Kevin Martin Marketing Plan Project

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T-Mobile USA, Inc.Marketing Plan Proposal

Prepared for: Doug Clopton

Prepared by: Kevin Martin

December 6, 2011


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Table of Contents

Introduction 1Analysis 2 Target Market 2 Marketing Environment 5 Current Strategy 7Recommendations 12


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Introduction

T-Mobile Background

T-Mobile USA, Inc. is an American mobile-network operator that can trace its roots as faras 1994 to the company VoiceStream Wireless.

In 2002 VoiceStream Wireless was acquired by

Deutsche Telekom AG, the largest

telecommunications company in Europe, and

officially became T-Mobile USA.

Later that year the companys 7 million customers would be the first to take advantage of

the first BlackBerry device with e-mail capabilities and in 2003 would experience the first

video messaging services in the United States. Since then the company has opened

thousands of Wi-Fi HotSpots at airports, restaurants, and retailers, unveiled a number of

innovative mobile devices, as well as earned years worth of J.D. Power and Associates

Customer Service, Customer Satisfaction, and Retail Sales Satisfaction awards. T-Mobile

USA now serves nearly 34 million customers securing the aforementioned title of fourth-

largest wireless carrier in the United States.

This report will attempt to analyze T-Mobile USAs current marketing strategy. It will include

an evaluation of the companys strengths, weaknesses, opportunities, and threats as well

as an analysis of the current target market, marketing environment, and marketing mix.

Recommendations will be provided based on these analyses to contribute to the future

progress and growth of the company.

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Analysis

Target Market

Target Customers

As a national provider of wireless services, T-Mobile USA, Inc. has a network capable of

reaching over 293 million customers. The customers targeted by the company include any

individuals that desire mobile connectivity in the form of voice or data services. The

company offers separate product lines to appeal to customers searching for both personal

connectivity solutions and business connectivity solutions.

Current Customers

T-Mobile USAs third quarter of 2011 results report that the company served 33.7 million

customers as of November 10. Of these customers, 25.6 million are customers using

services requiring a contract while 8.1 million are customers using prepaid services. These

customers can be further divided into mobile handset customers and mobile broadband

customers within the respected categories, however these figures are not available at this

time.

Marketing ResearchTo improve customer satisfaction the company gathers both primary and secondary

research. Primary research is conducted mainly through voluntary survey opportunities

provided at retail stores, over the phone, and on the companys website. Secondary

research is obtained from outside firms such as J.D. Power and Associates and The

American Customer Satisfaction Index. The latest results from these firms report that

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T-Mobile customer satisfaction scored4 and 5 points, respectively, behind

the segment leader (Figure 1). Other

statistics such as demographics are

provided by the U.S. Census Bureau.

Market Segmentations

Aside from company-specific

segmentation of the customers, the

following factors also play a major role

in the marketing strategy:

Demographic - With the

average age for a first cell

phone now down to under 12

years old, wireless carriers have a larger and more diverse customer

base to appeal to. While contract services require customers to be 18 years of age

or older due to credit reasons, prepaid services can be purchased without age

restriction. According to the U.S. Census Bureaus 2010 statistics, this leaves a

potential customer base of just under 270 million consumers (those over the age of

ten).

Psychographic - The CIA World Factbook determined that in 2010 the United

States had 279 million cell phone subscribers. This number represents the amountof potential T-Mobile customers based solely on the consumers perception of the

necessity of the products and services that the company provides.

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Figure 1


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Figure 2

Geographic - As mentioned before, the T-Mobile wireless network is capable ofserving 293 million customers based on mobile coverage in all fifty of the United

States as well as parts of Mexico and Canada.

Behavioristic - Behavioristic factors can include how often a consumer believes

they would need to use the product or service and the loyalty of customers. T-

Mobile does offer multiple variations of its products and services but quantitative

figures are unavailable for the potential customer base in this respect. Customer

loyalty, however, can be seen in the number of branded customer losses present in

recent quarters. This indicates the decrease in the amount of customers that use a

product or service with the T-Mobile brand name specifically. Recent quarters show

a decrease in customer loss which can be seen in Figure 2.

B

T-Mobile

anded Net C

USA, Inc.

stomer Loss

s

Q3 2011 Q2 2011 Q1 2011 Full Year

2010

Q4 2010 Q3 2010

135,000 608,000 656,000 1,582,000 509,000 404,000

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Marketing Environment

The marketing environment for any product or service contains uncontrollable factors that

can greatly affect a companys ability to satisfy the wants and needs of its customer base.

