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PESTLE Analysis for ACN in Australia

Discuss about the Mobile Technology is Revolutionizing Marketing.

American Communication Network (ACN) is an American based multinational dealing in services like telecommunication, energy and merchant services. The notable point about ACN is that it uses multilevel marketing (pyramid selling) as a sales strategy (ACN, 2018).  Pyramid selling is a sales model in which a company enrols members as sales staff and these members are paid for getting more members. The company operates in 25 countries including Australia (ACN, 2018). This assignment focuses on marketing plan for telecommunication services of ACN in Australia.

A firm’s business is affected by various external factors (Frynas & Mellahi, 2015). These factors can affect the firm’s ability to attain its goals. PESTLE analysis is a management technique which analyses these factors for a company (Harrison, 2013). Following is an external environmental or PEESTLE analysis for ACN in Australia.

Political- Telecommunication services expansion is supported by the political system in Australia as telecommunication helps in a country’s progress (Government of Australia, 2018). However, as telecommunication services can be abused by unscrupulous elements, taking license for selling telecom services is required. Additionally, it is required for a telecom service provider to be vigilant about the users of its services (Acnpacific, 2018). ACN has a licence for operation and it tries to manage its user base accurately

Economic- Telecommunication market is rapidly growing in Australia due to new innovations in digital and information technology (Lampe & Ploeckl, 2014). Telecommunication has become a 42 Billion Dollars industry in 2016 (ACCC, 2018). Hence, there is a huge potential for revenue growth for ACN in Australia.

Socio-cultural- Social trends are very conducive to telecommunication growth in Australia (Hill, 2012). It has become fashionable to own digital devices and people are becoming more and more internet savvy (Becker, 2013). This has led to an increased use of telecommunication services.

Legal- Australian Communications and Media Authority (ACMA) has laid down regulations for telecommunication services like user identity and licencing. ACN has to abide by all these regulations. (Government of Australia, 2018). Also the firm has to abide by non-discriminatory, working hours and labour related regulations in the country. Australian Competition and Consumer Commission (ACCC) had filed charges against ACN for being an illegal pyramid. That is it was accused of illegally operating in multilevel marketing in the country (ACCC, 2018). However, the High Court of Australia rejected the charge.

Environmental- Telecom services pose no direct harm to the environment (National Cancer Research Institute, 2014). However, some researches show that radiations from telecom services enabled devices can cause harm to human body. Therefore, ACN must take care of safety norms while dispensing of its services

Political Factors

Technological- For expansion in Australian markets, ACN has to consider many technical factors (Hill, 2012). Telecom industry is highly technology incentive (ACN, 2018). ACN would require huge amount of investment in various areas like telecommunication towers, servers, transmission technology etc. (Betz, 2011). The company needs to spend on research and development of new telecommunication technology to succeed in Australia

Competitive Environment- Telecommunication industry in Australia is highly competitive (ACN, 2018).  Australian Competition and Consumer Commission (ACCC) is the regulatory body which ensures healthy competition. Major competitors of ACN in the telecommunication sector are Vodafone, Telstra, TPG technologies etc. (Acnpacific, 2018). However, ACN has adopted the policy of partnering with some of its competitors like Vodafone to provide essential services to its customers.

An understanding of various external factors can help ACN in forming strategies to contend with these factors.

If a company wants to succeed in with in a market environment it needs to assess its own strengths and weaknesses and the opportunities and threats prevailing in the market (Ungson & Wong, 2012). SWOT analysis is a management tool through which an organisation can ascertain its overall strengths and weaknesses and also judge the market opportunities and threat to its business (Kaplan, 2012). Following is a SWOT analysis for ACN in Australia.

Multi-level marketing- ACN has a personalised customer base due to its strategy of multilevel marketing or pyramid selling (ACN, 2018). Multilevel marketing is a selling strategy in which a company pays its selling staff to recruit more selling staff (Boone, 2011). In other words, sales people are its members who sell the services to others and also make more members in the process (ACN, 2018). In this manner ACN pursues direct selling which reduces cost and increases customer base.

High brand recall and brand identity- ACN has been around for more than two decades now and people associate multilevel marketing with its name (ACN, 2018). This helps in market penetration and gives the company an advantage while selling in the Australian markets.

Reduction in cost through partnership- ACN has tied up with international telecom giant Vodafone to sell its services in Australia (Acnpacific, 2018). This has given it a ready customer base as well as technological help leading to cost reduction.

