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Mikail M Gasanov

Marketing Research,
BBA II, Business School Lausanne

Metropolis Holding SA
CH1854, Switzerland

Introduction and Company


Background.................................................................3
Situation
Analysis..........................................................................................
..................3
SWOT..............................................................................................
......................................4
PESTEL...........................................................................................
......................................5
BCG
Analysis..........................................................................................
.............................6
Problem and
Solution..........................................................................................
............7
Objectives of the
research.........................................................................................
.....7
Methods.........................................................................................
.......................................9
Survey............................................................................................
........................................9
Focus
Group.............................................................................................
...........................11

Projective
Techniques......................................................................................
...............12
Information
Analysis..........................................................................................
..............13
Gant
Chart..............................................................................................
...............................13
Resources/Budget...........................................................................
..................................13
Reporting & Presentation
Requirements..................................................................14

Introduction and Company Background


Vertu is a British luxury mobile phones manufacturer with its headquarters at
Church Crookham, Hampshire, UK. It was initially founded in 1998 as a
daughter company of the famous Finnish mobile phone giant Nokia. In
October 2012, the company has been acquired by a private equity group
EQT VI.
Vertu produces ultra-luxury phones with the price tag starting at $7000. The
phones are fully hand build and are made of a wide range of exclusive
materials, starting from stainless steel and carbon and ending with platinum
and diamonds.
Technologically, the Vertu mobiles have never been very advanced. Vertu
used the old Nokia platforms in most of its models, which are not
technologically modern but very reliable and simple in usage. The newest
touch-screen phones have the newer Android platforms, which are very
promising for the company. The most famous differentiating function of the
company is the exclusive
Concierge button on every
Vertu phone. It allows to make
a direct free call to the
personal assistant, who can,
with ones request, book him a
hotel, reserve a table at the
restaurant, get concert tickets,
etc.
Vertu has established more
than 500 retail stores around
the world and sold more than 326000 phones throughout its existence. Its
key markets are located in Russia, Asia and Middle East.
The main idea behind Vertu is very simple IF YOU can spend $20,000 on a
watch, why not on a mobile phone? (Economist)
Situation Analysis
Currently, Vertu is experiencing certain problems due to several aspects.
First, it is being widely criticized for its posh nature and poor functionality.
Once, the Wired Magazine called Vertu tasteless trash, while the Financial
times thought of it as technologically modest.

Second, it shares the destiny of the luxury watch manufacturers to be


constantly copied. Every year, thousands of fake Chinese phones are being
sold in Asia, Russia and the Middle East. Every year, the copies become more
and more similar to the genuine products. They are mostly produced in
China; however, there are also high quality replica manufacturers in Belgium,
Austria, and even England. They use real gold, carbon and sapphire glass in
their products. The prices for a replica phone vary between $100 and $3000
depending on their build quality and materials used. The only still existing
true differentiator between the genuine and fake Vertu is the Concierge
function. This becomes a very serious problem for the company, since many
of its clients begin to realize why to pay $30000 for a phone if you can get
the identical product for less than 10% of its cost, and no one will ever notice
the difference.
Third, the Vertus most popular mobile
phones do become technologically outdated
and modest. On one hand, it is a good thing:
they are easy to use for the older
conservative people (Arab sheikhs, Russian
oligarchs, Eastern old-school businessman)
Vertus key clients. The phones are also
mostly used as a bling accessory, which
does not need any additional features
except for making calls just like the luxury
mechanic watch. On the other hand, people
change over time and Vertus key client
base decreases each year. People become more modern and progressive.
Even the simplest phones need to have certain functions as the easy Internet
access and 4G support.
Last, the new competitors arise and make it more and more difficult for Vertu
to defend its superiority and the position of the leader on the exclusive
phone market. Besides the similar technologically modest phones as the
Nokia-based Mobiado, Italian Tonino Lamborghini or Tag Heuer and Ulysse
Nardin from the famous watch manufacturers, there are new players. Some
of them are multiple luxury ateliers around the world, which specialize in
customizing Apple products. They replace the standard IPhone panels in their
creations with the custom ones made of gold, diamonds, carbon and wood.
Some of the mobile giants as Blackberry cooperate with different luxury
goods producers and create limited editions of their products (ex. Blackberry
Porsche Design P9981). This may become a serious problem for the Vertu,
because with the time, more and more people are willing to have something
not just expensive and bling but also functional and practical, so, they do not
need to carry two phones everywhere they go (as most of the Vertu owners
do).
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SWOT
Strengths:
1) Vertu is the absolute market
leader. In addition, this market
was created by Vertu itself.
The company takes more than
a half of the market share in
the exclusive mobile phone
market.
2) Vertu became a benchmark
and a recognized standard of
the exclusive mobile phone. It is known for the highest build quality
and unique design.
3) The company established excellent relations with the famous brands
like Ferrari, Boucheron and F1.
Weaknesses:
1) Vertu is technologically modest. Even its latest Symbian OS touchscreen creations had a lot of technological problems, including poor
battery life, constant breakdowns and poor functionality.
2) The price for the product is unreasonably high. The company receives
a lot of criticism and is seen, in most of the Western countries, as a
posh accessory and a bling. However, it is still not important, because
Europe and the US represent a very small part of the exclusive phone
market.
Opportunities:
1) Vertu can improve the technical side of its products.
2) Vertu can attract new customer segments with its new products
(progressive businessmen, rich young people, media people).
Threats:
1) The Vertu products are being constantly copied.
2) The new more practical and functional competitors arise.
3) The main customer segment (older conservative people) decreases
each year for obvious reasons.
4) Customers needs change with the time.
PESTEL
Political:
The current political situation in Asia and Russia does not significantly affect
the sales of the Vertu phones. However, the European sales dropped
significantly due to the new taxes on the super-rich. The Middle Eastern
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market is in a very difficult situation in many Arab countries due to the


