MGMT 102 - Strategy

In our strategy plan, we studied Uniqlo’s current Strategy Evaluation -

business environment as well as their competitors.
Uniqlo

Prepared For:
Prof. Victor Goh

Prepared by:
 MGMT 102 - Strategy

OUTLINE

Statement of the problem.........................................................................................................2

Situational Analysis....................................................................................................................2

Market Analysis..............................................................................................................3

Market Analysis..................................................................................................3

Industry Factors (Porter’s 5 forces)....................................................................3

Synthesis of external analysis............................................................................4

Internal analysis.............................................................................................................6

Resource-based view.........................................................................................6

Value chain analysis...........................................................................................7

Situational Anaysis.............................................................................................7

Company Analysis (SWOT).............................................................................................8

Competitor Analysis.......................................................................................................9

Appendix..................................................................................................................................18

Bibliography.............................................................................................................................36

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INTRODUCTION
UNIQLO brand of casual wear is the Fast Retailing Group’s mainstay operation that offers high-quality casual wear
at affordable prices based on its SPA (Specialty store retailer of Private label Apparel) business model, which extends
across product design, manufacture, distribution and retail. The first UNIQLO store opened in 1984 and first ventured
into international markets in 2001. Since 2005, the Group has adopted the strategy to diversify its operational base
through acquisitions and expansion of its lineup of women’s wear.

By 2010, UNIQLO had 808 stores in Japan, an increase of 38 stores nationwide, and 136 stores overseas in the United
Kingdom, the United States, China, Hong Kong, South Korea, France, Singapore and Russia etc. At the end of fiscal
2010, UNIQLO reported net sales of 605.5 billions of yen, an increase of 12.5% from 2009. [ CITATION UNI10 \l 1033
] Moving ahead, UNIQLO aims to attract new customers by opening large-scale stores in prime urban locations in
Japan.

SITUATION ANALYSIS
MARKET ANALYSIS

Foniq’s VoIP Callback offerings come in two forms - (1) through an iPhone application, and (2)
through a call-back calling card. The iPhone offering currently has competitors such as Skype and
Viber in the market and requires a short data connection to establish the call. The calling card
service faces competition from other calling cards and direct-dial international calls.

MARKET SIZE

To date, Foniq has only actively targeted travel agencies and business travelers. However, we
believe that it should not limit itself to these customer segments. The underlying needs targeted
should be that of making convenient and affordable international calls. This drastically increases
the targeted market size to almost anyone who needs to make an international call. Permanent
Residents and foreigners in Singapore would likely have cause to make overseas calls either to
friends or relatives, and these total 1.79 million people [ CITATION Wik10 \l 1033 ] . Likewise, foreign
students or businessmen who have relatives, friends or customers overseas would have
incentive to use the callback service. According to Singstat, international calls made in 2009
amounted to more than 10 million call minutes. Although this excludes any electronic voice
calls, it still represents part of the potential market size Foniq VoIP Callback can expect.

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MARKET SEGMENTS

The international voice market can be broadly segmented according to two variables – purpose
of usage and attitude towards spending (Figure 1). Of the available segments, customers lying
along the ‘bargain hunters’ scale would be the most likely adopters of VoIP usage. Thus we will

Blah Blah

Blah Blah

focus on the ‘corporate bargain hunters’ and the ‘retail bargain hunters’.

Figure 1: Market Segmentation for International Voice Market

MARKET TRENDS (PEST ANALYSIS)

Corporate
Political - Currently Singapore does not have any regulations restricting VoIP use, but there are
UsersVoIP services. Industry players would have to continually scan their
countries that regulate
business environment to ensure their business processes are not interrupted.

Economic - International VoIP is definitely a growing market in Singapore and throughout the
world. International voice traffic for Singapore has been increasing steadily over the years
[ CITATION Tra10 \l 1033 ] , hitting approximately 7 billion minutes in 2007. Of these traffic flows, we
can expect the Singapore Market to replicate the trends of international markets, where VoIP
can be seen to be capturing a larger share of the market over the years (Appendix B). Infonetics
Retail released its report on VoIP growth, citing demand for “residential and
Research has recently
Users
business VoIP services continues to grow even as spending in other communication areas
tightens”[ CITATION VOI09 \l 1033 ].

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Bargain Quality
Hunters Seekers
 MGMT 102 - Strategy

Sociocultural – With the rising affluence of Singaporeans, the number of smartphone owners has
been increasing as well. With over a 100% penetration rate for mobile phones and 47% of them
being 3G mobiles[ CITATION Bud10 \l 1033 ], and the rise of the internet age, there is no shortage of
potential VoIP users.

Technological - With increasing broadband speeds and WiFi coverage, the capability of offering
better VoIP services also increases. This could be a chance for VoIP providers to improve on
customer satisfaction levels by providing more dependable data flow, and by reaching out to
customers through the internet.

INDUSTRY FACTORS (PORTER’S 5 FORCES)

Threat of New Entrants - Barriers to entry into the VoIP industry is extremely low as switching
costs are almost non-existent, and distribution channels are easily established through the
internet. As a result, the threat of new entrants is quite low.

Bargaining Power of Suppliers – There are two forms of suppliers here; suppliers of Wi-Fi
services, and suppliers of telecommunications services. In both forms, suppliers are critical to
the functionality of the VoIP operations. Thus supplier power is considered high.

Bargaining Power of Buyers – Buyers have extremely low switching costs, and VoIP services are
normally not very differentiated, leading to high bargaining power of buyers.

Threat of Substitutes – International IDD cards offer comparable rates without the need for a
Wi-Fi connection and 3G phone. Providers like Skype and Rebtel have established brand names.
Coupled with the low switching costs for consumers, there is actually a high threat of substitutes.

Intensity of Rivalry – The industry currently is experiencing high growth rates and fixed costs are
typically low, as such, even with the lack of differentiation, intensity is unlikely to be very high.
Notwithstanding those factors, rivalry would likely become more intense once the industry starts
to mature.

