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Leading Mobile Communications Company In Malaysia Marketing Essay

Paper Type: Free Essay Subject: Marketing
Wordcount: 5403 words Published: 1st Jan 2015

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DiGi telecommunication Sdn Bhd is a leading mobile communications company in Malaysia, which is providing a comprehensive range of affordable, convenient and easy to use wireless services to simplify and enrich the lives of its customers. Moreover, DiGi creates value for its customers by selecting the most appropriate cutting edge technology so that they benefit from products and services that give them choice, convenience and control. With the slogan of “Always the smarter choice”, DiGi promises that the company always provides the high quality service to customers with the least cost.

DiGi is listed on Bursa Malaysia Securities Berhad with a paid-up capital of RM77.75 million and a market capitalization of approximately RM16.8 billion as at 6 April 2009 (DiGi, 2009). In the last five years, DiGi’s revenue has more than doubled to approximately RM4.8 billion with a subscriber base of 7.1 million.

Current Situation Analysis

Products and Services

DiGi provides a variety of mobile communication services from 1990 in Malaysia. The company owns telecommunications licenses to operate personal communications network (PCN) mobile which includes prepaid & postpaid voice plans, SMS, data plans, international gateway, national trunk, and very small aperture terminals (VSAT) services. It also supports mobile telecommunication and calling card services and WAP services. Since December 2008, DiGi has been doing trials for a 3G network, having sub-licensed the rights for operating a 3G network from Time DotCom (DiGi, nd). Recently, DiGi became the newest 3G broadband provider, investing in the latest High Speed Packet Access (HSPA) technology to be the first in Malaysia to deploy a 14.4 Mbps network.

Market Summary

Malaysia’s communications and multimedia industry is represented by telecommunications operators Telekom Malaysia, Maxis Communications, DiGi.com, and Time DotCom as well as postal operator Pos Malaysia and broadcasters ASTRO and Media Prima. In 2005, the communications and multimedia industry as a whole (including broadcasters, postal service providers, and value-added services providers) continued 10.2% of Malaysia’s gross domestic product (GDP), up from previous year (Malaysia Telecommunications, 2007).

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Government-controlled incumbent fixed-line operator Telekom Malaysia continues to dominate the market. In the fixed-line market, its major competitors are TIME DotCom and Maxis. With regard to the cellular sector, DiGi, Maxis and Celcom occupied the most market shares. Specifically, based on 13.1 million cellular phone users at the end of September 2006, it was accounting for about 52% of the country’s 25 million people, Maxis is the mobile leader, with about 41% share, followed by Celcom with 38% and DiGi, with about 21% (Figure 1). Telekom Malaysia and Maxis each received third generation (3G) universal mobile telecommunications service (UMTS) licenses in 2003 and both companies began offering commercial services in 2005 (Malaysia Telecommunications, 2007). DiGi did not pursue a 3G license in 2003 initially, but it did submit a bid for one of two new licenses auctioned in early 2006.

Figure 1 Mobile Market in Malaysia

Source: Ken Zita (nd)

Market Needs

Malaysia is Southeast Asia’s third-most developed mobile market, with 13.1 million cellular phone users in 2004. Until 2008, the mobile services revenue was occupied 71% in the telecommunications industry (Figure 2). The data indicated that the outlook for future was positive. Voice services dominate the mobile market today. There are signs that consumers are increasingly willing to embrace basic mobile data services. For example, SMS has begun to enter into youth market segment. Based on the research, it showed that Malaysia ranked Japan and Philippines in terms of high usage and high interest for advanced mobile services. Specifically, people used SMS frequently but 3G is not widely deployed. GPRS and multimedia messaging services provide uncompleted coverage and networks have not been uniformly upgraded to handle higher data speeds (Ken Zita, nd).

Figure 2 Mobile Service in 2008

Source: IDC, 2008

Market Growth and Trends

The study by market researcher IDC indicated that the Malaysia telecommunications industry will grow about 5% over the next five years, outpacing the global forecast of just 2% in the same period (Chris Lewis, 2009). Generally, the telecommunications industry is divided into four categories: mobile voice, mobile data, wire line voice and wire line data. Malaysia is a developing country with healthy economic growth but broadband and fixed-line penetration remains relatively low. It predicts that by 2013, mobile voice is set to grow 6% in Malaysia (versus 2% worldwide) while wireline data (mostly broadband) will increase about 11% in Malaysia (versus 5% worldwide) (Chris Lewis, 2009).

