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Executive summary
Claro is a subsidiary of Amrica Mvil, the leading provider of telecommunication
services in Latin America with operations in 18 countries in the Americas and the
Caribbean. For the purpose of this audit, the researcher has decided to take into
consideration just the mobile business line of Claro specifically in Colombia where its
the leader.
Although, numerous issues were found as the lack of coaching and hiring mistakes
when it comes to employees that are delivering a poor customer service, there are new
competitors emerging in the market, Claros prices are the highest among its
competitors and its Market share has reduced in the last two years. Moreover, the
Colombian government is aiming to reduce Claros monopoly position through sever
regulations, changes in telecommunication policies and sanctions. These issues are
leading the company to an important damage in its reputation.
It was founded that Claro is lacking marketing orientation since its lacking competitive
advantage for the current market and reputation damages are hampering the
companys leading position. Besides, it hasnt been able to achieve organizational
goals on knowing the needs and wants of target markets and delivering the desired
satisfactions better than competitors do.
The report also proposes a set of recommendation to counter this marketing orientation
problem ass facing viral online attacks, benchmarking successful Customer
Relationship Management, use a concentrated marketing strategy and revision their
pricing strategy.
Table of Contents
EXECUTIVE SUMMARY
1.1.
1.2.
1.3.
1.4.
High Prices
1.5.
1.6.
1.6.1.
Governments position
1.6.2.
1.6.3.
1.6.4.
ETBS case
1.6.5.
Other sanctions
1.7.
10
2.1.
10
2.2.
11
2.3.
12
3. RECOMMENDATIONS
13
3.1.
13
3.2.
13
3.3.
13
3.4.
14
4. CONCLUSION
15
5. REFERENCES
16
6. APPENDICES
19
6.1.
19
6.2.
19
6.2.1.
19
6.2.2.
20
6.2.3.
21
6.2.4.
23
6.2.5.
23
1.2.
1.3.
As remarked by Kienyke (2013), Colombia has expanded in recent years the number of
mobile operators. Traditional operators such us Claro, Movistar and Tigo, are not alone
anymore. Since 2012, the market has been focusing on mobile virtual network
operators (MVNO), which are mobile carriers that do not have their own networks, it is
otherwise rented to the traditional operators.
Although the latters have not been able to get a great amount of market share they
have been more innovative breaking the standards of the industry for example by
charging customers by seconds of usage rather than by minutes as Virgin mobile.
(Vega, 2008)
1.4.
High Prices
According to kienyke (2013), In April 2013, Virgin Mobile was officially launched in
Colombia, the first mobile operator to offer voice collection consumption in seconds
rather than in minutes as traditional companies did. A good indication for customers,
with more options, announcing the charge for seconds as a good pretext for other
operators to lower their rates, which were still very high according to the mentioned
6
sourced. The same author stated that prices have a huge implication in demand due to
the elastic behaviour of Colombians given to high competition in the sector.
Claros High rates are the main reason why the company has been criticized, which
currently has a full rate of COP 239 to call all operators in the country, 5% more than its
main two rivals Tigo and Movistar (kienyke, 2013).
1.5.
The company remains to hold the highest market share, with 59.1% of subscriptions in
the third quarter of 2013. The operator's share has weakened distinctly from its 67%
share about the end of 2009. Part of this due to improved performance from its
competitors and the introduction of rivals in the form of MVNOs. (BMI, 2014)
1.6.
1.7.
When Comcel was renamed Claro, Ricardo Galan, its brand analyst at that time stated
that the company needed to focus on the improvement of customer to have a better
reputation. However, this promise seems no to have been met so far (ConfidencialColombia, 2014).
In Colombia Its believed that billionaire Carlos Slim called business wizard, main
Claros shareholder, bought the company in conjunction with another one called Telmex
simply as a financial move aimed at Duplicating its stock market value (ConfidencialColombia, 2014).
Customers feel cheated saying that the clauses are not being applied clearly and fairly
and that when customers want to retire, the company charges very high fares that the
client had not considered before or knew of its existence (Confidencial-Colombia,
2014).
Company's reputation has been threatened with serious damages as recently its easy
to find web campaigns against Claro on social networks like Facebook and Twitter.