CUSTOMER ANALYSIS

COMPANY ANALYSIS
Figure 3: SWOT Analysis of Foniq application

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Strengths Weaknesses
- Robust Technology from Foniq's nine - There is no marketing program for the
years of experience in the field of product as well as severe lack of brand
information telecommunications systems awareness
- Parnership with Singtel ensures - Little or no experience in B2C
premium call qualities businesses
- Competitive pricing (as compared to the - Lack of differentiation
average competitor) - Requires Wi-Fi to initiate call
Threats
Opportunities
- Rapidly growing market provides - Many competitors already established
ample opportunities for entry and hold substantial market share, and
- Current offerings of international calls thus are in a better position to capitalize
are either expensive or inconvenient; on the market
Foniq would do well to cater to these - Competitors may easily copy Foniq's
needs value propositions if they chose to do so

From the SWOT analysis, we see that the main problem Foniq is facing is the lack of a coherent
strategy to market its product. Their product, with its robust technology, should be able to
capture a fair market share in the rapidly growing VoIP market. Of course, it would be
contingent on Foniq being able to create a value proposition or target a segment its competitors
are unable to compete on or not compete as effectively in. Next we will explore who their
competitors are and what they are currently offering.

COMPETITOR ANALYSIS

There are many competitors offering VoIP services internationally, but we will be focusing on
Foniq’s main competitors - Skype, Rebtel, Viber. The table below shows a summary of the
strengths and weaknesses of each of their competitors (for more details refer to Appendix C),
who are then introduced briefly in this section.

Table 1: Strengths and Weaknesses of Foniq’s Competitors

Company Strengths Weaknesses

Skype - Competitive rates – 0.033 SGD/min - Marketing limited to website

- Very established brand with strong
brand recognition - A data connection to the internet is
required for all calls

Rebtel - Leading independent mobile VoIP - Every single contact must be

company registered through their website

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- Can be used on any phone - Cumbersome process

- Comprehensive website that is
easy to understand

- No Wi-Fi required

Viber - Completely free - Only available for iPhone users

- Does not require registration or - Requires internet connection

login
- Bad customer feedback regarding
stability

International - Can be used without an internet - Drawn-out and lengthy dialing

IDD Cards connection process

- Rates not as competitive as SKYPE,

Rebtel and Foniq

SKYPE

With a market share of 12% of all international calling

minutes in 2009 [ CITATION Rob10 \l 1033 ], and an
established brand name, Skype is one of Foniq’s
biggest competitors in the consumer VoIP market, if
not the biggest. Their value proposition is that of a
product that is simple and catered to the needs of the
average consumer, and their simple, user-friendly, and
focused website helps to market this [ CITATION ith05 \l
1033 ]. Skype moved into offering other value-added
services on its website once it obtained brand
recognition.

Anticipated Reactions - As Skype does not offer the same callback services as Foniq, and it is
operating on a large international scale, it is unlikely they would be too concerned with Foniq’s
entrance into the market.

REBTEL

Rebtel is the world’s leading independent mobile VoIP company, with an estimated 9 million
callers and over 1 billion international call minutes logged, and a projected revenue of $75
million in 2011 [ CITATION Ale11 \l 1033 ]. Rebtel offers a slightly different product from Foniq’s, but
is still a main competitor for the international call dollar. Rebtel customers register each
international number they wish to call and are assigned a local number for each contact.

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Customers are then charged the local rate to this number as well as a competitive price for the
international part of the call.

Promotional Codes and Reward Schemes

Rebtel entices customers through promotional codes that reward first-time and regular users, as
well as reward schemes. For example, the current scheme (March 2011) rewards Rebtel
customers whose referral becomes a paying member with $10 credit, and rewards this new
member with $5 credit.

Web and Print Ads

Besides relying on its website marketing like Skype, Rebtel also goes one step further by
advertising its product through web and print advertisement. In 2008, Rebtel realized that many
international customers were brought to its service by a need to connect with loved ones. It
thus tried to reach out to ethnic consumers away from home by employing popular web comic
strip, Doubtsourcing, to create 3 web and 2 print ad concepts which capitalized on the “Call Your
Mum” tagline in a humorous way whilst also establishing Rebtel’s identity as a straightforward,
straight-talking company [ CITATION Ale11 \l 1033 ].

Anticipated Reactions - Given the large existing market share, and the offering of their product
over several operating systems, Rebtel is unlikely to be fazed by Foniq’s initial entrance into the
market. But due to their market and resource commonality, Rebtel might choose to respond
should Foniq become more successful.

VIBER

Viber is a strong direct competitor of Foniq,

since they offer similar mobile VoIP application on
the iPhone that allow convenient voice
communication between all users, be it local or
international. Since the launch of Viber in 2010,
they have received more than 7 million
downloads in the first month and quickly
became the No. 1 free application on Apple App
Store in several countries, including Singapore. With such tremendous hype and growth of Viber,
many have been comparing it to Skype and anticipating the takeover of Skype’s dominance on
the mobile calling market, largely due to its additional convenience and voice quality. Viber
focuses on packaging its product to be reliable, cost-effective and caters to the needs of an
average iPhone consumer, which is similar to that of Skype. The product is completely free at the
moment and it is powered by the world’s top voice and video over IP Engines provider, SPIRIT
DSP. On top of that, Viber heavily markets its competitive edge of being more convenient than

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Skype, since it does not require any registration or login prior to the use of application. Similar to
Skype, once the brand is well established, Viber will move into value-added services to make
revenue for the company.

Anticipated Reactions - Viber is currently designing compatible application for Blackberry and
Android phones, which have Smartphone market shares of 19.8% and 9.6% respectively. Viber
for Android will officially be launched at the end of March. Although Viber is more similar to
Skype than Foniq, with their current emphasis on market expansion, it is likely that they would
make tactical moves in response to competitive actions.

