1

Index
1.0 Executive Summary……………………………………………………………...3
2.0Situation Analysis………………………………………………………………...5
2.1 Industry and Our Competitors…………………………………………...5
2.2 Six Forces: Business Environment………………………………………6
2.2.1 Political and Legal Environment………………………………7
2.2.2 Economic Environment………………………………………..8
2.2.3 Socio-cultural Environment……………………………………9
2.2.4 Technological Environment……………………………………10
2.3 Market Segmentation…………………………………………………….11
2.3.1 Demographic Segmentation……………………………………11
2.3.1.1 Age…………………………………………………...11
2.3.1.2 Gender………………………………………………..11
2.3.1.3 Income………………………………………………..12
2.3.2 Geographic Segmentation……………………………………...12
2.3.2.1 People Living in Cities……………………………….12
2.3.2.2 People Living in Upper Egypt and Urban Areas……..12
2.3.2.3 People Living or Working in Remote Areas…………13
2.3.3 Behavioural Segmentation……………………………………..13
2.3.3.1 Companies and Business Organizations………..……13
2.3.3.2 Businessmen…………………………………………13
2.3.3.3 Youth………………………………………………………....14
2.4 Targeting…………………………………………………………………14
2.5 The Positioning Table……………………………………………………15
2.5.1 Comment on Table……………………………………………..15
2.5.2 Positioning Statement……………………………………….....17
2.6 SWOT Positioning Statement…………………………………………...17
2.6.1 Strengths and Weaknesses………………………………….....17
2.6.1.1 Strengths…………………………………………….17
2.6.1.2 Weaknesses………………………………………….17
2.6.2 Opportunities and Threats……………………………………..18
2.6.2.1 Opportunities………………………………………...18
2.6.2.2 Threats……………………………………………….18
3.0 Objectives………………………………………………………………………..19
4.0 Strategy…………………………………………………………………………..19
4.1 Market Penetration Strategy……………………………………………..19
4.2 Diversification Strategy (Secondary Party) ……………………………..20
5.0 Action Program…………………………………………………………………..21
6.0 Financial Statements……………………………………………………………..22
6.1 Marketing Expenses……………………………………………………...22
6.2 Income Statement………………………………………………………...22
7.0 Control……………………………………………………………………………23
7.1 Actual Implementation and Expenditure vs. Achievement of Objectives.23
7.2 Actual Expenditure vs. Budget…………………………………………...24
References…..………………………………………………………………………..26
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1.0 Executive summary

O2 provide integrated mobile, fixed and broadband services in the UK, Ireland,
Germany, the Czech Republic and Slovakia. Together, we’re Telefónica Europe, but
customers know us as O2.
Telefónica Europe also owns 50% of the Tesco Mobile joint venture business in the
UK and Ireland, as well as, the Tchibo Mobilfunk joint venture in Germany.
We have 54.5 million mobile, fixed and broadband customers across Europe and
29,000 employees across the Group.
Telefónica Europe, part of Telefónica S.A. is headquartered in Slough, UK.
Telefónica Europe announces its results, across its territories, with Telefónica's
quarterly reporting cycle. We reported revenues for the period ended 31 December
2009 of over €13.533 billion.
As part of an enlarged company, O2 continues to build on its track record of
operational delivery, the strength of its brand, and the momentum it has established in
all its markets.
O2 and Telefónica have brought together two strong, successful, growth-orientated
companies, creating a strong pan-European/global telecoms player.