These factors have been examined based on T-Mobiles target market to determine the

following:

Socio-cultural - The major socio-cultural trend affecting the company is also a

technological trend, that of a sharp increase in the demand for touch screenphones and smartphones. Out of the 29 phones that T-Mobile currently offers, 19

of them are touch screen phones while 22 of them are smartphones. Another trend

that only one major wireless carrier has made a major attempt to target is the trend

of environmental sustainability. T-Mobile competitor Sprint carries the Samsung

Replenish smartphone made partially from recycled materials and wrapped in fully

recyclable packaging. Sprint also carries solar powered chargers and conventional

chargers that are Energy Star compliant, as well as deriving 80% of the electricity

for their headquarters from wind energy.

Technological - In the same manner of the socio-cultural trends, the increase in

demand for touch screen phones and smartphones has been a large factor in all

wireless carriers marketing strategies. One major downfall for T-Mobile, however,

which is also a competitive factor, is the absence of an Apple iPhone in its phone

lineup. This line of phones that was first released in 2007 now contains the number

1 and 2 bestselling smartphones, and T-Mobiles three larger competitors have it.

Other factors include an increase in mobile internet services as well as the ability to

purchase products and services online, both of which T-Mobile has handled

appropriately. T-Mobile offers the least expensive unlimited internet package for

handheld devices and in addition to the ease of use, its website frequently offers

special incentives for purchasing online.

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Economic - In response the decline of the economy, T-Mobile has promoteddecreases in the cost of their products and services, as well as new offerings that

offer less but are more cost effective. Examples of these include the no contract

value plans, the $30 per month prepaid plan with 100 minutes and unlimited web

and text, as well as offering four different data plans for contracts starting at $10

versus the one $30 plan offered previously.

Political - Companies can target a consumers political and patriotic views to gain

favorable impressions. T-Mobile recently has not had any positive or negative

effects caused by political trends and has not attempted to alter their marketing mix

with regards to this trend to gain a larger customer base or increase revenue.

Regulatory - There have been numerous regulations that have affected wireless

carriers over the years. These can include regulations from 2003 allowing

customers to keep their cell phone number when they switch carriers, to more

recent distracted driving bans outlawing cell phone usage while on the road.

Another major regulatory factor is the amount of taxes and surcharges automatically

added to an accounts monthly bill, often equaling 15 to 20 percent of the net price.

Competitive - T-Mobile USA has three major competitors, AT&T, Verizon, and

Sprint. All four companies offer very similar products and services and equipment is

at times identical among the carriers, i.e. iPhone and Samsung Galaxy S phones.

The main factors that set these companies apart in the eye of the consumer

(excluding price which will be covered later on) are:

- coverage for both voice and data

- a selection of phones that are high quality and make use of advanced

technology

- good customer service

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Figure 3

T-Mobile has achieved one of these three goals consistently over the years and thatis good customer service. As mentioned before the company has won many J.D.

Power and Associates Customer Service, Customer Satisfaction, and Retail Sales

Satisfaction awards. T-Mobile also currently has The other two leave factors do

leave the company lacking a bit more than their competitors, but T-Mobile is not far

behind. One major drawback is the companys coverage, while not sparse, still falls

behind the three larger companys as seen in Figure 3. All four companies sell very

similar phones and as mentioned before, T-Mobile carries 29 different models, 22 of

which are smartphones. They do not, however, carry the bestselling iPhone that

their competitors do carry.

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Current Strategy

Product Mix

T-Mobile USA, Inc. provides wireless services and equipment. Services include mobile

voice and data connectivity as well as technical service and support for equipment.

Equipment includes mobile phones, tablet PCs, mobile broadband devices, and

associated accessories.

Both T-Mobiles service and equipment would be considered homogenous shoppingproducts. While shopping for wireless products, most consumers are simply looking for

the lowest price, unless they see a major advantage in something more expensive.

T-Mobile offers a multitude of wireless plans and features including prepaid plans, no-

contract value plans for both individuals and families, contract plans for both individual

families, as well as contract plans for both small and large (100+ employees) businesses.

T-Mobiles contract service plans, which brings in the majority of its revenue, have a major

advantage and disadvantage versus its competition. The advantage is that the companyis one of only two of the major carriers that offers unlimited data services. The

disadvantage is that they fail to offer unlimited mobile-to-mobile calling on any network

which has become increasingly popular among Sprint and AT&T.

T-Mobiles bestselling mobile phones use either the BlackBerry or Android operating

systems, two of the most popular operating systems

currently out. These products are designed by the

manufacturer of the phone, such as Samsung, HTC, and

RIM, specifically for T-Mobile services and then sold

directly to the authorized and third-party retailers.

