INSTITUTE OF BUSINESS MANAGEMENT

VODAFONE CASE
STUDY
Teaching Notes

Case Objectives
This study provides an analysis of how a big global brand like Vodafone plans to
extend its market and enter a developing country like Pakistan.
The case study states what marketing strategies Vodafone can follow if it decides to
enter the telecommunication market of Pakistan.
It also shows students the importance of using a creative market entry strategy, unique
and differentiated positioning to fight the intense competition in Pakistans telecom
industry.

Case Summary
Vodafone is the worlds leading mobile telecommunications company, with a significant
presence in Europe, Africa, Asia Pacific and the United States.
Vodafones current business strategy is to grow through geographic expansion,
acquisition of new customers, retention of existing customers and increasing usage
through innovations in technology.
Inspired by the success of the present telecom companies operating in Pakistan and the
growing trend of mobile users, Vodafone is planning to enter Pakistani market. During
FY 2011, cellular revenues in Pakistan enhanced by 11 percent to reach Rs. 262,761
million in comparison with Rs. 236,047 million in 2010.
Keeping in view the volatile political, economical, social and technological scenario in
Pakistan, Vodafone ponders over its strategy to enter this market. The cellular sector in
Pakistan had to face tough economic and business environment during 2011 due to
heavy taxes, soaring inflation, power crisis, security situation, extensive subscriber
churn and natural calamities. Despite these difficulties, the cellular industry managed to
double its growth rate.

An intense competition exists between telecommunication operators in Pakistan. To

successfully compete and get a higher market share every operator is using creative
marketing strategies. Vodafone will face intense competition from other operating
companies. Vodafone needs to come up with a unique positioning and an entry strategy
that distinguishes it from the existing companies.
Case Analysis

In 2011, Vodafone stands to be the worlds second largest telecommunications

company in terms of both subscribers and revenue. Its subscribers reached 439 million
by December 2011.
Vodafone has carried out many successful acquisitions. However, it is facing trouble in
certain developing countries where the political, technological and safety situations are
volatile. Vodafone was given a tough time by the Indian Finance Ministry in terms of
taxes and fees relating to the acquisition. It also faced tremendous criticism over an
advertisement that was blamed to inspire the revolution in Egypt. Pakistan also falls in
the category of such countries where the political and social environment is instable.
Therefore, Vodafone needs to analyze various options and strategies before it enters
this country.
The target market in Pakistan has a view and perception about Vodafone. The whole
effect is that 89 percent people have good perceptions about the brand and only 11
percent are those who are blank or completely unaware of the brand. Existing
consumers have the basic knowledge about what Vodafone has to offer and this will
help in occupying the desired share of market.
According to a research conducted, customers in Pakistan base their choice of mobile
operator on several factors. The most important are good network connectivity, cheap
call rates and SMS charges and Value Added Services Usage.
Every mobile operator existing in the Pakistani market has its unique positioning. All the
mobile operators advertise heavily. They continuously come up with new packages and

services to attract the customers. Amongst all this clutter, Vodafone needs to come up
with a unique positioning and an entry strategy that distinguishes it from the existing
companies.
Vodafone can follow the strategy of positioning itself as a one stop shop for all
telecommunication, internet, 3G, DSL broadband and high speed download provider.
Vodafone is a technology and innovation led company. Vodafone can position itself as a
niche between internet companies and cellular companies.
Vodafone can also strengthen its distribution channel in order to provide uninterrupted
service and availability of its products at the right place and time for the convenience of
its customers. The company-owned franchises and customer service centers constitute
of 46 percent of the channel mix. The third party chains are bringing in the highest sales
in the cellular service industry. This will provide ease of accessibility to its customers.
In Pakistan, the post paid services are very expensive, making it impossible for the
masses to use it. Most of the postpaid users are business executives and corporate
employees, who are using postpaid services provided to them by their employers.
Although 56 percent of the population including people of all ages prefer using postpaid
over prepaid. Vodafone can establish itself by coming forward with attractive postpaid
connections, which are more affordable and economical than other network providers.
Vodafone can follow a niche marketing strategy by providing premium innovative
services to the upper class. This can include their renowned 3G service. Apart from this
they can bring technology in Pakistan that is relatively new. The positioning for this
should be different, 3G phones are not yet as affordable as GSM phones. So the bulk
consumers in Pakistan do not have it yet. This is where Vodafone can create its niche;
they can enter Pakistan and bring 3G technology to the masses, just like they are doing
in India.
Vodafone has been acquiring major telecommunication companies around the world as
a part of its market expansion strategy. Vodafone can follow the same in Pakistan by
acquiring stakes in one of the local companies, Ufone, as suggested in the case.

