Market Penetration Strategy as a Means of Entering the Nigerian Telecommunication. A Study of Mobile Telecommunication Network (MTN)
Chapter One
Objective of the Study
- To examine the relevant marketing strategies in the overall performance of operators in Nigeria
- To determine the role of marketing strategies in entering the Nigerian telecom market
- To critically analyze the strategies used in market penetration
- To provide the basis for establishment of an effective strategy that will gain and consolidate market position in the telecom market.
- To establish problems which constraint managers in the application of marketing strategies in market penetration and to suggest recommendation on how these problems can be tackled.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
Introduction
The field of strategic management presents various typologies to describe the generic competitive strategies of firms, how firms compete in specific businesses or companies by exporting their competitive advantage in order to realise their goals (e.g. Hambrick, 1983, Porter, 1980 Miles & Snow, 1978). The typologies all focus on a firm’s relative emphasis on operational efficiency and low cost or uniqueness in the market. This paper however focuses on Miller (1992) High Performance Gestalt and Porter’s (1980) typology of generic competitive strategies which is made up of overall price leadership, differentiation and focuses (cost or differentiation in anarrow market segment) and hybrid for the following reasons. First, Porters typology overlaps with other competitive strategy typologies. For instance, Porters strategy of cost leadership is synonymous with Miles and Snow’s (1978) defender strategy and Hambrick’s (1983) efficiency strategy. Porter’s differentiation strategy also resembles Miles and Snow’s prospector strategy.
Second, Porter’s typology has been linked to many organizational, environmental and performance – related variables (Campbell–Hunt, 2000; Dess & Davis, 1984; Kotha & Vadlamam, 1995; Ward & Druay, 2000). Porter’s framework proposes that firms that pursue any of these competitive strategies would develop a competitive advantage that would enable them to outperform competitors in their industry. However, for a firm to earn superior profits and outperform its competitors, it must make a clear choice between a cost leadership and differentiation strategy in order to avoid “the inherent contradictions of different strategies” (Porter, 1996).
This study emphasizes price leadership, differentiation and focus strategies, because they are the commonly used strategy dimensions in the literature (Dess & David, 1984; Nayyar, 1993; Allen & Helms, 2006). A differentiation strategy in Nigeria telecommunication companies may be based on simultaneously creating customer loyalty by generating differences in product image through intensive marketing and image management (Miller, 1988), creating products that are innovative, dependable, durable and serviceable (Beal & Yasai-Ardeka 2000). Dess and Davis (1984) and Beal (2000) further develop the differentiation strategy of Porter. Beal distinguishes four different differentiation strategies i.e innovation differentiation, service differentiation, marketing differentiation and quality differentiation. The cost leadership strategy represents attempts by firms to generate competitive advantage by achieving the lowest cost in the industry (Amoako – Gyanpah & Acqyaah, 2008). The focus of firms implementing a cost leadership strategy is on stringent cost controls and efficiency in all areas of operation (Porter, 1980). Either of these two approaches can be accompanied by a focus of organizational efforts on a given segment of the market (Gibcus & Kemp, 2003). From a theoretical point of view, the arguments for the adoption of hybrid strategies stem from some problems associated with pure strategies (Miller, 1992). Thus, hybrid strategies may address customer needs better; they may be more difficult to imitate; and they may generate a more flexible wider view.
Meanwhile, Porter (1980) suggested that a business attempting to combine the two approaches invariably ends up stuck in the middle. He argued that the low cost and differentiation strategies are based on incompatible assumptions and thereby create trade – off within the organization. This notion received considerable initial support (Dess & Davis, 1984, Hambrick, 1981; Hoawes & Crittendon, 1984); it was later challenged by a substantial body of research (Oyedijo, 2012; Parnell, 1997; Parnell & Wright, 1993; Proff, 2000). Members of the “combination strategy school” have argued that business successfully combining low costs and differentiation may create synergies within the firm that overcome any trade – offs that may be associated with the combination.