unstable political environment (wars, protests, constant changes).
Economic:
The Western market is strongly hit by the recession. The Vertu sales there fall
dramatically. However, the key markets are
not in a bad situation.
Social:
The Western attitude towards the product is
negative it is seen as a posh and
unnecessary bling. However, the key market
of Vertu sees it differently. In Russia, Asia and
Middle East, Vertu phones are as important in
business, as luxury watches and expensive cars. They are considered to be a
symbol of power, wealth and success. For the socialites Vertu is a
mandatory compliment to a Birkin Bag.
Technological:
It is a modern technology era and Vertu is not the best example of it. People
have a strong need to be constantly connected to their emails, social
networks, blogs, etc. Most of the modern mobile phones do not even use
buttons, while Vertu still uses an old-school approach. In their Symbian
touch-screen models, there are many technological weaknesses and they
need a lot of work and improvement to keep up with the competitors.
However, since now they adopted the most advanced smartphone OS in the
world Android, this problem will begin to resolve.
Environmental:
Vertu is actively participating in different charitable and sustainable events.
It recently started a campaign Smile Train, where it will donate cleft plate
surgery for every handset sold. In addition, every year, it shares part of its
profits with different charities. This is extremely important for the brand
image, which of course needs a lot of improvement in the Western market.
Legal:
In legal perspective, Vertu is not affected anyhow. There are no laws and
regulations, which forbid people to purchase luxury goods. However, it is still
important to consider a fact that many of its clients are the Russian and
Chinese politicians, who officially have moderate-income level. Nowadays,
there is a lot of public and media attention towards the bribery in these
countries; so, Vertu may lose many of its usual customers.
BCG Analysis
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Marke
t
Growt
h
(%)

Star

Question Mark

New Android-based
Vertus: Constellation,
Constellation Ti
($6500 $20000)

New Vertu concept


proposed in the research
($2000-$5000)

Cash Cow

Dogs

Old-school classic Vertu


mobiles with buttons
and Nokia OS:
Ascent Ti, Signature
($6500 $310000)

Failed Vertu flagman


smartphones:
Constellation Quest,
Constellation T

Relative Market Share (Logarithmic Scale)

Problem and Solution


The main problem for Vertu at the moment is the functionality and
practicality of its mobile devices. Vertu has to improve its smartphone line of
products and attract new market segments, since it is losing its old key-client
base. The phones shall be more advanced and up to date with the latest
technology.
Some of the latest and most expensive
in production Vertu Models like Vertu T
(starting at $10000 touch-screen
Symbian-based smartphone with poor
battery life and low functionality) and
Constellation Quest (Clone of the old
Nokia E73 with small display and a lot
of tiny buttons priced at $8000) turned
out to be a disaster. However, one of
the main reasons, why these mobiles
did not earn their recognition was their
complexity. Their prices were too high
for the young and progressive customer
segment, while the older people preferred the easier in use models like the
elegant Signature S. After this dramatic decrease in sales of its smartphone
product line, Vertu switched from the old outdated Nokias Symbian OS to
the newest Android platform.