Moreover, 3G will be the trend in the telecommunications market. All of telecommunications enterprises have prepared to launch their 3G program already. For example, DiGi will expand its Turbo 3G coverage to the whole of Penang starting in 2010. The company said expansion of the 3G service was being done five months after introduction of the broadband service in the state (DiGi, 2009). Compare to DiGi, other competitors have launched the 3G services in 2005 since they received the 3G licenses earlier than DiGi, such as Maxis. The reasons are complicate in terms of 3G’s trend. Nowadays the society has entered into information stage, and the information demand become higher and higher by human beings. 3G, different from WIFI or WLAN, is wide area cellular telephone networks which developed to included high-speed internet access and video telephone, as well as the 3G services include video calls and broadband wireless. 3G brings the convenient and efficiency services to people anytime and everywhere.

SWOT Analysis


-Major International Backer

DiGi telecommunications is 61% owned by Norway’s Telenor, while local company Berjaya Group owns a further 20% and the remainder of the company publicity listed. The international backer enables DiGi to stronger since foreign investors can bring advanced technology and huge amount of funds to build the brand.

-Embrace Mobility

DiGi has re-introduced the brand values to the Malaysia market place after Morten Lundal joined DiGi by focus the energies on the market place, the customers and the competition. The management of DiGi launched new concepts that enabling companies to embrace mobility and Malaysians to communication over distance without being concerned about costs and offer the customers to take a step forward in using mobile communications. The low rate calling brings competitive edge to DiGi, as well as brings benefit to customers.

-Strong Growth on Postpaid

DiGi announced a 50.32% rise in terms of postpaid service (Figure 3). It is because DiGi offered attractive postpaid plans, including DiGi Family Plan which main line is free to call, SMS, and MMS with sub lines.

Figure 3 Comparative Study of Malaysia’s Postpaid Market (mn) in 2006-2009

Source: Malaysia Telecommunications, 2009

-High Reputation

DiGi brand awareness is increased gradually among customers. Not only does DiGi carry out distinctive marketing activities to attract market share, but also its corporate social responsibility (CSR) impressed in peoples’ minds. In 2007, DiGi won the Prime Minister’s CSR award for best overall CSR program in Malaysia since DiGi emphasized on a clear commitment to CSR, which goes beyond policies and financial and legal obligations.


-Lags behind Rival Operators

Until the first quarter in 2009, despite DiGi had a good performance over the year, it still lags behind rival operators in the market. According to the figure 4, Maxis still the leader in the telecommunications market of Malaysia, which holds about 42% market share compare to DiGi’s 25.4% market share. It indicated that competitors’ strong marketing strategies occupied the market share and maintained the customer loyalty, such as global alliance in Celcom, customer loyalty program in Maxis.

Figure 4 Market Share in the First Quarter of 2009

Source: Malaysia Telecommunications, 2009

-Regional Presence by Competitors

Maxis and Celcom always build their strong regional presence while DiGi is not able to grab the market share from the rival operators successfully. For example, Celcom has a strong customer relationship in the Penang, Kuala Lumpur and so on. Based on the strong customer loyalty, it is difficult to change the customers’ mind for DiGi.

-Weak Cash Flow

According to the annual report, the cash flow remains lower at the end of 2008 compared with the previous year, but it still positive. A weak cash flow showed that DiGi will have a tough period in the future since when 3G service launch in the market, it would cost a lot of money to promote the service.


3G Service

DiGi spent about RM 150 million in the development of 3G network over a three years period (IDC, 2008). In Sabah and Penang, DiGi customers can receive 3G network in 2009 as well. The trend of 3G services become more and more popular, and the competitors have launched the program already and the impact for DiGi is positive.

Network Development

Nokia Siemens Networks (NSN) was awarded a GSM network expansion contract by DiGi. The network expansion will be placed in the Klang Valley region in 2009 (IDC, 2008). Based on the agreement, NSN will provide maintenance and further support services to improve network efficiency and enhance quality of service in the next three years.