Semana (2013) argues that not even national serious issues as peace achievement
have gotten the attention that Claro has gotten with its poor service. Its customers have
become a solid group for one cause and against the flood social networks with their
voices in protest: "Sure, today we have no signal, not tomorrow", "Join and support this
cause against Claros bad service "," the worst service Claro Colombia.
2. Critical
Assessment
of
the
concept
of
marketing
orientation
2.1.
10
2.2.
The above definitions include the application of several activities headed by the
company towards its market that would accomplish marketing goals and increase
organisational performance (McDonald, 1995; Hooley et al., 1990; Piercy, 1992).
Organisations that are considered to be marketing oriented must engage in market
exploration
and
segmentation,
customer
needs
analysis,
positioning
and
11
2.3.
Different research efforts have been focused on the examination of the connexion
between the degree of MO implementation and organizational performance (Anttila et
al., 1995; Cadogan and Diamantopoulos, 1995; Avlonitis, 1999). All these have created
important indication of a relationship between the two concepts.
Germain and Dorge (2000) go deeper stating that firms involved in formalised strategic
planning inside marketing are probable to have enhanced financial performance.
Other study by (Hooley et al., 1990) also proposes a relation between them, regarding
the stress given to marketing actions, marketing organizations nature, marketing level
of training, , and degree of proper marketing planning.
On the other hand, other authors (Panayides, 2004; Baker et al., 1994) question that
the relationship between these two concepts have led to studies that have shown
mixed results culminating in inconclusive evidence. The exploratory study proposes a
positive association between performance and market segmentation. MO and
differentiation do not appear to be meaningfully related with enhanced performance,
even though cross-functional consumer focus displays an important connexion.
Other positive comparisons between concepts have been developed. For example,
Alrubaiee and Al-Nazer (2010) studied the relationship between MO and customer
loyalty trough studies with regression analysis that showed a positive impact.
Dibb and Stern (2000) unravel the complexities faced by marketing instructors when
developing their courses. Dealing with these complexities requires the instructor to
consider exactly what is taught and how to balance material from different sources. In
transferring knowledge the instructor must consider the balance between the three
areas of the marketing trifid which they defined as the contributions of researchers (is
it true?), teachers (does it make sense?) and practitioners (does it work?).
12
3. Recommendations
After exploring the concept of MO some recommendations for the company focused on
this report emerged.
3.1.
According to Kotler and Armstrong (2013), experts agree when they state that in case
of online attacks, organizations should protect their image without fuelling the fire, and
solve it with prevention, diplomacy and engagement. Therefore, the best strategy may
be monitor the attacks and answer to customer concerns, which are most of the times
based on unresolved anger. This could sound as a very simple idea but it has shown
interesting results. For instance, FedEx and Boeing have accepted mistakes and
turned negative customer experiences to positive ones, advertising apologies and
answering over YouTube and Twitter or even inviting customers to their facilities. On
top of that, many organisations as Dell have created specialist teams that engage
unhappy customers when having online chats (Dell, 2014).
A strong campaign to clean reputation might be an interesting solution to explore.
3.2.
Vodafone, which is also a multinational mobile operator is proud of its CRM when
retaining valuable customers, showing unique experiences. To provide value, its
customers are segmented on their mobile phone use whether is personal or business.
Moreover, Vodafone collects information from several sources as customer purchase
and demographic information and develops successful loyalty programs(Hooley et al.,
2011). Even though both companies have different markets around the globe, this kind
of benchmarking is extremely useful as both of them share lots of similarities given that
they offer almost the same products and services with similar technology standards
sharing similar concerns as challenging customer retention and attraction of new ones
due to the increasing competition in the sector. This strategy is consistent whether in
Retail shops, call centres and online services (Hooley et al., 2011).
3.3.
decrease in market share. The researcher suggests this approach as the organisation
will have a better marketing position given that will develop a larger knowledge of
consumer requirements in the niches it aims marketing more efficiently(Kotler and
Armstrong, 2013).
3.4.
This strategy is not only suggested but forcibly forecasted as one of Claros new risks
is the governments decision to remove long-term contracts (Garca and Hernndez,
2014). Therefore, Claro will have to change the pricing strategy that consisted of selling
the mobile device at a low rate, but charging customers highly for their monthly contract
fee. According to Kotler et al (2009) by offering lower priced product any company can
successfully reposition in the market.