Case Study Questions

1. Is Pakistani telecommunications market really a viable and profitable option for
Vodafone? Or being a new entrant it will face difficulties in finding a profitable
customers following considering the already established brands in the market?
Keeping in mind the volatile political, judicial and economical situation in
Pakistan, would it be a sensible market expansion?
2. If Vodafone decides to establish itself as a one stop shop (option A), how
successful would this be in a country like Pakistan?
3. Considering that the masses are mostly using prepaid packages due to financial
and convenience factors, do you think Vodafone would be able to attract a
profitable customer base if it decides to focus on the postpaid segment? How can
they achieve success and what challenges would they face?
4. Would opting to strengthen its distribution channel a good enough strategy for
Vodafone as a new entrant? Give reasons as to why or why not would you opt for
this strategy?
5. Should Vodafone acquire shares in an existing company in Pakistan like Ufone?
What advantages could this strategic step give them? Would it be a wise choice
considering the law suits its facing in India as given in the case study?
6. If Vodafone decides to enter the Pakistani market by launching sub brands,
would this be a wise strategy?
7. Do you feel if Vodafone positions itself as being the premium provider for the
upper class, it will be able to attract a profitable customer base? Or will it have to
focus on the masses like every other network in the country?
8. For a country like Pakistan where inflation is at its peak and people are
constantly on a look out for a cheaper alternative, would Vodafone be able to
attract the masses by positioning itself as the best Network Quality provider?

(Considering it was the most important attribute consumers look for) Would this
mean direct competition with Mobilink which has the same strength?
9. In your opinion, is Pakistani market ready for the 3G phones? Would this give
Vodafone a first mover advantage? Or will they face the consequence of entering
a premature market?
10. What are your recommendations for Vodafone for entering Pakistan?

Questions/Strategic Direction Options

1. As stated in the case, despite the environment on instability prevailing in the
country, the telecommunications market of the country has been growing. The
availability of cheap handsets and affordable calling and SMS charges are the
major factors of this growth. They have made cell phones a necessity. Keeping
this growth trend in mind, it is suggested that Vodafone should enter Pakistan.
However, it should aim at such an entry strategy that helps it in positioning itself
in such a way that differentiates it from the competitors. The telecommunication
market of Pakistan has not reached its maturity stage yet. It is still in the growth
stage, therefore there is still an opportunity for new entrants. Also, as per the
case study, the customers are not brand loyal. They are constantly on a look out
for better packages. Vodafone can attract other competitors customers by
providing them with that they value the most.
2. Considering that Pakistan is still in development stages when it comes to
technology. Majority of the areas do not have proper infrastructure or means to
afford such high-tech gadgets. Smart phones are needed for 3G and
computers/laptops/tablets etc for internet usage. While the urban population of
Pakistan will be able to make use of this one stop shop, the other rural majority
will not find much use from it. The trend of high speed downloading is rising in
Pakistan but that too amongst the urban youth. So, if Vodafone does decide to
enter with this strategy, they will have to target a very niche market.
3. The masses in Pakistan prefer prepaid as it convenient. They can recharge their
credit whenever they want with whatever amount they can afford. It is the best
option for the financially constrained population. It is feasible for youngsters who
do not have fixed income and also housewives. Also, there is a mindset in
Pakistan that having a postpaid connection is a hassle and is not affordable.
However, if Vodafone comes up with cheaper postpaid packages and promotes
the importance of check and balance for security reasons in the country and the