Our company, O2 found the way paved to start it giant investment in Egypt in
the field of mobile services and satellite communication. The market is expected to be
segmented with respect to geographic locations as follows as people living in the
cities like Cairo, Alexandria, and Giza where the greatest percentage of customers can
be found. People living or working in remote areas such as, oil fields, mobile phones
are very vital as it is the only way of communication that exists there. The second
segmentation is Behavioural one in which B2B is probably the most important
segment that uses mobile phones. Companies use mobile services in business to
create a continuous network between its employees. Usually business organizations
are looking towards the quality of the service. Based on the segmentation process, it
was decided that the best strategy to be used for targeting would be a Custom
Marketing Strategy, where different services are introduced addressing the unique
needs of each customer. Our Strengths will be high capital investment: the high
capital investment will help the company provide the newest technology like the
satellite service, while Our Weakness is the costs would be high relative to the
revenue at the beginning in order to attract more customers.
The Opportunities that may encounter our company are can be summarized as the
increase in number of out-of-towns jobs; the skilled workers, the importance of
mobile phones to Egyptians; the political stability in Egypt and the welcome of the
Egyptians to forth company that may break the Cartel Triple. On the other hand, our
company may undergo some Threats such as the low purchasing power of Egyptians;
the coalition of the competitors and the economic recession in Egypt. Our Objectives
are to Create Awareness To Gain & Attract The Niche Market Segment in cellular
phone network coverage business in Egypt with five year and achieve profit of 500
 4

million pounds. Strategy: Market penetration strategy. We should enhance A Price

Premium Tactic to keep the price of a product or service artificially high in order to
encourage Niche Market . The company has a huge capital to establish its brand. To
offer High price will attract A Class Consumers. Diversification strategy targets
specific stratum to promote Connect with your customers anytime, anywhere
 5

2.0 Situation Analysis

Accordingly, our newly lunched company, O2 found the way paved to start it
giant investment in Egypt in the field of mobile services We started to study the
environment where it will open its project.
Egypt is located in Northern Africa, bordering
the Mediterranean sea. It possesses one of the
most important water passages in the world
which is the Suez Canal. This canal
represents an international way passage for
world trade. The population in Egypt
reached 78 million. Egypt is developing
country. Most of Egyptians are belong to the
medium class. The medium category
represents the majority of the Egyptian
society. People in this category are educated people working for companies in the
private or governmental sector, or owners of very small projects like grocery
shops, mini-markets. Most of customers falling in this category are having mobile
phones; yet, their usage of mobile phones is very limited.
 6

2.1 The Industry and Our Competitors

MobiNil ,Vodafone & Etisalat are functioning at the present time as they are

the three competitive cell phone companies to O2. Now, mobile phones are becoming

an essential part of the daily life and are considered to be a necessity. It is known that

MobiNil is a national company, Vodafone & Etisalat is a multinational operating in

Egypt

In late 1996, MobiNil started operating under the name Arento Telecom

Egypt. The company was owned by the government for a few months then it was

privatized and became the first mobile operating company in Egypt. MobiNil was

considered a monopoly at that time as the government gave it the exclusive right to

produce; moreover it was the only producer, owner of a key resource (mobile

technology only at that time) and a price maker. MobiNil has proved its leadership in

marinating Mobile services in Egypt to the extent that it has even able to acquire the

trust of huge number of customers. It is main objective is providing quality service

for its customers. It is a pioneer in meeting customer's diverse needs. MobiNil is the

first telecommunication company to develop EDGE that has five times speed than

GPRS. Its network covers 98% of Egypt.

In 1998, Vodafone started its investment in Egypt. Since then, the

investments of Vodafone have reached 4.5 billion L.E. It is estimated that Vodafone

has many products, such as, pre-paid lines, SMS, wireless fax. In 2003, Vodafone

launched the first GPRS network which was the base of Vodafone line. The mission

of Vodafone is to help people around the world enjoy communication technology

developments, preserve the environment and support the local communities. Its

network covers 98% of Egypt.

 7

In May 2007 Etisalat Misr was launched as the first 3.5G operator. Etisalat’s entry to
the Egyptian market ushered in a new era for the telecom industry.
Etisalat Misr introduced for the first time to the market a host of 3.5G services, such
as video calling, mobile TV, mobile broadband internet and data services. In a bolder
step, 3.75G was introduced and assumed absolute market leadership in providing the
fastest broadband internet in the market through USB modems and 3G mobile
handsets.Etisalat Strategy is to enhance a price promotion tactic for the prime product
to gain substantial market share . Etisalat Misr’s 2G and 3G robust and high quality
network covers and serves 96% of the population in Egypt

2.2 Six Forces:

Business Environment
For O2 to enter the Egyptian market and to position our product well it becomes
of extreme importance to study the external environment (climate) in which
O2 is going to work in. The external climate for our company has several dimensions
which include political and legal environment, economic environment, socio-
cultural environment, and technological environment.

