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China Mobile's Marketing Strategy: Assessing Its Effectiveness And Making Tentative Recommendation

6343 words - 25 pages

Chapter 1.0INTRODUCTION1.1 Background"WHICH is the biggest mobile-phone market in the world? The answer, since July, is China's. A country in which, until a few years ago, the only people who could afford mobile phones were triad mobsters now has 121m users. BDA, a Beijing consultancy, forecasts that the number will rise to 370m by 2005, enough to persuade many investors--even after telecoms shares have dived all round the world--that China was, and would remain, a magic market." (A billion voices calling? Mobile phones in China, 2001, p1)'The magic market' of China has been a recent event, yet the seeds of this market were sown in 1976 after the death of Chairman Mao. China initiated a series of economic reforms at this time, and the telecommunications industry was seen as vital to economic growth (Harwit, 1998, pp4-6).However, it was not until the 1990s that the pace of reform was quickened when China's telecommunications market changed drastically (Harwit, 1998, p1). A key part of this change was to split up the monopoly China Telecom into four state-owned companies, which are China Telecom, China Netcom, China Mobile and China Unicom with relatively distinct but to some degree overlapping markets (Pangestu and Mrongowius, 2002, pp5-7).China Mobile rapidly became the largest mobile phone operator in China. In 2001, its asset was more than $32.74 billion and it had 100 million subscribers. Until 2002, these figures have grown to over $38.8 billion and more than 138 million subscribers (China Mobile Company Profile, 2004, p1). However, the continued good performance of China Mobile is threatened by a number of factors.These threats come from a number of places, the most important of these being the fierce competition with the three other state-owned companies. However, this competition will be increased in 2007 when the WTO Basic Telecommunications Agreement comes into effect, allowing foreign companies access to China's telecommunications market (Yang, 2003, p3). This pressure is reflected in the fact that the Mobile Phone Revenue per User has dropped 50% in the past three years (Yang, 2003, p3) to a figure of RMB100 Yuan (Reuters, 2004, p1). Another major threat faced by China Mobile comes from China Unicom, which has gained significant strategic advantages through its security of exclusive rights to use the new CDMA network technology (Yang, 2003, p3).All of these mean that China Mobile's marketing strategies, especially its advertising strategies, will become the most important element of its sustained and successful growth. The challenge for China Mobile is to gain and maintain market share, and continue to seek future growth."WINNING CLIENTS is one thing; keeping them an entirely different challenge... companies have to adopt proactive strategies to retain hard-won customers." (How to maintain loyalty among 'risk' customers, 1999, p1)Therefore, the application of successful advertising strategies is a critical factor for attracting new...

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