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CONTENT

Executive Summary

Introduction

SOSTAC – Situation Analysis

PESTEL

Porter’s Five Forces

Threat of new entry

Bargaining power of suppliers

Bargaining power of buyers

Rivalry among existing competitors

Treat of substitution

SWOT/TOWS

Product life cycle

Industry life cycle

VRIO Framework

STP

Segmentation

Target Market

Position

Objective and Strategic/Tactic

Societal

Financial

7P’s Analysis

Objective and Evaluation

Conclusion

Reference

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Executive Summary

AT&T is known as a giant telecommunications carrier in US, providing high quality

products, and outstanding services. The company is currently in a competitive environment,

this marketing plan shows the company current status and direction. AT&T has an aim to

keep people connected, so the company consistently develop new products and services with

new innovation to give customers best experiences on communications network. The most

dominant product of the company is wireless network which makes the majority of

company’s revenue. AT&T claims that it has the fastest and most reliable 4G LTE covering

99% of US. For AT&T to sustain its market position as a leader in this competitive market,

the company has to keep the existing customers as well as obtain new customers, introducing

new products and services, and always be pioneer.

Introduction

AT&T is an American multinational telecommunications cooperation, and it is one of the

world largest communication companies providing innovative, reliable, high-quality products

and services. Products of the company include wireless communications, local exchange

services, long-distance services, data/broadband and Internet services, video services,

telecommunications equipment, managed networking, wholesale services and directory

advertising and publishing (New York Times 2015). Mission of the company is to keep

people connect by creating new solutions for consumers, with a motto “imagine a world

where your life is always connected to people, information and experiences — wherever you

are, wherever you are going. A place where life if just plain better. Welcome to your world…

mobilized” (AT&T INC. 2014: 13). AT&T is dedicated to make the world better through

corporate social responsibility, the company committed to improve the community in which

they live and work, from supporting the troops to empowering employees to volunteer their

time, and to engage in company’s sustainability and disaster relief efforts, this commitment is

evident across all aspects of their business (AT&T INC. 2015).

SOSTAC

Situation Analysis

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The situation analysis of AT&T is examine by macro and micro environment of the

company, showing strength and weakness from internal factors, and threat and opportunity

thought external aspects. To understand the overall performance, as well as to be able to

predict the future choices and direction of the company.

PESTEL

Political In telecommunication industry, political play an important role which can

directly effect the companies. Therefore, a stable political situation in US has

a positive impact on the company.

Economy Economy is another external factor that has an impact on the industry, The

GDP of US faced a slowdown in the fourth quarter of 2014 (The Guardian

2015) , the slowdown recovery affected AT&T Inc as customers purchased

less and are more price sensitive (AT&T INC. 2015b).

Social The change in lifestyle, people relying more on technology and increased in

usage (AT&T INC. 2015b: 38) benefits AT&T as it is the second biggest

telecommunication network provider in US.

Technology An increase in smartphone market directly bring advantage to

telecommunication industry. In 2014, the sale of smartphone was

significantly rose by 26.3% in annual (Agomuoh 2014) which in turn a

growth in customers signed up for service, "we had strong subscriber growth

in wireless and U-verse, and our strategic business services revenues

continued to post double-digit growth," said AT&T chairman and CEO

Randall Stephenson

(Yu 2014).

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PESTEL

Environment AT&T has built a strong energy efficiency program, which in turn an increase

in company saving of $191 million from 2010-2013. Furthermore, AT&T

invest in alternative-fuel vehicles (AFVs) which allow the company to avoid

purchasing nearly 6 million gallons of unleaded gasoline in 2014 and each

following year (AT&T INC. 2014: 13). Additionally, the energy efficiency

program turns out to be success as it 4.5 million cell phones were

reused/recycled, 487,000 pounds of cell phone batteries and accessories were

recycled, saved $40 million from energy saving, and water was saved by 42

million gallons in 2013 (AT&T INC. 2014: 8).

Legal A change in government regulations can effect the company, for example, net

neutrality issue, or the principle that all online data should be treated equally

without paid priority system, has become a widely debate topic in US over the

past year (BCC 2014). In early 2015, net neutrality rule passed by US

regulator (Wakefield 2015), this legalization could have a huge impact on

AT&T revenue in the near future.

PESTEL

Porter’s Five Forces

Threat of new entry

Entering telecommunication industry require huge investment, thus economy scale become a

barrier for the new entries. It is not easy to compete in this competitive industry because only

AT&T itself already hold one third of all shares in the market (Statista 2015), therefore the

threat of new entry is low.

Bargaining power of suppliers

There are only four major network providers in US, Verizon, Sprint, T-Mobile, and AT&T

whereas the only supplier is Federal Communications Commission who has primary

authority for communications law, regulation and technological innovation (FCC 2015). That

make bargaining power of supplier high.

