Case Study on

Impact of Advertising on Ufone Sales/Market Share

Submitted to: Submitted by:

Malik Faisal Azeem Zohrab Ahmad

(Sp11-mbo-003)

Submission Date:

6th January 2012

Comsats Institute of Information Technology Wah Campus

Impact of Advertising on Ufone Sales/Market Share

Introduction: Ufone GSM is a Pakistani GSM cellular service provider, It's one of five GSM Mobile companies in Pakistan, and is a subsidiary of Pakistan Telecommunication Company. After the privatization of PTCL, Ufone is now owned by Etisalat. Ufone has a subscriber base of 20.23 million as of September 2010. Company profile: PTML is a wholly owned subsidiary of PTCL established to operate cellular telephony. The company commenced its operations, under the brand name of Ufone from Islamabad on January 29 2001. During the year, as a consequence of PTCLs privatization, 26% of its shares were acquired by Emirates Telecommunication Corporation (Etisalat). Being part of PTCL, the management of Ufone has also been handed over to Etisalat. During the year July 2005 to June 2006, further expanded its coverage and has added new cities and highways. Ufone has network coverage in more than 750 cities, towns and across all major highways of the country. During the year Ufone completed the network expansion of Phase 4 in existing as well as in new cities and towns which amounted to more than US Dollar 170 million. As a result the asset base of the Company has increased from Rs. 20 billion to Rs. 27 billion. This customer focus and best offering has allowed Ufone to build a subscriber base of over 20 million in less than a decade. Ufone has network coverage in 10,000 locations and across all major highways of Pakistan. Ufone currently caters for International Roaming to more than 288 live operators in more than 160 countries. Ufone also offers Pakistans largest GPRS & BlackBerry Roaming coverage available with more than 200 Live Operators across 122 countries. More recently, Ufone has become a focused and intensive leader in VAS, constantly introducing innovative services, which have been the first of their kind in the Pakistani cellular industry. As the world of telecommunications advances, Ufone promises its customers to stay ahead, developing and evolving, to go beyond their expectations, because at Ufone, its all about U.

Ufone Advertisement History: The study of advertising usually begins with a focus on creative strategy and tactics. Creative strategy determines what the advertising message is going to say while the creative tactics deal with how the message strategy will be implemented. Humor is one of the most widely used techniques in advertising around the world, as about one out of five television ads contain humorous appeal. Although the use of humor in advertising has its origins in the early days of the business, its widespread use as advertising strategy is a more of a recent phenomenon. However, few studies in this topic have addressed the fact that advertisements attempting humor vary dramatically in the level of humor they actually evoke in the target audience. While some ads are spectacularly successful at raising a laugh, while others fail to do so. In Pakistan, use of humor in advertising is not a very common practice; however, there are some brands that have used it successfully and made lasting impact in the minds of the consumers. Currently, the telecom sector, undoubtedly, is the biggest advertiser in Pakistan both in terms of advertising spend and airing of television commercials. This sector has used humour successfully in their advertisements which was first introduced as an advertising platform in telecom by Asher Yaqub Khan, a local marketing guru of the telecom industry. His managerial career took off at Ufones launch where he was a significant team player. Working as a manager marketing he was the first one to implement the idea of humor in Ufones commercials. The TV viewers must have remembered the Salma and Shabbo commercials which Faisal Qureshi, Adeel Hashmi and his team had produced. At present, Asher is working in Banglalink, an Orascom Groups company in Bangladesh, as Chief Marketing Officer and now has 14 years of experience in the telecom sector. Asher previously worked with Mobilink, as Director VAS, IR, LDI before joining Ufone in February 2008 for the second time, where he was responsible for a major turnaround in the company. In 2006 Asher had left Ufone and joined DVCOM as GM marketing where again he used humor technique in BIG Time calling cards commercials. After DVCOM Asher worked with Mobilink as Director VAS, IR, LDI for almost 22 months, where he couldnt implement his humor technique as his position offered lesser freedom in creative inputs in the companys advertising concepts. However, it is interesting to note Akbar Khan was his counterpart as of head of brands at Mobilink at that time.