14
4. Conclusion
The mobile line of business of Claro Colombia presents different issues, exposed here,
which were identified from the audit as the lack of coaching and hiring mistakes when it
comes to employees that are delivering a poor customer service, there are new
competitors emerging in the market, Claros prices are the highest among its
competitors and its Market share has reduced in the last two years. Though, Claro
remains the market's leading operator, it faces uncertainty as antimonopoly laws
imposed by the government are being implemented to reduce its dominance. These
issues are leading the company to an important damage in its reputation. It was also
found that Claro is lacking MO through dedifferentiation as it hasnt been able to
achieve organizational goals on knowing the needs and wants of target markets and
delivering the desired satisfactions better than competitors do.
The report also proposes a set of recommendation to counter this MO problem ass
facing
viral
online
attacks,
benchmarking
successful
Customer
Relationship
Management, use a concentrated marketing strategy and revision their pricing strategy.
15
5. References
Alrubaiee, L. and Al-Nazer, N. (2010). Investigate the Impact of Relationship Marketing
Orientation on Customer Loyalty: The Customers Perspective. International Journal of
Marketing Studies, 2 (1), p.155174.
Anttila, M., Moller, K. and Rajala, A. (1995). Assessing market orientation of high
technology companies: a study in the Finish electrical and electronic industry.
Marketing for Today and for the 21st Century, 16 (19), p.13831392.
Avlonitis, G. J. (1999). Marketing orientation and its determinants: An empirical
analysis. European Journal of Marketin, 33 (11), p.10031037. [Online]. Available at:
http://search.proquest.com/business/docview/237023291/fulltext?accountid=131694
[Accessed: 12 August 2014].
Baker, M., Black, C. D. and Hart, S. (1994). Competitive Success in Sunrise and
Sunset Industries. The Marketing Initiative, p.7889.
Ballantyne, D. (1997). Internal networks for internal MARKETING. Journal of Marketing
Management, 13, p.343366.
Bandyopadhyay, S., Gupta, K. and Dube, L. (2005). Does brand loyalty influence
double jeopardy? A theoretical and empirical study. The journal of product brand
management,
p.414423.
[Online].
Available
at:
http://search.proquest.com/business/docview/220601140/24D5E38CBF1A4CF3PQ/1?
accountid=131694 [Accessed: 14 August 2014].
BMI. (2012). Colombia telecommuntications report. 2012. [Online]. Available at:
http://media.proquest.com/media/pq/classic/doc/2605993231/fmt/pi/rep/NONE?
hl=economies%2Ceconomy%2Ceconomies%2Ceconomy%2Cin%2Cin%2Ccolombia
%2Ccolombia%2Ctelecommunication%2Ctelecommunications%2Ctelecommunication
%2Ctelecommunications&cit%3Aauth=&cit
%3Atitle=Colombia+Telecommunications+Report+-+Q2+2012&cit
%3Apub=Colombia+Telecommunications+Report&cit%3Avol=&cit%3Aiss=&cit
%3Apg=1&cit%3Adate=Second+Quarter+2012&ic=true&cit%3Aprod=ABI
%2FINFORM+Complete&_a=ChgyMDE0MDgxNDE3MTEzOTEzNDo4NjgwMzMSBzE
wMDU4O [Accessed: 14 August 2014].
16
(2014).
Claro.
[Online].
Available
at:
(2014).
Tomates
para
Claro.
[Online].
Available
at:
(2014).
Meet
the
Team
Dell
Community.
[Online].
Available
at:
[Accessed:
31 July 2014].
17
http://www.ramonmillan.com/tutoriales/planmarketinggrupotelefonica_parte1.php
http://www.sysmaya.net/blog/post/2901/internet-movil-colombia-claro-comcel-
Available
at:
https://db3efde3-a-62cb3a1a-s18
sites.googlegroups.com/site/didiervega/tesis/tesis.pdf?
attachauth=ANoY7crfQmWUwpZKzuY70rh7E9oBkJzUE9AezQ2XvKpYm2u4jPtZ53Mc
3KK_XKnp_iBQfXLsk322WL-Pda-OOCgyHnXJKdAMLSLLm5ZBy_fDBZqTHe_0RzGg-nmLKG_kkJNQtu4GUMykGsH0GEF50Uv_j2MZpnK_njNSgBrbL3APWmb0Lv_Km1F-L4Qbk5WxyuZQSjlsX_yOXn4RjH82Ff3SueThfA4A%3D
%3D&attredirects=0 [Accessed: 28 july 2014].