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Bargaining power of buyers

As there are various choices of telecom providers in US, the customers tend to have more

bargaining power. AT&T, however, is one of the largest and fastest mobile broadband

network in US (AT&T INC. 2015b), which make the bargaining power of buyers moderate,

owning to strong brand performance in telecommunication industry.

Rivalry among existing competitors

Telecommunication industry is rapidly grow, and becoming very competitive in the past

years. AT&T faces substantial and increasing competition in wireless business, namely

Verizon Wireless, Sprint, T-Mobile/Metro PCS, a larger number of regional providers of

cellular, PCS and other wireless communications services and resellers of those services

(AT&T INC. 2015b: 23), which provide similar products with different communication

technologies and services, so the company has high rivalry with its competitors.

Treat of substitution

In the competitive telecommunication industry, the treat of substitution is relatively high.

Customers can easily shift to alternative providers who provide better services or promotions.

Even though AT&T claims to be the fastest network provide, it can not underestimate its key

competitor like Verizon. Verizon states in their site that their 4G LTE “cover 98% of

Americans” (Verizon 2015) which benefit customers in rural areas.

SWOT/TOWS

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STRENGTH

• The network provide cover all major metropolitan areas in the United States

• Premier network experience• Strongest LTE signal • Strong brand image

WEAKNESS

• Price war (2nd most expensive carrier)

OPPORTUNITY

• Economy predicted to grow in 2015

• The development of new technologies

• Company’s acquisitions • An increase in wireless

demand

SO Strategic options

• New customers • Business expansion from

acquisition• Company will benefit from

wireless market growth• Postpaid draw more customers

WO Strategic options

• When economy grow, people spend more

• Acquisition in Mexico allow AT&T’s price to be more reasonable

THREAT

• New legislation of net neutrality

• Rapid change in telecommunication industry

• Multiple competitors

ST Strategic options

• Provide premier network experiences to its customers to differentiate from competitors

• Use its strength to get advantage from the rapid change in the industry

• Customers shift to AT&T from net neutrality regulation

WT Strategic options

• Company should consider pricing issue as there is a new legislation on net neutrality

The significant change and development in technology and dramatic rise in usage

(AT&T INC. 2015b: 38) give AT&T an opportunity to expand their business to all

major cities in US to grasp new customers in each area. As well as the increasing

demand of wireless data usage (AT&T INC. 2015b: 21) Despite the slowdown in US

economy in 2014 where AT&T was effected as customers purchased less, economy

predicted to grow by 3.5% on 2015 (The Guardian 2015) which may lead to the rise of

company’s revenue. An acquisition of GSF Telecom in Mexico allows AT&T’s

customers to use wireless services without roaming, this seamless access will bring

more customer to the company as well as make the price of services seem to be more

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reasonable. Economy growth rely on people spending (Whitney 2013), as the

economy forecasted to grow in 2015, the purchase power of people will also rise,

which may in turn more spending on company’s products or services. With an equal

price for the wireless service from net neutrality, there is a potential that more

customers will shift to AT&T as it is one of the biggest carriers that provide fastest

and strongest signal. Nevertheless, the company should find a solution to neutralize its

expensive cost on its products and service in order to keep existing customers and to

get new customers.

Product life cycle

Even though its wireline segment’s revenue is decreasing, the wireless segment will cover

these losses as the segment account for 56% of company’s operating avenue in 2014 (AT&T

INC. 2015b: 13). Wireless service of AT&T is a key driver in company’s revenue, thereby,

the wireless service is in maturity stage of the product life cycle.

Industry life cycle

With 34% share of the market, AT&T currently has the largest marketshare as well as its key

competitor, Verizon who hold the same percentage of marketshare of 34% in the last quarter

of 2014 (Speculations 2014). Therefore, company’s industry life is in maturity stage where

weaker competitors withdrawn (Metro PCS, and Leap wireless closed down in 2013, and

2014, respectively (Statista 2015)), the sale slowdown creates overcapacity in the industry

which intensifies competitors (Kotler and Keller 2014: 335).

VRIO Framework

Valuable Rarity Inimitability

Organized properly

Competitive implication

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Products/Services quality Yes Yes No Yes

Temporary competitive advantage

InnovationYes Yes Yes Yes

Sustained competitive advantage

Employee diversity Yes Yes No Yes

Temporary competitive advantage

Product and Services’s quality

AT&T delivering great value to customers by providing premium services through new

innovations, responding to customers’ wants. The company has maintained a constant

commitment on research and development in order to offer best-in-class services and best

network. Company’s products and services comprise of mobility services, network services,

network security, cloud services, hosting services, voice services, unified communications,

and application services. The biggest portion of company’s revenue was on wireless&wireline

which made up 54.3% of AT&T 2014 total revenue (AT&T INC. 2015b). The quality of

AT&T’s high is high which makes it standout from its competitors, the company network

covers more than 99% of Americans which is 1% higher than Verizon, with US’s most

reliable 4G LTE network covering more than 300 million people, and they own and operate

more than 34,000 Wi-Fi hotspots across the nation.

