Report for Eco-Fone 2019 | Sharksavewriters

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REPORT FOR ECO-FONE

Date: April ??, 2019

Report for Eco-Fone 2019

Introduction

The report focuses on Eco-Fone Smartphones that sells smartphones and accessories from two shops, one in Putney and one in Richmond. The report is divided into two sections. The first section is a brief analysis of the UK mobile industry and in particular the trend in the usage of Smartphones among the older consumers. The second section focuses on the management of Eco-Phone Smartphones. A Pro and Cons analysis will be done to determine whether the company should expand its operations to Kingston. Moreover, a customer satisfaction survey will be done on Eco-Fone. Finally, a poison distribution procedure will be conducted to establish whether the probability of more than three invoices will be returned in a given month should be less than fifteen percent is a success.

Analysis of Issues for Eco-Fone Smartphones

1.1 An Overview of the Mobile phone market in the UK

The UK Mobile phone industry has witnessed significant growth over the last two decades. However, the sector is dominated by the use of a Smartphone with an estimated 85% of mobile phone users. Nearly 95% of UK Smartphone users use their device daily. Mobile phones are the leading tools that the UK citizens use to access the internet and for social media usage. The industry uses 4G network although the country is preparing for the introduction of 5G network. The usage of the mobile phone is estimated to continue growing between 3 and 4 points until 2022. The college students and working-class represent the highest portion that uses Smartphones. The sector is characterized by stiff competition among mobile phones, tablets, and laptops (Poushter, 2016). Connectivity speeds, camera resolution, processors, and sensors have continued to improve to rival tablets and laptops specifications. Although the unit cost of mobile phones has gone up, the market has low-cost mobile phones for low-income earners (Berenguer, Goncalves, Hosio, Ferreira, Anagnostopoulos, and Kostakos, 2017). Deloitte estimates that the average cost for mainstream Smartphones spans from £100 to over £1,000. Finally, the UK mobile market is dominated by the Apple iPhone (48%), Samsung (35%) and Sony Xperia (4%) as summarized in the screenshot below:

Source: https://www.statista.com/statistics/387227/market-share-of-smartphone-manufacturers-in-the-uk/

1.2 Forecasting the UK Adult Smartphone use

According to Deloitte’s Global Mobile Consumer Survey 2017 the use of Smartphones in the UK is expected to continue strengthening and stabilizing at 85% (as it was the case in mid-2017). The penetration rate was estimated to be the 1-3 percentage for a similar period in 2018 and 2019 (Berenguer et al., 2017). Among the active population (18-45) the adoption rate is forecasted to be 90% by the year 2022. Although the 4G network is predominately used in the UK, the survey predicts that the usage of the 5G network is within the horizon. Besides being the most popular electronic device in the UK, the survey forecast that the adoption rate of Smartphone to be twice that of a tablet in the year 2019. It is also forecasted that the adoption of Smartphone among the senior generation (55-75) will rise from 29% in 2012 to 71% in the period 2018. Finally, it is forecasted that some applications will become embodied in Smartphone technology such as e-commerce, online communication, face recognition, e-banking, among other technologies (Rosales and Fernández-Ardèvol, 2016). The screenshot below shows a scatter diagram for the 2010 to 2018 forecast growth:

Source: https://www.statista.com/statistics/487780/market-share-of-mobile-device-vendors-uk/

1.3 Smartphones – A potential market for older customers

The short video form has provided an opportunity for older customers to use Smartphone devices. For instance, the Global Mobile Consumer Survey 2017 reports that the usage among older consumers has risen fivefold from 2012 to 2017. Consumption of video via Smartphones remains the greatest potential for senior UK citizens. Indeed, the argument is backed by the fact that over 85% of the adult population in the UK owned a Smartphone compared to 52% in 2012. Moreover, high video consumption among older consumers is on the rise. For instance, in the mid-2017 there was an increase of 3% of the adult population who consumed catch-up TV on daily bases via their Smartphones (Choudrie, Junior, McKenna, and Richter, 2018).

