Bt global services

Issue 1:

The organisation analysed is BT Global Services (BTGS) a division of British Telecom Group (BTG).

The products sold are Managed Networked IT Services. This includes IT services that require large, physical and geographically wide networks as well as a service to manage these products effectively. As an example a core product sold by BTGS is called MPLS and involves connecting geographically diverse offices to one another in a network so that employees can easily and quickly communicate with remote offices. The service element consists of the ongoing management and maintenance of these networks (eg. monitoring, upgrades and break/fix). Physical elements include network equipment. As such BT's product is a mixture of a good and service. The mission statement for BT Global Services is “to be the global leader in managed networked IT services. This means being the provider of choice for converged, network-based products, services and solutions to corporate and public sector customers in the UK and globally.” (Bunting 2010)

BTGS operates in a competitive market with the main competitors identified as Orange Business Services (OBS), Verizon and AT&T (Boyer 2010).

Based on a marketing audit of BTGS (AGSM 2010) there is relatively higher emphasis on sales and production orientated marketing with a relatively lower emphasis on product, marketing and social marketing.

An emphasis on production orientation is understood given the impact the Global Financial Crisis (GFC) had on BT, particularly in the home country of the UK. BT management believes that the products should be produced more efficiently (ie. at lower cost) and major programs are underway to try to achieve this - eg. rationalisation of products sold from hundreds to a few core products under the GS09 program (Cavan 2010). Another internal program is implementing targets for reducing total labour cost including offshoring various activities that are not directly customer facing to lower cost economies ie. India/China/Poland and Brazil. A sales orientation is the second large relative emphasis of marketing and high levels of personal selling are undertaken which is a key feature of B2B markets (AGSM 2010 pp3-43). BT hosts many events where customers are invited to hear the BT story, BT provides dedicated sales teams to a single customer account with named individuals who mange the relationship and instead of trying to sell via other indirect means (eg. Telesales) BTGS relies on these individuals to identify and close sales. Brand plays an important role in BT's marketing strategy as the brand signifies a long history and therefore company stability. Using the BT brand is also key to differentiate BT from other competitors who offer very similar products. The BT logo features heavily in all customer collateral (Roche 2010).

Issue 2:

Strengths

* Global presence - allows for local variation/customisation and direct access to customer markets

* Number of Products - Customer choice

* Owns the network

Weaknesses

* Major Financial Issues

* Major targets regarding headcount reduction targets - employee motivation/employee transition?

* Regulatory issues due to number of countries to work in

* No. of Products - how to efficiently deliver range of products?

* Cost in maintaining own network

Opportunities

* Awards/Recognition from Industry - Telemark, Gartner etc

* Emergence of Asian business in global market

Threats

* New entrants in a traditionally monopolistic environment

Some key weaknesses identified as being major obstacles to the vision of BT GS is that due to a 2009 loss of £2.1bn there is great pressure to ensure that costs are cut and efficiency increases to improve long term business sustainability (ie. make a profit). The losses were generally attributed to poor internal governance (eg managing costs and signing unprofitable contracts) (Wiki 2010). The way that costs have been cut internally focus on headcount reduction (Muthukrishnan 2010). Coupled with the wide variety of products produced (from a simple telephone line to a complex security solution) it becomes extremely difficult to develop standard processes to cater for the breadth of products available, the variety of countries to deploy within and the varying customer wants. Yet this move along a production orientated path is what is believed is needed to reduce operating costs. A major threat is that new entrants are now entering the global telco field. Smaller regional telecoms providers and even niche players now have the ability to deliver globally based on deregulation and the reduced cost to enter the global market as technology improves. These smaller entrants are able to provide similar services to BT, and sometimes at a cheaper price as they have not invested as heavily in infrastructure as BT (ie. They rent the network instead of building, owning and operating it as BT has done).

Customers:

BT GS is very clear in the customer base it wants to serve - Multi National Corporations (MNCs) - “(BT) will focus on a specific list of target multinationals” (Compton 2010). BT believes it's core strength is in providing global MNCs a single communications operator to manage their global communications networks/services whilst understanding the client's individual business needs. This is further detailed under Issue 4 - segmentation, targeting and positioning.

