Case Study: New Line in Mobile Phones by Haris Awang

CASE STUDY 2

Features | Benefits | Products | Services

Submitted to:

Mr. Kumaran Raman

Acting Postgraduate Coordinator & Senior Lecturer

Faculty of Business & Law

ASIA METROPOLITAN UNIVERSITY

Tel: 03-9080 5888 Ext 680

02nd June, 2016

A.HARIS AWANG MBA2016-04-1001 MBA 6033 Marketing Management

CASE STUDY 2 | NEW LINE IN MOBILE PHONES | BY A.HARIS AWANG | PAGE 1

CASE STUDY 2: NEW LINE IN MOBILE PHONES

One of the oldest principles of marketing is that sellers may sell features, but buyers

essentially buy benefits. This is a distinction sometimes lost on technology led

organizations, and the service sector is no exception. Recent experience of the UK’s

largest telecommunications company, Vodafone, illustrates how crucial it is to see service

offers in terms of the benefits they bring to customers. The company was aware of

extensive research which had found high levels of confusion among purchasers of mobile

phones, with a seemingly infinite permutation of features and prices. With four main

networks to choose from, dozens of tariffs and hundreds of handsets, it is easy to see

why buyers sought means of simplifying their buying process. Throughout the 1990s,

Vodafone had positioned its UK network as superior technically to its competitors.

Advertising focused on high coverage rates and call reliability.

Vodafone was the UK's most popular mobile phone operator, with almost eight million

customers, including 4.2 million Pay as you Talk customers. It had opened the UK's first

cellular network on 1 January 1985 and was the market leader since 1986. Vodafone's

networks in the UK - analogue and digital - between them carried over 100 million calls

each week. It took Vodafone more than 13 years to connect its first three million

subscribers but only 12 months to connect the next three million. Vodafone had the largest

share of the UK cellular market with 33% and had more international roaming agreements

than any other UK mobile operator. It could offer its subscribers roaming with 220

networks in 104 countries.

Despite all of the above, Vodafone was aware that although it was recognized as an

extremely strong business in the corporate marketplace, it was not so strong in the market

for personal customers. Research indicated that personal buyers bought Vodafone for

essentially rational reasons rather than having any emotional attachment to the brand.

The success of the competing Orange network, which had developed a very strong image,

was a lesson to Vodafone that many people did not understand many of the product

features on offer, but instead identified with a brand whose values they could share.

Vodafone recognized that it needed to be perceived as adding value to a consumer’s


lifestyle. Given the increasing complexity of product features, positioning on technical

features was likely to make life more confusing for personal customers. An alternative

approach was needed which focused on image and lifestyle benefits.

The company decided to hire Identica – the consultancy that originally created the One 2

One brand – to revamp its brand communications and advertising strategy in an effort to

make Vodafone more appealing to personal customers. Identica created a new ‘visual

language’ for the Vodafone brand. Vodafone became involved in the biggest ever TV,

press, poster and radio advertising campaign in its 15 year history. Employing a

completely new style, the new advertising centered around the theme: 'You are now truly

mobile. Let the world come to you' and featured a new end-line - Vodafone ‘YOU ARE

HERE’. The campaign demonstrated how Vodafone's products and services were

designed to make life easier for its customers.

The campaign, created by BMP DDB, was worth £20 million over two months alone and

ran for the whole year. Bringing meaning to the Vodafone brand and what it represented,

a series of advertisements, through a range of media, showed how Vodafone let the world

come to its customers, enabling them to be truly mobile. This portrayed how Vodafone

always pioneered to make things more possible for its customers in a wire-free world.

In press and poster executions, Vodafone used arrows photographed in various real life

situations to depict its flagship services, e.g. a weather vane was used to illustrate the

Vodafone Interactive weather service showing how weather information could be brought

to customers through their mobile. Each advertisement again had the Vodafone ‘YOU

ARE HERE’ end-line. The arrows indicated the directional approach of Vodafone, letting

the world come to the customer. Other executions illustrated cinema listing information,

sports updates, share price information, international roaming and the Vodafone Personal

Roadwatch 1800 service.

The change in emphasis by Vodafone seemed to be timely. The mobile phone industry

was facing a new wave of confusing product features hitting consumers, with the

development of Wireless Access Protocol (WAP) phones and the newer “Third generation”

phones due to be launched in 2001. It seemed inevitable that all of the competing


networks would be offering confusing permutations of features with their service, so

Vodafone calculated that, given similar levels of reliability and sophistication by all

networks, a favorable image and lifestyle association would be an important source of

competitive advantage. Given the right image with existing technology, there would be a

strong probability that consumers would migrate with the brand to the new technology

when it arrived.