This year, Vertu introduced two all-new touch-screen Android smartphones


Constellation and a more exclusive Constellation Ti. Vertu Constellation is the
most affordable (starting at $6500) companys mobile currently on sale. It is
supposed to save the company and bring it back into the game.

The suggested continuation of the program is to go even further with the


affordable smartphone line. Vertu may launch a new young and
progressive people oriented line of products, which will be produced out of
light and sustainable materials like high-end caoutchuc, ceramic, glass and
carbon. They can be made in much larger numbers than the classic Vertu
phones and will be completed much quicker. The full hand-build process will
not be used for this line of products. They will be technologically advanced,
light, modern and significantly less expensive than the older Vertu mobiles.
The price will vary between $2000-$5000 for a device. The latest Android
platform can be taken as their base and updated every couple of years
(Apple approach). This mobile phone line will create its own niche on the
market just above the most expensive IPhones.
In Russia and the Middle East, IPhone is still the most popular mobile device
in the young and progressive market segment. In addition, many of the
IPhones in Russia are sold without a contract in the top of the range version
before the official Apple release of the product in the country. The prices for
such IPhones can go up to $2000. Rich Middle Eastern customers also prefer
buying the unlocked IPhones in the top 64GB versions. Vertu can compete in
this market niche in Russia and the Middle East to satisfy the customers
needs.
The most important aspect Vertu shall consider is changing its focus from
exclusive craftsmanship of the case to making the ultimate mixture between
the case and its filling in this product line. Of course, the company shall
leave its older product lines for the usual clients, but by adding this modern
line of mobiles, the company may attract a lot of new interested customers,
who seek for the perfect combination in the design, craftsmanship,
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functionality and practicality of the mobile. In addition, if some customers


are willing to pay up to $2000 for the high-end Vertu replicas or not-yet
released IPhones; they will surely be interested in purchasing a genuine
Vertu phone for just the same amount.
These phones can even sell under a modified brand name in order to not
damage the reputation of the classic Vertu hand-build mobiles. One of the
suggested product names can be Model-Y by VERTU, referring to the
Generation Y as the main customer segment. The company cannot repeat
Apples mistake, when they called IPhone 5C the budget IPhone. In Vertus
case, $2000 mobile cannot be called a budget Vertu, but progressive and
innovative Vertu for the modern people. In the future, Vertu can add more
exclusive and expensive phones to this product line, as the Generation Y will
get older.
Objectives of the research
1) See if the customers are interested in the new progressive line of Vertu
products, how much they are willing to pay for it?
2) See if adding a new line of less bespoke and expensive products will
damage the reputation of the Vertu brand.
3) See what the Vertu customers think of the new line of products and
how they are going react to it.
4) See what the IPhone/Sony/Samsung top of the range model users
thinks of the new Vertu product line.

Methods
Secondary
For the secondary research, Vertu can benefit from its product sales history
achieves. The company can see what were the most popular models sold,
their price range and the materials used. This will help to understand what
the new Vertu mobile should look like. It can also use the information about
the most popular smartphones on sale (IPhone, Samsung Galaxy, Sony
Xperia) their functionality, camera quality, memory, display size, weight,
etc. This is very important to understand what the targeted customers are
looking for in the smartphone for their needs.
Qualitative (Focus Group)

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The focus group is a lot more complicated part of this research study. In this
case, the main difficulty is the Vertus customers. The idea to invite the
current Vertu owners to participate in a focus group is not clever. Normally,
they are extremely rich and busy people, who will not be interested in
wasting their precious time for any kind of money. So, the focus groups will
consist of the new company target the young and progressive segment.
These will mostly be the wealthy and perspective younger people of different
occupations (bankers, lawyers, office executives, real estate agents,
entrepreneurs, traders, students from rich families). Their age will vary
between 20-40 years. These customers seek for functionality and practicality
in their mobiles. They are the users of the latest IPhone/Sony/Samsung top of
the range models.
Quantitative (Survey)
The survey is another very important part of this research process. It will be
oriented only towards the Vertu owners. It is very hard to approach them, so,
the survey must be presented very professionally. First, it has to be short
no more than seven minutes. Second, it can be done in two ways: via email
or by approaching customers directly in the Vertu store. It is crucial to keep
the research process very private and personal in order to not damage the
companys reputation.
Survey
The survey can be sent to the Vertu customers via an official email along
with usual promotions and company newsletters. This is much easier than
approaching customers directly in the Vertu stores. However, the second way
can also be practiced on special Vertu sponsoring events and other VIP
occasions. It is very important to understand that only very few people can
afford a $2000 mobile phone, so, only these very few have to be asked. The
objective of the survey is to approach 100 Vertu owners in total. The number
is relatively small due to the obvious circumstances.
The survey must be customized for each of the key regions (Russia, China,
ME). This will help to understand, what will be the primary market for the
new Vertu product. The main task of this program is to understand what do
the Vertu owners think of the new product. The survey will also help to
determine whether the new product line will damage the reputation of the
brand, and what is the customers attitude towards the brand in general.
The filtering and data overview will be fully custom processes. Since all of
the surveys will be made private and exclusive only for the Vertu owners, the
possibility of the funny results is highly unlikable. The only mistakes, which
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may occur during the process, will be related to the customers


