In what ways has The Carphone Warehouse gained competitive advantage?
Mobile phones are an ever increasing feature in our modern society, if you walk down the street, you will observe that many people are carrying or using a mobile phone. There are 4 or 5 key providers in the mobile phone market within the UK, The Carphone Warehouse being the largest independent retailer of mobile communications in Europe. I felt that, as a member of modern society, and a mobile owner, it would prove interesting to discover exactly how the Carphone Warehouse has managed to expand and grow to this degree.
Within this investigation, I will hope to look in depth at the different strategies used by the Carphone Warehouse and the customer services offered to gain consumer confidence and repeat business. I will first describe and explain the information that I have gathered, then finally analyse and evaluate my findings, coming to a firm conclusion to my question. HYPOTHESIS: It is in my opinion that my findings will show that the Carphone Warehouse has managed to gain and maintain competitive advantage through its continued growth and focus on customer service and innovation.
FINDINGS: The Carphone Warehouse is a new generation retailer. They began trading in 1989, and are now the largest independent retailer of mobile communications in Europe. As from 29th September 2001, they operate in 12 different countries, ranging from here in the UK with 431 stores, to Poland with 3 stores, collectively they manage over 1,085 stores, and are the market leaders for mobile retailers in Spain, Sweden, Ireland, Germany, The Netherlands and Belgium.
They can also boast an incremental increase in turnover for the period ending 29 September 2001 where they witnessed a 20% growth to i?? 539. 6m. In addition, they’ve also maintained repeated revenue from i?? 32m to i?? 69m. This substantial rise in figures is due to 14% more connections, now counted at over 1. 5m. Their extensive growth can be credited to a number of strategies that the company have undertaken. For example they have divided their UK stores into 3 segments: Distribution, telecom services, and data services.
The distribution division is compromised of retail, online, wholesale and insurance. Its role is to persist with the growth of the company by increasing online sales and concentrating on organic growth and reorganisation in non-key markets. The last two consecutive financial years saw the distribution business generate a 10% rise in total revenue, from i?? 436m in 2000 (with contribution costs of i?? 32. 1m) to $496. 4m in 2001 (with contribution costs totalling i?? 35. 1m). An added financial input was due to the wholesale section.
It witnessed total revenue of over i?? 175m, a considerable increase from i?? 127m in 2000. Again, another significant area of growth is a result of the retail business that managed to induce a 14% raise in the number of customers connected, now counted at over 1. 4 m. Finally, their online sales proved beneficial, leading to the insurance business seeing a policyholder increase to in excess of 888,000, meaning a 36% rise. Telecoms Services consists of on-going airtime revenues, facilities management business and our MVNO (Mobile Virtual network Operator – see below).
Its function is to influence European retail presence, hopefully resulting in growth in its on-going airtime revenues. In addition to this, it was instigated to help enlarge its management business model across Europe. Similar to the distribution segment, the telecoms service business observed a remarkable 268% upsurge in revenue from i?? 11. 5m in 2000, to i?? 42. 3m in 2001. Additionally, they are now seeing organic growth; the Carphone Warehouse telecom services now manage in excess of 915,000 customers.
The Carphone Warehouse data services embrace all their mobile services and products. Its main job is to stay up-to-date with technology, for example, WAP services (mobile access to the internet), and GPRS services. Again, this segment has observed an increase in revenue, from i?? 0. 4m in 2000, to i?? 0. 9m in 2001. As shown above, by the Carphone Warehouse dividing their company into three, manageable areas, it has enabled them to grow and develop with staggering and very advantageous results.
For the Carphone Warehouse to gain, and then maintain competitive advantage, it must have a strict but realistic set of aims. Logically, they have created their own ‘philosophy’. In this they state that they must “exceed our customer’s expectations by providing an innovative approach to service”. For this to happen, they constantly need to be updating and creating new services and ideas. Therefore, they need to ensure that their employees are motivated and stimulated, as they are key players in delivering the standard of service wanted.
To enable this philosophy to be effective, the Carphone Warehouse invests much of their time and money in extensive training programs, especially for sales consultants, as these are arguably the most influential figure for every customer. They go on a two week training program where they are shown how to recognise what package is most suited to each individual customer, and taught the importance of impartiality towards other networks (otherwise this could be off-putting for customers if they are ‘forced’ to go with the preference of the sale consultant).
Throughout employment, they are constantly being trained and assessed, to ensure that they are up to date with new offers and technological advancements. To ensure that they maintain the standard of service required by the company, the Carphone Warehouse has set up 5 regulations that must be adhered to (see appendix): 1. if we don’t look after the customer, someone else will