Mobile TV Services

Thanks to 3G, people can use mobile phones to do everything. Mobile TV can provides visual effects to customers, and the TV channels can be locally and international.


Strong Competitors

Maxis and Celcom are the first 3G license holders in Malaysia, and both of them launched the 3G service in 2005, and Maxis collected about 7000 subscribers while Celcom picked up more than 5,000 subscribers in the first week of operations. Thanks to the successful operation on 3G service, Celcom decided to invest RM1.5 billion in 2010 and Maxis invest to plan to achieve 80% on 3G coverage by 2014.

Prepaid Users Concern

Figure 5 Comparative Study of Malaysia’s Prepaid Market (mn) in 2006-2009

Source: Malaysia Telecommunications, 2009

Although postpaid subscriber had the trend of increase in DiGi, the prepaid market also went up and acquired 26.82% market share (Figure 5). However, the prepaid market share brought instability to DiGi and the company cannot attract customers all the time.

Service & Product Overview

DiGi provides telecommunication services to customers, which categorized into prepaid, postpaid communication service. Furthermore, DiGi brings internet and personal insurance services to customers as well. With regard to products of DiGi, DiGi carries out DiGi Music, DiGi Games and DiGi Rewards.

Key to Success and Critical Issues

Environmental Analysis

Macro Environmental Analysis (PEST Model)

Political Factors

Generally, politic comprises of laws, regulations and rights that granted by the government to control the development of an industry. In order for the industry to grow according to the projected Ninth Malaysia Plan (RMK-9), Malaysia government emphasized and encouraged the information system because they believe that increasing the numbers of internet users will directly boost up the economies especially in the scope of GDP as internet could be one of the virtual marketplace that possess its transaction (includes money supply, creating demand, money flow, etc) that similar to the actual marketplace. From this perspective, government would like to amplify the numbers of internet users by controlling the price among the Telecommunication market. Moreover, government controls the legislation on providing licenses on 3G and other spectrum. This directly encourages Telco to have tough competition. Apart from that, Malaysia government implemented the program of Mobile Number Portability (MNP) which allows mobile phone users to retain their existing cellular numbers while switching to different service provider. This implementation has created a great impact on Telco industry for the players to maintain customer loyalty and differentiate themselves to gain competitive advantages.

Economic Factors

Economic factor may influence government policies (from the view of monetary and fiscal) and consumer behaviour. This is because the demand and supply will be affected directly by economics condition and eventually changes in the consumers’ purchasing behaviour. Global economic slowdown has affected the demand for mobile communications service especially in Asia. Telecommunication market was badly affected in financial crisis (stock markets have fallen, fuel and electricity price has risen and rate of inflation increasing) hits Malaysia back on the year of 2008. Thus, the government came in to rescue by injecting more cash into the market and make changes in the taxation policies. This directly improved the demand for the computers and increasing the numbers of users for mobile communication. Since then, the GDP in Malaysia had grown at a pace of 5.8% which had directly increased the personal income and in turn increase the disposable income. This scenario is proven favorable for the Telecommunication industry as the demand for the communication service has started to augment. Lastly, since telecommunications is critical for a rapid growing economy, Malaysia government is looking for alternatives that can allow the Telecommunication markets to grow swiftly in terms of subscribers and new technologies to achieve the Ninth Malaysia Plan (RMK-9) effectively.

Social/ Cultural Factors

Generally, social factor can be classified as the subjective judgment for the economist to look into. The changes of the social form are considered in the scope of psychographic. Due to the enormous shifting of demographics nowadays, the lifestyle trend such as handset culture among teenagers has create a great impact on the growth of Telecommunication providers. For instance the increasing mobility lifestyle has shown that the demand for fixed line subscription has drop and moved to mobile telecommunication providers. This shows that the changes within the demand for communication service are directly related to the taste and preferences. Apart from that, the increasing number of foreign workers in Malaysia are also one of the factors that boost up the usage of communication service namely such as International Direct Dial (IDD) services. Lastly, consumers nowadays are well-educated and tend to switch Telecommunication provider after comparison and seek for better value. Thus, Telecommunication provider should improve and research as well as differentiate itself to stay competitively in the market.