fact that Postpaid will decline misuse of cell phones, they might be able to attract
people to switch to postpaid.
4. As stated in the case, majority of the sales is done through third party channels.
Because they are convenient for the customers. They can easily buy a new Sim
from their local area shops. This often leads to misuse of the Sims too. Vodafone
will have to strengthen its distribution channel and make sure it provides ease
and convenience to the customers. It should be available where their target
market shops. Having a strong distribution channel is really important as
customers give a lot of importance to the convenience factor. But Vodafone
should not make this the basic entry strategy. They should strengthen their
distribution channel side by side but their entry strategy should be such that it
attracts the customers. Once they decide to purchase, a strong distribution
channel should be present to complement it.
5. Vodafones history shows the successful acquisitions it has been carrying out
around the globe. If it does the same in Pakistan, it would be advantageous for
them. Reasons being, it will give them an established customer base, they will
get a better understanding of the Pakistani market. They will also get
technological advantages like established Towers. According to an article in
ptclworkers.com, Mobilink and Ufone have signed an agreement to share mobile
towers. This collaborative effort is in line with the initiatives taken by the
Pakistan Telecom Authority and the Federal Government to encourage cellular
providers to drive greater efficiencies while reducing the carbon foot print. They
can learn from the law suits they faced in India and carry out the acquisition after
making sure all the legal requirements have been followed. With Ufones vast
network coverage, Vodafone can provide better quality network to its customers.
6. All the network providers in Pakistan have a prepaid service and a different
postpaid service. Usually with under a different name. Like Mobilink has Jazz for
Prepaid and Indigo for Postpaid. Hence, the Pakistani market is not new to this.
But being a new entrant, Vodafone will have to establish its unique identity. They
will have to make sure that their sub brands strategy does not create confusion

amongst the market. Their positioning for each brand should be distinctive and
separate but carry the same Vodafone message. They will have to have
complete understanding of both the segments and make sure they cater to their
needs. This strategy will give them a big customer base but will increase the
competition too.
7. Vodafone will have to attract the masses too. It can come up with a low prices
prepaid package and a premium postpaid package. Majority of the Pakistani
consumers fall into the category of masses who use cell phones for making calls
and SMS. If Vodafone enters as only a premium brand, it will miss out on this
large chunk of the market.
8. Vodafone will have to focus on price competitiveness. In Pakistan, every mobile
network has various call and messaging packages that cater to their customers
according to their needs. Like cheap messaging packages for the youth and
cheap call rates for the housewives etc. In order to compete in this market,
Vodafone will have to understand what the customers want. They can make their
network quality better by collaborating with Mobilink and share Towers as Ufone
did. But prices should be kept as such that attract the masses.

9. According to an article in the Express Tribune, Mobilink, Ufone and Zong have
confirmed their participation and even upgraded their telecom hardware to 3G.
13 million users are already using mobile internet over their phones. Pakistani
market is ready for this upgrade. However they content will have to be in the local
languages for the masses to understand. Some 65% of Pakistans population
lives in rural areas and cant speak English. The country needs to develop local
content that can be consumed using 3G service.
10. Vodafone should understand the Pakistani market before it enters it. They should
understand the cultural values of this region.
All the legal requirements should be carried out in order to avoid any problems in
the future.

Vodafone has carried out successful acquisitions all around the globe; one of the
best options for it is to do the same in Pakistan.
Vodafone should communicate to its target market extensively and promote the
usage of 3G services in such a way that it attracts the smart phone users.
Introduction of feasible and affordable packages for the masses should be
carried out.
Basis of student evaluation
To discern whether the student is bright and can analyze the case, one can evaluate his
ability to apply theory to practice and come up with ideas for creative marketing
strategies. This case is focused on a creative market expansion and entry strategy. It
also

discusses

how

to

position

your

brand

in

telecommunication.

References
Express Tribune Pakistan
Company website for Vodafone
Company websites of Local telecommunications brands

Mobilink
Ufone
Warid
Telenor
Zong

competitive

market

like