PART 1: RESEARCH
BRIEF:
The purpose of this research is to explore the
opportunities for American Telephone & Telegraph
Company (AT&T) to enter into Pakistan’s
market, and earn market share and profits through
providing services and infrastructure to the telephone
industry, as well as mobile networks, broadband
and wireless communications, and Automated Voice
Response Systems.
AT & T:
AT & T is one of the largest companies in
the Telecommunications Industry worldwide and
also America’s largest company in the private
sector. The total business has been divided into
two companies; AT&T Consumer and AT &T
Business. The company has a variety of calling
plans and bundled packages for the telephone,
mobile and Internet markets. It has a separate
section or division of the business dealing with
small and medium sized companies and entrepreneurial
firms, and a separate division dealing with large
and global businesses, as well as governmental
agencies. AT & T Wireless deals with wireless
and Internet communications. Customers can call
Local, Long Distance, and International callers
through billed and prepaid services, as well as
use the DSL (dial up Internet cable access).
The history of AT&T is largely the history
of the telephone in the United States itself.
AT&T's roots stretch back to 1875, with founder
Alexander Graham Bell's invention of the telephone.
During the 19th century, AT&T became the parent
company of the Bell System, the American telephone
monopoly. The Bell System provided what was by
all accounts the best telephone service in the
world. The system broke up into eight companies
in 1984 by agreement between AT&T and the
U.S. Department of Justice. From 1984 until 1996
AT&T was an integrated telecommunications
services and equipment company, succeeding in
a newly competitive environment. Today, AT&T
is rapidly evolving from a company that handles
mostly long-distance voice calls to a company
that provides data and voice communications over
any distance through its two operating units,
AT&T Business and AT&T Consumer.
For more than 125 years, AT&T has been known
for unparalleled quality and reliability in communications.
Backed by the research and development capabilities
of AT&T Labs, the company’s commitment
to innovation has made it a global leader in local,
long distance, Internet, and transaction-based
voice and data services.
AT&T serves more than 3 million global business
customers in 149 countries, and was earlier this
year rated first for global network services overall
in the Yankee Group's Global Network Strategies
Survey of more than 1,000 multinational companies
worldwide. The company scored highest in the United
States, Canada, Europe and Asia Pacific regions.
AT&T's global IP network delivers complex
networking services that help customers boost
productivity, cut costs and grow revenue.
Source: AT& T Website Homepage (www.att.com)
Telecommunications Sector In Pakistan:
With only 28.92 having a landline telephone per
1000 people (Year 2001 estimate), Pakistan represents
a sizeable opportunity for AT&T. The domestic
telephone system operates by way of microwave
radio relay, coaxial cable, fiber-optic cable,
cellular, and satellite networks. AT&T has
the required expertise in all these areas, and
the technologies and know-how to further improve
upon the existing local conditions.
Since the 1980s, considerable effort was made
to upgrade Pakistan’s telecommunications
system. The nation’s Sixth Five-Year Plan
called for a public-sector investment of Rs10.1
billion to improve and expand the telephone and
telex systems.. The number of telephone connections
increased from 461,000 in June 1984 to 1.6 million
in March 1993, when the government announced that
the Pakistan Telecommunications Corporation would
be privatized. A new entity, the National Telecommunications
Network, was planned to assume responsibility
for the government's own network.
The domestic system is mediocre, but improving.
Service is adequate for government and business
use, in part because major businesses have established
their own private systems. Since 1988, the government
has promoted investment in the national telecommunications
system on a priority basis, significantly increasing
network capacity. Yet, despite major improvements
in trunk and urban systems, telecommunication
services are still not readily available to the
majority of the rural population.
Source: Economic Survey of Pakistan (www.finance.gov.pk/survey)
Firms in the Telecommunication Sector (Current
State of the Industry):
The provision of telecommunication services in
Pakistan has largely been the domain of a State
Enterprise called Pakistan Telecommunication Company
Limited (PTCL). Previously wholly Government owned,
the ownership has now been partly divested to
the public. The Group's principal activity is
the provision of telecommunication services. The
group provides domestic and international services
throughout Pakistan. The Group also manufactures
telecommunication related equipment. Telephones
typically account for 97% of revenues of the company,
while Telex, Telegraph and Other Facilities account
for the remaining 3% of revenues.
In recent years, there has been some competition
from local firms using calling cards kiosks within
the major cities, at busy locations in shopping
centers, near bus, train and air terminals etc.