In the mobile handset business a products life cycle is usually short lived and can easily be

seen. Even the bestselling iPhone has an easily visible life cycle as seen in Figure 4,

although it has had a considerably longer life than most handsets. For the year 2007 the

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Figure 4

slow sales as a result of market introduction are visible, followed by market growth in2008, and eventually peak sales during market maturity in 2009. In 2010 iPhones sales

started to decline.

Price Mix

T-Mobiles prices are determined by a number of factors. Internally these include, but are

not limited to the cost of:

staffing

mobile devices, as well as exclusive contracts with companies to produce

company-specific phones

capital expenses, i.e. buildings, towers, and other equipment (including

maintenance) for day-to-day operations

logistics

advertising and promotion

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Externally the prices can be determined primarily by the:

availability of the product or service

demand for the product or service

competitors products, services, and prices

When comparing many of the services that T-Mobile offers to their competitors similar

services, T-Mobile proves to be marginally less expensive. This can be seen in the

comparison in Figure 5.

Place Mix

T-Mobile provides its branded contract and no-contract products and services through

authorized specialty stores as well as through third-party retailers such as Best Buy and

Walmart. Prepaid products can be purchased at these stores as well as at convenience

stores and other retailers such as Walgreens and even Toys R Us and Family Dollar. T-

Mobile also provides services to mobile virtual network operators (MVNOs) which in turn

provide T-Mobiles service to the consumer without the T-Mobile brand name.

All physical products are purchased by the retailer directly from the manufacturer which

provides Freight On Board destination.

Promotional Mix

T-Mobile has had a strong presence in promotional media since its inception in 2002 when

Catherine Zeta-Jones became the spokesperson for the company. Back then the

companys slogan was Get More, today the official slogan is Stick Together. However,

with the increase in mobile internet usage among consumers, current advertising largely

emphasize that T-Mobile has Americas largest 4G network.

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Figure 5

The companys promotional strategy relies largely on a push effort, but with someproducts, such as obtaining iPhone, a pull effort may be needed. The low prices as well

as data coverage have been a staple for their advertising in recent years, although

currently the company advertises many different types of plans in ambiguous ways that

have been confusing to customers. For example, large signs at retailers state $69.99,

unlimited talk, text, web, and 2 lines, yet in small print on these signs the price is

established as per line, doubling the believed price. They also advertise their classic and

value plans without acknowledging the numerous differences between the two.

Numerous times, though, the company has attempted to appeal to families by offering

sales on additional lines, including their 2010 Kids are free till 2012 promotion. T-Mobileretailers also do well to communicate these promotions in store for consumers to establish

connections between the two.

The company also uses a personal selling strategy to gain more retail outlets as well as to

sell services to small and large businesses.

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Recommendations

Based on my evaluation of the current marketing strategy of T-Mobile USA, Inc., it is my

belief that the following can help the company progress and further the development of the

company.

While T-Mobile does offer many plans to fit the customers needs, I feel that the presence

of so many rate plans confuses consumers and can deter them when they realize the

actual facts behind some of the plans. The company should stick to contracted services

and prepaid services and weed out the plans and features that are scarcely taken

advantage of. They should continue to promote through the media their data coverage

and low prices, two of the main features consumers are looking for. Their sales

promotions on additional lines is also a great way to increase revenue and bringing

younger customers in provides the chance of a long-term relationship with that customer.

The company needs a flagship mobile handset that makes use of some of the most

advanced cellular technology available today. T-Mobile currently has the MyTouch as their

exclusive line of premium phones, but they have proved to be subpar and unpopular. A

profitable solution, I believe, would be to obtain the rights to sell iPhone. This could alsoincrease the companys reputation and bring other customers in.

Focusing on customer service both before and after the sale is extremely important. T-

Mobile has excelled at this previously and needs to continue to do so and not neglect its

current strengths.

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References

(2011). Average age for first cell phone is now 11.6 years-old . The Online Mom, Retrieved from http://www.theonlinemom.com/secondary.asp?id=1981&t=average- age-for-first-cell-phone-is-now-116-years-oldThe American Customer Satisfaction Index, (2011). May 2011 and historical ACSI scores. Retrieved from website: http://www.theacsi.org/index.php? option=com_content&view=article&id=205:acsi-scores-may&catid=14&Itemid=261Central Intelligence Agency. (2010). Country comparison: Telephones - mobile cellular. The World FactbookSprint. (n.d.). Sprint sustainability. Retrieved from http://green.sprint.com/index.php

T-Mobile USA, Inc., (2011). T-Mobile USA reports third quarter of 2011 results. Retrieved from website: http://www.t-mobile.com/Company/pdf/English/ TMUS_Q3_2011_Press_Release.pdfU.S. Census Bureau, (2012). Statistical abstract of the united states. Retrieved from website: http://www.census.gov/compendia/statab/2012/tables/ 12s0007.pdf

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