CASE STUDY REVIEW QUESTIONS

1. Identify the principal benefits to customers which derive from a mobile phone. What

differences are likely to exist between market segments?

Answer:

Mobile phones, also known as smartphones in recent years, have become more than

just devices to make and receive calls. With the advent of mobile technology, they have

become a necessity and inseparable from businesses and individuals.

Principal benefits of a mobile phone to a customer are described as follows (Jung, 2016):

COMMUNICATION OPTIONS

Smartphones offer multiple ways of communicating. Users can access email like Yahoo!

Mail or Gmail which was only limited to PCs in the old school mobile phone days.

Communication is made easier by Whatsapp, WeChat or Telegram where in the old days,

only SMS texting was available. With front-facing cameras video calls are also possible.

Socializing through Facebook, Instagram, Twitter and LinkedIn have also been beneficial

to users.

WEB EVERYWHERE

Previously, users have to use PCs to access the Web. With smartphones, users can be

anywhere - train, bus, shopping mall, park or beach as long there’s coverage.

Smartphones and internet technologies have become sophisticated to allow users to get

high speed and quality content like video streaming and gaming.


DEVICE MERGER

Users no longer have to lug gadgets like laptops, tablets, GPS devices, cameras, MP3

players and cell phones all at once when traveling. Not only that, each gadget usually

requires a charger which may also be bulky and heavy. All that are now bundled into a

smartphone. That translates into cost saving and portability.

ENDLESS APPLICATIONS

Thousands of apps available today have made smartphones the essential gadgets to

businesses and individuals. Online banking transaction, fitness monitor, unit converter,

currency converter, Waze, internet TV, just to name a few are benefiting users. Users

have cut down time wasted on queuing up to pay bills or do banking thanks to

smartphones.

Benefits which derive from mobile phones vary from person to person. What customers

see as benefits depends on what value mobiles phones have to offer. Chatting or surfing

using mobile phones may be considered aimless and useless to some while enjoyable

and useful to others.

The differences likely to exist between market segments are for example, the degree of

importance of features depending on the value perceived by the users. Segments can be:

age, gender, occupation, income, lifestyle or demographics. Different segments may have

different needs and marketers must identify which features or benefits suit which segment

for successful marketing.

Depending on how mobile phone companies would want to segment their market, a

typical mobile phone market should be segmented into work-oriented customers, highly

social customers, and customers who consider mobile phones as a status symbol. Highly

social customers would expect mobile phones to be durable, technologically advanced,

and easy to use. Work-oriented customers would prefer buying phones that are

inexpensive and durable. Mobile phones are considered as a status symbol by many

people. They expect their phone to be technologically advanced, expensive, sleek, and

stylish. (Mello, 2014)


2. Is a strong brand identity on its own a source of sustainable competitive advantage?

To what extent must this be backed up by real product features?

Answer:

A strong brand identity on its own can be a source but does not guarantee sustainable

competitive advantage. It has to be backed up by real product features to the extent that

they satisfy customers’ needs and wants.

Take for example, Blackberry by Research in

Motion (RIM). Yesterday, it was “the” phone

brand embraced by many enterprises and even

being spotted in the hand of President Obama’s.

Today, it is reduced to almost non-existence with

a barely noticeable market share of 0.2%

(Haselton, 2016). Blackberry phones were

focused and targeted at enterprises while

ignoring the individual market segment. The

launched of Apple’s iPhone has changed the

game. Despite the introduction of the Z10 and

the Playbook, Blackberry was a little too late to

respond in order to survive.

iPhone on the other hand was packed with real features that customers wanted. For

example, the capacitive touch screen really makes the smartphone easy to use instead

of having the physical QWERTY keyboard and a track pad that sacrifice the screen size

by nearly half. People who switched from Blackberry to iPhone are less likely to switch

back to Blackberry for this reason. (The national, 2013)

It is also worth mentioning other strong brands that went into the oblivion – Nokia,

Compaq, Polaroid, Kodak which just proves the point that strong brand on its own does

not guarantee sustainable competitive advantage.


3. Are goods different to services in the way that a distinction is made between features

and benefits?

Answer:

Yes, they are all distinctive. First, let’s have a look at how distinct features and benefits

are from each other.

Features are what product or service enables customers to do. They are characteristics

that a product or service does or has. They are usually advertised alongside a product or

service to give customers an idea of what it can do (see figure 3.1). Features such as

megapixel, lens type or Wi-Fi can help customers make the purchase decision. When

products or services can be conveniently compared with competitors’, consumers are

more likely to choose products or services with the most features. For example, a digital

camera that offers Wi-Fi as an additional feature compared to a competitor’s of the same

class will most likely be chosen.