Distributi on

Foniq currently has no distribution plans for the iPhone application aside from the listing on the
App Store. Existing customers are ancillary to their B2B business and are not actively sought
after. The B2B business is their primary source of revenue and has an active sales force pursuing
the development of the business unlike its B2C arm. In the pursuit of a marketing strategy for
their B2C business, Foniq would have to establish proper distribution channels (which will be
covered in the Action Plan).

SELECTED MARKETING STRATEGY

Based on our analysis, there are tremendous growth prospects for the VoIP market, although
current players like Skype and Rebtel are already established internationally. Despite a sizeable
number of mature players, we recognize the industry as still reasonably attractive, and
successfully entering such a market would be possible with the right value proposition and
strategy. Skype and Viber are both limited by Internet connections in order to work, and Rebtel
is extremely troublesome to use (despite competitive rates). This means that so long as Foniq
eliminates the need for Wi-Fi connection in their product, and is easy to use, a distinct
competitive advantage can be attained.

We anticipate little or no action from competitors against Foniq’s small entrance into the
market, as it would be more productive to direct their efforts towards more profitable current
pursuits.

We recommend targeting the bargain hunters, particularly the foreign students (homesick
youngsters), since this segment is not currently being focused on. As foreigners in an unfamiliar
country, these homesick youngsters commonly lack the necessary support system to cope with
stress that their local counterparts face [ CITATION San98 \l 1033 ]. Studies by Prieto (1995) have
shown that what is needed for these individuals is more contact with people they are familiar
with, as this contact will help soothe and encourage them. As such, we will tailor our marketing

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strategy to first create awareness of their as-of-yet-unknown underlying needs, and then to
convey a sense of warmth and sincerity to fill this void. A completely new product branding is in
order as ‘Foniq’ sounds too technical, cold and distant, and it has no prior brand equity to
leverage on.

Also, since homesick youngsters would typically be early adopters of technology, there would be
less switching costs involved for them to embrace the application. We recommend starting with
the Singapore market as well as Singaporean students overseas as this ties in with the closer-to-
home warmth we are trying to achieve. To be even more specific, slightly more emphasis can be
placed on Chinese or Indian students as calling rates for their home countries are amongst the
lowest, and affordability is aligned with our image of sincerity and care.

While it may not be the cost leader, Foniq’s prices are competitive; while it may not have the
clout that big players do, its image conveys a personal touch reminiscent of home.

ACTION PLAN
PRODUCT

Our competitor analysis shows that Rebtel is currently the strongest competitor since it is does
not require data connections for the entire call, unlike Skype and Viber. However, like IDD cards,
Rebtel can be inconvenient and user-unfriendly. Therefore, in order to get ahead, Foniq can
make their product easier to use and more accessible.

We recommend renaming the product ‘Less Than Three’, or ‘<3’. In online

messaging language, love is usually typed as ‘<3’ for short, which symbolizes
a heart. Ideally, this would imply that with

‘<3’, customers’ underlying needs for support and love will always be met. An
effective advertising campaign is necessary to build such an image, and it is
imperative all aspects of the brand present a cohesive image.

Given the competitive environment of the VoIP services industry and the low switching costs,
quality is of utmost importance. Hence, ‘<3’ needs to offer top-notch quality. In fact, clarity, cost
and stability are the top 3 considerations amongst foreign students according to survey results
(Appendix D). To achieve this, ‘<3’ should aim to eliminate the requirement of Wi-Fi connections,
due to the inconsistent connection stability that could severely affect quality of their product, as
well as the limitations this places on callers.

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Another key aspect is to simplify downloading and calling procedures. The product must be of a
seamless, one-touch-to-call quality. ‘<3’ might also offer similar perks offered by close
competitors such as the complimentary Skype-to-Skype usage via Internet. To further build on its
wholesome image of a sincere service provider, the application would also feature an additional
display of total calling costs incurred at the end of every phone call, for greater transparency in
billing. This would help ease concerns about hidden cost, and allow customers to focus on the
quality, hassle-free service, and the benefits it has brought.

The website would be improved aesthetically and provide

more information without being overly technical, as it is
important the customer is not turned off by an overly
technical or complicated appearance. Clear instructional
videos would be posted, as visual representations are able
to demonstrate such technologies in a more appealing and
intuitive way than text. The website would also serve as a
one-stop avenue for downloads, feedback, advice as well
as payment services. Leveraging on a good website, ‘<3’
can increase awareness and adoption of its product. The
website could even be integrated with social media such
as Facebook and Twitter, to make use of Web 2.0
technologies to further carry out social media marketing. Applications should also be made for
android and blackberry smartphones to greatly increase targeted market size, especially since
the technology is versatile, as shared by a Foniq personnel.

PRICE

In coming to a pricing decision, we looked at ‘<3’’s objectives and strategy, the nature of its
customers, and its competition’s product and pricing.  There are three different pricing strategies
available to ‘<3’:

1. Maintain its current pricing schedule, which is at a premium to Rebtel, but similar to
charges on IDD calling cards.  Doing so would require ‘<3’ to offer some premium service
or customer value to justify the charges.  Expected initial market share – 20%, market
share growth – 5%.
2. Offer Rebtel competitive pricing, doing so would enable ‘<3’ to capture a larger market
share, but reducing its current pricing structure would require ‘<3’ to have serious

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discussions with Singtel to work out better deals.  Expected initial market share – 50%,
market share growth – 2%.
3. Offer the cheapest price on the market.  If ‘<3’ is able to be the cost-leader, a large
majority of the market would definitely be theirs as long as the advertising campaign is
successful.  But this would once again require ‘<3’ to renegotiate their deals with Singtel.
Expected initial market share – 70%, market share growth – 1%.