Technological Factors

Technology is a crucial factor to be complimented with communication services industry. Thus, the new technology and advance products are only demanded especially on the technology-driven market. To gain the competitive advantage,

Telco industry has to increase functionality and features and yet maintain the inexpensive pricing. For example, product diversification like broadband, 3G technology should be implemented. Moreover, most of the Telecommunications had also implemented effective Customer Relationship Management (CRM) technologies in the line of their services to create customer loyalty and satisfaction efficiently. These technologies will definitely encourage the users to spend more on the advancement of technologies that possessed by different Telco provider. For example, the Bubletalk from DiGi and “location detector” of Maxis are those creative invention that had been applied in the industry to trigger the demand from the consumers.

Micro Environmental Analysis


DiGi is considered in an oligopoly market, the reason is because in Oligopoly market there are only few main players and many small players. There are two main competitors of DiGi in Malaysia such as Maxis and Celcom and one small competitor which is U-Mobile. In Oligopoly market, firms are able to set their own price normally it is also known as price maker. Even though they can set their own price, the firm still need to identify the competitors pricing because in order to compete with other competitors the firm must able to set their price equal or lower compare to other competitors. However if the firms want to set high price then the firms must look at the quality of the products and the price that customers pay to get the products must equal to customers satisfaction. (Chrystal and Lipsey, 1997)


Maxis Berhad was establish in August 1995, and it launched fixed line and international gateway operation in the early 1996. Now it became the market leader of the communication service provider in Malaysia. It has the highest mobile subscribers with over 11.4 million subscribers compare to other companies such as DiGi and Celcom as of 30 June 2009. Maxis Company was the pioneered and led the Malaysian market into innovative mobile products and services. It is the first mobile communication company to launch 3G services in Malaysia and it is known as Maxis 3G in 2005. It is also the world’s first use HSDPA provide wireless broadband services. It was the first operator which had brought smart phones to Malaysia such as Black Berry and Apple iphone. Maxis brand is very well known throughout the Malaysia, and it is the fourth most valuable brand in Malaysia as Asian Mobile news award in 2007 (Maxis, 2009).


Celcom Berhad is the premier of mobile cellular telecommunication in Malaysia and it is considered as the oldest mobile telecommunication company. It is under Axiata group of companies. It was establish in 1988 during the world economy crisis. Celcom has the widest network coverage area, and currently it cover up to 97% of the populated areas in Malaysia. It also has the widest 2G, 3G and 3.5G coverage in the country. It offers postpaid and prepaid products under 019, 013, 0148 as an access code for Celcom. Even though Celcom was the premier company in telecommunication industry and also it has the widest network coverage areas but it still has lower subscribers compare to Maxis Company and currently it is in second position in terms of subscribers. (Linkedin, 2009).

Consumer Behavior

DiGi uses low tariff cost as one of its key factors to attract or influence its consumer behavior. The reason is because DiGi want to gain more customers by providing cheap tariff for its customers. DiGi believe that by providing low tariffs customers will eventually switch to use DiGi. DiGi target market is teenager and young professional. Those customers are DiGi main target market and it is very important to keep updating with the customers behavior example what trends are currently in the market. The research done by Charles F. Moreira shows that teenagers have the high percentage of using mobile phones, followed by those aged 20-30 and then the lowest usage group of people which is older age group (Moreira, 2009). It means that more teenagers use mobile phone compare to the adults therefore DiGi targeting on teenagers is the right choice because the more people use mobile phones, more people will need SIM card. This is where DiGi can attract customers to buy its products and use it services.

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DiGi target teenagers and young professional who can be considered as no income or low income level. The reasons DiGi target teenagers and young professional are because first, they have no income and still depend on their parents, therefore their parents might want to teach them how to save by providing them low tariff service provider and at the same time can contact their children anytime and anywhere. As for young professional who falls under low income level, they might considered to use low tariff service provider because they do not have much money to use expensive telecommunication service provider.

Secondly, it is because those groups of people use their mobile phones for message and phone call more frequently compare to adults who concern about their health. Since they afraid of radiation and they can look at their mobile phones for too long, adults tends to avoid the usage of mobile phone as less as possible.

