Like any other global industry, the telecommunications industry contributes a generous amount of money to the economy. Verizon is the second largest telecommunications company in the world and the largest service provider in the US. It has grown from a modest wireline provider to become the dominant player in the wireless technology segment. The last documented profit margin for the current financial quarter is 31 billion dollars.(Poncuano, 2018). Though the wireline segment is lagging behind, the wireless segment compensates for this. Verizon has a unique value proposition based on its wide coverage that spans over 90% of the population. (Dano, 2018). The company also continues to build on its brand name to ensure that it lives up to its reputation. The group has an impressive market share and generous dividends for its share holders. Investors are encouraged to buy more shares and earn from dividends rather than earning from selling the shares. The marketing plan focuses on acquiring new customers while improving service delivery for the existing users. The company also uses its corporate social responsibility program to market itself as well as become equipped future staff members. Infrastructural maintenance is key to its operations. However, the company faces risk from increased government regulations, competitors, a nd changing market trends.
Verizon Communications
Verizon Communications Inc is a telecommunications company whose main business is in the provision and maintenance of wireless communications services. The company began in the year 2000 when GTE Corp and Bell Atlantic Corp merged into what is now one of the largest communications company. Verizon was built on the wireless technology that Bell Atlantic brought to the table. A combination of the wireless technology as well as the 3G network propelled Verizon into dominance in wireless digital technology.
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The company followed up with their own Smartphone that included a colored screen handset. Since then the global digital company has continued to grow by introducing many firsts to the market. The firsts include Internet on mobile devices, consumer 3G, 4G and now 5G network. Other inventions include cyber security solutions, expanded network coverage including in rural areas and live streaming and TV channels. The company continues to expand its portfolio by acquiring global markets and investing in expanding their existing services.
Industry analysis
Verizon is estimated to have a loyal following of over 18 million customers in about 150 countries. ( D&B Hoover, 2018). This figure does not include those who use its data plans, security solutions or those who buy their products such as cell phones. According to Statistica (2018), in the US alone, the company takes 35.31% of the total market share. This findings were consistent with other reports documented by competitors. Statistica (2018) further reports that the telecommunications industry generates an estimate of about $256 billion. Verizon takes a bigger percentageof this with income generated from its enterprise services. Other sources include residential and small business services, partner programs, and the wireless services.
The company had an impressive annual sales grossing at $128 billion. According to Poncuano (2018), the company ’ s profit margin for the last financial year stood at $31 billion. This excluded their existing and new infrastructural acquisitions which updated their assets portfolio to $265 billion. The company is currently valued at a market value of $201 billion (Poncuano, 2018). However, during the third quarter of 2018, compared to previous years, Verizon has had a marked drop in the revenue growth.
While an average of competitors managed a 9.31% growth, Verizon only managed 2.8% growth (Poncuano, 2018). However, it still maintained its position as the highest earner. The top position was because its net profit stood at 15.52% (CSIMarket, 2018). C SIMarket further states that Verizon maintained its dominance in the domestic wireless network market and it held on to the najority of consumers. The greatest contributor to loss in revenue was the wireline segment.
Verizon's Unique Value Proposition
Verizon continues to thrive because it capitalizes on a number of factors. First, it is the company ‘ s brand. According to Dano (2018), Verizon established its brand name by ensuring that it had a massive coverage in the US. The author further points out that This began even before the wireless services were launched. Dano states that the company ensured that over 98% of the nation's consumers had access to its services. This included connectivity in the rural areas where other providers shied off from investing in infrastructure.
Verizon ’ s brand further gained popularity because it does not discriminate against either retail or commercial users. This endeared it to the public who continued to support its growth Dano (2018). It is currently the largest wireless communications service provider and the second largest wire line provider in the US.
The brand has come to be trusted above some of its other competitors as its performance has consistently been above board. This excellent service cover has given Verizon the reputation of being thrown most reliable in terms of coverage and service. The quality is respected across the board where providers have always offered quality in the 3G, 4G and now 5G network. Their network also combines the security aspects of its business to ensure that clients get the most secure network possible. Overall, their speed has consistently been higher than the majority of the providers.
Verizon has stayed ahead of the game by constantly presenting improvements or new variations of their products to its customers in the global market. The company has dedicated an entire department to market research and development of new products. This has ensured that they remain the market leader in communication (Sheffer, 2015). An example is the recently launched 5G network that has already overtaken some providers who were still rolling out the 4G network.
According to Sheffer (2015), the company continues to roll out new technology and to collect customer input on the new needs emerging in the market. Sheffer (2015) reports that these three factors led analysts into recommending investors to buy more rather than sell off their shares. Its annual dividends rates are also higher than the average.
Verizon's Marketing plan, Operational plan, and Financial plan
Verizon employs professionals with creative minds. Leaders who are strategic and passionate in creating new global market relationships. These creative minds have come up with Verizon’s a strategic marketing plan that is aims at protecting the current customer base while acquiring new customers. Madsen and Rodgers (2015) report that the company uses the BCG Matrix to tailor its marketing program. The matrix is commonly used as a business portfolio, where each product is assigned the specific strategy that boosts its penetration into the market.