Competitors:

Various industry bodies such as Gartner and Ovum predict a lowering of technology costs and an influx of new entrants into the Networked IT market (Boyer 2010). Porter's Five forces affecting BT in Asia Pac are:

Competitive Rivalry

HIGH - eg AT&T, OBS

New Entrants

MED - HIGH - increasing

Power of Suppliers

HIGH - BT reliant on key suppliers

Power of Buyers

LOW - MED - Buyers need product, but available from other competitors

Threat of Substitute Products

MED - HIGH - Substitute products available

Collaborators:

BT has engaged in several high level partnerships to try and differentiate itself as a one stop shop for all a customer's ICT needs. This is necessary as BT does not have the skills in certain areas and this is known in the marketplace. BT is consistently rated low in areas such as SI (system integration) (Chee Eng 2010). As such BT has partnered with several leading companies in SI such as HP. There has been limited success in this area as both BT and it's collaborators want to control the overall account and revenues with neither side wanting to take the support role. As such these collaborators tend to become competitors on the same deal.

Context:

Using a PEST analysis the major issues for BT in Asia are listed below:

P

China cheaper labour market but privacy concerns around BT deploying security services employees in China due to lack of political control.

E

Lack of funds from customers to buy services (GFC) - more selling on price

S

170+ countries covered - creates cost and opportunity to sell effectively in local market

T

Lower cost of entry for competitors due to technological improvements

Issue 3

-BT conducts bi-annual reviews of it's customer base utilising market research, market insight and internal information. Key drivers/issues for BT's target customers are expansion into emerging economies (eg. China/India), efficiency (eg. Outsourcing non-core business functions) and protecting brand image based on the latest issued report (Walker 2010). This directly impacts BT GS in terms of the volume of business available (ie. an increase in Asia as business expand into Asia) as well as an emphasis on BT's marketing to ensure that BT's customers can protect their brand by utilising high quality products from BT.

What customer's want

- BT utilises a combination of market research and market intelligence to answer this question. A team called customer insights has the goal of “providinginsight on specific BT corporate customers - informationincludes company background, structure, strategy, ICT use, executives and much more” (Walker 2010). Market research includes extensive customer satisfaction programs, run by an impartial 3rd party, on BT's behalf. An in depth 30 minute interview is conducted once every 6 months across all of BT's activities and how the customer perceives these. The survey asks customers what BT needs to achieve in order to move or maintain them at an overall rating of very/extremely satisfied. This data is shared with relevant management and is the basis for improvement plans in areas that rate poorly. BT also heavily utilises market intelligence such as Gartner, Ovum and government statistics to shape key initiatives such as which geographic markets to target based on growth rate, what activities will dominate different sectors in the future etc (Elliot 2010). 

Which competitors pose a threat

- similar to customer insight another department called Competitor insight provides similar information on BT's main competitors (Boyer 2010). The same tools/strategies (except for customer satisfaction surveys) are utilised for competitor analysis. Reports on individual competitors is available within BT and guides sales on how to compete against specific competitors on large bids detailing the generic sales strategies of these competitors and how best to use BT's strengths to communicate comparatively higher value to the potential customer.

How the context of business is changing

- A third team called Market Context utilises market research, market intelligence and internal information to study how the business context is changing. An example report's executive summary is as follows: “One of the consequences of  phenomenal growth of emerging economies has been that a number of home-grown companies from countries such as India, China and Brazil are expanding internationally and are starting to challenge the dominance of established multinationals. The market context  team has completed detailed research on this topic, and has identified about 300 emerging multinational companies (EMNCs) which represent a significant opportunity for BT.” (Murdoch 2010)

Issue 4

- BT has a clearly defined segmentation and targeting profile: “The BTGS MNC Market Unit will focus on a specific list of target multinationals, providing seamless global connectivity and networked IT services” (Compton 2010). The whole market is broken down first on size and breadth of the organisation to identify the large MNCs. BT will only target corporations with multiple offices in multiple countries. Once it has completed this primary segmentation on size and spread of operations it then segments this smaller market into industry verticals - ie. Global Banking and Finance Markets, Manufacturing, Pharmaceuticals etc. Each vertical is then targeted with specific marketing and sales approaches eg. Under the Global Banking and Financial Markets vertical, internal sales teams are provided “customer & industry feedback on programmes and events” pertaining to the target industry (Nash 2010). Talking to a customer about their own business, using their jargon and referencing events important to them can create value in the customer's mind as they feel that BT understands their business and is not just selling a communication service but also consultancy and advice. BT has structured it's sales teams into these various verticals to promote the business advantages of utilising BT's products. This directly ties in with the vision statement of providing value to the customer by utilising expert knowledge in the customer's own industry “We also provide a thin layer of value-add services, which are bespoke to an individual client.” (Bunting 2010) The value to customers is not just the product features, but the product features and industry knowledge shared by BT.