2.2.1 Political & Legal Environment:

For a foreign company like O2 wanting to establish a new market for itself in
Egypt, it is important to know the formal and informal rules under which a firm must
operate. Government regulations and legal issues of importance to our case include:
tax policy, employment laws, environmental regulations, trade restrictions and tariffs,
and political stability.

Regarding tax policy, the Egyptian government does not follow a stratified system of
taxation (i.e. a tax rate for every stratum); however it follows a fixed taxation system
which obliges all the corporations working in Egypt to pay a fixed percentage (20%)
of its income as a tax on its business. O2 will have to account for a fixed portion of its
income as a tax for the Egyptian government regardless of the performance of the
company. This is an edge from the point of view of our company because this is
considered a moderate and fair tax rate so it will not break our back!!
 8

Egypt offers very skilled workers, computer scientists, IT specialists, and engineers
for much lower wages than their counterparts in Europe or the Untied States.
Therefore, it is considered advantageous for O2 to establish a business in Egypt and
make use of this fact. However, it should be noted that the Egyptian government sets
strict laws for employment which dictates that no person should work manually more
than 8 continuous hours, and has the right to have one day off per week in addition to
the fact that overtime is not mandatory but optional. Although employment laws are
not firmly enforced in Egypt, it is strongly recommended (especially to multinational
companies) .

There is a growing trend here in Egypt to stop spoiling the environment and/or the
public’s health by either the wastes of an industry or by secondary effects of the
product itself. Since O2 is basically a mobile phone network coverage company it is
crucial that our supply stations do not radiate (or at least in an acceptable limit) any
harmful radiations that may undermine the public’s health and the environment. This
may not become a problem for O2 because of the usage of the state of the art
equipment so our business here will not be stopped by the environmental issues yet
we should put it in our minds for further penetration in the market.

Since O2 emphasis is on offering services and not products, trading regulations and
tariffs will not be considered as a drawback because Egypt is considered a developing
country and the components used in our service offering (which are high-tech) are not
manufactured locally, the tariffs imposed on imported products will be a minimal
because our importing does not affect the local industry. A word of caution is that the
Egyptian industry is developing and tariffs may be imposed on our components in the
future, yet this should not be a big deal because at that time our product will be well
positioned in the market and the number of customer will be increased.

Political stability is one of the significant characteristics of the Egyptian market. Since
the last war Egypt went into was in 1973, and since then Egypt didn’t go in other wars
which may affect its political stability. The diplomatic relationships between Egypt
and its neighbors are well so there is no fear of a coming war. There is a one
overwhelming dominating political ruling party so there is a little chance that any
 9

other party will throw it away and take its place. Regarding the history of Egypt in the
last 3 decades one could say the Egypt has a very stable political stability with very
minimal occasions of unrest.

2.2.2 Economic Environment:

The economic analysis of a country should be related to the factors the affect the
purchasing power of the consumers and the firm’s cost of capital. These factors may
include the economic growth, interest, exchange and inflation rates.

Egypt is ranked as a developing country yet its economic growth is very much related
to national projects and not individual ones. National projects which affect the
Egyptian economy are like tourism and the Suez Canal. Projects like these are the
backbone of the Egyptian economy. Due to the previous fact, the Egyptian
government pays attention to the field of tourism where tourists and who accompanies
them will certainly need a wide mobile phone coverage service on tourism areas.

Most of the Egyptians are risk averse which is reflected in their investment in risk free
investments which yield low returns. The interest rates offered by national banks
usually range from 8.5% to 11%. However, inflation rates in Egypt are very high
(8.3% for year 2005) which consumes lots of the gains on the Egyptians investments’.