High research cost- Telecom sector is highly technology intensive (Fisk, 2013). Therefore, research and development increases the cost for the company.

Reach of pyramid selling- Through the strategy of pyramid selling the company may not be able to reach as many customers as a company selling through proper stores does (Harrison, 2013). Pyramid selling is a personal selling method and is dependent on the sales force.

Economic Factors

Market growth potential- Telecommunication sector is a growing sector (Fisk, 2013). Many people are buying new digital devices and there is great demand for internet and broadband services (Frynas & Mellahi, 2015). This is a major opportunity for market growth in Australia.

4G and other cellular technologies- People are becoming more and more dependent on the cellular technology. With 4G internet speed technology, more and more people are now using mobile networks for their daily internet usage (Jurisic & Azevedo, 2011). Therefore, there is an opportunity for the firm to expand in Australia

Competition- As telecom industry is growing there is tough competition in this sector (ACN, 2018). In Australia the company faces tough oppositions from large companies like Telstra, Vocus Group, Vodafone and many others (ACN, 2018). This leads to higher marketing cost.

Distrust due to legal cases- ACN was stuck in a legal battle with ACCC over legality of its business in Australia (ACCC, 2018). The high court had dropped all charges against the company but lacks of awareness makes some people still think that the company is illegal.

SWOT analysis can help ACN in taking stock of its strengths so that it can optimally utilise its opportunities to reduce its weaknesses and threats.

Segmentation is a marketing method in which an organisation divides its consumer base into groups based on perceived similarities (Armstrong, 2012).  Companies can divide the consumer base in number of way. In demographic segmentation, consumers are divided based on age, income, family size etc. In psychographic segmentation, the firms can group their customers based on their lifestyle values and beliefs (Baines, 2013). Similarly, in behavioural segmentation consumers are segmented based on their buying patterns like usage, buying frequency and brand loyalty.

Before understating segmentation of its customers ACN should be aware of its target customer (Armstrong, 2012). Target customers are the customers identified by the company who are likely to buy the company’s products. Target market consists of the potential customers to whom the company expects to sell its products (Ferrel, 2012). For segmentation, the target market is identifies and is then divided into groups (Armstrong, 2012). Segmentation can help an organisation like ACN to make strategies for pricing, communication and distribution as per customer choices (Armstrong, 2012). Following are segmentation strategies that can be used by ACN in Australia

Demographic segmentation – major characteristic of demographic segmentation is that under this type of segmentation consumers are grouped based on age, income or life cycle stages (Armstrong, 2012). ACN can segment the market based on age of the consumers. It can target students by giving attractive offers on night data (Armstrong, 2012). The company can also target middle income groups by giving long duration data packs at nominal prices

Socio-cultural Factors

Geographic segmentation- Under geographic segmentation a company divided the market based on regions (Armstrong, 2012). The consumers are grouped based on their geographic locations. ACN can divide the market based on urban and semi urban regions in Australia (Armstrong, 2012). Mostly in the urban areas more demand for internet packs is seen. Additionally, people require large data capacity (Rowles, 2013). Therefore, ACN can provide large and long duration internet packs for urban areas. On the other hand, in semi urban or rural areas use of internet it’s limited. In these places people prefer more emphasis on voice calls (Rowles, 2013). Therefore, the firm should provide more offers on voice calls in semi urban and rural areas.

Behavioural segmentation- The major feature of behavioural segmentation is that in this segmentation consumers are divided based on their buying patterns like their frequency of purchase and benefits required (Armstrong, 2012). ACN can use behavioural segmentation to target customers in Australian market. It can offer discounts to customers who renew their data packs (ACN, 2018). Additionally, it can give free calls for users who use its voice services very frequently.

Psychographic segmentation- Psychographic segmentation is undertaken when the company divides the customer base based on life style, value systems and beliefs of the customers (Armstrong, 2012).ACN can have different data plans for high profile businessmen and separate plans for students (Armstrong, 2012). To elaborate farther, the company can give night time free data or free access to gaming and movies to those having a night entertainment lifestyle. Whereas, for businessmen, it can provide high speed internet packs.

Therefore, segmentation makes it easier for the company to make sales and marketing strategy for the target market.

Strategic planning and formulation of a company’s goals and objectives is considered as one of the most important functions for an organisation (Deal & Bolman, 2013). By formulating mission, goals and objectives a firm brings structure into its strategic policies. Through a well-defined mission, goals and objectives an organisation provides directions to its workforce (Stevens, 2013), Mission statements is the statement of purpose of an organization (Hill, 2012). Aim of strategic planning is to achieve this mission. Goals and objectives are specific targets serving a specified purpose for the bigger achievement of the mission (Harrison, 2013). Goals and objectives may change in the short term but on the whole they should always be in sync with the mission.