Innovation

According to AT&T inc, the company has a technology innovation team made up of

approximately 1,300 of the world’s best scientists, and engineers including advanced data

networking experts, software engineering, systems integration, and speech technology known

as AT&T Labs. Its inventors pioneered new technologies and developing new products and

services, namely the transistor, the creation of the field of Information Theory, the solar cell,

and the communications satellite ever since 1901(AT&T INC. 2015). This sustain AT&T’s

competitive advantage by delivering great value to customers by providing a new generation

of network and communications services that enable seamless, user friendly, high quality,

and affordable. Moreover, the rarity and inimitability can be seen from AT&T’s existing

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history image and position of the brand in the telecommunications industry. Therefore, the

innovations of the company is a sustained competitive advantage.

Employee diversity

According to AT&T, “AT&T's 137-year history of innovation is a story about people from all

walks of life and all kinds of backgrounds coming together to connect people to their world,

anywhere, anytime and on any device” (AT&T INC. 2015d). The company valued in

employee diversity, they believe that talented and dedicated individuals are critical to

maintain their position in this rapidly evolving communications industry. This diversity

differentiate AT&T from its competitors, the company give opportunities to all those with

talents even those with communications challenges or medical disabilities. The company

overlook the issue of gender and race inequality, hence, AT&T’s 50-state workforce is 36%

female and 40% people of color. A simple philosophy of the company reflects how diversify

is a competitive advantage, “we serve our customers better when we build diversity into all

we do, and that positively impacts our customers and share owners” (AT&T INC. 2015d).

This is a temporary competitive advantage because this capability is imitable.

STP

Segmentation

AT&T has undifferentiated or so-called ‘mass marketing’, providing the whole market with

same offer (Kotler and Keller 2014: 255). Products and services of AT&T can be sold to the

expansive number of buyer as they all expect the same service from the company, instead of

segmenting the market, the company provide variations in term of promotions or plans to

suite customers' needs.

Target Markets

There is no doubt that people in this era are relying on smartphone, 71% of all US population

own at least one device (Nielsen 2014). AT&T primary target audiences persona data is

shown in the table below.

TARGET MARKETS

Geographic United State of America

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TARGET MARKETS

Demographic Age : Teenagers to Adults

Gender : Male and Female

Income : Middle to upper income

Lifestyle : Socialize, Business people, Trend followers,

Social class : Middle to upper class

Psychographic People who are interested in using communications and

telecommunication network, those who want entertainments, or

want to stay ‘connect’.

Behavior User status : New customer and Existing customer

Loyalty status : Client to Advocate

As the company provide wide range of products and services, the target market is huge. To be

more specific, for wireless and wireline segment, the target group is male or female, age from

18 to 64 (Pew Research Center 2014) with average to high income, those who want to stay

connected to the social world, which own technology devices like smartphones or PCs, and

will be able to develop loyalty to the brand.

Position

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The position map shows that AT&T has a position of high quality service with high price.

AT&T is positioning as the second largest telecommunications provider in US after Verizon.

The reputation of AT&T in telecommunication industry is positively strong with 34% market

share, make AT&T a star player among telecommunication carriers (Statista 2015). In a

competitive environment, AT&T has a brand image as a giant telecommunications carriers

with reliable reputation, aside from that the company has some points of differentiate which

are innovative, pioneer, and high quality. Even though the company offering same products

as Verizon, Sprint, and T-Mobile, the quality of AT&T is far better than Sprint and T-Mobile.

Verizon and AT&T, however, are neck and neck in the industry to win over customers.

Objective and Strategic/Tactic

Societal

AT&T is trying to make a positive impact on the world. One of the societal objective is energy

management, due to the fact that most of the company’s activities and service are depend on data

traffic which requires energy, for example mobile data traffic on AT&T’s wireless network increased

more than 50,000% in from 2007 to 2013 (AT&T 2014). AT&T have set goals for this objective by,

first, reducing direct emission (GHG emission from fleet vehicles, and Bloom Fuel Cells) by 20% by

2020 Bloom (AT&T 2014). Second, AT&T states that, “by the end of 2015, a majority of spend with

strategic suppliers will be with those who track greenhouse gas (GHG) emissions and have specific

GHG goals”. Lastly, reduce the consumption of electricity of the company which relate to data growth

network by 60% in 2020.

One way to achieve the goals is to have ability to measure and understand greenhouse gas (GHG)

emissions, and it will lead to illuminate associated threats and opportunities of the company. AT&T

focus on three areas of energy management known as three-pronged approach: company-wide energy

efficiency, collaboration with external groups, and alternative energy. The first area, company-wide

energy, in this area the company focus on three sub-areas, firstly, internal energy management

structure, where company creates energy policy for its people to follow to reduce the use of energy.