The survey also noted a strong correlation between the age of the user and Smartphone applications. For example, the survey recorded that atheist 81% of the adult population confirmed to be aware of more than one use of a smartphone application. Consequently, this is a potential market for the age bracket (18-750). Among the uses that were recorded included the following; route suggestions, Google maps, Google translation, voice to text, electronic calendar entry, among other applications. Moreover, Smartphones are used in e-commerce, m-banking (mobile-banking) and money transfer (Visvanathan, Hamilton, and Brady, 2012). Logically, money transactions and e-commerce will target the adult population compared to the younger consumers. In this regard, older consumers are a potential market for mobile devices compared to their junior users. More adults have enrolled in academic programs which require constant access to the internet and communication with the supervisor and other course mates. Consequently, Smartphone offers a platform through which such an adult can successfully conduct research, submit assignments, and communicate with supervisor and other students.

1.4 Feasibility of Expanding business to Kingston using Pros and Cons table

The table below shows a summary of Pros and Cons of business expansion to Kingston:

Should we expand our business to Kingston?

Pros

Score/10

Cons

Score/10

Increase in the company’s market share

A lot of capital will be used in marketing and hiring additional staff

The company will employ the local communities which will, in turn, create more market share

The company will incur cost in corporate social responsibility programs in the local community

Economies of scale since the product will be made in bulky without starting a new plant (Briciu and Căpuşneanu, 2013).

There is a risk that the Kingston community may not accept Eco-Fone’s products

Diversification of profits in case the businesses in the Borough of Richmond fail.

The company may face stiff competition from the local producers

Improved brand exposure with multiple locations which will help in improving the company’s image globally

Weakened business culture and relationships due to cultural and social differences

Total Pros

Total Cons

Average Pros

6.6

Average Cons

From the Pros and Cons table above, it can be concluded that the advantages of expanding the business to Kingston outweigh the disadvantages; hence Eco-Fone’s products should be introduced in the new market. Indeed, expanding the company in the new location will increase the profit margin of Eco-Fone.

1.5 Costs of a New Building

Eco-Fone has two options for the expansion program; to lease or to own new apartment in central Kingston. The asking price the new building is £400,000, but this might be negotiable closer to £350,000. However, owning an apartment will depend on the payment of mortgage the two Borough of Richmond shops:

The monthly cost for mortgage = £3,442.30 (refer to the appendix).

When purchasing a new building (£350,000), there will be no payment of interest; hence it is advisable to purchase a house than to lease. However, the company will need to factor for transport facilities since the leased apartments are located in the Borough of Richmond.

1.6 Testing the Possible Difference in Net Takings in the Two Shops

The comparison will be based on the following information: A sample of 40 net daily takings from the first shop has a mean £100 and a standard deviation of £20. A sample of 40 net daily takings from the second shop has a mean of £90 and a standard deviation of £40. From the given information, it is evident that the net undertaking of the two shops is not the same. Statistically, a smaller standard deviation means that the sample is closely related, unlike a standard deviation which is large which shows that the samples are sparsely distributed. Therefore, it means that the sales in the first shop do not fluctuate unlike in the second shop where sale price per day fluctuates.

Also, the net takings can be explained in terms of mean per sale. In this regard, the first shop has higher sales in terms of the collection since its average sales are £100 compared to the second shop whose mean sales are £90. Another possible explanation for the difference in the undertaking is that the second shop could be having loyal customers who are enticed by seasonal pricing and discounts, unlike the first shops where such incentives are not given to the clients. Moreover, the difference between the two shops could be the target clients. As argued earlier, the consumption rate for older clients is lower than that of the middle-aged population. Therefore, the second shop could be selling the products at a lower unit price (aged population) compared to the expensive products in the first shop.

1.7 Customer Satisfaction

Regularly processed customer questionnaires will be used when answering this task. From the questionnaire, the average response of the participants in range 1-6 is given as 4.5. This score implies that the clients are satisfied with the services given by Eco-Fone. Customer care is one of the strongest points of the company (Berry and Linoff, 2004). Most clients answered that “they are willing to buy from the company in future” mainly due to the experience they (customers) had with the workers. Moreover, the customers’ feedback is in support of the strong customer care services offered to the clients.