Thirdly, the customer’s behavior towards telecommunication service provider. There are customers who are not bound with brand loyalty issues and they can easily switch from one user to other users. Since many Malaysian already knew that DiGi provides the lowest tariff in Malaysia, many of them will suggest their friends or family members to switch to DiGi because it is very cheap as to compare to other competitors and those who are concern about the price rather than brand will easily influenced by the tariffs given. Therefore many customers will switch to DiGi user in the future.

Competitive Strategy

Costing Control Strategy

DiGi used lower cost strategy which meant that DiGi will cut the cost of the production; however it is not directly to the products, it is electricity and paper cost will be used lesser. The cost of product is a very important because if a firm can reduce its cost, it might reduce its product’s price. If the firm has high cost definitely the price of the product will also be high. So in order to keep DiGi’s customers from switching from DiGi to other competitors, DiGi had to lower their tariff and currently it has the lowest tariff. Since DiGi has the lowest tariff, the profit that it gains may not as high as other competitors therefore in order to compete with the competitors; DiGi must be able gain more profit by lowering the tariff DiGi has to cut their cost as low as possible. There are several ways to cut cost in DiGi Company, and it has been implemented until today such as use less paper and cut down the usage of electricity in the company, normally employees in organizations print out their report to show to their boss but DiGi encourage them to use pen drive or email (DiGi, 2008).

DiGi also had implemented using less electricity, it does not mean that DiGi has use less technology or other electronic stuffs but it means that DiGi had a technology where it can automatically shut off the electricity in the rooms which are not occupied. It also able to set the electricity to the highest and lowest, when it is peak of people it will automatically set to the highest and when it is lesser people in the company it will set the lowest. This technology was available in DiGi headquarters. Since DiGi had cut down it cost, it will be able to gain more profit and it does not lose to the competitors even though it is at the last position in terms of subscribers. However even DiGi had cut down its cost, but the tariff that DiGi provided will not be able to decrease much, it will remain the same or lower a bit since the tariff is already considered very low (DiGi, 2008).

Marketing Strategy (STP)

Vision & Mission

Vision: Discover DiGi, and Discover What Drives Us to Achieve More.

Mission: To be the industry sharper by taking leadership positions through series of innovative value propositions, simplicity and excellent execution (DiGi, nd).

Marketing Objectives

To achieve the 10% increase in net income by the end of year 2010

According to the annual report in 2009, DiGi’s revenue increased 2% to RM 3.66 billion but net income decreased 12% to RM 754 million. The fact indicated that there was an increase in demand of mobile services while DiGi faced the issue that higher expenses, depreciation cost and a drop of profit margin. Hence, the one of marketing objective will state that to achieve the 10% increase in net income by the end of year 2010.

To occupy the 35% of the total market share in the next three years

Based on the SWOT analysis (Figure 4), it showed that Maxis and Celcom still was the first and second telecommunication provider and DiGi only held the 25.4% of the total market share in Malaysia. In 2009, DiGi started to launch the 3G service and it was an opportunity to occupy more market share in the telecommunication industry. As a result, the objective of marketing plan is to occupy the 35% of the total market share in the next three years.


Target Market

From what has discussed above, DiGi still focus the target market which is the group of 15-25 years old, and followed the group of persons who are 25-35 years old. It is because the usage of mobile phone services has high rate among the persons who are teenagers or 20-30 years old. Moreover, there is no limitation on the races.

Income: RM 500 and above per month

Occupation: student, blue collar, white collar, young professional, IT fans, business man.

Lifestyle: relax, casual, SOHO

Positioning Strategy

Before determining the positioning strategy, it should be understood the competitive advantage for DiGi. Low cost and low price is the most important factor that DiGi attracts consumers, as well as the economical calling package occupy the family market share. Moreover, based on the vision and mission, it indicated that the high quality, simply and outstanding services should be provided by DiGi. Moreover, 3G services should be played an important role in the future. As a result, DiGi should position itself as a holistic and quality telecommunication service provider to achieve the effectiveness and efficiency.

Marketing Mix (4 Ps)


The product which offered by DiGi is telecommunication. Thus, calling package is the core products which DiGi offered. Besides, DiGi also provide internet service. For calling package, there are Prepaid and Postpaid (Appendix 1). Various calling plans are provided for different customers. Other than that, DiGi started to venture to internet market by providing broadband, 3G and WiFi. This is a value-added product to DiGi’s customer. Customer has more alternatives to choose internet package as internet usage is considered high nowadays for most of the people.