A typical calling card consists of facility for
25 to 100 local calls.
The mobile telephone sector is a comparatively
open environment, with manufacturers of sets competing
eagerly for the market share. Well known brands
like Nokia, Ericsson, LG, Samsung and Siemens
are represented here, as well as a few second
and third tier manufacturers. There is some degree
of public awareness of the sets available in the
market, their prices and demand fluctuating on
account of public perception and rumors regarding
their durability, reliability, ease or difficulty
of use and the cost factor. With newer and newer
models entering the market on a daily basis, the
prices and demand for the earlier models are drastically
reduced in a matter of months, or even weeks.
In the matter of provision of mobile telecommunication
networks, three companies are competing for market
share, namely Mobilink, PTCL and UPhone. Each
of them have their own networks with varying bandwidths,
audio, video and messaging abilities. There are
a variety of packages to suit different segments
of the public. Mobilink has a package called Jazz,
and PTCL a package called Tango. UPhone’s
package is named simply UPhone. Mobilink has the
lion’s share of the market, nearly 60%,
mainly due to its good marketing and advertising
campaign. PTCL and UPhone are late entrants into
the market, and will face stiff resistance from
Mobilink in the matter of market share. It has
been seen that the reliability factor for any
mobile network provider depends largely on the
state of its technological equipment, the infrastructure
availability and compatibility, and the level
of its problem solving and after sales service.
However as companies go for more and more clients,
their existing network must be strengthened, or
it falls prey to connectivity and reliability
issues. More customers on the same network also
means a busy network. While Mobilink is the most
widely used and popular service, UPhone’s
is the most reliable given its small network.
PTCL falls somewhere in between in terms of both
cost and efficiency. At present, Mobilink has
the widest network, with PTCL quickly catching
up. UPhone however, has a long way to go.
In the sphere of Internet Communications, there
are a variety of companies providing this service.
The types of service provided include Dial up
Connections, Cable, Web Accounts. Lately there
has also been a move towards Wireless (WiFi) technology
and Satellite servers, but this is relatively
expensive and out of the reach of the majority
of the populace. It can only be used for large
organizations or people requiring dedicated servers.
Majority of the people use Internet for emails,
chatting, web browsing and research purposes.
The Government has defined the limits of network
bandwidth for the general populace and the industry-
and companies entering the industry will have
to conform to these directives. The Government
has also tried to have some sort of clampdown
and control on pornographic sites and materials,
and has officially stopped access via a firewall
and server having the addresses of the objectionable
websites. The issue is being debated in the highest
circles. Gerry’s Internet, SatNet, WolNet
are some of the known Internet Service Providers
in Pakistan.
On the local level, the providers of Cable TV
channels have also entered into providing Internet
access via Cable. Operating from single or multiple
servers, these providers use similar technologies
and setup to operate the cable internet service.
Obviously the cost is reduced as the service operates
only on a few dial up lines which is then split
up through the server and reaches a multiple number
of users via hubs, routers and cable lines. Cable
service is usually available 24 hours a day- at
a reasonable cost compared to dial up- in which
the telephone or internet lines are in use for
the time of the Internet Access. These providers
are supposed to register with the relevant Government
Authorities and give a fixed charge to the Government
on a monthly basis. There are one time registration
charges as well.
Taking the market for Automated Voice Response
Systems, typically used in the Banking, Brokerage
and Call Center industries, it is a specialized
market with only a few manufacturers and service
providers having the necessary technology and
know how about these products and services. This
niche is becoming more and more important as Pakistan
sees improvement in the Financial Services and
Call Center industries. It will create thousands
of jobs for the educated graduates and fuel the
economy with funds as well. Typically equipment
and service providers for Automated Voice Response
Systems are required to be on call 24 hours a
day, they create purchase, installation, implementation
and replacement service contracts on a yearly
basis. These services are required to be online
and operational 24 hours a day. Reliability and
availability are two important aspects, and the
loss of either could directly affect the revenues,
profits, service and reputation of the firms concerned.
AT &T’s advantage here is that it can
enter into some or all of the above markets in
a phased growth strategy; profits from one sphere
of the industry can either be reinvested or can
be put into the other sectors of burgeoning success.
It has the required expertise to operate in the
hardware equipment/ technology infrastructure
areas as well as the provision of telephones,
mobiles, DSL, Internet Access, Wireless and Voice
Response systems. Furthermore, it can have separate
operations for individual customers and organizational
customers. It is however very important that the
Government attitude and policy for the telecommunications
sector remain stable and uniform in its approach-
this is imperative for foreign investment to flow
in and remain within the country, providing opportunities
for local employment as well as a boost to AT
&T’s earnings capacity in a new market.
