Competition among companies in the US communication industry is increasing by the day. Communication companies are adopting new technologies in order to stay ahead of the competition. Due to this struggle for market share, the level of innovation and quality of services has improved among the different products offered by these companies. This paper looks at two leading companies in the communication industry namely Vonage and Verizon and seeks to establish the different strategies used, and the effects of these strategies on product and service delivery. It will also assess the transformational process as well as the potential threats and opportunities facing the two companies.
Vonage company profile
A leading provider of broadband telephone services, Vonage Company commands a market share of 2.4 million subscribers. Vonage provides broadband it telephone services both local and long distance calls to USA, UK and Canada. It provides these services through retailers such as circuit city, Best buy, Wal-Mart and Target. Since its inception in 2001 its services are had grown to 150 by March 2001, focused by its drive on Brand recognition and as the best alternative to traditional telephone services.
Verizon company profile
Verizon is a communications company that deals in providing wireless and wireless telephone services such as voice, network access broadband video, data services and global Internet protocol IP networks. Verizon primarily operates in New York City and employs approximately 242,000 people. Since 2005, its revenues and profits have steadily increased except for year 2006 where it realized a 16.2% decrease in net profits compared to the fiscal year 2005.
The two companies are providers in communication services. However, there are differences in strategies between the two companies. For instance, difference in marketing strategy. Verizon company website has many sub sites unlike that used by vonage. Its company website is simple for users to read and is precise to what one may be looking for. For this reason, users do not have to worry about all the clutter and company related business marketing jargon. A new user of vonage company website is usually at serious risks of information overload due to the complex and vast amount of content on the website. Vonage website aims at providing an overall impression of the company its products as well as the latest offers. Vonage uses this site as an intensive advertising tool giving resellers and buyers information about recent company development and technological solutions. Perhaps this is the failing factor because one is likely to get lost in the large amount of information contained in the site. Additionally, time constrained users may not be able to fetch substantial relevant information as it takes time to digest all the information provided in the site. Moreover, the site created a false impression of the culture and values of the company. An uncluttered precise websites is an added bonus to any company that uses it as a marketing tool. The site should emphasize mission statement and company record of accomplishment as the integral part of effective promotion. Comparing the two websites as in products, Verizon takes home the prize as the most effective and practical website.
Verizon VolP website analysis is equally good. It is user friendly and as long as one can get past the address look up part of Verizon site. Getting on the voice wing homepage one is able to find all information needed without writing to the Verizon staff. The frequently Asked Questions provides an easy to read intuitive summary of information. It also gives a picture of versatility and diversity of customers served as seen on the people pictured on the site. In addition, all information on the various topics fit the screen perfectly without forcing the user to scroll down to view further information. The links are also excellent for instance, if you hit the Verizon logo at the top of the page, it takes you to the main Verizon home page. Inside the voice wing homepage, other pages are simpler uncluttered and thus more fun to flick through and read about the new way of calling. I gather from a reliable source that the sound clarity is great and the prices are good; therefore, new customers should be won over in greater numbers with time. So what is the strategy that Vonage uses in its sales and marketing efforts? First, it is worthwhile to know the main competitors of Vonage Company. These are Verizon, AT&T and cable providers. Cable companies are building phone services with internet access and cable to provide packages that is cheaper than that of Vonage. Verizon provides similar products as Vontage thus increasing competition. The main buyers of Vontage products are small businesses and customers. Vontage Company is a leading provider of Broadband IP telephone services as well as customer service management. These telephone services are either long distance or local calls. These services are divided into six types of services namely residential premium unlimited, residential basic, small business unlimited, small business basis, international rates and E911 services for its VolP in San Francisco, CA and 400 locally run emergencies. It seems that these services are categorized as such as a strategy to create differentiation for products to cater for the diverse needs in customers. According to a Business weekly issued on Feb 2007, Vonage plans to start offering wireless services to subscribers by the 2nd quarter of 2007 and additional sell broadband services nationwide. Furthermore, Vonage intends to start selling dual mode phones, which offer cellular as well as Wi-Fi access. I believe the strategy that will recreate the range of services for Vontage and this will see Vontage rename them as ‘Vonage wireless’
Since the incorporation of Vontage Company in 2001, the company’s management has demonstrated capability of transforming the company to a market leader commanding 55% of the mobile and communication technologies market. (Lookabaugh, 2006,p.213). Technology can help transform and shape a business towards success and growth and Vonage is a bright example of this. The transformation process in Vonage has taken many forms ranging from transformation of managerial aspects, emphasis to shift from traditional telephone communication towards use of new advanced VoIP technology, product transformation and so on.
It seems the management in Vonage Company has good understanding of the benefit of offering revolutionary products to the customers and has utilized this knowledge to develop the company’s products. This it has achieved recognizing customer’s needs and performing the transformation process through complex set of measures. This task has not been easy and it involved deep marketing and customer response research analysis.