In early 2008, Ufone was facing severe marketing and network issues and the brand was not keeping pace with the market growth. Asher was once again brought back to Ufone as Chief Marketing Officer; through his dynamic approach he once again made Ufone a successful brand in the telecom sector. He was responsible for a major upturn in Ufone in a year-and-a-half. If we look at the statistics for 2008 and the first half 2009 for Ufone, we see that the company did pretty well in grabbing customers and also showed positive financial results. After becoming the CMO of Ufone Asher brought Akbar Khan in his team who had been working with Mobilink as head of brands. Although, Asher has left Ufone, his policies including advertising approach has not changed since then. His successor does not seem to have enough clout to choose different technique / platform. The current Ufones humorous advertising platform with Faisal Qureshi, Adeel Hashmi and his team now has become very monotonous and not creating similar impact with the viewers as they used to. With these funny ads, Ufone has failed to grab the corporate customer. The brand is now more of known amongst the teenagers only, unlike Telenor and Mobilink who brought funny and decent TVCs in parallel to cap all types of audiences. For Ufone commercials, concept and production is being undertaken by Faisal Qureshi and his team. Common mans wisdom will suggest that its Ufones current marketing team behind all these funny ads, however, when discussed with a creative head of an advertising agency and a close ally of team, the source mentioned, that the team still discusses with Asher Yaqub about any new idea that comes to their mind, although Asher is no more part of Ufone. Under the circumstances Ufone marketing team needs to come up with their own ideas, to break the monotony of the same faces which some time become more powerful than the brand. It seems that the current marketing team of Ufone lacks creative ideas which prevent it from taking any new initiatives.

PROMOTION OF UFONE: Ufone uses timely sales promotion stunts to remain in within its customers and to further boost its sales. Ufone uses different sales promotion tools such as contests, games, premiums, gifts, free tickets and promotional products.

CONTESTS:

Ufone held a prominent Cricket Talent Hunt contest under the patronage of SHOAIB AKHTAR in year 2002 GAMES:

Ufone is currently running its game show on ATV prime time. Ufone customers can participate and win prizes in it.What we the group members have felt is that Ufone is not promoting its Game Show through advertisements. It must advertise it properly. PREMIUMS:

The premium is offered, when a customer dont use his/her sim for more than 3-6 months, in the form of extra credit balance delivered to their numbers for free

GIFTS: Here Ufone is offering a premium over recharge with cash prize of Rs. 10 lakhs and other bumper prizes including car, plasma

TV, mobile phone, DVD player and an air conditioner.

ADVERTISING MEDIA: Ufone advertise in the following media types: PRINT MEDIA: Ufone tries and print ads in all leading newspapers including The Dawn, Jung,Nawa-iWaqt, Khabrain and local Sindhi newspapers as wellUfone place its ads in all leading magazines as well i.e. Sunday magazine, akhabr-e-jahan, Libas, Mag etc. Print media Broadcast media Display Media Online Media Events

BROADCAST MEDIA: Ufone tries and advertise in all Pakistani channels including GEO, Hum, ARY, Indus, TV one, HBO, etc (except MTV Pakistan). Ufone also plays its ads on local channels like WASEB and Punjab TV AND radios DISPLAY MEDIA:

Ufone advertise using vehicles like billboards, hoardings, signs, posters, wall paintings etc. SME Multan has used a new and innovative vehicle in display media i.e. Ufones painted rickshaws

ONLINE MEDIA: Internet is the online media. Ufone is not carrying out direct mail or direct e-mail advertising. And it is not even advertising itself on websites

EVENTS: Ufone has sponsored many events in the past and holds future plans concerning it. The famous event sponsored by Ufone in 2006 was a series of musical concerts did all over Pakistan, featuring Mikaal Hassan and Junoon, it named UROCK