Since Foniq has refused to provide us with a breakdown of their costs structure, we can only
base our computations on benchmarks.  We assume price elasticity of demand for VoIP services
to be elastic due to the low switching costs involved.  In our simple analysis using the three
pricing strategies mentioned (calculated in Appendix E), strategy 3 would breakeven the fastest
because of the lower costs of implementation, but it is extremely contingent on Foniq being able
to negotiate a better deal with Singtel or any other service provider. Thus we feel that although
strategy 1 takes a longer time to breakeven, it requires less infrastructural changes, and is more
coherent with our marketing strategy.  Strategy 1 also offers the highest long-term returns.
Pricing will be based on current charges offered by Foniq with discounts as described in our
promotions section. At a 20% initial market capture rate and an annual 5% growth rate
thereafter (very low estimate for a technology company), ‘<3’ can expect to breakeven by the
third year.

PROMOTION

Promotions management will be essential for ‘<3’ in order to gain any sort of brand recognition
in a market that has an almost perfect competition and little product differentiation. The two
primary means to do so are advertising and sales promotions.

The two most common and cost-effective mechanisms of advertising (non-television based) are
print ads and outdoor ads/campaigns. Print ads will be placed in youth-centric areas: primarily in
university campuses as well as malls and cinema theatres. Possible advertisement efforts will
cleverly play on the heart symbolism, witty word play (for example, a print ad of a phone keypad
missing the numbers 1 and 2, with a question, “Something missing from your phone?” or “Can’t
call home without <3?”) and emotional aspects that influence viewers to miss their loved ones
but provide them with the solution in ‘<3’ (for example, for Christmas, ads might show happy
families tucking into a thanksgiving meal while a student dines alone. Nonetheless, he looks
content, as he is talking to loved ones over ‘<3’, depicted in the ad perhaps by a speech bubble
with ‘<3’ in it).

Outdoor ads and campaigning might involve “mascots” wearing ‘<3’-insipired costumes
interacting with potential customers, inviting them to a free trial. Positive and negative feedback
can be collected immediately, which might yield results normal delayed feedback channels

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cannot capture. The advertising would work through peripheral processing of the elaboration
likelihood model, allowing customers to be attracted by looks and feel of the product. Those who
are unconvinced will be presented with the specifications of the product so that it caters to
those who prefer a more cognitive approach in their purchasing behaviour.

Since the product caters to a price-sensitive market – we believe that sales promotions will drive
the company’s customer base in the short-run. The three types of consumer discounts that we
propose are in the form of free samples, cash rebates and contests.

The application can be bundled with $2 of international calling so that consumers can ease into
purchasing the product by getting a first-hand experience of the product. This will warrant an
element of trust and credibility towards the company and product, as the consumer will feel
secure towards the brand. Cash rebates and contests can also help boost customer loyalty.
Firstly, we propose that the company offers a package such that the consumer gets one
complimentary minute for every ten minutes of a single call made. Another ambitious plan is to
offer a free flight ticket to a customer who has used the application for more than six thousand
minutes in six months. This will be upheld to the destination to which the customer calls the
most. The rationale is that there is not an overwhelming percentage of people who would call
that much (based on surveys) in six months, but nonetheless, this provides an incentive to call
with ‘<3’ rather than competitors’ products. International students, who travel to their home
countries at least once a year, will be enticed by this offer.

We believe that there could also be promotions on alternate means of earning credit (balance
required to make a phone call), given the tech-savvy nature of the target market. Currently, the
application needs to be a regularly topped-up with currency through credit cards or PayPal. The
company can capitalize on new trends in order to stay socially and culturally relevant and
identifiable by adopting Facebook credits, (http://www.facebook.com/credits) allowing customers to
top-up their balance through virtual currency. Although this system would initially require the
traditional credit-card method to have balance in the system, subsequent balance can be earned
through introducing friends to ‘<3’. This allows ‘<3’ to reach customers with minimal effort, and
it has been seen that using such streams (Facebook, Twitter, etc.) to channel distribution
generally gives a return of huge customer base (eg. Viber and WhatsApp).

PLACE

Foniq currently uses the iTunes store as its sole avenue for distribution of its iPhone application.
However, this may not receive much attention, as there are over 350,000 independently
designed applications for the iPhone[ CITATION App11 \l 1033 ].

Therefore, the company should use direct channels to effectively reach and cater to its target
audience. As mentioned previously, the target audience includes international students who may

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not be familiar with the various VoIP options but have the need to make international phone
calls. There are 3 potential channels of distribution that can be considered:

Before these international students begin their research on available options, ‘<3’ can push their
product to them by collaborating with the universities’ office of admissions and office of
exchange programs to recommend ‘<3’ when students register. This would be congruent with
the school’s agenda to help students adapt to the foreign environment. International students
who are looking for a cost-effective means to call their home country will find this useful and will
not have to search for alternatives in the market. The key here is to approach customers before
they research extensively and stumble upon the more established brands. Moreover,
recommendations by the school will help vouch for Foniq’s credibility and compensate for its
lack of established brand name as compared to its competitors.

‘<3’ could also place docking stations around schools, especially hostels and international
student centres, where there is high traffic of international students, to allow for easy and
convenient downloads. Payment can be made at docking stations at the end of the month, via
methods like PayPal and NETS. Easy-to-understand brochures with relevant information like
pricing, should also be placed at the stations.

Their website would also be an avenue for users to download the application as well as make
payment at the end of the month. Relevant information about the application can also be made
available on the website, and download should be seamless and easy.

OVERALL ASSESSMENT
In the planning of our marketing strategy, we recognized several problems which could
undermine the success of our product.

Extreme reliance on advertising campaign to create brand image

If ‘<3’ is ineffective in establishing the sincere and homely product image that distinguishes it, it
is all too possible for ‘<3’ to be lost amongst the millions of iPhone applications launched
regularly. It is essential that awareness be cultivated well, and aspects which global competitors
are unable to fully explore are capitalized on, for example a personal touch, or a ‘close to home’
feel.