2.2.3 Socio-Cultural Environment:

An analysis of the Egyptian socio-cultural environment may include the family
structure, values, norms,

The Egyptian society is a society which holds family traditions at great esteem. The
most common family type is the normal families which consist of parents and
children. The other type of families is the extended families where three or more
generations live together. This type of families is most encountered in rural areas. The
other less common (but steadily increasing) is the nuclear families where a child lives
 10

with a single parent and this is the least encountered in Egypt. Family relationships
are very important in Egypt and being a member of a family this entitles you to
communicate with each other on a very frequent basis and it became a norm that
people should not stay off contact for a long time otherwise they will be undermining
a very important social value which is “keeping in touch”.

It should be noted from observing the history of mobile phones in Egypt that it
became a norm that Egyptians older than 16 years old should carry cellular phones.
And it is very important for girls in high school or university to have a cellular phone
in order for their parents to check up on them regularly when they are not home.

2.2.4 Technological Environment:

Technological factors have a significant role in lowering the barriers to entry,
enhancing the production efficiency, and outsourcing decisions. Some technological
factors include: R&D activity, automation and rate of technological change.

Since technology is an investment a company should make in order to succeed and in

the field of mobile communications technological advancements are limitless. It is
very important to keep up updating our system to meet our competitors.

The technology that our competitors mainly use is a satellite communication

technology & a traditional one in the sense that they depend on local network supply
stations to enhance the signal coming from the head quarter to the mobile users and
vice versa.

2.3 Market Segmentation:

In the following section, three types of segmentations are handled:
demographic, geographic and behavioural segmentation as they are relevant to this
particular business. Psychographic segmentation is not handled as it's relevant to
mobile phone industry but it does not have a significant role in the network services
business.
 11

2.3.1 Demographic segmentation:

2.3.1.1 Age:
According to CIA world fact book (2006), there are 78,887,007 persons in Egypt
classified as follows:
0-14 years 32.6%
15-64 years 62.9%
64 years and over 4.5%
The median age is 24 years.
The data above shows that largest and the overwhelming category in Egypt is youth.
In fact, they are the most frequent users of mobile phones in making calls, sending
messages, ring tones, logos, clips… and so on. Egyptian youth are also the most
frequent users of internet and up-to-date technology-based products in the Arab
World.

2.3.1.2 Gender:
In fact, gender role is a very determinant factor, when trying to segment the Egyptian
customers for two main reasons:
 Literacy:
Age 15 and over can read and write, but high levels of illiteracy reaching more
than 40% of the population can be found in some areas like Upper-Egypt and
Oasis especially among girls.
Unfortunately, illiterate people are not expected to be frequent users of mobile
phones as literate people who can use the phone, send messages, e-mails, tones,
logos,……etc.
 Customs and traditions:
As part of the Egyptian culture and the Egyptian family, ladies are given less
privilege than men especially in urban areas and Upper Egypt. In such area, it is
not usual for girls to hold mobile phones.

2.3.1.3 Income:
 12

Income is one the important factors if not the most important one, upon which the
market is segmented because it determines the buying power of each segment. In
Egypt, three categories of incomes can be differentiated:
 Low to very low income:
These are people who can not or can hardly satisfy their basic needs such as food,
transportation, and basic education.
 Medium income:
This category represents the majority of the Egyptian society. People in this
category are educated people working for companies in the private or
governmental sector, or owners of very small projects like grocery shops, mini-
markets. Most of customers falling in this category are having mobile phones;
yet, their usage of mobile phones is very limited.
 High income:
This category includes people with high incomes such as businessmen, owners of
large projects and companies. Of course, all members of high income families are
included in this category. In fact, customers falling in this category are the most
frequent users of mobile phones. ( Target Segment )