Leader in Innovation: Ufone the leader in innovation and the best telecom brand in Pakistan (Source: AC Nielsen Study Top Brand report 25th April 2011) was bestowed the best advertising campaign award 2010-2011 by the Pakistan Advertising society (PAS). The PAS was formed to promote the value of advertising and to ensure that the recipients realize the importance advertising has in economic development and to spread how imperative it is for the consumer to have options to choose from. The societys existence strives for excellence in advertising. Over the last few years advertisers have taken a number of steps in order to stand out in the hope that consumers will choose their brands over those being offered by competition, but one brand that has stood out no matter what industry is Ufone. Ufone has given humor as a platform a whole new meaning, the unique yet highly amusing advertising with concepts never before seen have taken over the hearts of the nation. It is due to the element of excitement and humor that today Ufones ads are loved by all no matter where they reside around the country. Most importantly a number of these adverts are true to life hence viewers can relate to instances in their own lives. The team of actors/comedians in their advertising have each become household names which has played an important role in the likeability towards the brand itself. Mr. Akbar Khan Chief Marketing Officer Ufone said that this is indeed a milestone for Ufone. Pakistan is a country with a growing and diverse advertising sector and we get to experience a number of challenging and unique advertising practices on a daily basis. The team at Ufone strives to be the best at what we do and this award is recognition of our hard work. Ufone always has and always will bring a smile to the people of Pakistan.

LITERATURE REVIEW A D CO CEPTUAL FRAMEWORK Nature of Advertising Advertising i s much more complex than could be really imagined. Placing cause and effect is much more difficult in advertising than in the physical science. This is because it is not easy to control the various factors that could be regarded as contributory in an advertising environment. For instance, a company cannot categorically claim that a particular advertising campaign was solely responsible for recorded increase in its sales at the end of the campaign. Other u n r e c o gn iz ab l e f a c t o r s like higher income for potential customers, reduction problems of competitors, improved customer relation of distributors and retailers and other unnoticeable factors apart from the campaign may be responsible for the companys improved sales. It i s a l s o difficult to classify a d v e r t i s i n g as either an art or a science. Neither practitioner nor academicians have ever agreed on an answer. This is because advertising has a bit of both. In general, creative people regard advertising as an art and themselves and artistes who through their creative ability device effective ways of communicating advertising ideas that will persuade potential customers to use a product, service or an idea. However, people who work in the area of advertising as part of marketing mix often emphasize the science of advertising. This is because they see advertising as part of a mixture of elements combined in a marketing plan to achieve an effect. This, of course looks quite scientific. Whether we emphasized the art or science of advertising, we must concede the fact that like many other fields of social endeavor, advertising is becoming more and more measurable and scientific source. But because it deals with people and its main products are artistic expressions of human creativity, it will never be an exact science but a social science. (Frank , 2005) THE ROLE OF ADVERTISIG The main role of advertising is to make known the availability of a product or science to sell. In addition to this however, advertising performs some other useful and important roles in every society. (Sandage and Rotzoll 2001) stated that advertising plays the following roles: 1. 2. 3. 4. Creation of Standards through Competition Provision of Employment Opportunities Provision of Entertainment and Relaxation Improvement of Living Standard

Different Ways Advertising Increases Ufone Sales

Selling Direct : Some products can be sold directly from an ad or direct mail solicitation, like servicing of Ufone.Utunes, Caller tunes, cards through ban etc. It also works well for supplies and other commodity items that can be grouped by category and offered in a catalog format. There are literally millions of websites using this approach.

Generate Sales Leads : This type of ad encourages response by making a free offer of some type - usually a free white paper, a free initial consultation, free estimate, free evaluation of a problem, or other free information. Sometimes leads are overlooked by busy advertising managers, but when handled and funneled properly to the sales team, they can add tens of thousands, even hundreds of thousands of dollars to a company's gross sales each year.

Educate Prospects : Advertising can communicate information about your product, your service, your business philosophy, your way of doing business, or your unique approach to solving the customer's problems. How to use sim card and how different packages work according to the prospect desire and need. Create Awareness: Give customers awareness about the new promotions and new packages Establish Credibility : Establish credibility with information sources just like this one. By providing some web editorial on how to do effective advertising, we build credibility with our clients that need these types of services. Providing helpful information to potential clients that helps them make better buying decisions is a good way to begin building a relationship with a future customer

Keep Ufones Name in Front of the Public : Ufone maintains its name in front of public through humorous and funny ads producing day by day. Like all new ad build a great position in front of customers eye. Make the most of the budget: Ufone spend its most of budget of its sales in advertising as describes already i-e almost 20 % of its sales.