Figure 3.1. An example of products & features on a website. (Source: canon.com.my)

Benefits are the outcomes customers get that help them achieve their objectives. Benefits

also help in solving customer’s problem. A benefit answers the question "What's in it for

me?," as it provides the customers with something of value to them. Benefits are the

reasons customers buy the product or service. Benefits are results customers get by


using the features. Benefits can also masquerade as features. They are used to enticed

customers into buying the products or services. As in the example of figure 3.1, each

feature’s benefit is not clearly shown. Customers somehow have to go deeper to look for

what each feature is about which normally leads them to the benefits. Features can also

imply benefits as they convey a subtle message as to why one would want to use a certain

product. For example, Coca-Cola has introduced Diet Coke, an alternative to the regular

Coke that is low in sugar and less calories. Even though not stated, consumers who

consume Diet Coke know that these features give them the weight loss benefit. So not all

benefits are clearly spelled out in advertisements. As in the example below (fig. 3.2), Diet

Coke is associated with skinny celebrity, Taylor Swift, that conveys the benefit that is very

subtle – drink Diet Coke if you want to lose weight.

Figure 3.2. An example of a product’s benefit associating Taylor Swift & Diet Coke. (Source:

google.com)


From examples in Tables 3.1 and 3.2, we can see that benefits are derived from features

of products or services. Marketers have to understand the difference in these two

definitions for successful marketing.

Table 3.1. An example of features and benefits of a product.

Product Features Benefits

Digital Camera 12MP CMOS sensor Instant sharing so users can upload to

social media

24-120mm lens Great for family, portrait and

landscape

ISO 80-12800 For low lighting condition e.g. indoor,

night, overcast

Built-in Wi-Fi Sharing on internet

RAW format recording Good for advanced post-editing

Table 3.2. An example of features and benefits of a service.

Service Features Benefits

Uber Taxi Cashless No worries about carrying cash or

paying exact change

Apps driven Order the ride at fingertip. Can see

driver’s picture. Can map the ride.

Cars less than 5 years Ride and safety is ensure with new

cars

Door-to-door Don’t have to walk far to get a taxi

Fare estimate in advance Less likely conned or overcharged


Secondly, products and services are also distinctive as described below.

Kotler & Keller (2012) defined products as anything that can be offered to a market to

satisfy a want or need and services as any act or performance that one party can offer to

another that is essentially intangible and does not result in the ownership of anything.

Products are tangible, which means they exist in physical form. Customers can touch,

feel or in the case with online products, see before they could decide to purchase.

Examples of products are:

Computer

Smartphone

Automobile

Food

House

Camera

Services are intangible, which means they exist as an act or performance to satisfy

customer’s needs. A service may also be a business derived from a product. For example,

an automobile is a product that requires services at a later stage.

Examples of services are:

Consultation

House cleaning

Haircut

Car service

Security

Airline


Table 3.3. A comparison between products and services.

ProductsTangible

Ownership

Have immediate value

Quality easily measured

Transferable

Can be inventoried

ServicesIntangible

Non-ownership

Have value when used

Quality not easily measured

Non-transferable

Cannot be inventoried


REFERENCES

Douglas, L. .C. (2000). Marketing Features Vs Benefits. Retrieved 2 June, 2016, from

https://www.entrepreneur.com/article/34942

Haselton, T. (2016). TechnoBuffalo. Retrieved 1 June, 2016, from

http://www.technobuffalo.com/2016/02/18/mobile-os-market-share-gartner/

Jung, B. (2016). Chroncom. Retrieved 1 June, 2016, from http://smallbusiness.chron.com/benefits-

smartphone-technology-57037.html

Kauffman foundation. (2015). Product/Service Features and Benefits. Retrieved 2 June, 2016, from

http://www.entrepreneurship.org/resource-center/productservice-features-and-benefits.aspx

Kotler, P & Keller, K.L. (2012). Marketing Management. (14 ed.). US: Prentice Hall.

Lorette, K. (2016). Product Vs Service Marketing Challenges. Retrieved 2 June, 2016, from

http://smallbusiness.chron.com/product-vs-service-marketing-challenges-658.html

Mello, J. (2014). Walkmecom. Retrieved 1 June, 2016, from

http://product2market.walkme.com/benefit-segmentation-examples/

The national. (2013). The Bottom Line: What happened to BlackBerry?. Retrieved 2 June, 2016, from

https://www.youtube.com/watch?v=ppLIRdUezug