Visnagar, P. (2013). Global country report on Columbia. [Online]. Available at:
http://www.gtu.ac.in/ABP/GCSR PDF 2012/739 - Columbia.pdf [Accessed: 14 August
2014].
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6. Appendices
6.1.
Claro is a subsidiary of Amrica Mvil, the leading provider of telecommunication services in Latin America
with operations in 18 countries in the Americas and the Caribbean, which has:
More than 225 million mobile customers
More than 28 million fixed lines
13 million broadband accesses
More than 10 million TV subscribers for a population of more than 823 million (Claro, 2014)
For the purpose of this audit, the researcher has decided to take into consideration just the mobile
business line of Claro specifically in Colombia.
As stated by BMI (2014), Claro is the largest mobile operator in Colombia with 59,5% of the market share.
As part of a regional strategy, Amrica Mvil acquired Telmex International operations in Colombia in 2011,
in which it holds a 99.3% stake. In June 2012, Amrica Mvil rebranded its operations in Colombia under
its Claro brand.
According to Semana (2013), the company has coverage in 1,121 municipalities in the coffee country, 80
of which have no competition from other operators like Tigo and Movistar.
6.2.
IMPLICATIONS
PRIORITY
Low
High
POLITICAL/LEGAL
It
important
to
maintain
strong
is
permissions.
Government has initiatives to remove VAT on
broadband domestic connections.
ECONOMIC
power.
New infrastructure
telecommunications
and
FDI
sector
become
more
20
client.
The dependency on mobiles encourages
operators.
There is a growing trend in digital life fostered to
trend.
4G, which
due
technology,
is
the
ultimate
technology
for
to
the
generation
accessibility
of
pressure
to
companies to be updated.
gases
Implications
Therefore, a new competitor would need economies of scale to achieve low costs and be competitive in the market.
In addition to that, every time that there is a new competitor Claros reaction is aggressive, taking advantage of their
monopoly position.
21
Price competition is strong among the competitors. Though, Claros prices are the highest.
Broadest mobile network in the country. It has coverage in rural municipalities that the other providers cannot.
Implications
Rivals represent a high risk for the company, threatening its market share.
Mobile phones fabricants like: LG, Samsung, Nokia, Sony Ericson, Motorola and Apple.
Electric network suppliers.
Implications
Due to the numerous companies that produce mobile phones, none of them has a great power. However, that depends of the
technology and demand that they have.
BARGAINING POWER OF BUYERS (MEDIUM)
Details
There are two different types of buyers for Claro: Pay-as-you-go customers and post-paid customers:
Buyers are aware of quality, services and prices in the market.
Implications
The company needs to have a different MO for each of those segments to target them the right way.
Pay-as-you-go customers do not have high switching costs because of the lack of a contract but post-paid customers have
high switching costs due to the contracts signed that are usually from 12 to 24 months.
As customers have lots of information about the market it implies a risk for switching to the competitors.
STRENGTHS
Great amount of money invested in advertisement
Financial muscle. America Mvil which is its parent company is a key player in the Latin-Americas mobile sector
Diversity of mobile Plans
Market position. Largest operator in the market
Advanced technology. Broadest mobile network in the country. It has coverage in rural municipalities that the other
providers cannot.(semana,2013)
Know-how with 19 years of experience within the Colombian market as they were the first network operator.
WEAKNESSES
High prices
High rate of complaints from customers
Intermittence of mobile network
Hiring of personnel and coaching: High staff turnover and lack of proper coaching in the customer service department
Most of its growth has come from the pay-as-you-go segment
OPPORTUNITIES
Mobile number portability policy from Colombian government
Robust demand of mobile phones and need of a mobile operator.
THREATHS
High level of rivalry among current competitors
22
New competitors emerging in the market and are moving forward quickly with innovation.
Its market share is decreasing given that its rivals are strengthening
Is the target of the government due to its dominant position (BMI, 2014)
Subject of economic sanctions for over-charging its subscribers(BMI, 2014)
23
24