Secondly, energy team and champions, and lastly ATNO energy transformation strategy, AT&T’s

technology and network operations. Next, collaboration with external groups to help company shave

operating costs and reduce emissions. Lastly, alternative energy, AT&T use alternative energy

sources, namely Solar, Fuel cells, and Wind (AT&T INC. 2015). Be following company energy

management path form, AT&T will be able to achieve its goals.

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Financial

In 2015, AT&T expects their operating environment to be challenge as facing an intense

competition, especially in wireless segment, and the lowdown economy together with the

change in regulation which is unfriendly to invest in broad brand service. Furthermore,

AT&T expects to see an increase on consolidated operating revenue driven by their wireless

data, and IP-related wireline data services, including U-verse (AT&T INC. 2015b).

AT&T has a plan to expand their wireless, and other sections by investing in each section as

follow:

• $21,199 in capital expenditures, excluding interest during construction.

• $234 in interest during construction.

• $3,141 for the acquisitions of wireless spectrum licenses (including a refundable deposit with the FCC for the AWS-3 Auction), Leap and other operations.

• $1,890 in short-term investments, consisting of time deposits greater than 90 days.

(AT&T INC. 2015b)

7P’s Analysis

People AT&T invests in training and development programs to maximize

employees’ potential (AT&T INC. 2015a), namely Talent Development

Programs, Leadership Development Program (LDP), and Accelerated

Development Program (ADP) (AT&T INC. 2015d). Furthermore, AT&T

has diversify workforce, overlook gender, race, and disability, but

focusing on individuals talents.

Product Products and services offer by AT&T are Internet, U-verse TV, direct

TV, wireless, home phone, mobile phone, and Wi-Fi, which cover most

of the services in telecommunications industry. The products and

services of the company enhanced customer experience in entertainment

and communications (AT&T INC 2015).

Price AT&T offers various data plans with different charges to suit customers

usages. For example, wireless service, customers can get cheaper price as

they sign longer contrast (AT&T INC 2015). Moreover, AT&T provides

both postpaid and prepaid for phone users.

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7P’s Analysis

Place AT&T has more than 16,000 retails, including company owned stores

and kiosks, authorized dealers and third party retail all over US to serve

customers. The store give customer opportunity to get hands-on interact

with fully function wireless handsets and service. Additionally, AT&T

launched the Online Experience Store where customers can experience

and purchase AT&T services and products via a digital storefront

(AT&T 2015).

Promotion To target customers, AT&T use promotion strategy through different

methods. The company use this strategy as one of the way to get new

customers, for instance, new customers will get $48 discount on monthly

base for 24 months contrast of AT&T U-verse TV plans, or Online-only

bonus giving new customer $100 reward card when purchasing online at

att,com. Nevertheless, this strategy al so apply to existing customers to

purchase more products, for example, AT&T wireless customer will get

$50 reward card when purchasing Internet. (AT&T 2015)

Process AT&T deliver it service through several methods start from innovation

new technology and service to delivering them. Staffs of AT&T are

trained to be experts in their area, by instructor-led classes, self-paced e-

learning courses and virtual conferences, to be able to deliver the best

service to customers (AT&T INC. 2015d).

Physical evidence AT&T has tangible physical evidences, for example

• Corporate branding (sign, symbols, artifacts)

• Development goals, and plan

• Store environment

• Employee’s dress code

7P’s Analysis

Objective and Evaluation

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OBJECTIVE EVALUATION

Reducing the use of Energy in the

organization

• Ability to measure and understand GHG

• Form energy team and create energy policy

• Use alternative sources

Increasing in revenue as the economy is

slowing down

Invest more on company’s services and

products, especially on mobile network

Conclusion

The performance of AT&T can be effected by both internal, and external factors. The change

in technologies and society give an advantage to the company as people rely more on

communications network. As a giant telecommunications provider, holding 34% of

marketshare, AT&T has a strong brand reputation as a leading carrier which can attract new

customers, and keep existing customers as the same time. Undoubtedly, wireless network

service of AT&T has the most potential to grow, as seen in company’s revenue, which this

product has the biggest proportion of. This service will surely help increase the company’s

revenue in 2015, when US economic is slowdown because the demand of wireless service is

slightly increasing. Nevertheless, new legislation of net neutrality from FCC is a big issue

AT&T has to consider as it may lead to the lose in company’s revenue when the regulation is

releases. The company, however, is in a competitive market, where customers can easily shift

to other network provides who provide better service or give more reasonable promotions. In

order to sustain it position in the market, AT&T has to keep its strength of being innovative, a

fast developer, and consistently improve standard of its products and services.

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