Harvard Case - Kansai Digital Phone: Zutto, Gaining Japanese Loyalty
"Kansai Digital Phone: Zutto, Gaining Japanese Loyalty" Harvard business case study is written by F. Asis Martinez-Jerez, James R. Dillon. It deals with the challenges in the field of Marketing. The case study is 15 page(s) long and it was first published on : Jul 19, 2005
At Fern Fort University, we recommend Kansai Digital Phone (KDP) to implement a multi-pronged strategy focused on strengthening its brand positioning, expanding its digital marketing efforts, and leveraging its innovative Zutto service to solidify its position as the leading mobile provider in Japan. This strategy will involve a combination of brand management, digital marketing, product development, and customer relationship management initiatives.
2. Background
This case study focuses on Kansai Digital Phone (KDP), a mobile phone service provider in Japan, facing increasing competition from established players like NTT Docomo and Softbank. KDP's unique selling proposition lies in its 'Zutto' service, which guarantees users a consistent monthly bill, regardless of usage. Despite this innovation, KDP struggles to attract new customers and retain existing ones. The case study highlights KDP's need for a robust marketing strategy to effectively communicate its value proposition and establish a strong brand presence in the competitive Japanese market.
The main protagonists in this case are:
- KDP Management: Concerned about market share and customer retention, seeking a strategy to differentiate KDP and achieve sustainable growth.
- Zutto Users: Appreciate the predictable pricing but desire more features and a wider network coverage.
- Potential Customers: Drawn to KDP's Zutto service but hesitate due to limited network coverage and brand awareness.
3. Analysis of the Case Study
To analyze KDP's situation, we utilize the following frameworks:
1. SWOT Analysis:
- Strengths:
- Innovative Zutto service, offering predictable pricing.
- Strong focus on customer satisfaction.
- Potential for growth in a highly competitive market.
- Weaknesses:
- Limited network coverage compared to competitors.
- Lack of brand awareness and recognition.
- Dependence on a single innovative service for differentiation.
- Opportunities:
- Growing demand for mobile data and services in Japan.
- Increasing adoption of digital marketing channels.
- Potential to expand Zutto service to new customer segments.
- Threats:
- Intense competition from established players with wider network coverage.
- Potential for technological disruption in the mobile industry.
- Fluctuations in consumer spending and economic conditions.
2. PESTEL Analysis:
- Political: Stable political environment in Japan, but potential for regulatory changes in the telecommunications sector.
- Economic: Growing economy with increasing disposable income, but potential for economic downturns.
- Social: High mobile phone penetration and increasing demand for data services.
- Technological: Rapid advancements in mobile technology and network infrastructure.
- Environmental: Growing awareness of environmental sustainability and the need for eco-friendly mobile services.
- Legal: Strict regulations governing telecommunications services in Japan.
3. Consumer Behavior Analysis:
- Target Market: KDP's target market includes price-sensitive consumers, families, and individuals seeking predictable mobile costs.
- Motivations: Consumers value predictable pricing, reliable service, and value for money.
- Decision-Making Process: Consumers are influenced by brand reputation, network coverage, pricing plans, and value-added services.
4. Competitive Analysis:
- Key Competitors: NTT Docomo, Softbank, and other established players with wider network coverage and stronger brand recognition.
- Competitive Advantage: KDP's Zutto service provides a unique value proposition, but needs to be communicated effectively.
- Competitive Strategies: Competitors focus on network coverage, brand loyalty programs, and aggressive marketing campaigns.
4. Recommendations
KDP should implement a comprehensive strategy to address its weaknesses, leverage its strengths, and capitalize on market opportunities. This strategy should focus on:
1. Brand Positioning and Marketing Strategy:
- Redefine Brand Positioning: KDP should reposition itself as the 'reliable and affordable' mobile provider, emphasizing the value of its Zutto service and its commitment to customer satisfaction.
- Develop a Strong Brand Identity: Create a memorable brand name, logo, and tagline that resonates with the target market.
- Implement a Multi-Channel Marketing Campaign: Utilize a mix of traditional and digital marketing channels, including TV advertising, social media marketing, content marketing, and influencer marketing.