The sustainability of the three generic strategies demands that a firm’s competitive advantage resist erosion by competitor behaviour or growth. The sustainability of a generic strategy requires that a firm possesses some barriers that make imitation of the strategy difficult. It is usually necessary for a firm to offer a moving target to its competitors by investing in order to continually improve its position. Each generic strategy is also a potential threat to the others (Gibcus & Kemp, 2003). Gibcus and Kemp (2003) argued that firms with a clear and consistent strategy will outperform firms without such a strategy. This is the main argument for porter to define his generic strategies.
Telecommunication companies operations and performance in Nigeria
The development of telecommunication facilities in Nigeria began in 1886 when a cable connection was established between Lagos and London by the Colonial administration (Adegboyega, 2008). From the very beginning it was clear that the introduction of telephone services in the country was not induced by economic or commercial motives. Furthermore, it was not meant to enhance economic growth; it was originally developed as a tool for colonial subjugation.
Salawu (2008) stated that between independence in 1960 and 1985, telecommunication service became commercialized. He stressed further that the old department of post and telecommunication (P&T) under the Ministry of communication Limited (N.E.T) was created to take care of external telecommunication services while the old P & T handled internal network. By January 1985, the erstwhile (P&T) divisions merged with N.E.T to form Nigeria telecommunication limited (NITEL) a government owned Limited Liability Company. The objective of establishing NITEL was to harmonize the planning and coordination of the internal and external communication service, rationalize investments in telecommunication development and provide accessible, efficient and affordably services.
NITEL, the only national monopoly operator in the sector, was synonymous with epileptic service and bad management which made telephone then to be unreliable, congested, expensive and customer unfriendly. According to Ajayi, et al (2008) the years 1992 to 1999 were tagged as the partial liberalization era, when government embarked on market – orientated, partially liberalizing the Nigeria telecommunication sector via NCC Decree 75 of 1992. The reforms include separation of the policy – making body from industry regulator and networks operators/ service providers and licensing of network operator/ service providers which began in 1996.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
POPULATION OF THE STUDY
According to Udoyen (2019), a study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitutes of individuals or elements that are homogeneous in description.
This study was carried to examine Market Penetration Strategy As A Means Of Entering The Nigerian Telecommunication. Mobile Telecommunication Network (Mtn) forms the population of the study.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of eighty (80) questionnaires were administered to respondents of which only seventy-seven (77) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 77 was validated for the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain Market Penetration Strategy as A Means Of Entering The Nigerian Telecommunication A Study Of Mobile Telecommunication Network (Mtn). In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of Market Penetration Strategy as A Means of Entering the Nigerian Telecommunication
Summary
This study was on Market Penetration Strategy as A Means of Entering the Nigerian Telecommunication a Study of Mobile Telecommunication Network (Mtn). five objectives were raised which included; To examine the relevant marketing strategies in the overall performance of operators in Nigeria, to determine the role of marketing strategies in entering the Nigerian telecom market, to critically analyze the strategies used in market penetration, to provide the basis for establishment of an effective strategy that will gain and consolidate market position in the telecom market and to establish problems which constraint managers in the application of marketing strategies in market penetration and to suggest recommendation on how these problems can be tackled.. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from Mobile Telecommunication Network (Mtn). Hypothesis was tested using Chi-Square statistical tool (SPSS).
Conclusion
Out of all the other entry strategies of business, this study established that MNCs can best engage in better expansion through the FDI which guarantees participation in decision, ownership, and capital growth of the stakeholder’s business interest in foreign countries. It however entails dealing with country related regulations that are cumbersome like in the case of Nigeria and MTN, and often exposes the business to capital pressure or loss of interest, but the interest and growth indices especially with proper analysis, are unimaginable. On another note, FDIs have been tools of underdevelopment of regions, countries, and states. This is as a result of the structure which the MNCs vantage to maximise their profits while lobbying the gatekeepers to look the other ways
Recommendation
Therefore, this study recommends that telecommunication application service firms should consider adopting niche market penetration strategy as this positively and significantly improves firm performance. Further, in order to efficiently serve the target market, knowledge of consumer needs is critical, firms should consider relationships management strategies that can provide information that allows the firm to serve customers’ needs and wants.
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