Market leadership in the 3G market
A Hutchison 3G case study

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Page 4: Product and market orientation

Product orientation

Production and marketing go hand in hand in successful businesses. You can only convince customers that you can meet their needs if you have the products to do so.

3G technology has significantly more bandwidth than 2G technology. More bandwidth means more space for transmitting large amounts of data e.g. videos rather than text. A 3G phone offers up to 384 kilobytes per second when a device is stationary or moving at pedestrian speed. During 2007, 3 will launch a high speed service which will have a target speed of 1.8 Mbytes per second.

There are three main sections of 3's UK business:

three main components of 3G

First mover advantage

3 was the first company in Europe to appreciate the opportunities offered by 3G. It invested seriously in this market, hoping to acquire 'first mover advantage' by being the first one to develop a specific market. The first mover becomes associated by customers with that expansion. It is then able to be at the leading edge of new developments so its rivals are continually trying to catch up. 3 is always seeking to improve its products and services to maintain its market leading position. In 2006 these included:

  • signing an exclusive deal to stream ITV1 ITV's flagship channel to its 3.75 million customers in the UK (customer numbers in August 2006)
  • signing deals with leading handset producers such as Nokia, Motorola and Sony Ericsson to provide handsets to complement the network. A recent example of this is the link with Sony Ericsson's K610i and K800i Cyber-shot phones
  • screening the 2006 World Cup directly on customer mobile phones. This created an all-time high in mobile television usage
  • launch of the X Series from 3, which is supported by a commercial link with key Internet service and software providers such as Microsoft, Yahoo, Google, eBay, Skype, Slingbox and Orb. These links will take wireless broadband to the next level, allowing consumers to experience the full Internet experience whilst on the move.

Market orientation

Hutchison Whampoa took a considerable gamble in investing in the 3G network market. At the time it was a relatively untried new technology, but there was considerable support for the development. Britain is a member state of the European Union (EU), which was able to see the advantage of this innovative technology. In 2002 the EU Council wanted telecom network providers to transfer 80% of telecommunications to 3G.

3 is always seeking to improve its products and services to maintain its market leading position.

Existing network providers and new competitors had to bid for licences to operate using this system but the cost of these was extremely high. Because of this, the successful companies were left with only limited funds to invest in the new technologies. However, 3 was determined to lead the field and has invested considerably in this market. Today it is beginning to harvest the benefits.

Achieving market leadership

3 invested £4.4 billion to purchase one of the five licences available from the Government. Since then, 3 has invested heavily in developing its network which was launched on 3rd March 2003 and which today covers 90% of the UK population.

The market is getting stronger all the time. The network is continually being extended and there are new and innovative companies producing the high-quality phones required to access the products and services delivered across the network.When you phone someone using 3, 3G chops up your call into a miniature packet of data, which is coded. This is a highly efficient way of sending information. Using this system of chopping and coding, 3G can deliver large files such as pictures and videos at a much faster speed.

The results of 3's market research

3's market research shows that young people like 3G because it enables them to send pictures, view videos and listen to music downloads. It is also popular with business customers and people who work in the media for example, film editors and journalists.

The market research was able to illustrate that 3G provides customers with many benefits including:

  1. Real-time communication for example, phone calls, e-mails (including large attachments) and faxes. This means that people can be in constant touch.
  2. High-speed Internet access you can browse the web and download data files and software using your handset wherever you are.
  3. Access to information for example, watching the World Cup or accessing news bulletins.
  4. Personal organisers including electronic diaries and lists.
  5. Global roaming you can access services anywhere in the world (within 3's sister territories).
  6. Video conferencing for business people or schools linking with partner schools in other parts of the world.

Hutchison 3G | Market leadership in the 3G market