Failure of good product introduction into the market

Due to the viral nature of internet feedback, Foniq would have to ensure that the product they
push into the market is as close to flawless as possible to reduce negative dissonance. Any

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would quickly spread through word-of-mouth, and since the community of homesick youngsters
in Singapore is not very large, the contagion effect would take root very quickly.

Lack of support structure for ‘<3’

As a service oriented product, Foniq would have to ensure the best support pipelines possible.
Customer service would be a critical function of the support process, and website serviceability
crucial to the success of ‘<3’. The entire support process has to portray the same image of
sincerity and warmth as the product, lest customers be discouraged by any negative experiences
when dealing with ‘<3’.

Word Count: 4,926

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APPENDIX A: INTERNATIONAL TRAVELLERS AND CALL MINS STATISTICS

  Actual *Forecasted

YEAR 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

19,4 20,2 21,0 21,88

Air passenger arrival (thousands) 14,336 15,364 16,678 17,640 18,185 18,026 92 89 85 2

19,4 20,2 21,0 21,89

Air passenger departure (thousands) 14,270 15,356 16,690 17,582 18,103 18,063 87 90 93 6

1,764,5 1,837,2 1,909,8 1,982,59

International Travelers (TOTAL)   1,390,451         16 07 99 1

279,8 291,3 302,8 314,40

International Travelers (Business related)   220,498         17 45 72 0

                     

10,7 11,9 13,1 14,33

International Call Mins ('000) 4,131 4,778 5,074 6,303 8,457 10,138 10 19 27 6

Mobile phones - 3G ('000) - 175 884 1,701 2,474 3,160 3946.8 4708.54 5444.432 6193.5756

Source: Singstat – Yearbook of Statistics Singapore 2010 (Transport and Communications)

*Forecasted using simply trending analysis

APPENDIX B: INTERNATIONAL VOICE TRAFFIC GROWTH

International VoIP and switched traffic growth

Source: http://www.telegeography.com/ee/free_resources/figures/tg-01.php , accessed on February 20, 2011

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APPENDIX C: STRENGTHS AND WEAKNESSES OF COMPETITORS

SKYPE

KEY STRENGTHS

Competitive Rates

Skype provides calls to over 30 countries at a competitive rate of 0.033 SGD per minute.
Even including the small connection fee required under this pay per use scheme, this is a
highly competitive price that undercuts many of Foniq’s rates.

Established Brand Recognition and Strong Following

Skype enjoys strong brand recognition and a strong following within the consumer-centric
VoIP market, with a record of 29 million people online simultaneously [ CITATION Sky11 \l 1033 ]
and an estimated 6.4 billion billing minutes[ CITATION Pet10 \l 1033 ].

KEY WEAKNESSES

Marketing Efforts Mainly Focused On Website

Skype’s main marketing vehicle has always been its website. While this has proven wildly
successful, this does present other companies the window of opportunity to hook
customers before they conduct the search for Skype and stumble upon its website.

Call Requirements

Skype calls require a Wi-Fi connection, a fixed internet connection, or a $99 monthly Verizon
plan. This may prove inconvenient for users who need to make calls where such connections
are unavailable, or require data plans, which are costly when overseas.

REBTEL

KEY STRENGTHS

Competitive Rates

Rebtel’s international rates to 196 destinations are comparable to or cheaper than Foniq’s,
with no subscription or connection fee. Also, the free trial as well as promotional codes and
reward schemes are attractive to consumers as this presents cost savings. Most enticing of
all, Rebtel offers free international calls between 50 countries, in hopes of attracting
customers to use its paid services when calling other countries.

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Available on Any Phone

Consumers can use Rebtel on any phone, be it a landline, mobile or smart phone. Rebtel
makes it even simpler for customers with apps available for iPhone, Blackberry, and Android
phones.

Comprehensive Website

Rebtel’s user-friendly website is attractive, simple and comprehensive. It contains useful

how-to videos that explain potentially confusing procedures and is effective in packaging its
product as simple and affordable.

KEY WEAKNESSES

Need to Register Contacts

The extra step of registering every contact one wishes to call may be cumbersome and
inconvenient if the caller wishes to make the call straight away.

INTERNATIONAL IDD CARDS

Calling cards are the traditional means of calling internationally, and are readily available
worldwide. Besides information that is readily available on the service provider’s websites,
calling cards are normally advertised at payphones or in airports where travelers can
purchase one on the spot. Singtel’s WorldCard can be purchased anywhere from
convenience stores to Hello! Shops to atms and AXS stations and more.

ANTICIPATED REACTIONS

As consumers become more aware of better calling options available on the Internet, calling
card companies will face stiff competition for their market share of international calls. While
calling card providers will have to find a way to deal with such competition, it is unlikely that
they will target Foniq specifically because it is a relatively small entrant. However, Foniq
might be affected if these companies are effective in steering consumers back to the calling
card and away from applications like Foniq’s product.

KEY STRENGTHS

Available without Internet

Calling cards preceded online VoIP solutions such as Skype or Foniq, and have for many
years been available separate from the Internet. Users are able to register for an account

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 MGMT 102 - Strategy

without Internet access, which may be practical for travelers without Internet access, or for
users who need an account on the spot.

KEY WEAKNESSES

Cumbersome Procedure

Calling procedure can be cumbersome, with multiple numbers to enter and options to
choose from.

Less Than Competitive Rates

Often, the rates offered by calling cards are not as competitive as the newer online services
such as Skype, Rebtel or even Foniq.

VIBER

KEY STRENGTHS

Service is completely free

Not only is the download of the Viber application free, all calls are completely free as long as
both parties have the Viber application and 3G or Wi-Fi Internet connection on their iPhone.
This includes calls that are made internationally, since it is able to bypass the use of any
cellular voice minutes.

Convenience

Unlike Skype and Foniq, it does not require any registration or login prior to the use of the
Viber application. Once the application is installed, Viber automatically syncs all contacts in
the phone and indicates which are Viber-users. With Internet connection, this process
allows calls to be made and received automatically without the login process, adding of
contacts using usernames or IDs, and paying call minutes charges.