In addition, the company has transformed from a small entity based in Edison N.J into a large technological institution by paying attention to customers’ needs and needs of the market. Use of VOIP technology facilitates this communication. The transformation process has been triggered by several factors for instance need to make larger profits unpredicted threats from cable providers Verizon and AT &T increased productivity and growing customer demands. As it stands currently, Vonage employer more than 1700 people (Vonage 2007)
Notably the transformation process at vonage has brought about changes in traditional managerial aspects and has integrated product transformation with the expansion and development of Vonage company structure (Kennedy, 2004)
On the other hand, Verizon a chief competitor of vonage seems to be lurking in the middle of being transformed and not transformed. Generally, Verizon is transformed in terms of distribution channels. It has numerous resellers and whole seller networks throughout the country. Additionally, it has collaborated with other organizations and diversified its products so that there is an array of choice for businesses to choose from. (Verizon website) the diverse services that Verizon has incorporated shows that it is technologically savvy and perhaps this is what keeps it in the leagues of Vontage and AT & T in the market. However the voice wing site is not fully transformed, at least that is in my opinion. This is because it is hectic trying to locate the voice wing site front the Verizon homepage. Verizon has not done much of advertising on the voice wing products as seen in the lack of links to the voice wing site there are two explanations to this deficit. One, perhaps voice wing is not among the ‘hot’ products and services in Verizon product list, hence the lack of special focus to advertise it. Alternatively, the reason is that Verizon is not transformed. Yet it seems to me that Verizon is not transformed because if it were then it would care to spend money on transforming voice wing sit to resellers and marketing it to customers more aggressively. Yet in contrast, it chooses to file never-ending lawsuits with Vonage over patent infringement. If Verizon were fully transformed then it would dwell more on advertising and marketing voice wing site other than chasing after lawsuits that it probably never will win.
The potential opportunities and risks
Verizon Company faces potential threats from rival cable companies such as Time Warner, Comcast and COX communications. These cable companies seem to be commanding strong presence in the communication market. In 2006, AT &T, Bellsouth and Verizon lost 5 million telephone customers to cable rivals. Cable companies are building phones services with Internet access and cable to provide packages that are cheaper than Verizon. They also have an added bonus of TV services that these companies do no offer. Cable companies are able to broadband phone systems and standard, mandatory E911 services (Verizon website). For this reason, Verizon has rapidly lost customers and it needs to move in fast to reduce the erosion of customers. Verizon has been aggressive to beat the competition by rolling out implementing a plan to roll out fiber to the fiber to the premises, it has registered considerable success for instance in 2005, Verizon passed 3 million homes and in 2006 it added 3 million more. Despite these successes, Verizon has lost 3.5 million lines in 2006 to cable wireless and VOIP competition. Its stock has equally fallen by 10% within the same year. Standard & Poors and Moody’s investor services have down graded Verizon debt due to the costs associated with his endeavor. Verizon strategy to face these threats has been to provide the best possible services to customers. It is also counting on customers to gin interest for band with over the next few years. Overall, Verizon plans to spend over $22 billion to complete roll out of this technology. (Senia, 2006). Vonage Company on the other hand uses the strategy of providing customers with hassle free unlimited international calling plans and low priced unlimited calling packages. It has also increased its services areas to over 75 international locations.
A PEST analysis into these two companies shows that the ties, rules and regulations in the political legal environment varies from country to country and they have to play according to the international markets requirements. In the economic environment vonage seems to be doing equally well spreading all over USA, Canada and UK and global markets. The strategy that vonage and Verizon seem to be utilizing is concentrating in rich places where they offer high speed Internet and services. The social environment is fast changing, as consumers become cash rich but time poor individuals. Vonage and Verizons seem to be incorporating the need to provide fast, convenient and accessible services to all service areas and diversity products to suit customers’ taste and preferences. The technology being dynamic vonage has adopted a strategy to spend more money in marketing in order to at least retain customers long enough to recover expenses covered during advertising.
Vonage Company faces threats from lawsuits filed by Verizon Company accusing it on infringing on patent right as regard to voice wing. It also faces competition from other broadband Internet services like Verizon, AT & T and cable providers. However both Verizon and vonage companies face threats on reduced market share as traditional operations more into IP telephony market and launching nationwide services plains. Competition from new entrants threatens to kill these companies profit chunk.
Verizons and Vonage products innovations are still not well known between customer and this represent untapped market. The plan to accelerate their marketing campaigns provides opportunity to reach these customers and make sales. In addition, push for reseller networks as well as online sales have enabled partnering with nationwide retailers thus strengthening market dominance. Other strengths accruing to both companies include competitive prices, strong direct sale channels, focused management and staff, good relationship with network operators, unique services as well as appeal to small businesses and individual customers
Effects of the strategies used by the two companies
The effects associated with the dif strategies use by the two companies are that the level of quality of product features has improved. For instance, the customers who use voice wings are amazed at the reduced international rates for class. They also enjoy unlimited nationwide calling packages and voicewiing access via the Internet. The choice of area codes has also increased. Customers are now able to transfer their old numbers or get a new one fast. Another added feature is that customers are able to control just about any feature with their personal account manager or from accessing account from a broadband connection. Phone line features have also improved with innovations such as speed dialing; call waiting with caller ID, Fax capabilities and three ways calling among others. The billing system has been revolutionized. For instance, with voice wing there are no cheques to write because they us credit cards billing. Verizon offers voice wing extra services account, which is similar to prepaid services. Another billing innovation by Verizon is online account management. Customers now enjoy money guarantee, in case of dissatisfaction with service, one can be compensated within 30 days of when he/she activated the Verizon provided adapter. Generally, the effects of the different strategies used by Vonage and Verizon have culminated to increase in service provision, more variety, innovation and better service delivery.
The many companies expanding into the communication industry have had positive impacts on the consumers’ lives. This is because prices have become friendlier and the quality of services has generally improved. The downside of this competition is that companies are losing their profits to new players in the industry. It seems that the only way out for Vonage and Verizon is to intensify their sales and marketing efforts as well as increase innovation.