The company can borrow from its success stories
in other developing nations- to capitalize on
the opportunities in the Pakistan market.
In summary, considerable opportunities exist
for AT &T to invest, grow and prosper in Pakistan.
There are opportunities for AT &T in all of
the relevant sectors: landlines, mobile communications,
wireless, broadband and DSL/ Internet. Some opportunities
exist also in the newly emerging VOIP market,
with such systems employed by Banks and other
organizations having international clientele.
Opportunities for Call Centers are also fast emerging
and will help the case for AT&T’s growth
while at the same time giving an impetus to Pakistan’s
economic development.
Objectives of the Marketing Research:
1. To determine the market opportunities in Pakistan
for AT & T’s products and systems.
2. To determine the market demographics for the
different products: land lines, mobile systems,
wireless and Internet Broadband/ DSL and Automated
Voice Systems.
3. To determine the various factors affecting
costs, pricing and profitability in each of the
different sectors.
4. To determine a strategy for long term growth
and making a name in the local community.
PART 2: RESEARCH PROPOSAL FROM RESEARCH COMPANY
IN RESPONSE TO THE BRIEF
The President,
AT&T (Pakistan) Pvt. Ltd.,
Islamabad, Pakistan.
Dear Sirs,
We are in receipt of your Research Brief outlining
the objectives planned by your company in view
of its plan to enter into the Telecommunications
Sector of Pakistan.
We have read the brief submitted to us and would
like to undertake the task of Marketing Research
for your company, involving each of the under-mentioned
four objectives:
I. To determine the market opportunities in Pakistan
for AT & T’s products and systems.
II. To determine the market demographics for the
different products: land lines, mobile systems,
wireless, Internet Broadband/ DSL and Automated
Voice Systems.
III. To determine the various factors affecting
costs, pricing and profitability in each of the
different sectors.
IV. To determine a strategy for long term growth
and making a name in the local community.
To accomplish the research objectives, we shall
use a combination of both Primary and Secondary
sources of data. The primary data will be taken
by the established standard sampling techniques,
questionnaires, house to house surveys, point
of sale centers (for mobile sets and accessories),
and in the retail and wholesale electronic markets
for telephonic instruments, computer systems and
accessories. Similar data will be gathered from
Internet Service Providers (ISP’s) for Wireless,
Broadband and DSL usage. For the Automated Voice
Systems, we shall determine the existing players
in the Market, their level of service, ease of
use and complexity, by using a Questionnaire cum
Interview approach with the IT and Call Center
Managers of the Banks and various other institutions
using these systems.
Secondary data on the Telecommunications Sector
in Pakistan is rather limited, confined to Research
Reports of local Governmental and private sector
organizations, research firms and professional
institutions. By and large this information needs
to be constantly updated to be of use. However
it may serve some purpose from a historical perspective.
The total cost of the project is expected to
be US$ 50,000 and will take six months. If you
are agreeable to this, please send us your acceptance
within 15 days of receipt of this letter.
Thanking you, we remain,
Mahmood Aftab,
For Aftab Associates,
Research Consultants,
Islamabad, Pakistan.
RESEARCH METHODOLOGY:
Following is a summary of the research methodology
that is proposed to be adopted in researching
each of the above-mentioned objectives:
I. Determining Market Opportunities In Pakistan
for AT &T’s Products & Systems:
Determining marketing opportunities for AT&T’s
products will necessitate an analysis of the infrastructure
available for introducing and implementing these
products in Pakistan. Here we will have to take
some help from the secondary data available from
professional magazines and research reports. We
will also have to tap into the existing market
for telephonic instruments and systems, the models
available, their configurations, system requirements
and compatibility, and find out similar details
for AT&T products and services. Level of ease
and complexity of instruments will also be determined.
We will conduct a first hand primary research
here at the electronic markets of the country
and the point of sale locations.
For smaller products such as mobile phones, point
of sale location data will be gathered both from
the supplier of sets and the customers. For larger
products and services such as Automated Voice
Systems, Questionnaire cum Interview sessions
with the relevant managers/users will be conducted
first hand by our research associates. For Internet
use, we will distribute a Questionnaire on existing
and desirable attributes needed by existing and
potential users. Questionnaire may also be advertised
in newspaper and replies gathered online via the
Internet.