Mission statement of ACN is to fulfill customers demand and provide them with high quality services within their budget (ACN, 2018). The company also wants to create growth opportunities for people through its pyramid selling system.

Legal Factors

The firm intends to create more business through its direct selling network (ACN, 2018). The firm also aims to create more business opportunities for people by inducting them into their sales force.

ACN aims to be a company which is known for its integrity (ACN, 2018). By being honest the company wants to increase its brand image (ACN, 2018).  The firm also wants to sell quality services to its customer via high powered technology innovation.

ACN is a global firm; however, it wants to increase the reach of its telecommunication network and wants to become a telecom leader in Australia (ACN, 2018).

Based on the assessment of external environmental factors affecting the firm, SWOT analysis and segmentation, following goals can be created for ACN for its further growth in Australia.

ACN can aim to become a leader in telecom technology by investing into new information and telecommunication technology systems within the next five years (Rowles, 2013). This will help in increasing market share, profits and net margins. The firm can reach this goal by investing into research and development and spending on setting up telecom towers and servers.

Another goal which can help in company growth is to build lasting relationship with customers so that company goodwill can be improved (Rowles, 2013).  This can be done through active relationship management and loyalty rewards system (Armstrong, 2012). The company should provide better offers to customers who rebuy their services. This will help in increasing sales and will improve return on investment. More customer base will also enhance net profits for the company.

Another suggested goal for the firm is to become one among the top five telecom companies in Australia with in next five years (Hill, 2012). This can be achieved by increasing marketing activities. The firm should advertise more often (Ferrel, 2012). Additionally, it should add online selling to its direct marketing methods (Rowles, 2013). This will help in increasing company revenue and sales volume.

It can be inferred from the above that by setting proper goals and objectives the firm will be able to set a direction for expansion in Australian markets.

Strategies are tactics are ways in which a company can solve a business issues (Harrison, 2013). Strategies also propel the company towards the achievement of goals and objectives (Ferrel, 2012). Major issue facing ACN is to grow as a communication company in Australia. The company needs to invest more in technology, improve its brand image tarnished due to illegality charges and enhance its customer base (Jurisic & Azevedo, 2011). This can be done by adopting proper marketing mix strategies.

Environmental Factors

Marketing mix strategies are strategies pertaining to product, place, price and promotion used to influence customer purchase decision (Baines, 2013). Through these strategies a firm can create product, place, price and communication strategies to counter the issue at hand (Baines, 2013) Following are the marketing mix strategies which can be used by ACN to enhance its customer base in Australia and improve its brand name.

Product- ACN’s product is telecommunication services. (ACN, 2018). However, as the case with other services, telecommunication services are also homogenous (Fisk, 2013). That is, the core service provided by all service providers of a particular service, is similar. Therefore, customer is not able to differentiate correctly between the service of one company and another (Fisk, 2013). To enhance its customer base and establish itself as a trustworthy company, ACN needs to add differentiating factors to its services. The company should focus on quality of service and try to position itself as a service provider who provides better technology products.

Place- ACN wants to increase its customer base. The firm will not be able to increase its customer base just by using direct selling and multi-level marketing (Armstrong, 2012). Current era is an era of diversification. The firm needs to diversify its distribution strategies (Armstrong, 2012). In order to increase its customer base, ACN can sell its voice and data services through own galleries. ACN can also use online selling though its web portal. (ACN, 2018). ACN should also use its salesmen strength more extensively to acquire more customers.

Price: Due to homogenous nature, services get perceived as similar by the customer. (Fisk, 2013). This leads to the problem of adequate pricing (Fisk, 2013). For the purpose of penetration into the market the ACN should keep prices low and use penetration pricing strategy (Fisk, 2013). Additionally, the firm should use price bundling and give free data on subsequent data recharges. This will help in increasing customers.

Promotion: Another issue with telecom service industry is that it is highly competitive (Fisk, 2013). Additionally, as the service is homogenous the firm needs to be creative to make a mark on the customers mind (Jerbashian & Kochanova., 2017). ACN has an extensive pyramid selling network through which its salesmen acquire new customers (ACN, 2018). However, to grow more in the market ACN has to extensively use advertising, sales promotion and publicity (Baines, 2013). ACN should give more frequent reminder ads on television. This will help in creating a lasting expression on the mind of the customer.