High voice quality

Viber is powered by SPIRIT DSP, which is the world’s top voice and video over IP Engines
provider. Other than Viber, they provide their services to recognized products like Apple,
Microsoft, Oracle, and more than 250 others. They claim to “deliver superior quality and
integrated voice and video over IP services for telecommunications, cable and mobile
service providers, … and social networks.”1

1
http://finance.yahoo.com/news/Viber-Turns-to-SPIRIT-for-prnews-961063363.html?x=0&.v=1

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 MGMT 102 - Strategy

SPIRIT provides advanced software to ensure “full-duplex, rich, wideband voice” 2 for Viber
users. They also provide technical services that addresses all network impairments that
Viber faces, like bandwidth limitations, delays, spikes and so on. Hence, this helps Viber to
ensure the high voice quality that is crucial to the satisfying its customers.

KEY WEAKNESSES

Limited to iPhone users

Despite its cost-efficiency and convenience, Viber is limited to iPhone users only, since it is
an iPhone application. Currently, the global market share of iPhone in the Smartphone
market is only 15.8%. Hence, consumers with similar needs are unable to enjoy the benefits
of Viber if they do not own an iPhone.

Negative user feedback

From the customer reviews retrieved from the Apple Store, it shows that the connection of
Viber is not stable as they claim. Users have reviewed that calls have been cut off when the
connection is not stable.

APPENDIX D: SURVEY RESULTS

2
http://blog.tmcnet.com/blog/tom-keating/voip/why-spirit-dsp-powers-vibers-popular-hd-mobile-
voip-app.asp

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 MGMT 102 - Strategy

1. To which country (countries) do you make overseas calls?

# Answer Response %

1 Malaysia 1 4%

2 China 1 4%

3 Philippines 0 0%

4 India 17 71%

5 Indonesia 2 8%

6 Others 9 38%

Others Statistic Value

UK Min Value 1

Sri Lanka, England, Australia Max Value 6

Australia Total Responses 24

None, only make overseas calls when i'm overseas. Call back to SG.

Thailand

KOrea

USA

Vietnam 2. What is your primary

Australia purpose to call
overseas? 
# Answer Response %

1 Work (colleagues) 0 0%

2 Family 17 71%

3 Relationship 1 4%

4 Friends 6 25%

5 Others 0 0%

Total 24 100%

Statistic Value

Min Value 2

Max Value 4

Mean 2.54

Variance 0.78
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Standard Deviation 0.88

Total Responses 24
 MGMT 102 - Strategy

3. How often do you call overseas? 

# Answer Response %

1 Never 3 13%

2 Less than Once a Month 3 13%

3 Once a Month 0 0%

4 2-3 Times a Month 3 13%

5 Once a Week 2 8%

6 2-3 Times a Week 8 33%

7 Daily 5 21%

Total 24 100%

Statistic Value

Min Value 1

Max Value 7

Mean 4.75

Variance 4.54

Standard Deviation 2.13

Total Responses 24
4. On average, what is the duration for each of
these calls?
# Answer Response %

1 < 2 mins 2 8%

2 Between 2 and 5 mins 5 21%

3 Between 5 and 10 mins 4 17%

4 Between 10 and 20 mins 6 25%

5 Between 20 and 45 mins 4 17%

6 > 45 mins 3 13%

Total 24 100%

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 MGMT 102 - Strategy

Statistic Value

Min Value 1

Max Value 6

Mean 3.58

Variance 2.34

Standard Deviation 1.53

Total Responses 24

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 MGMT 102 - Strategy

5. Which is your preferred mode of contacting

friends/family/others overseas?
# Answer Response %

1 Phone apps (e.g. BBM, WhatsApp, Viber) 9 38%

Internet video conferencing (e.g. Skype,

2 11 46%
Google video)

3 Google chat 7 29%

4 WhatsApp 2 8%

5 Facebook 7 29%

6 Phone call 14 58%

7 Calling card 8 33%

8 VoIP 1 4%

9 Others 2 8%

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 MGMT 102 - Strategy

Others Statistic Value 6. What do you like about the current

Email Min Value 1 mode of overseas communication you
callback card Max Value 9 use?
Text Response Total Responses 24

Its convenient

easy, cheap

It's fast and immediate :)

cheap, convenient and reliable

Easiest and most convenient. Not too expensive.

Not much. Really.

Its free for the most part with IDD. Whatsapp FTW!

It's convenient and allows me to make calls in line with my schedule, especially when I'm on the go.

It's cheap enough.

Convenient, reliable.

Phone is the most convenient

Convenience.

Skype. Its free and I am able to video call my friends.

Ease of use, inexpensive/free

It's very affordable.

Nothing, expensive

Its cheap.

It's free.

convenient. i love you bharath

I can use video on Skype, which allows me to see my family. Also Skype to Skype is free.

easy to access and use hassle free and can call using a callback card when internet signal is low

Statistic Value

Total Responses 21

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 MGMT 102 - Strategy

7. Please rank the following in terms of importance for your

overseas communication. 1 - most important 5 - least important
# Answer 1 2 3 4 5 Responses

1 Cost 12 2 2 3 5 24

2 Clarity of call 1 13 5 4 1 24

3 Stability of call (not getting cut frequently) 2 3 13 6 0 24

Brand of the communication mode (eg. Particular type of calling

4 5 1 0 2 16 24
card, etc.)

5 Convenience of making the call 4 5 4 9 2 24

Total 24 24 24 24 24 -

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 MGMT 102 - Strategy

Statistic Cost Clarity Stability of call (not Brand of the communication Convenience of
of call getting cut mode (eg. Particular type of making the call
frequently) calling card, etc.)

