecommunication industry of Australia has altered the way people of the country is interacting, with an increased level of connectivity. There is a rise in demand for mobile services, along with an increase in revenue extracted from wireless services that is driven by the increasing volume of data consumption and developed connectivity. The revenue generating potential is only dampened by the fall in demand of fixed lines and strong price competition. The forecast predicted a fall in revenue by an annualized 0.2% across the five years through 2017-18, reaching to a total of $42.8 billion (Ibisworld.com.au, 2018). The industry employs a whooping 49,956, contributing largely to the overall economic development of the country. There is a prediction regarding the 5G network to experience momentum in competition as the global standards are inching towards ratification and Telcos are looking to capture the first mover advantage. The industry is simultaneously continuing its transformation and the infrastructural improvements. The usage cases of Internet of Things (IoT) also is looking to grow, as it is offering huge opportunities to the Telcos for being pioneers in the overlap of operational and information technology. Moreover, cybercrime and continued technology growth has brought market disruption, generating revenues of A$2.2bn, which is expected to rise to A$6bn by 2026 (Venture Insights, 2018).  

Market size / growth 

The Australian telecom market generates more than $42 billion revenue on a yearly basis (Prnewswire.com., 2018). The market is saturated and the growth rate of the industry is less than 1% in the past few years.

Customer / Target Market profile 

The target market consists of the general population, small businesses and large enterprises (Bedo, 2018). The organization provides personal services to homes and individual users. They also provide wholesale services to businesses and carriers.

Competitor Analysis 

The major competitors of Telstra in Australia are Singtel Optus and Vodafone Hutchison. Optus has a strong hold in the Australian market and has been the second-best company with almost 25% share in the market and similar communication services to its consumers (Budde.com.au, 2018). However, the majority of the market share is dependent on the mobile network services. Optus become the first company to pair 3CC Aggregation technologies to pre- 5G technologies (Budde.com.au, 2018). Similarly, Vodafone and Hutchinson merged to form Vodafone Hutchison and the organization has been moving a fast pace in terms of competition with the market leaders. They are spending huge funds on infrastructure and technological development to tale leadership in the internet of things space.  This shows that the major rivals in the industry are draining their resources to aggressively capture the market by gaining technological supremacy and innovation.   

SWOT Analysis 

Opportunities

Threat

· The organization has the opportunity of making an expansion into the foreign market · Telstra has the opportunity to different business sectors as they are technologically strong and easily enter into other markets.

· The telecom market in Australia have become saturated and change in the regulations in the telecom sector have significantly reduced the entry barriers. Therefore, the organization faces threats from the global industry giants. · The change in technology is also a threat as technological progress of the other global players in the market may drive the organization into a disadvantageous position.

Table 3: Opportunities and Threat

Source: (Telstra, 2018) 

Conclusion

The overall report shows that due to the reduction in the entry barriers in the market and increasing aggressive strategies based on technological innovation made by Vodafone and Optus implies that Telstra will have to be focused on developing new technologies and use innovation to develop cost leadership. This will enable them to compete with the companies in the market and the global companies making future entrance in the market.

Bedo, S. (2018). Would you need this much data on your phone?. Retrieved from https://www.news.com.au/technology/gadgets/mobile-phones/telstra-announces-news-plans-with-199-unlimited-data-deal/news-story/4db0fa067816b2eab667443771cccb97

Bruwer, J., & Li, E. (2017). Domain-specific market segmentation using a latent class mixture modelling approach and wine-related lifestyle (WRL) algorithm. European Journal of Marketing, 51(9/10), 1552-1576.

Budde.com.au. (2018). Australia – Telco Company Profiles – Telstra, Optus and Vodafone – BuddeComm. Retrieved from https://www.budde.com.au/Research/Australia-Telco-Company-Profiles-Telstra-Optus-and-Vodafone

Ibisworld.com.au. (2018). Telecommunications Services – Australia Industry Report | IBISWorld. Retrieved from https://www.ibisworld.com.au/industry-trends/market-research-reports/information-media-telecommunications/services/telecommunications-services.html

Jenkin, M. (2018). Telstra leaders exit, new executive team unveiled. Retrieved from https://www.crn.com.au/news/telstra-leaders-exit-new-executive-team-unveiled-499253

Prnewswire.com. (2018). Australia – Telecoms Industry – Statistics and Forecasts. Retrieved from https://www.prnewswire.com/news-releases/australia—telecoms-industry—statistics-and-forecasts-300425066.html 

Schlegelmilch, B. B. (2016). Segmenting Targeting and Positioning in Global Markets. In Global Marketing Strategy (pp. 63-82). Springer, Cham.

Telstra. (2018). Telstra Annual report 2017. Retrieved from https://www.telstra.com.au/content/dam/tcom/about-us/investors/pdf%20F/Annual-Report-2017.PDF.

Telstra.com.au. (2018). Telstra – mobile phones, prepaid phones, broadband, internet, home phones, business phones. Retrieved from https://www.telstra.com.au/?direct#tab-personal

Telstra.com.au. (2018). Telstra – Suppliers – Our company. Retrieved from https://www.telstra.com.au/aboutus/our-company/supplying-to-telstra

Telstra.com.au. (2018). Telstra launches 5G Innovation Centre to accelerate the deployment of 5G technology in Australia. Retrieved from https://www.telstra.com.au/aboutus/media/media-releases/Telstra-launches-5G-Innovation-Centre-to-accelerate-the-deployment-of-5G-technology-in-Australia

Venture Insights. (2018). Top Australian Telco trends to watch in 2018 – Venture Insights. Retrieved from https://www.ventureinsights.com.au/product/top-australian-telco-trends-watch-2018/