A majority of the respondents “have purchased from the company for more than five years”. This response gives another strong indication that the firm has loyal clients, as argued before. The company’s strong presence in the region coupled with the distribution of high-quality products is some of the reasons behind the high rate of customer retention. The firm also gives a warranty on its products as well as discounts to its customer which makes the firm popular among the local consumers. Community involvement through corporate social responsibility is another way in which the local communities have embraced the products supplied by Eco-Fone. For instance, employing the local communities and sponsoring local programs are some of how the firm has succeeded in winning the support of the local communities. Finally, the investigator suggests that the company should increase the firms’ outlet in the area by opening up the proposed Kingston store to increase its market share.

1.8 Quality Procedures

Poison distribution is the most appropriate procedure to be applied in this case since it is used in discrete data to determine the success or failure of an event. In this case, the Poisson distribution will be applied by Eco-Fone to determine if the procedure test were a success. Calculation using excel formula (see the attached appendix) show that the quality procedure was a success (TRUE). This test implies that the quality test has confirmed that the probability of more than three invoices will be returned in a given month should be less than fifteen percent. Another importance if using the poison distribution test is because this probability is used when dealing with a significantly large sample (in this case 10,000 events).

1.9 Conclusions & Important Findings

This report is on the mobile industry in the UK and specifically on the quality assessment of Eco-Fone Company. The research has established that the sector is dominated by the use of Smartphone with an estimated 85% of the mobile phone users. Indeed, the use of Smartphone has been on the rise and is forecasted that the demand for smartphones in the UK will continue to increase. Further, the investigation has established that the demand for smartphone among the older generation (17-75) has been on the rise. Indeed, calling and messaging are no longer the main uses of smartphones. Route suggestions, Google maps, Google translation, voice to text, and electronic calendar entry are among other applications that are popular with the aged population (Buttle, 2004). Pros and Cons table has been done and shown that the advantages of expanding the business to Kingston outweigh the disadvantages; hence Eco-Fone’s products should be introduced in the new market. Moreover, a poison distribution procedure has established that the probability of more than three invoices will be returned in a given month should be less than fifteen percent.

References

Berenguer, A., Goncalves, J., Hosio, S., Ferreira, D., Anagnostopoulos, T. and Kostakos, V., 2017. Are Smartphones Ubiquitous?: An in-depth survey of smartphone adoption by seniors. IEEE Consumer Electronics Magazine, 6(1), pp.104-110.

Berry, M.J. and Linoff, G.S., 2004. Data mining techniques: for marketing, sales, and customer relationship management. John Wiley & Sons.

Briciu, S. and Căpuşneanu, S., 2013. Pros and cons for the implementation of target costing method in Romanian economic entities. Accounting and Management Information Systems, 12(3), pp.455-470.

Buttle, F., 2004. Customer relationship management. Routledge.

Choudrie, J., Junior, C.O., McKenna, B. and Richter, S., 2018. Understanding and conceptualising the adoption, use and diffusion of mobile banking in older adults: A research agenda and conceptual framework. Journal of Business Research, 88, pp.449-465.

https://www.statista.com/statistics/387227/market-share-of-smartphone-manufacturers-in-the-uk/

https://www.statista.com/statistics/487780/market-share-of-mobile-device-vendors-uk/

Poushter, J., 2016. Smartphone ownership and internet usage continues to climb in emerging economies. Pew Research Center, 22, pp.1-44.

Rosales, A. and Fernández-Ardèvol, M., 2016. Beyond WhatsApp: Older people and smartphones. Romanian Journal of Communication and Public Relations, 18(1), pp.27-47.

Visvanathan, A., Hamilton, A. and Brady, R.R.W., 2012. Smartphone apps in microbiology—is better regulation required?. Clinical Microbiology and Infection, 18(7), pp.E218-E220.

Appendices