Min Value 1 1 1 1 1

Max Value 5 5 4 5 5

Mean 2.46 2.63 2.96 3.96 3.00

Variance 2.87 0.94 0.74 2.82 1.65

Standard
1.69 0.97 0.86 1.68 1.29
Deviation

Total
24 24 24 24 24
Responses
8. How much does your current mode of communication to
overseas cost (monthly)?
# Answer Respons %
e

1 < 10 $ 12 50%
Statistic Value
10 $ - 20
2 4 17%
$ Min Value 1

21 $ - 35 Max Value 6
3 6 25%
$
Mean 2.00
36 $ -
4 1 4%
50$ Variance 1.65

51 $ - 75 Standard Deviation 1.29

5 0 0%
$
Total Responses 24
6 > 75 $ 1 4%

100
Total 24
%

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 MGMT 102 - Strategy

9. Are you familiar with the term VoIP? If yes, please name a few
that you use.
# Answe Respons %
r e Statistic Value
1 Yes 8 33% Min Value 1
2 No 16 67% Max Value 2
Total 24 100% Mean 1.67

Variance 0.23

Standard Deviation 0.48

Total Responses 24
10. In your opinion, which is the most
important aspect you look for in a VoIP
service?
# Answer Response %

1 Clarity of call 7 33%

Statistic Value
2 Cost 5 24%
Min Value 1
3 Stability of call 4 19%
Max Value 5
4 Convenience 1 5%
Mean 2.52
5 Other 4 19%
Variance 2.26
Total 21 100%
Standard Deviation 1.50
Other
Total Responses 21
No idea

not familiar dude

11. Have you heard about FONIQ? 

# Answe Respons %
r e Statistic Value
1 Yes 0 0% Min Value 2
2 No 24 100% Max Value 2
Total 24 100% Mean 2.00

Variance 0.00

Standard Deviation 0.00

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Total Responses 24
 MGMT 102 - Strategy

12. What features would you like to see in an iPhone app that
enables you to call other countries through VoIP?
Text Response

No idea :)

No, I use Blackberry. I want a Blackberry app.

Free & Easy, over 3G or Wi-Fi

Not an iPhone user.

Free video streaming

Good connection

I dun own iphone!

Free and very clear communication

stable. also who pays 10$ for an app?

Video.

ability to call phone for free - mobile and landline clarity of call even when using wifi not 3g data plan

Statistic Value

Total Responses 13

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 MGMT 102 - Strategy

13. Which country are you from? 

# Answer Response %

1 Singapore 8 33%

2 Malaysia 0 0%

3 China 0 0%

4 Philippines 0 0%

5 India 11 46%

6 Indonesia 1 4%

7 Others 4 17%

Total 24 100%

Others Statistic Value

Singapore PR - Indian Citizen Min Value 1
Sri Lanka Max Value 7
Thailand Mean 4.04
Korea Variance 5.35

Standard Deviation 2.31

14. How much would you be willing to pay
Total Responses 24
for an iPhone app that would let you
make unlimited calls on a monthly basis?
# Answer Response %

1 < 10$ 20 83%

2 11$ - 15$ 4 17%

3 16$ - 20$ 0 0%

4 21$ - 30$ 0 0%

5 > 30$ 0 0%

Total 24 100%

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 MGMT 102 - Strategy

Statistic Value

Min Value 1

Max Value 2

Mean 1.17

Variance 0.14

Standard Deviation 0.38

Total Responses 24

15. What is your monthly budget (excluding rent expense)? 

# Answer Response %

1 Less than 200 2 9%

2 Above 200 to 500 7 30%

3 Above 500 to 1000 12 52%

4 Above 1000 to 2000 2 9%

5 Above 2000 to 3500 0 0%

6 More than 3500 0 0%

Total 23 100%

Statistic Value

Min Value 1

Max Value 4

Mean 2.61

Variance 0.61

Standard Deviation 0.78

Total Responses 23

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 MGMT 102 - Strategy

16. Age
Text Response

21

20

21

19

20

21

21

24

23 OMG

21

22

22

22

23

22

20

20

22

23

24

24

34

21

22

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 Statistic Value

Total Responses 24

MGMT 102 - Strategy

17. Gender
# Answer Response %

1 Male 12 50%

2 Female 12 50%

Total 24 100%

Statistic Value

Min Value 1

Max Value 2

Mean 1.50

Variance 0.26

Standard Deviation 0.51

Total Responses 24

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APPENDIX E: PRICING FORECASTS

PROFIT FORECASTS
 Year 2009 2010 2011 2012 2013 2014 2015 2016 2017
Total Population (Singapore) 4,987,600 5,077,377 5,168,770 5,261,807 5,356,520 5,452,937 5,551,090 5,651,010 5,752,728
Number of foreign students 142,183 144,742 147,348 150,000 152,700 155,449 158,247 161,095 163,995
Total Amount of International Calls 10,000,000 10,180,000 10,363,240 10,549,778 10,739,674 10,932,988 11,129,782 11,330,118 11,534,060
Estimated calls from foreign students 285,073 290,204 295,428 300,746 306,159 311,670 317,280 322,991 328,805
VoIP users (assume 70% adoption) 199,551 203,143 206,800 210,522 214,311 218,169 222,096 226,094 230,164

Charge slightly higher than Rebtel. Current prices.

Premium (expected customers 20%, 5% customer 39,9 40,6 41,3 52,6 64,2 76,3 88,8 101,7 115,0
growth) 10 29 60 31 93 59 38 42 82
Revenue 4,069 4,143 4,217 5,366 6,556 7,786 9,058 10,374 11,734
Brand Awareness Campaign     6,000
Advertising Costs     2,200 1,000 1,000 1,000 1,000 1,000 1,000
Variable Costs     2,109 2,683 3,278 3,893 4,529 5,187 5,867
Profits     (6,091) 1,683 2,278 2,893 3,529 4,187 4,867
Accumulated Profits     (6,091) (4,408) (2,130) 762 4,292 8,479 13,346

Charge similar to Rebtel, competitive prices.