misunderstandings of the questions.
Below is the list of possible questions for the survey (they can be customized
according to the market and the targeted customers).
Multiple-choice questions:
1. Since when are you a Vertu customer?
(Less than 1 year, 1-3 years, 3-5 years, 5-10 years, 10+ years)
2. How old are you?
(50<, 40-50, 30-40, 20-30, <20)
3. What Vertu model/models do you currently own?
(List of Vertu models, other _____)
4. What is your favorite Vertu model?
(List of Vertu models, other _____)
5. Do you own, use any other mobile phone devices?
(IPhone, Blackberry, Samsung, HTC, Sony, Nokia, other _____)
6. How many phones do you carry with you?
(1, 2, 3, more than 3)
7. What are the quality/qualities you look for in a true Vertu mobile?
(Hand-build quality, exclusive materials, status, functionality, design,
simplicity in usage, other _____)
Closed-ended questions:
1. Are you happy with the Vertu mobile you are currently using?
2. Would you like to have a dual SIM card slot in your mobile phone?
3. Do you like the proposed look of the new Vertu mobile?
4. Would you choose a new Vertu smartphone over the classic
smartphone (IPhone, Samsung, Nokia, etc.)
5. Do you think that a proposed mobile phone is a true Vertu?
6. Would you choose a new Vertu smartphone over the classic Vertu
models?
Open-ended questions
1. What is your occupation?
2. What are your feelings about a new Vertu smartphone concept?
3. What functions (camera quality, memory, apps, platform) are you
looking for in your smartphone/business phone?
4. What are the ideal appearance and proportions of your smartphone
(weight, size, screen size, material)?
5. Why do you use/buy a Vertu mobile?
6. What would you want to add to a new Vertu smartphone?
Focus Group
Focus group organization is a lot more complex process for the Vertu
marketeers. Approaching the targeted young and progressive segment is a
very delicate task. Vertu must carefully handpick each participant; so, each
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one will represent a certain sub-group of the companys target (student,


doctor, lawyer, business executive, etc.). Each focus group will consist of 8
people all of different occupations, but sharing the common lifestyle and
values. They can get personal invitations via post or email, or will be offered
to participate in this research on different VIP occasions. It is very important
to create and emphasize the exclusivity in the event people have to see
it not as a focus group but as a high-class private gathering. They will want
to be a part of this focus group. Their motivation will not be the money
(question mark) but the interest due to the significance of the event (they
may even feel honored to be invited on such occasion). These focus groups
will be conducted in the key market regions, adding the US and the UK to the
list. Their purpose is to help to understand whether the new Vertu product
line will interest and attract new customer segments.
Research Topics
The main research topics of the focus groups are:
1) Will the new Vertu mobile interest the targeted market?
a) Would you want to own one?
b) How much would you pay for it?
c) Will it suit your needs?
d) Can it become your ultimate business/home mobile phone?
e) Will you still need to carry a second more advanced device with
you?
f) Will you choose it over the newest IPhone/Samsung/Sony? Why?
Why not?
g) Is the new mobile phone appealing to you in general?
h) Will it be acceptable (from business etiquette perspective) in your
social circle?
i) Why would you want to own one?
j) Why would not you want to own one?
2) What should be added/changed in its design and technical specs of the
device?
a) Is the proposed design of the new Vertu appealing to you?
b) What would you change in it (weight, size, screen size, etc.)?
c) What materials would you want to be used in this mobile (carbon,
steel, etc.)?
d) What OS do you prefer to have in your smartphone?
e) What functions/apps do you want to have in the new Vertu?
f) Would you want to have a classic Vertu Concierge function on the
device?
g) What key technological specifications do you look for in an ideal
smartphone (memory size, dual SIM-cards, camera quality, 4G
support, etc.)?
h) What would you personally add/remove in the new Vertu mobile?

