The phone house 2000-2007 : case study

Pages: 9 (2016 mots) Publié le: 26 juillet 2010
1. What are the characteristics of the mobile telephone distribution industry?

Whereas the mobile phone service market in France is a clear cut case of oligopolistic competition, the mobile service distribution market is much more competitive thanks to the presence of a greater number and variety of players. There are roughly two major categories: first the physical retailers which canbe defined by opposition to the internet based retailers. They are by far the more numerous at the time of this case study elaboration. Second the internet based distributors which remain in the shadows of this study. As a matter of fact, it seems better to focus our attention on the physical distributors.

These distributors fall mainly into three categories. They are either the MNO’s owndistribution network, or mass merchandisers. Finally, they can be independent distributors whose sole business is to sell telephones, telephone services and various consumables linked to the telephones they sell.

The MNO’s own retailing network are dedicating to the promotion and retailing of the MNO’s services. They represent 55% of mobile services sold in France in 2007 thanks to thefact that they offer a direct access between the service provider and the final consumer. They have a tight national network: the smallest, Bouygues Telecom, has about 500 outlets. On the top of that, we must add many independent retailers who sell MNO’s services and who, in exchange are used by the MNO’s as an extra advertising and promotion base to reach their customers.

In secondposition we find the mass merchandisers such as Auchan, Carrefour. They use their national network of well known hypermarkets to reach customers that may escape the nets of the MNO’s retailing network. They represent about 10% of the distribution but they also use their network to distribute their own telephone services using different differentiations strategies but with a common aim: cutting a slice ofthe MNO’s sales in their premises by selling there their own services.

Finally, the remaining part of the market is occupied by independent retailers the core activity of which is to sell telephones and attached services and goods. In this sector, the most prominent brand remains TPH, a leader in terms of market shares but also in terms of distribution outlets. This segment of the marketis characterized an uneven competition. By its size, TPH dwarfes its competitors making them change their strategy. If Telephone Store keeps on using its own shops, Internity decided to move to a looser structure by granting “contrats d’enseigne” (a form of partial franchising) to independent retailers operating as SME’s.

2. What type of competitive advantage does the Phone House have?Quantify it using data from the Carphone Warehouse plc accounts given.

The Phone House has several competitive advantages over its competitors, among which:

- A “first mover” advantage

Although there are other retailers in the market, TPH is the biggest, and one of the only retailers of this size on the French market. Furthermore, it has several years of successful experience on theFrench market. Hence, we can say that it can benefit from a first mover advantage and is better positioned on this market than its competitors, or potential newcomers.

- A well developed distribution network and well known brand name

TPH is currently the biggest retailer of mobile communication products on the French market, with a network of 305 shops. This large number of storeshas allowed TPH to reach more customers year after year. Furthermore, as it increased the number of stores it operates, TPH also developed its brand. TPH can now benefit from a well developed network, and a well known brand name, which highly impact on its sales and allow TPS to reach a much higher number of customers than its competitors. The network effect has also allowed TPH to increase its...
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