2.3.2 Geographic segmentation:

The market is expected to be segmented with respect to geographic locations as
follows:
2.3.2.1 People living in the cities:
In cities like Cairo, Alexandria, and Giza, the greatest percentage of customers can be
found. In these cities, life is very dynamic and full of interactions between people
working together, students, relatives. This is why the use of mobile phones is high.
2.3.2.2 People living in Upper Egypt, and urban areas:
In urban areas and Upper Egypt as stated above due to some factors like high
percentage of illiteracy and existence of some rigid customs and traditions that make
the use of mobiles among ladies not favourable. Therefore, the lowest rate of using
mobile phones can be found in such areas.
 13

2.3.3 Behavioural segmentation:

2.3.3.1 Companies and business organizations:
B2B is probably the most important segment that uses mobile phones.
Companies use mobile services in business to create a continuous network between its
employees. Mobile lines are also used by companies in order to connect with
employees working in remote areas. For instance, oilfield companies work on
projects in the desert, the sea and they are in need to communicate to the head office
frequently.

Usually business organizations are looking towards the following aspects in

communication services:
 Quality of the service.
 Continuity of the service (no frequent breakdowns)
 Fast response from the company providing the mobile services.
 Price

2.3.3.2 Businessmen:
Mobile phone is very vital to people who own or manage a business. They use the
phone for long time to make many local and international calls.
Such segment of customer is usually looking for aspect like:
 Quality
 Price
2.3.3.3 Youth:
As stated above, youth constitutes the majority of mobile phones users in
Egypt. They are using almost all aspects or services offered by the mobile phone
service provider like making calls, voice calls, sending messages, jokes, ring tones, e-
mails, logos, chatting…etc.
Such segment of customer is usually looking for aspect like:
 Variability of services offered (e-mail sending, voice mail, ring tones,…).
 Ease of use
 Reasonable price
 14

The 80/20 Rule is valid to a great extent in this particular business as the B2B and
business segments representing no more than 20% of the mobile phone users
consumes about 80% of what is consumed by the whole market.
2.4 Targeting:
Based on the segmentation process, it was decided that the best strategy to be
used for targeting would be a custom marketing strategy, where different services are
introduced addressing the unique needs of each customer.
For B2B market and businessmen, O2 Company will offer satellite network coverage
that will allow consistent coverage with high quality any where. In addition, O2 will
use and activated the concept of customer care by building a very Friendly &
Professional relationship with other businesses and by fast responding to any
comments, complaints made by these customers.

2.6 SWOT Analysis:

2.6.1 Strengths and Weaknesses:

2.6.1.1 Strengths:

 High capital investment: the high capital investment will help the company

provide the newest technology like the satellite service.

 Satellite technology will enables clients to use our service anywhere. This

feature will be very useful to users, like Businessmen & Class A who travel

outside the country.

 Providing better customer service that aims to inform client about his system

plus keep providing him with service he needs.

 Premium price service, to target the niche market.

2.6.1.2 Weaknesses:

 Very high initial costs: The costs would be high relative to the revenue at

the beginning in order to attract more customers.

 15

 Not having enough experience about the telecommunication business

environment in Egypt. The company has not yet had enough contact with

the Egyptian public and all the environmental trends surrounding the

mobile business. That would take it sometime to adapt to the Egyptian

environment rather than just making market research which its results are

not as accurate as real experience.

2.6.2 Opportunities & Threats

From the previous analysis of the business environment, the opportunities and threats
which encounters O2 as a foreign multinational company wanting to establish mobile
communication business in Egypt is deduced.

2.6.2.1 Opportunities:
The opportunities in the external environment can be classified into the following:
o Targeting Niche Market which necessitates network coverage 24/7.
o The abundant skilled workers and specialists at lower prices than most
other countries.
o The importance of cellular phones to Egyptians socio-culturally.
o The relatively high political stability in Egypt allows the establishment
and continuation of multinational businesses.
o The welcome of the Egyptian society to a forth mobile coverage
company which may break the Cartel Triple.
2.6.2.2 Threats:
Although there are opportunities that O2 may take advantage of, there are also threats
which may cause a source of unrest to the company which are:
o The low purchasing power of the Egyptian economy.
o The coalition of the Three competitors together against (O2).
o An economic recession in Egypt which may force the Egyptians not to
use mobiles.
 16

3.0 Objectives
 To Create Awareness to Gain & Attract The Niche Market Segment in
cellular phone network coverage business in Egypt within 5 years.
 To achieve a profit of 500 million pounds after a period of 5 years.

