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Marketing Assignment (Iinet)

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MARKETING SITUATIONAL ANALYSIS
MARKETING SITUATIONAL ANALYSIS

BUSM 1534 Marketing for Managers
Assessment 2A

Prepared By: Name | Student ID | Chan Huan Hian | S3374254 |

Word Count: 1100 words

Table of Contents

1.0 Introduction ………………………………………………………………………………2
2.0 Strategic Business Unit (SBU) ………………………………………………………………………………3
3.0 Situational Analysis
3.1 Internal Environment
3.1.1 Product…………………………………………………………4
3.1.2 Price……………………………………………………………4
3.1.3 Promotion………………………………………………….......4
3.1.4 Distribution…………………………………………………….4
3.2 External Environment 3.2.1 Market …………………………………………………….......5 3.2.2 Competitive Environment……………………………………..5 3.2.3 Political-Legal Environment…………………………………..5 3.2.4 Economic Environment………………………………………..6 3.2.5 Social and Cultural Environment………………………………6 3.2.6 Technological Environment……………………………………6 3.2.7 Demographic Environment…………………………………….6
4.0 SWOT Analysis…………………………………………………………………..7
5.0 References……………………………………………………………………….8-9

1.0 Introduction iiNet Limited is an Australian public company headquartered in Subiaco, Western Australia that iiNet has a broad product portfolio related to internet and telecommunications solution, encompassing internet access, phone, IPTV service, hardware & software, and domain & web hosting (iiNet, 2011). Besides, it has 2000 employees across several countries including Australia, New Zealand, and South Africa. In 2011, the company generated total income of $700,613,000 including sales and other revenue. Through several strategic merger and acquisition (M&A) activities, iiNet has become second largest DSL Internet Service Provider (ISP) and leading challenger in telecommunication market (IBISWorld, 2011).

2.0 Strategic Business Unit (SBU)
Internet Service Provider (ISP) SBU can be placed in Question Marks category as it has a comparatively low market share (10.10% market share and 0.24 times relative market share against that of its leading competitor, Telstra) and high market growth rate (estimated 9.5% annual growth rate of ISP for the next three years) in Australia (IBISWorld, 2011). As ISP SBU has made up the majority of iiNet’s revenue and there is an existence of market synergy between ISP SBU and its other SBUs, ISP SBU will be selected to develop its marketing plans in this assessment.

3.0 Situational Analysis

3.1 Internal Environment

3.1.1 Product iiNet has developed a wide range of ISP’s products, including naked DSL, broadband, WiFi Hotspots, National Broadband Network (NBN) and virtual private network to consumer and business markets. iiNet has differentiated themselves through product innovation. For example, iiNet had launched first naked DSL plan, with ADSL2+ broadband delivered without the need for a phone service in Australia (IBISWorld, 2011). Most ISP’s products come with freezone, 24/7 customer support, 10-email address, email protection and no excess quota usage charges (iiNet, 2011).

3.1.2 Price iiNet offers various pricing structure for every product based on the speed, usage quota and attach value added features and services to differentiate their offers . For example, iiNet offered 100 GB data plan for $69.95 per month for basic Naked DSL. Users could pay an extra $10 a month to receive 5GB extra usages (iiNet, 2011).

3.1.3 Promotion
The promotional tool it uses is advertising. Investing heavily into this area, iiNet has managed to create a large amount of advertisements that can be found on any TV network, press, outdoors and all over the Internet to create the brand awareness. For instance, in 2011, iiNet has launched its New No. 2 advertisement campaign across multiple channels to hail iiNet’s position as the clear number two DSL broadband service provider in Australia (iiNet, 2011).

3.1.4 Distribution iiNet sell their products through direct distribution channel. iiNet has set up online store on the official website and telephone ordering facility to accept orders from the customers. For new online customers, they are requested to register for a new account at the official website before subscribe the products.

3.2 External Environment

3.2.1 Market
Dobie (2012) mentioned that ISP’s currently has recorded the growth rate of 2.0% per annum, as there is a rapid switching from dial-up to broadband among consumers from 2007-2012. The market growth is forecasted to surge by 10.8% per annum in the next five year as the analysts anticipate most users will upgrade their current broadband plan to NBN plan in the near future (IBISWorld, 2011).

3.2.2 Competitive * iiNet has three major competitors, encompassing Telstra (42.5% market share), Singtel Optus (8.5% market share), and TPG (4.4% market share) (IBISWorld, 2011). * The ISPs are heavily reliance on the PSTN cable line that is primarily provided by Telstra and Optus. The high fixed cost nature of the industry has encouraged a series of M&A activities within the smaller ISPs, such as TPG and iiNet to achieve economic of scale and gain the market share from Telstra’s dominance (IBISWorld, 2011). * For NBN products, iiNet has offered lower price to undercut its main rivals, especially Telstra. For instance, iiNet offered a 100/40 Mbps Terabyte of data for $99.95 per month. Meanwhile, Telstra offered a 100/40 Mbps plan for $150 per month (iiNet, 2011).