- Focus on Customer Experience: Provide exceptional customer service, offer personalized solutions, and build a strong community around the brand.
2. Product Development and Innovation:
- Expand Network Coverage: Prioritize investment in expanding network coverage to reach a wider audience.
- Enhance Zutto Service: Introduce new features and benefits to the Zutto service, such as data bundles, international calling options, and loyalty programs.
- Develop New Products and Services: Explore opportunities to develop innovative mobile services that cater to the evolving needs of Japanese consumers.
3. Digital Marketing Strategies:
- Optimize Website and Mobile App: Create a user-friendly website and mobile app that provide easy access to information, account management, and customer support.
- Leverage Social Media: Build a strong presence on social media platforms to engage with customers, share content, and build brand awareness.
- Implement Search Engine Optimization (SEO): Optimize website content and online marketing materials to improve search engine rankings and attract organic traffic.
- Utilize Paid Advertising: Run targeted online advertising campaigns to reach specific customer segments and drive conversions.
- Develop a Content Marketing Strategy: Create valuable and engaging content that educates and entertains the target audience, building brand credibility and trust.
4. Customer Relationship Management (CRM):
- Implement a CRM System: Utilize a CRM system to track customer interactions, preferences, and feedback, enabling personalized communication and targeted marketing.
- Develop Loyalty Programs: Offer rewards and incentives to encourage customer loyalty and repeat business.
- Focus on Customer Retention: Implement strategies to reduce churn rates and retain existing customers, such as proactive customer support, personalized offers, and exclusive benefits.
5. Basis of Recommendations
These recommendations are based on a comprehensive analysis of KDP's internal and external environment, taking into account:
- Core Competencies: KDP's core competencies lie in its innovative Zutto service, customer-centric approach, and potential for growth in the Japanese market.
- External Customers and Internal Clients: The recommendations cater to the needs of both existing and potential customers, while also aligning with the goals of KDP management.
- Competitors: The recommendations address the competitive landscape by focusing on differentiation, brand building, and digital marketing strategies.
- Attractiveness: The recommendations are expected to enhance KDP's brand image, increase customer acquisition and retention, and drive revenue growth.
6. Conclusion
By implementing these recommendations, KDP can effectively communicate its value proposition, build a strong brand presence, and solidify its position as a leading mobile provider in Japan. The strategy emphasizes a customer-centric approach, leveraging innovation, digital marketing, and customer relationship management to achieve sustainable growth and profitability.
7. Discussion
Other alternatives not selected include:
- Aggressive Price Cutting: While this could attract price-sensitive customers, it could also damage brand image and profitability.
- Merging with a Larger Competitor: This could provide access to a wider network and resources, but could also lead to loss of control and identity.
Key assumptions underlying the recommendations include:
- Consumer demand for predictable pricing: This assumption is based on the success of Zutto service and the growing need for affordability in the Japanese market.
- Effectiveness of digital marketing strategies: This assumption is based on the increasing adoption of digital channels and the potential for targeted advertising and content marketing to reach the target audience.
- Continued innovation and product development: KDP needs to continuously innovate and develop new products and services to stay ahead of the competition.
8. Next Steps
- Develop a detailed marketing plan: Outline specific marketing objectives, target audiences, channels, and budget allocation.
- Implement a CRM system: Select and implement a CRM system that meets KDP's specific needs.
- Launch a multi-channel marketing campaign: Develop and execute a comprehensive marketing campaign across multiple channels, including TV, social media, and online advertising.
- Monitor and evaluate results: Track key performance indicators (KPIs) to measure the effectiveness of the strategy and make adjustments as needed.
By taking these steps, KDP can effectively leverage its innovative Zutto service and establish itself as a leading player in the competitive Japanese mobile market.
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Case Description
Ted Katagi, marketing strategy manager of Kansai Digital Phone (KDP), utilizes customer lifetime value as a key metric to prioritize initiatives in an emergency plan to turn around the company. KDP is a regional phone company in Japan with less than stellar performance. Katagi is sent from the U.S. partner, Airtouch (later Vodafone), to assemble a team to design and implement a plan that improves company to performance. Katagi must quickly prioritize actions and then assess the expected economic impact.
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