Wednesday, 17 September 2014

It could be U ? Changes in the marketing model #phones4u – Vertical Integration selling through to selling to PLACE

  Changes in PLACE in the marketing model can have profound repercussions.

Strap line on a poster in a Phones 4U shop window
Market share is vanity

Profit is sanity

Cash-flow is reality...

...Yet supply is  'SURVIVABILITY'  

The priority of any business is firstly survival- Profits are not enough

Place is one of the critical 4 Ps of marketing
Despite making £100 million profit last year the 550 stores across the UK are closed today. News of the cut in supply came to the company last Friday. Both EE and Vodafone have not renewed their contracts.

"If mobile network operators decline to supply us, we do not have a business," said Phones 4U boss David Kassler.

 EE said the decision not to renew its contract with Phones 4U was "driven by developments in the marketplace that have called into question the long term viability of the Phones 4U business".

They added that the decision was also "in line with our strategy to focus on growth in our direct channels".

Sad notice last Monday notice
 on a closed Phones 4 U store
Any trend setter ordering the new iPhone 6 over the weekend - would be effected
. A customer service line will be open from Monday at 09:00.
So what has happened ?

Stefano Quadrio Curzio, from BC Partners, said: "Vodafone has acted in exactly the opposite way to what they had consistently indicated to the management of Phones 4U over more than six months.

"Their behaviour appears to have been designed to inflict the maximum damage to their partner of 15 years, giving Phones 4U no time to develop commercial alternatives.

"The company is in a healthy state and both EE and Vodafone had, until very recently, consistently indicated that they saw Phones 4u as a long-term strategic partner."

PwC, which is expected to be appointed as administrator on Monday, will decide on whether the business can continue to trade.

Phones 4U was set up by the entrepreneur John Caudwell in the middle of the 1980s and sold for £1.5bn some 20 years later.

Well wisher talking to a Phones 4U
branch manager last Monday morning
Phones 4U said it had been a profitable business, with turnover of £1bn, underlying profits £105m in 2013 and plenty of cash in the bank, but that without the contracts from the phone networks it no longer had a business.

So what changed in the marketing model. The move for EE and Vodafone to further Vertical Integration The Change has taken place in PLACE from selling though outlets like Phones 4 U to selling to.

Vertical integration is where the supply chain of a company is owned by that company. Usually each member of the supply chain produces a different product or (market-specific) service, and the products combine to satisfy a common need. It is contrasted with horizontal integration. Vertical integration has also described management styles that bring large portions of the supply chain not only under a common ownership.

Apple Inc. is an example of a vertically integrated company. Specifically, it controls many elements of the ecosystem for the iPhone and iPad, such as the processor and hardware designs, operating system and application software, and related cloud services.

 Hardware itself is not typically manufactured by Apple, but is outsourced to contract manufacturers such as Foxconn or Pegatron who build Apple's branded products to Apple's specifications.

 Apple's hardware and software are sold directly to consumers primarily through the company's own brick-and-mortar and online retail stores, while cloud services are available through the devices themselves.

Further developments

A well located store at pedestrian crossing.
 Dixons carphone group look well placed 
to exploit Phones4u's collapse
The London Evening  Standard  Business page reported on the collapse of Phones 4U into administration. Its demise has boosted prospect of rivals Dixons Carphone with analysts predicting £225 million in annual revenues. Merchant Bank Investec's Alistair  Davies suggesting a potential increase in market share for  Dixons Carphone.

 ( Note to self and yourself ! - it's worth following these Investment / Securities Analysts like Alistair Davies and Retail Analysts like Kate Calvert .  Similarly Deutsche Bank's Analyst Warwick Okines. They are "in the know". They and their reports are a useful source of information for Professional Sales people for information on direct competitors , indirect competition ( and even your own company or sector!)) 

Do you know the Bank Analysts who follow your trade sector?

The decision by EE to no longer support Phones 4U is understood to account for around half of Phones 4 U "1 billion annual revenues.

It is understood that the networks Three O2 Vodafone and EE wanted Phones4U to improve its store service and promotion of brands in shops.

 Dixons Carphone have said that they intend to approach Pwc the administrator over jobs of employers in 150 out of the 550 Phones 4U concessions which had widely been expected to be supplanted  by Carphone warehouse outlets since its merger with Dixons last month.

The  Phones4U story continues...

A slide from a Vodafone Presentation marked July 2014
Expose by the London Evening Standard gives some credence that Vodafone were still signalling to Phones4U a respected partner of Choice

No comments:

Post a Comment