3.2.3 Political and legal * The enforcement of The Copyright Amendment Act 2006 by Australian Federation Against Copyright Theft (AFACT) has forced ISPs to cooperate with copyright industries in deterring infringement of copyright (Swan, 2012).

* Australian federal government has invested $43 billion in National Broadband Network (NBN) project. The rapid development of the 100Mbps FTTP NBN has accelerated the speed of wired networks and coverage in Australia (Bingemann, 2011). Besides, it might also ensure the fixed ISPs to achieve a notable growth in future.

3.2.4 Economic * In Australia, the Global Financial Crisis (GFC) has changed consumer behavior. The retail trade figures showed that retail sales grew by a dismal 0.5% in June 2012 (ABS, 2012). The low growth rate of retail sales shows that there is post-GFC frugality adopted by Australian consumer.

3.2.5 Social and cultural * Australia has the 5th highest level of internet penetration in the world. In the report, it found that 81% of Australians aged 16 years and above could be classified as an active online user (Nielsen Report, 2012).

3.2.6 Technological * The rapid innovations of smartphones and tablets have resulted in a rise of the utilization of mobile Internet. The number of wireless network subscribers has surged by 5.9% in 2011-2012 (IBISWorld, 2011). * The revolution of IPTV service in Australia has encouraged 27% of Australian consumers to switch their satellite TV to an IPTV subscription service in 2010 (ACMA, 2010).

3.2.7 Demographic * The proportion of Australia’s population aged 15-64 years increased by 1.6% (or 237,700 persons) in 2010 (ABS, 2010). It might indicate the increasing demand for the internet service in future.
4. SWOT analysis Strengths | Weaknesses | * Strong brand awareness * Excellent customer support * Strong capability of innovation in product development * Strong financial performance in term of revenue growth * Lower price of NBN plan. | * Heavily dependent on third-party infrastructure network * Weak position in other SBUs * Heavily rely on M&A activity to achieve revenue growth | Opportunities | Threats | * Huge government investment in NBN project might drive the ISP’s market growth. * Mounting number of heavy Internet users and working age population might increase the demand for Internet service in future. * Promising growth in ISP’s market might attract more investors. * The revolution of IPTV services and a rising number of IPTV service subscribers might accelerate the demand for faster speed of DSL. | * iiNet might potentially copyright lawsuits from copyright industries * The escalating number of mobile Internet subscribers might lead to the contraction in fixed Internet connection. * High fixed-cost of network infrastructure might hinder iiNet to expand its network coverage in Australia * Low growth in consumer spending might stop subscribers to upgrade their Internet service. |

5.0 References

Australian Bureau Statistic (ABS) (2012), 8501.0 - Retail Trade, Australia, June 2012, (online), Available at: http://www.abs.gov.au/ausstats/abs@.nsf/mf/8501.0 Australian Bureau Statistic (ABS) (2010), 3201.0 - Population by Age and Sex, Australian States and Territories, Jun 2010, (online), Available at: http://www.abs.gov.au/Ausstats/abs@.nsf/mf/3201.0 Australia Communication and Media Authority (ACMA) (2010), “Australia in The Digital Economy: Consumer Engagement in E-commerce”, (online), Available at: http://www.acma.gov.au/webwr/_assets/main/lib310665/aust_in_digital_economy-consumer_engagement_with_e-commerce.pdf Bingemann. M (2011), “Deal on National Broadband Network to Cost Billions”, (online), Available at: http://www.theaustralian.com.au/national-affairs/deal-on-national-broadband-network-to-cost-billions/story-fn59niix-1225916138585 Dobie. K (2012), “Online Business Propels ISP Growth”, (online),
Available at: http://www.smartcompany.com.au/internet/049053-online-business-propels-isp-growth.html IBISWorld (2011), “IBISWorld Industry Report: Internet Service Providers in Australia”, IBISWorld Pty Ltd.

IBISWorld (2011), “IBISWorld Industry Report: Mobile Telecommunication Carriers in Australia”, IBISWorld Pty Ltd.

IBISWorld (2011), “IBISWorld Industry Report: Wired Telecommunication Carriers in Australia”, IBISWorld Pty Ltd.

IBISWorld (2011), “iiNet Limited – Premium Report, Balance Date: 30 June 2011”, IBISWorld Pty Ltd.

iiNet (2011), “Company Profiles” ”, (online),
Available at: http://www.iinet.net.au/about/ Nielsen Report (2012), “The Australian Online Consumer Landscape”, The Nielson Company
Swan. O (2012), “Australia: The New Face of Copyright Law In Australia”, Intellectual Property.

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