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3) What will be the key market of the new product?


This topic will be discussed when all the other questions are answered. It
will be easy to understand whether the targeted customers from the
certain regions (Russia, China, ME, UK, US) are interested in the product.
Projective Techniques
A few projective techniques might be used in the focus groups to optimize
the results of the study.
Vertu can use associations to better understand the targets reaction towards
the brand and its products. For example, asking the questions What is the
first thing that comes to your mind when you hear the word Vertu? or What
comes to your mind when you see this phone at your office table/restaurant
for the first time (different prototypes are demonstrated)? These kinds of
questions will help to analyze whether the product is socially acceptable in
the targeted regions and is interesting to the potential buyers.
Asking for an association to the words, like IPhone 5s, Samsung Galaxy 4,
Android, Smartphone, will give a better understanding of the competitors
positions on the market and the customers attitudes towards the
smartphones in general.
The picture association can also be practiced during the focus group
research. For example, the company can demonstrate several
pictures/prototypes of the proposed designs of the new Vertu smartphone
and see how the customers will react to them. This will help to understand,
which design is the most attractive for the targeted customers.
Another important technique, which should be used in the focus group
organization, is creating the right environment. Relaxing luxury atmosphere
is very important for the targeted clients. By offering them food, drinks, and
providing comfortable seating, the company will get the maximum possible
time from the participants (they will not be willing to go early or finish as
soon as possible). These focus groups can be organized in private
residences, luxury offices, 5* hotels, or popular places (even some private
restaurants will do). This informality and comfort are the things, which create
true luxury sense for the modern businessmen. Of course, the organization
of the focus groups will be completely custom in each of the key market
regions to match the local customs and traditions. For example, the Russian
focus group can be organized in a private restaurant, and the participants
will be offered some alcoholic beverages, while the Arabs will prefer to meet
in some private residence and will not drink anything. The Western people
will be invited to different offices and business centers to have this
discussion.
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Due to the importance and complexity of the task, the focus groups will be
run by the Marketing Directors of Vertu in each of the regions personally. It is
very important to demonstrate the level of the importance of the event to
the focus group participants. Each of them will be called on his mobile and
met in person before the meeting takes place. This personal connection is
very important, so, the participants will not miss the event and will put all of
their effort in it.
Information Analysis
All of the data recorder from the survey and the focus groups must be
collected and analyzed manually by a group of experts due to its limited
quantity and particular importance. The process will be managed by the
marketing executives of Vertu and monitored by the directors themselves.
The end results will be brought into conclusions and put in the form of a
written report and a presentation. Then, they will be presented to the board
of directors of Vertu and EQT VI.
Gant Chart

The deadlines given for the research are quiet broad due to the complexity of
the task. The focus groups and surveys will take place in several regions of
the world, so, it will take around eight weeks to coordinate the task and
approach the chosen targets. The survey is the most time-consuming part of
the process due to the fact that it is really difficult to approach the Vertu
owners. The full marketing process from the primary research to the board
decision will be done in a period of seven months.
Resources/Budget
Conducting such a complex research requires a lot of financial resources and
support.

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Focus Group: the standard rate for the eight-person focus group is about
$8000 for a 90 minutes session. However, due to the innovative approach in
the focus group organization, the cost of each meeting will vary between
$10000-$15000 depending on the country and local requirements. It is very
important to understand that the targeted customers are no ordinary people
and their time is much more expensive than the usual rate. The rent for the
focus group facilities is also very high due to the exclusive location and
environment choice. Considering that the focus groups will be organized in
five regions, the cost of the whole process will be around $70000 with all the
additional expenses.
Survey: they are less expensive to make. The total cost will be around
$40000, due to the unusual target audience. The hardest part will be
approaching them in person, it takes a lot of time and man-hours to do.
Collecting and Analyzing: the process for all the results will be around
$20000 due to the involvement of the companys executives and the
amount of manual work required.
Report and Presentation: The report on the analysis and its presentation will
cost around $10000.
Total: $140000
Reporting & Presentation Requirements
Report will be done in the written format, but presented to the board in a
form of an interactive presentation. It is very important to have a detailed
paper document; so, the executive office can evaluate the proposed solution
much easier. The presentation is important to give a first impression about
the concept, so, the board will decide, if they are interested in the project.

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