II. Determining the Market Demographics for the
Different Products:
By including questions and queries relating to
various demographic elements required in a typical
survey, we can determine the profile of the consumers
for the different products. Similar data will
be gathered by our researchers, present at the
point of sale locations. Profile data for organizations
using Voice Systems will be gathered first hand
during the Interview cum Questionnaire sessions.
III. Determining the Factors Affecting Costs,
Pricing & Profitability:
This will have to be done by a combination of
primary and secondary research methodology. Research
articles will give you an historical idea of cost,
pricing and regulations available in the Industry.
However first hand data may be obtained from interviewing
suppliers and customers, and updates on regulations
may be obtained from relevant govt. agencies or
through their websites.
IV. Strategy for Long Term Growth & Making
a Name in the Local Community:
The successful introduction of AT&T’s
products and systems will be a boon for the people
of Pakistan and a boost to its economy. In time,
AT&T will be able to recover its startup investment
costs. By starting aid and education programs
within the local community, AT&T can hope
to make a name for itself and meet the goal of
social responsibility. Adherence to global practices
and respect of environmental standards is highly
desirable and expected of the local arm of a multinational
organization.
TARGET RESPONDENTS:
The total market potential for AT&T’s
products will differ in the various sectors. For
consumer products like mobile phones it may be:
Percentage of Population living in a Specific
City x Percentage Wanting to Buy An AT&T Set
& Having the Purchasing Power x Availability
of Suitable Infrastructure & Knowledge to
Use the Sets Properly.
SAMPLE SIZE ESTIMATE:
Recent research studies for electronic products
such as mobiles and Internet use has indicated
that a Sample Size of 3% of the Relevant Population
gives a more than reasonable estimate of the probable
behavior of the population desired to be surveyed.
Thus we will be following the same sample size
as sufficient for the purpose. Thus if the relevant
population in a city is 100,000 people, the sample
size contacted will be 100,000 x 0.03 = 3,000
people.
ANALYSIS AND REPORTING:
Once all the relevant data has been gathered,
it will be subjected to the relevant tests in
our research laboratory. Examples of possible
tests are Correlation tests on different demographic
variables, Covariant Analysis etc. It may also
be possible to glean some details of the price
and cost structure of competitors products as
well, and this will help in pricing strategy for
AT&T products and services.
TIME FRAME:
The total period for researching the market,
analyzing the results and providing you with a
detailed report is six months from the date of
starting the project.
CONFIDENTIALITY:
Aftab Associates undertakes to provide you with
the assurance that the research details and findings
will be undertaken and kept with the highest degree
of professional security and integrity, and will
not be disclosed to anyone.
PROJECT TEAM EXPERIENCE:
This research project will be undertaken by a
team of expert researchers. The leader of the
project, Mr. Asad Ali has a total research experience
of 12 years, of which 7 have been spent in the
Energy & Telecommunication sector. He will
be ably assisted by our Research Assistants, Abdul
Qayyum and Nisar Abbas. Their telephone and fax
numbers will be given to you upon your acceptance
of the terms and conditions.
PART 3 : HANDOUTS FOR AT&T INDUCTION PROGRAM
IN PAKISTAN
A) Nature & Structure of Research Industry
The Research Industry in Pakistan has been established
since the last 50 years or so. There are a number
of research firms- ranging from sole proprietorships
to partnership firms to established research companies.
Most, but not all, of the sole proprietorship
firms have been a family affair. Some of the partnership
firms too started with two or more family friends
with an interest in research and analysis. The
good firms and companies applying modern scientific
research techniques and methodology are either
the product of the children of these business
owners having received a good business education-
or they have been opened in the last 20 years
or so, being started and carried on under professional
management.
There are a handful of associated companies that
are affiliates of well-known research entities.
For example, Booz Allen Hamilton, A.C.Nielsen,
KPMG are represented by local firms and affiliates
in Pakistan. The nature, structure and workings
of these affiliated companies are no doubt more
professional than the average local firm- and
are regarded as such as well. Therefore any multinational
seeking to enter into the market and needing preliminary
research would prefer going to these companies
for their research needs. The methods followed
are scientific, universally approved and ratified
and the results can be well quoted as the product
of true research.
With some research firms having been around for
five decades- and the standard of professional
research firms nothing to be scoffed at- it can
safely be said that the Research Industry in Pakistan
is in a Growth to Maturity Stage.