A Good Advertisement: Using ad agency that is doing well from years in the Pakistan the Ufone is going well through making very good recall able ads. Do It Differently: Doing different may high the cost of doing this but is very much profitable in future. To making a good position and which shows the difference from other competitors like telenor, and Jazz etc.

Advertising Produce Sales Equation:

Advertising = Increase Sales + Increase Customers

Better product/Better Experience = Increase Sales + Increase Customers

Advertising = Increase Sales + Increase Customers

Integrated Marketing Communication = Better product/Better Experience = Increase Sales + Increase Customers

Market Share and Revenue Analysis: Pakistans Cellular industry faced tough fiscal year 2009-2010. Hiked pricing, lower buying power, power crisis, currency devaluation and price war remained major strikers for the cellular companies in year 2009-2010. Objective of this report is to analyze the industrys growth & performance of individual players. Companies may benchmark their next years strategy on the basis of Network KPIs given in Section 4 of this report. 1. Revenues In comparison to 17% revenue growth in FYE 2009, overall industry revenue growth slowed down to 11% in FYE 2010.

Following graph shows the contribution of individual cellular players in the revenue growth. During FYE 2010, 39% of increased industry revenue was picked by Ufone, followed by 32% by Telenor & 15% by Zong. Warid & Mobilinks share in the increased industry revenue remained less than average industry growth rate of 11%.

2 Market Share (in terms of revenues) In terms of revenue, Ufone, Telenor & Zong managed to increase their market share, while Warid & Mobilink continued to lose.

3. Network Roll-Out 2,000+ sites were rolledout during the fiscal year 2009-2010. Ufone & Zong continued to aggressively rollout network (Ufone added 820 sites, Zong added 760 sites) during FYE 2010. Warids network rollout remained onhold (added 78 sites during the year).

4. Network Utilization KPIs Industry Revenue/avg. cell site dropped from PKR 8.6m in FYE 2009 to PKR 8.1m in FYE 2010. Following table shows that Mobilink topped network utilization in terms of revenue generation with PKR 10.7m per site, followed by Ufone & Telenor at PKR 9.3m per site.

In comparison to network size, revenue market share of Mobilink, Ufone & Telenor is higher than network share, while Warid & Zong remained on lower side in terms of revenue share.

5. Conclusion: Industrys growth is slowing down over the period of time, which means that new subscribers addition is reducing and future competition will be focused more towards launch of innovative products/services to increase revenue streams. Subscribers retention & acquisition of subscribers is already on the top of to-do lists, alongwith, customer support is going to play pivotal role in coming days. ADERTISIG AND SALES RELATIONSHIP:

The relationship between advertising and sales has been the topic of lots research and discussions designed to determine the shape of the response curve. Almost all advertisers subscribe to one of two models of the advertising/ sales response function. The Concave Downward Function: After reviewing different studies of the effects of advertising on sales, I concluded that the effects of advertising budgets follow the microeconomic law of diminishing returns. That is, as the amount of advertising increases, its incremental value decreases. The logic is that those with the greatest potential to buy will likely act on the first (or earliest) exposures, while those less likely to buy are not likely to change as a result of the advertising. For those who may be potential buyers, each additional advert will supply little or no new information that will affect their decision. Thus, according to the concave-downward function model, the effect of advertising quickly begins to diminish. Budgeting under this model suggests that fewer advertising naira may be needed to create the optimal influence on sales.