Similar (expected customers 50%, 2% customer 99,7 101,5 103,4 109,4 115,7 122,1 128,8 135,6 142,7
growth) 76 72 00 71 28 75 16 56 01
3,9 4,0 4,1 4,3 4,5 4,8 5,1 5,3 5,67
Revenue 64 36 08 50 98 55 18 90 0
Brand Awareness Campaign     3,000
Advertising Costs     2,200 1,000 1000 1,000 1,000 1,000 1,000
Fixed Costs     2,054 2,175 2,299 2,427 2,559 2,695 2,835
Profits     (3,146) 1,175 1,299 1,427 1,559 1,695 1,835
 MGMT 102 - Strategy

Accumulated Profits     (3,146) (1,971) (672) 756 2,315 4,010 5,845

Charge less than Rebtel, cost leader (10% discount to

Rebtel).
Cost Leader (expected customers 70%, 1% customer 139,6 142,2 144,7 149,4 154,3 159,2 164,3 169,5 174,9
growth) 86 00 60 71 04 63 51 70 24
4,9 5,0 5,1 5,3 5,5 5,6 5,8 6,0 6,25
Revenue 95 85 77 45 18 95 77 64 5
Brand Awareness Campaign     3000
Advertising Costs     2200 1000 1000 1000 1000 1000 1000
Fixed Costs     2,588 2,673 2,759 2,848 2,939 3,032 3,128
Profits     (2,612) 1,673 1,759 1,848 1,939 2,032 2,128
Accumulated Profits     (2,612) (939) 820 2,668 4,606 6,638 8,766

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COSTS FORECASTS
  Premium Competitive Cost-Leader Remarks
To promote brand
awareness and increase
Awareness campaign
- - brand equity, only
(Outdoor) 3,000
necessary for premium
strategy
Ipod docks costs around
150 each, install in each of
Infrastructure costs (Ipod
the Universities for easy
docks) 450 450 450
access for international
students
Sales promotions and
continual advertising can be
Advertising (Magazine)
1,200 1,200 1,200 done through school
magazines in the initial year

Yearly advertising online to

Advertising (Online, yearly)
1,000 1,000 1,000 keep customers aware

*Source: www.iesmallbusiness.com/resources/Major_Media_Types.doc
Newspapers – $1,300 per week for 2” x 2” ad
Television – $200,000 for one 30-second commercial (during prime-time)
Direct Mail - $1,500 for 1,000 4x6 postcards (includes postage)
Radio - $90 to $120 per week on a rotator (prices higher if time slots for ad are selective)
Magazines - $1,200 to $5,000 per month or per issue (depends on ad size and demographics)

Outdoor (billboard) - $3,000 to do artwork and install media on billboard; rates depend on impress level,
ranges from $5,000 to $500,000 (the higher the qualify of the artwork and the larger the demographic group,
the higher the price); minimum contract is 16 weeks

Online - $0.60 pay-per-click or $1,200 - $1,800 a month for aggressive campaigns (does not include search
engine optimization) or $200 to $1,200 per year per banner ad on websites

Rebtel Calling Rates US$

Singapore to China 0.019

Singapore to India 0.0179

Singapore to Indonesia 0.0576

Average Charges 0.0315

Foniq Charges S$
0.1000
Singapore to India 0
 MGMT 102 - Strategy

0.0400
Singapore to China 0
0.1658
Singapore to Indonesia 9

0.1019
Average Charges 6

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BIBLIOGRAPHY

Apple. (2011 22-Janurary). Apple Store. Retrieved 2011 13-February from Apple:
http://www.apple.com/pr/library/2011/01/22appstore.html

Brockmann, P. (2010 12-08). Skype Statistics 1H2010. Retrieved 2011 08-03 from Brockmann & Company:
http://www.brockmann.com/communications/voip/2112-skype-statistics-1h2010

BuddeComm. (2010 07-April). Reports: BuddeComm, Singapore - Telecoms, Mobile and Broadband. Retrieved
2011 25-February from BuddeComm Reports: http://www.budde.com.au/Research

Department of Statistics Singapore. (2010). Singapore in Figures. Singapore.

Drewniak, A. (2011 14-01). Rebel Launches Free International Calling App for Blackberry. Retrieved 2011 08-03
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blackberry/

iThink. (2005 21-11). Skype - Marketing Brilliance and Use of Website. Retrieved 2011 08-03 from ithink -
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Sandhu, D. S., & Asrabadi, B. R. (1998). An acculturative stress scale for international students: A practical
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Skype. (2011 22-02). Skype - The Big Blog - 29 Million People Online On Skype. Retrieved 2011 08-03 from
Skype - The Big Blog: http://blogs.skype.com/en/2011/02/29_million_people_online.html

TeleGeography. (2007). Free Resource: TeleGeography. Retrieved 2011 26-February from A TeleGeography
Web site: http://www.telegeography.com

TeleGeography. (2011). TeleGeography: Report and Database: Voice Traffic: Publications: TeleGeography
Research. Retrieved 2011 05-03 from TeleGeography: www.telegeography.com

Trading Economics. (2010). International voice traffic (minutes per person) in Singapore. Retrieved 2011 26-
February from Trading Economics: http://www.tradingeconomics.com

Vector InfoTech. (2005). Corporate Profile. Retrieved 2011 04-03 from Vector InfoTech:
www.vectorinfotech.net

VOIP biz-news. (2009 11-November). VOIP biz-news. Retrieved 2011 1-March from VOIP: Market Data:
http://voip.biz-news.com/news/2009/11/11/0004

Wauters, R. (2010 19-01). Report: Skype Now Accounts For 12% Of All International Calling Minutes. Retrieved
2011 йил 06-03 from TechCrunch: www.techcrunch.com/2010/01/19/skype-international-calling-minutes-
share/

Wikipedia. (2010). Demographics of Singapore. Retrieved 2011 26-February from

http://en.wikipedia.org/wiki/Demographics_of_Singapore
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