B) Stages of the Marketing Research Process
The marketing research process consists of the
following seven stages:
Stage 1: Problem Definition
In this stage, we define the purpose for which
the marketing research is being undertaken. The
objectives of the market research project of AT
& T have already been submitted to the Research
firm, Aftab Associates. The objectives of the
research are: (1) To determine the market opportunities
in Pakistan for AT & T’s products and
systems.(2) To determine the market demographics
for the different products: land lines, mobile
systems, wireless, Internet Broadband/ DSL and
Automated Voice Response Systems (3)To determine
the various factors affecting costs, pricing and
profitability in each of the different sectors,
and
(4) To determine a strategy for long term growth
and making a name in the local community.
Stage 2: Research Design
In this stage, we plan the research design and
methodology to be adopted in conducting research
on the particular problem at hand.
Stage 3: Data Collection Methods
In this stage, we define and determine the methods
that will be more effective for the collection
of data.
Stage 4: Sampling
Modern research processes typically focus on the
sampling process as a means of forming a reasonable
estimate of the behavior of the relevant population.
The nature and type of sampling is to be determined.
The level of confidence desired will have a direct
impact on the sample size.
Stage 5: Fieldwork
Using the data collection methods defined above,
the researchers go into the field and collect
the relevant data by means of questionnaires,
interviews, telephone surveys etc.
Stage 6: Analysis of Data
In this stage, the researchers compile the data
collected in the field and perform various statistical
tests on it. For example, correlation of buyers
behavior with particular demographic variables
such as Social Status, Level of Income and Profession,
can determine the probability of his/her purchasing
a particular product.
Stage 7: Presentation of the Results
In this stage, we present the results of our findings
to the client, giving him an idea of whether the
research results support his hypothesis or assumptions,
whether or not his campaign will be successful
etc. We can also give him helpful suggestions
based on our research experience and knowledge
of that particular segment or industry.
C) Procedure for Selecting A Marketing Research
Firm
The procedure for selecting a Market Research
firm is as under. One needs to follow a series
of logical steps to get best results.
1. Determine the needs of your marketing research.
In this case, AT&T wants to determine the
opportunities in the Telecommunications Sector
in Pakistan. Therefore this is a feasibility study
and will look at the benefits and pitfalls of
making a long term commitment in this sector.
We will also have to focus on a more detailed
analysis of demographics vis-a-vis product salability,
acceptance, level of technology and infrastructure
available in the country. Governmental policies
and outlook must be steady and conducive to investment,
with few barriers to entry.
2. Shortlist firms that have experience with
the type of research desired. This can be done
from a listing of the research firms available
in the country. Reputation and experience of the
research firm will have to be established by word
of mouth. Visits to a number of shortlisted firms,
and asking them for a list of previous projects
worked on may also help. One may contact other
U.S firms doing business in the region, and ask
for their advice and recommendations.
3. Submit a Research Brief to the Shortlisted
Firms of your Choice. This will be given to firms
shortlisted at the end of stage 2 above. The marketing
brief should present details of the Research Objectives,
the time frame expected for results, and the type
of final output desired to help in the firm’s
decision making process.
4. Review Each Firm’s Research Proposal
& Make a Final Choice. The choice of research
firm will be finalized based on the management’s
satisfaction of a particular research firm’s
professional integrity and ability to produce
results. Interested firms usually send in a research
proposal, outlining the research design, plan
and methodology to be followed in collecting and
analyzing data. Time taken to produce results,
quality and experience of the research team, and
cost of research are determining factors in selecting
the final firm for the project.
D) Ethical & Social Responsibility of Marketing
Research Task
The ethical and social responsibility of the marketing
research task at hand would involve the following
considerations:
1. Adherence to Governmental Regulations: AT
&T would have to study the regulatory environment
for the Telecommunications Sector in Pakistan.
The Government may only allow certain types of
technology, transmission methods, bandwidth etc.
for transactions and conversations. AT &T
may have to give some assurance to the Government
under signed contract that they will do business
under the specified regulations.
2. Invasion of Privacy: The research firm would
have to determine the best way to carry out the
research project. Collection of data from household
visits may be frowned upon in a conservative society
as it is considered an invasion of privacy. Point
of sale, interviews and questionnaire methods
may be best here.
3. Fueling Consumerism: AT & T may be seen
as a foreign company trying to eat into the profits
of local firms. By rapidly introducing numerous
models of consumer goods (e.g. mobiles) into the
market, the company may be blamed for fueling
consumerism, living on credit beyond one’s
means and the resultant difficulties.
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