Incremental Sales Advertising expenditures The concave downward response curve

DATA ANALYSIS: Data collection from annual reports and accounts regarding sales and advertising cost of Ufone to find the impact of advertising on Ufone sales and market share. Table 1 : Annual Reports & Accounts YEAR Revenues (#) ADVERT/sales % (#) 16098 11% 2006 14% 21867 2007 13% 27455 2008 19% 40060 2009 20% 49186 2010 Annual Reports & Accounts (2006-2010) Data Analysis Result: After analyzing the recent financial reports of Ufone and by comparing it with past, I found that Ufone is increasing its advertising expense each year. After testing we can conclude that advertising is effecting the whole revenue and market share of the Ufone. As company increases its advertising expense, the company get more revenue and more market share. So we can say that advertising plays a major role in building the market share of Ufone which is already describe as it is almost more then 26% and second in country. As the competitors increase after 2008 but Ufone still maintains its position as compared to Mobilink and other new entrance companies.

Conclusion: After different studies I fully conclude that advertising is a major source for Ufone. As advertising is not individually helpful for the company it is a part of marketing so all parts should be organize well and others like distribution, quality and availability of it every where with full benefits. Ufone advertisements have been the talk of the town for more than two years now. Truly, Ufone has set a perfect example of how simple and tasteful humor can catapult an advertisement into the realm of entertainment. Who can forget the popular Teri mehrbani advertisement that made headlines and even took over Zubaida Apas jokes. However, the point to ponder is that even though, we all have a brand recall for Ufone, does that really matter? Has it stimulated the majority of us to change our networks or brand loyalties? The statistics are indeed startling; with Mobil ink still leading the market and Ufone ranked as third among the telecom service providers. When you come to think of it, no connection has a comparative advantage over the other. Trust me, there is no special difference between charging Rs3 per minute or Rs1.5 per 30 seconds. Even if a connection is charging less for a call, it will somehow manage to suck the blood of its customers through the Value Added Services or an asterisk at the top of every call rate, which would require reading glasses to notice. Are Ufone advertisements merely comic enactments or are they actually increasing the brands sales and market share? Ufone advertisements have a lot of viewership without a doubt. They are also one of the very few Pakistani advertisements whose print advert does not need an explanation; just a screenshot of the electronic advertisement actually speaks a thousand words for the print ad. Their popularity is such that everyone has already seen the electronic advertisement for the same ad. In fact, one of the paint companies has also started to follow their lead by stealing Ufones main men. According to results of a recent customers perception survey result (September/October 2011) based on the performance of their respective cellular mobile operators by Pakistan Telecom Authority (PTA), Ufone finished in at the last position among its competitors. So yes, we do need quality advertisements (like everybody says), but are they actually needed to alter perceptions of the audience? Likewise, a typical answer to the impact of advertisement on sales is that advertising enables an organization to enhance sales. Similarly, advertising is used to persuade and drive consumer

behaviour with respect to a commercial offering i.e. products, ideas, or services. Advertising is certainly not a social service and I am sure, Ufone did not promise to keep the nation happy by feeding them with an entertainment package every now and then. Therefore, the million dollar question is, are Ufone advertisements really effective? If we take feedback as a measure of the advertisements effectiveness, then not only the target audience i.e. youth, but majority of the nation is responding positively towards Ufone advertisements. My grandmother does not remember her date of birth, but she proudly recalls a famous Ufone commercial. But that is just one side of the story; the measures of advertisements effectiveness not only include recall, but also attitude change, and brand choice at the same time. Persuasion is there, but it does not move, affect, or determine a purchasing decision in Ufone s case. Feedback is also there, but that is interms of viewers demand for more and more advertisements from Ufone. What we need to know is that humour in advertising does not work alone, because advertising is only a part of the total marketing effort. A product that is poorly positioned or inadequately distributed in comparison to its competitors, may not make it to the top even though, the advertising itself is well conceived and professionally executed e.g. Mobilink does not spend much on advertisements, but has a large customer base because it reaches out to almost every town of Pakistan. In short from year 2006 to still Ufone is increasing its sales and revenue as the overall market share is not too much increasing but the competitors are also increased recent years. Hence the each company have good strategies and there is not much difference in price of services and packages offered however the only difference is the Ufone ads which are innovative and recall able, which customers like a lot and this makes the difference between the Ufone and other telecom companies.

References:

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