4.0 Strategy
Due to our offering of Three different products in the Egyptian market, it is
appropriate to approach our consumers in two different strategies.

4.1 Market Penetration Strategy (prime product):

Because basically the product offered by (O2) is already existing and established in
the Egyptian market, we will have to gain a space in Egypt by offering the Higher
Quality of service with a Premium Price. in order to attract The Niche

By following this strategy it is expected that the Egyptians will subscribe in (O2)
service and we will gain a room in the Egyptian market. It is predicted that we will
have a tough competition at the beginning but consequently in few years we will be
able to gain a stand in the market and acquire a substantial market share.

To summarize the reason for choosing a market penetration strategy for our prime
product is that:
o (O2) has a huge capital which will enable it to establish its brand in the
market despite the strong competition predicted.
o Higher Quality of service with a Premium Price. in order to attract
them The Niche
o Following a market penetration strategy will enable (O2) to achieve
the objective of Creating Awareness To Gain & Attract The Niche
Market Segment in cellular phone network coverage business in
Egypt within five years
 17

4.2 Diversification Strategy

Connect with your customers anytime, anywhere

Inspiration can strike anytime and anywhere. Whether it's to compare digital cameras
or to find a nearby restaurant, consumers increasingly search and browse the web
from their phones. With o2 mobile ads, you can reach this fast growing audience and
engage consumers when they're receptive to buy.

Reach the Right Customers at the Right Moment

o2 mobile ads let you connect with the right customer at the right moment, wherever
they are. Is your customer just around the corner from you? Mobile users' locations
can be pinpointed with meter-level accuracy. Advertisers can easily target or tailor
your message according to location and automatically show your customer relevant
local store information, like phone numbers and addresses, to enable them to take
immediate action.

Easily Manage Campaigns in One Place

Quickly and easily ramp up to reach mobile users. With one click, you can extend
your existing campaigns to target both desktop computers and mobile devices, or just
mobile devices.
 18

5.0 Action Program

Starting Date Action Assignment

Jan-011 T.V Ads

Jan-011 Sales to Retailers

Jan-011 Classical Concerts

summer-011 Popular Concert

 19

7.0 Control
7.1 Actual Implementation and Expenditure vs. Achievement of
Objectives

The amount of profit is obtained by subtracting the costs and expenses from the net
sales. This is beneficial in controlling the objective related to amount of profit.

As mentioned in the weaknesses of O2 that it will have very high initial costs

because of differentiated costs which will enable the company to widen its consumer

base. Hence, this will enable the company to recover its losses. Therefore it is very

important that O2 measure its actual expenditures vs. budget.

7.2 Actual Expenditure vs. Budget:

Media Advertising: Media advertising is expected to be 30,000,000 LE for every

coming year. This includes T.V ads, magazine ads, press and other media. T.V is

going to be the main medium for advertising.

Brand/PR Sponsorship: O2 is going to sponsor many events, hosting very famous

Egyptian and international singers, like Amr Diab, Samy Yousef, Tamer Hosny and

others. The company would print its logo on the tickets, and provide booths to inform

people mainly about its products. The events would be in respectable places like Al

Gezira Club, Ahly Club . Also considering the businessmen and other VIPs the

company would sponsor concerts, for artists like Omar Khayrat, Opera shows and

other classical events to attract the high class people who travel outside Egypt

frequently. Again Tickets would contain Logo of the product and there would be

booths nearby for informing about the qualities of the product. Popular and classic

events would be carried out both once a year for the coming 5 years for 40,000,000

L.E.
20