Currently, DiGi is not only working with Blackberry but also partnership with Apple to come out with Apple Iphone 3GS. It is a great opportunity for DiGi to increase sales as well as market share. It is considered strength of DiGi to look into the trend of demand for customers and potential users. Thus, DiGi should keep this strength and improve on it to gain more market share in telecommunication market.

Other than that, supplementary products are also important to a company. DiGi provides DiGi games as well as mobile lifestyle which suit different demands. Customers can check for traffic information, stock information, sports, news alert and many more through using DiGi. These supplementary products may affect customers’ decision too. Therefore, it is essential to take care of every potential opportunity in order to match customers’ demands.


According to Dennis Adcock, “pricing is vital for an organization and it is useful to remind ourselves that ‘quality is remembered long after the price is forgotten’. (Dennis, 1995) Competition-based pricing is the pricing strategy which adopted by DIGI. Competition-based pricing is a pricing approach that setting the price of particular product or service based upon prices of the similar competitors’ products. The firm might charge the same as, more than or less than its major competitors. (Kotler, 2004)

As mentioned above, telecommunication is considered oligopoly. The players in market are following the pricing strategies of the market leader which is Maxis. Thus, DiGi always tend to follow or set lower pricing than Maxis.

Target market for DiGi is teenagers who do not have much purchasing power or wealth. Thus, competition-based pricing strategy is successfully adopted. For calling package, it can be divided into Prepaid and Postpaid. Prepaid market is targeted on students while Postpaid is targeted on young adults. Both of the packages with various calling plan to suit different target market in different pricing.

Telecommunication is facing quite tough competition although there are only few players. Thus, price is the main factor for gaining more customers and market share. Thus, competition-based strategy should be maintained and DiGi should come out with more value-added service to attract customers.


Promotion is the communication link between sellers and buyers about the product and services. In general, each of the company has different kind of strategy or promotion to attract their customers since there are competitors in the market. According to Walker, Boyd, Mullins and Larreche (2003), promotion is the most effective strategy to attract customers. There are several promotion tools that can be utilized by business organizations such as advertising, sales promotion, public relations (PR), personal selling, direct selling, sponsorship, and point of purchase (POP).

Generally, DiGi’s promotion can be considered as very successful in past 2 years. It is successfully attract existing customer as well as potential customer. Firstly, it advertised on newspaper, television, cinema and billboard (Diagram 1), and the DiGi Man is impressed deeply into the minds of people. Although all of tools spent a lot of money, they promoted the DiGi brand awareness and enhanced the DiGi’s equity. Secondly, with regard to sales promotion, DiGi carried out the family calling package in the postpaid customers to increase the revenue. Specifically, the postpaid customers can call with lowest call rate from 10sen/min to all fixed and mobile numbers, and free to call, SMS and MMS with family members in sub lines (Diagram 2). Thirdly, in terms of POP, the mascot of DiGi Man usually appeared in the shopping mall to send brochure, and catch peoples’ attention (Diagram 3). Lastly but not least, DiGi rent the concourse in the shopping malls during holidays, as well as in the school to promote DiGi’s products and services in the PR.

Diagram 1 Billboard Advertising

Diagram 2 Sales Promotion

Source: DiGi, nd

Diagram 3 Mascots in POP

Indeed, the promotion strategies are very successful in the Malaysia, and the brand equity increased year by year. However, due to the 3G services launched into the market, the promotion strategy should be change a bit. It is because that the previous promotion may not suit for the current marketing objectives. Furthermore, based on the market trend analysis, more and more customers would like to use 3G service in the mobile phones, but the current promotion strategies cannot provide any 3G information to consumers. As a result, if the promotion strategies are not suit for the current situation of company, it may not achieve economies of scale, as well as DiGi is not able to receive the return but spent huge funding.

As a result, the new promotion strategies should be concentrated on new DiGi services as well as maintain the competitive advantages previously. Moreover, the new promotion strategies will not spent huge amount of funding compare to previous promotion strategies since the promotional tools will be chosen as cost effectiveness.


Transit Advertising

It will be implemented in KTM and Monorail in KL because of the huge passenger circulation, and most of target customers should us


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