Verizon's past business patterns have led them to apply two different strategies for the wireless and wireline segment of the business. The wireline segment is working on reviewing their packages and bouquets. They may also adjust their prices downwards with an intention of winning back some of the subscribers they lost to competitors. This is a long term strategy as the wireline segment has suffered from lower income (Sheffer, 2015). The wireless services are employing aggressive advertising in a bid to increase their market share. Offers are also in place so as to retain their current customers.
The operational plan involves maintaining their infrastructure and ensuring that it optimizes its function. According to Madsen and Rodgers (2015), this will assist the brand to maintain its leadership role in the market and keep its speed optimized. Moreover, the company had in the past carried out a vigorous and popular social responsibility program. The continuing initiative is part of its operational plan (Madsen & Rodgers, 2015). It is used as an avenue to get access to new markets. The platforms also allows for collection of feedback that is channeled to the research and innovation department.
Olenski (2018) reports that the Verizon ’ s operational plan is aimed at protecting the current status of the company while improving effeciency. The financial plan relies on the marketing and operational plan. According to Olenski (2018), the main aim is to ensure that the cash flow is maintained so that it can support the first two plans. The company also plans to acquire more profitable income generating ventures such as the smaller telecommunications companies willing to sell. The financial plan also caters for the mentorship program that nurtures young talent. For instance, the Ad Fellows program trains and prepares youth for the industry.
Risk Assessment of Verizon
The greatest risk currently facing Verizon Communications is from its biggest competitor AT&T. Olenski (2018) states that this telecommunications giant is attempting to match its services and products in a way that closely reflects the operations of Verizons. Ross (2018) further adds that the data plans are surprisingly similar with the pricing becoming too close to call. Verizon is having to prove itself by offering exemplary service that will make it rise above its competitors. Verizon is disadvantaged in the areas that have poor network coverage as its competitors capitalize on this topic discredit their almost flawless record.
Other risks that Verizon faces is that from the government. Recent legislation put in place by the Federal Communications Commission(FCC) have limited the pricing mechanisms of all telecommunications companies including Verizon (Ross, 2018). This has reduced their projected income and profit margins significantly. The company also faces the threat of an external breach during handling of customers data (Solutions, 2018). Measures have been put in place to ensure that the risk is mitigated as it occurs on a daily basis.
Conclusion
Verizon Communications Inc is a strong and stable telecommunications company. They are leaders in the US as they have been able to capitalize on the wireless services and hold on to the wireline as well. The company holds a strong financial position and it is constantly improving and expanding its portfolio. Despite the challenges that are posed by government regulations, competitors and changing market trends, the company still continues to grow and make its presence felt among the population. However, the case study is limited because the literature reviewed does not include any in depth look from someone inside the company. However, the financial information in the public eye is enough to give an accurate predictor of the company's status.
References
CSIMarket (2018). VZ Sales vs. its Competitors Q3 2018 . Retrieved from https://csimarket.com/stocks/com pet_glance.php?code=VZ
Dano, M. (2018). With huge 1.2M customer gains, Verizon shrugs off lack of video service bundled with wireless. FierceWireless . Retrieved from https://www.fiercewireless.com/wireless/huge-1-2m-customer-gains-verizon-shrugs-off-lack-video-service-bundled-wireless
D&B Hoover. (2018). Verizon Communications Inc.Company Profile. Retrieved from http://www.hoovers.com/company-information/cs/company-profile.verizon_communications_inc.823b8314533d790d.html
Madsen, P. M., & Rodgers, Z. J. (2015). Looking good by doing good: The antecedents and consequences of stakeholder attention to corporate disaster relief. Strategic Management Journal, 36 (5), 776-794.
Olenski, S. (2018). V erizon CMO believes this is the future of marketing . Forbes . Retrieved from https://www.forbes.com/sites/steveolenski/2018/05/18/verizon-cmo-believes-this-is-the-future-of-marketing/#35168be73efc
Poncuano, J. (2018). The World's Largest Telecom Companies 2018: AT"T, Verizon Remain On Top As Sector Struggles. Forbes . Retrieved from https://www.forbes.com/sites/jonathanponciano/2018/06/06/worlds-largest-telecom-companies-2018/#528f07df7d39
Ross, S. (2018). Government Regulated Impact on the Telecommunications Sector. Retrieved from https://www.investopedia.com/ask/answers/070815/how-does-government-regulation-impact-telecommunications-sector.asp
Sheffer, R. (2015). YahooFinance .. Analyzing Verizon ’ s Value Proposition in the US Telecom Space
Solutions, V. E. (2018). Data Breach Investigations Report, Apr. 2015.
Statistica. (2018).The Statistics Portal. Retrieved from https://www.statista.com/statistics/199359/market-share-of-wireless-carriers-in-the-us-by-subscriptions/
Team, V. R. (2015). 2015 data breach investigations repo rt.