Technological Factors

Conclusion

Telecommunication industry is a growing industry in Australia and there are lots of opportunities to increase profits in this sector. However, it is highly technology driven and competitive. There are many international and big companies in this sector. However, ACN is also a multinational company and has experience of operating in 25 countries. Therefore, it can use its vast experience and brand awareness to penetrate in the market. With proper marketing strategies along with channelized goal orientation the firm can make its mark in the Australian markets. ACN also needs to invest in technology and research to come up with quality in its service delivery. This will help the company in increasing its customer base and penetrating further in the market.

ACN also faces problem of trust from people. The company was accused of being an illegal entity; however, it had won the case in the court. Despite this, misconceptions still exist among people regarding its legal status. The company must advertise extensively to create more trust.

ACN uses multilevel marketing or pyramid selling which is a good way of increasing customer base. Through this method the company creates personal contact for customers and also creates business opportunities for them. However, only multilevel marketing will not help the company in becoming a leader in telecommunication in Australia. It must also use other ways of selling like selling through stores, online portlet etc.

Through proper goal orientation, enhanced marketing and research and development the company can become a name to be reckoned with in the field of telecommunication in Australia.

References

ACCC. (2018). Court finds Australian Communications Network scheme is a pyramid selling scheme. Retrieved April 30, 2018, from https://www.accc.gov.au/media-release/court-finds-australian-communications-network-scheme-is-a-pyramid-selling-scheme

ACN. (2018). ACN-Company. Retrieved April 30, 2018, from https://acninc.com/

Acnpacific. (2018, May 15). Home. Retrieved from ACN Pecefic: https://www.acnpacific.com

Armstrong, G. (2012). Marketing: An Introduction. New Delhi: Pearson Education.

Baines, P. (2013). Essentials of Marketing. Oxford: Oxford University Press .

Becker, K. B. (2013). Culture and International Business. NewYork: Routledge.

Betz, C. T. (2011). Architecture and Patterns for IT Service Management, Resource Planning, and Governance: Making Shoes for the Cobbler's Children. Amsterdam: Elsevier.

Boone, L. (2011). Contemporary Marketing. New York: Cengage Learning.

Deal, T. E., & Bolman, L. G. (2013). Reframing Organizations: Artistry, Choice, and Leadership. New Jersey: John Wiley & Sons.

Ferrel, O. (2012). Marketing Strategy. New York: Cengage Learning.

Fisk, R. P. (2013). Services Marketing Interactive Approach. NewYork: Cengage Learning.

Frynas, J., & Mellahi, K. (2015). Global Strategic Management. oxford: Oxford University Press.

Government of Australia. (2018). Licencing and Regulation. Retrieved April 30, 2018, from https://www.acma.gov.au/Industry/Telco/Carriers-and-service-providers/Licensing/telecommunications-licensing-and-regulation-carrier-licensing

Harrison, J. (2013). Foundations in Strategic Management (6 ed.). New York: Cengage Learning.

Hill, C. (2012). Strategic Management: An Integrated Approach. New York: Cengage Learning.

Jerbashian, V., & Kochanova., A. (2017). The impact of telecommunication technologies on competition in services and goods markets: Empirical evidence. The Scandinavian Journal of Economics, 3(628-655), 1193.

Jurisic, B., & Azevedo, A. (2011). Building customer–brand relationships in the mobile communications market: The role of brand tribalism and brand reputation. Journal of Brand Management, 18(4), 349-366.

Kaplan, A. M. (2012). If you love something, let it go mobile: Mobile marketing and mobile social media. Business Horizons , 55(2), 129-139.

Lampe, M., & Ploeckl, F. (2014). Spanning the Globe: The Rise of Global Communications Systems and the First Globalisation. Australian Economic History Review, 54(3), 242-261.

National Cancer Research Institute. (2014). Cell phones and cancer risk. Retrieved from https://www.cancer.gov/cancertopics/factsheet/Risk/cellphones

Rowles, D. (2013). Mobile Marketing: How Mobile Technology is Revolutionizing Marketing, Communications and Advertising. London: Kogan Page Publishers.

Stevens, R. E. (2013). Strategic Planning for Private Higher Education. NewYork: Routledge.

Ungson, G. R., & Wong, Y.-Y. (2012). Global Strategic Management. Mew York: M.E. Sharpe.

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