BT produces a significant amount of customer collateral about the product features as well as the additional benefits of using BT. As an example a core product called MPLS is examined. All information presented is available for external customer presentation:

1. BT offers MPLS 6CoS - Competitors only offer 5 CoS (product differentiation)

2. BT offers dual core, no one else does (product differentiation)

3. BT offers industry expertise eg. customer testimonials and specific verticals (value add)

4. BT offers customer collateral targeted at different decision makers in the target organisation

    1. IT managers (Influencers/Gatekeepers) - “Key Features” describing technical superiority to other products
    2. Finance managers (Deciders) - “Key Benefits” describing how costs are lowered
    3. CTO/CIO (Deciders) - “Key Benefits” describing rapid deployment and management of services. (Vrins 2010)

All these strategies position BT as a high quality product and service advisor to the relevant industry.

Issue 5:

BT has done a good job in segmenting and targeting a particular set of customers. Based on the past experience of targeting every possible customer with every possible product which resulted in heavy financial losses a good balance looks to have been met in rationalising the number of products for sale (and therefore cost to manage) whilst still focusing on what is seen as the most profitable customer base to BT (ie. The MNCs). Based on the strengths in the SWOT analysis size and geographic reach are major contributors to the marketing strategy. BT has chosen a target market with the most money to spend and with needs that fit BT's strength (global reach). BT operates in a limited to extensive problem solving scenario in a B2B market. Attributes such as quality, product specification, reliability and customer service are a common theme in BT marketing collateral and this is what is appropriate given that the business customer will be looking at this overall value set and not just price (AGSM pp 3-55). The customer satisfaction program in place is designed to create loyal customers by giving the customer a voice into BT. The aim here is to move customers away from defection/exit and to the loyal category (AGSM 3-14). A key weakness identified is that whilst there is much effort to protect the BT brand to external clients, internal marketing is lacking. The focus on reducing costs has had a psychological impact on employees within BT as per results from a regular employee survey (Chandrakala 2009). The actions/behaviours of people who feel that their jobs are threatened may not be in line with what BT wishes to portray to it's customers. Many internal programs (eg. GS09) are not fully understood by BT employees. As an example a recent survey of employees showed 1 out of 7 actually understood what the GS09 product rationalisation program was and the overriding thought was that BT simply wants to cut costs not improve service (Chahal 2010). The actual aim of many of these programs is to improve service however due to poor internal marketing this is not seen as the motivation by BT employees. The company's orientation to a production and sales emphasis does make sense to increase revenues and reduce cost however care needs to be taken that there is not too much emphasis on driving down costs to the detriment of perceived service quality. If BT's quality drops from a customer perspective, the ability for a new market entrant or existing competitor to take revenue from BT increases. BT tries to balance this mix of production orientation and the customer want for customisation by deploying a group of people to manage the customer wants into BT and produce solutions that can be effectively managed. For example a standard process may involve a report of type A being produced. If the customer wants report B they can hire a professional service to deliver this for them. In this way the customer want is satisfied, BT charges for this option (thus making a profit) and hopefully the customer perceives value in this customisation. BT has traditionally operated in a monopolistic environment where no substitute products were available. BT has taken steps to address the increasing move towards a more competitive market and increasing substitute availability via segmentation into industry verticals and a focus on understanding customer needs not simply what products BT has to offer. The aim here is to create loyalty and value for customers in their specific fields. The effectiveness of this is yet to be measured however the strategy is based on proven theories such as value creation. The monitoring and analysis of the 5Cs is done particularly well given that bi annual, in depth reviews of customers, competitors and the market are undertaken and a wide variety of sources from internal information, market research and market insight are used. The way this information is then utilised is questionable given the BT strategy is now approx 6 months old yet there has been no published update to the strategy based on any new findings in the last review of customer needs, competitors and the business context. Where BT could improve is to undertake annual/semi-annual reviews of the overall marketing strategy with respect to new information and publish any changes or simply the fact that no changes were needed. Based on the market research available BT has made a good choice in it's targeting method. Few competitors can target truly global networks effectively thereby creating a competitive advantage from one of BT's identified strengths (wide geographic reach) and the studies indicate that the MNC market is large enough to sustain BTs operations (even with competition). By leveraging on BT's strength (global presence) and limiting the number of competitors who could compete in the same business context the STP strategy looks sound. An opportunity identified is the emerging MNCs from India, China and Brazil will be expanding across the globe. BT at this point in time does not have any plans to target these emerging MNCs. The BT Market context team has indicated this as a key area of growth (Murdoch 2010) though no action has yet been taken to address this opportunity. This again leads to the question whether BT is effectively utilising the information it collects to shape it's strategy.

BT generally has a good approach to marketing and invests heavily in research and formulating it's strategic marketing plan. The largest weakness appears to be lack of internal marketing and the slow pace at which it can implement/change it's plan as conditions change however given the size and scope of the company this is understandable to some degree.

 

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