Introduction
Background of company
Digi, used to be known as
Mutiara Swisscom Bhd., is a telecommunications company founded in 1995. Digi is
owned 49% majority, by Telenor ASA of Norway. Digi has achieved many things
over the years and one of it is being the first telco company in Malaysia to
introduce and run a fully digital cellular network. Not only that, Digi is also
first to offer GPRS (2.5G) and later onwards in 2004, EDGE (2.75G). Also, Digi
was the first to offer customers the power to pick their own cellphone numbers
when buying a sim-card rather than the older times where people were given a
fix mobile number that was pre-assign when customers had purchased a sim. It’s
competitors are mainly Celcom and Maxis.
Market Competition
There are four types of
market competition which is perfect competition where , monopoly, oligopoly and
monopolistic. Digi is an oligopoly as there is only a few competitors such as
Celcom, Maxis, Tune talk and U Mobile.
Digi is a strong competitor as they
actually have one of the cheapest prices among the competitors and therefore
one of the leading telecommunication companies in Malaysia making super profit.
But super profit requires an extremely high capital, therefore Digi actually
uses a lot of capital for their network cable, base station and especially
advertising in order to create awareness of their offers. Also these kinds of
business have quite a high barrier and therefore it is harder for people to
start up these kinds of business. Other than that, Digi is a cartel company as
they compromise to set up the price, being price maker in the business
industry. Furthermore, oligopoly is usually homogenous but differentiated. This
means that the services provided by these companies are usually the same like
going online and paying their bills or providing a hotline but then again, they
are different in terms of the style they serve people or their speed and
efficiency in their service. Digi is elastic in a way that, if their prices
increases, people would not want to continue with Digi and move to another
company.
Objective
This survey of the main
role is to find out the elasticity of demand for Digi as well as the factors of
why the consumer chooses to consume Digi.
Issues
Limitation in conducting survey
This survey is only conducted done by the Taylor’s student. So far, our research is only based on 10 people therefore the data that is used may not be accurate. Also, the people that has been interviewed are only students so the facts are not based on the majority users of Digi. Sometimes, users may be bias towards one company or may not answer the survey given in an honest fashion and therefore the results may not be accurate and the research may be turning from factual to fictional.
Methodology
Decisions were
made between doing a web blog on either Microeconomics or Macroeconomics and
Microeconomics was chosen. The company chosen to do research on, is Digi ,
basically because of its popularity among people residing in Malaysia and it
being widely used by majority. The questionnaire was designed on the website
which is especially for surveys called , ‘Survey Monkey’ . The survey was distributed to the
correspondents through the internet. The objective of this web blog
is to know the demand factor(s) of Digi. The factors which were included in the
survey are price , income level , age, consumers’ expectations of services
offered in future and loyalty to the company. This
method is very reliable to achieve the objective as ‘Survey Monkey’ produces a
well-organized layout with results shown in graph/chart, which is helpful in
understanding the demand factor of Digi very well.
Finding Analysis
Bar chart 1.1 : Why do you choose Digi?
Based on bar chart 1.1, the four
factors that affect the demand of Digi user are price, coverage, services and
offers. From our survey, the main concern of respondents in using digi is the
price. Therefore, this shows that price is the main determinant that attracts
customers to purchase digi service. The price is important to customers is
because there are so many competitors. Competitors could give a reasonable
price, coverage, services and offers as well. That is why the customers are
very concern about the price that is given by Digi. The lower the price, the
higher the quantity demanded. The percentage that affects the demand of buyers
is 50%, the largest portion compared to other factors, price.
In addition, the coverage and
services are the least percentage compared to all of the factors, which is only
consists of 10%. The quantity demand will increase when digi improve the coverage
and the customer services because people will tend to use more services such as
text messages, calls, data plans and more.
However, the offers only contain
30% of all the other factors of demand. It shows that the promotion that is
given by Digi will also influences the demand of the customers whereas some of
the customers will purchase the services based on the offers.
Bar chart 1.2 : Would you use more
services provided by Digi if your income had increased? Why?
The reason that respondent
who choose “YES” is :
- As my income increase and I can spend more time chatting
with friends
- to have a better data plan
- because it’s cheap
- because they provide the best services among the others
- upgrade data
The reason that respondent who choose “NO” is :
- because I don’t like the services
- prefer other telecommunication company
Based on the graph 1.2, when the
respondents’ income increases, many of them will purchase more Digi services
because now the price of the Digi products only occupy a small percentage on
their income spent. This clearly shows that the price elasticity of demand on
Digi service are very high. Customers with high income will tend to have an
inelastic demand. On the other hand, the income is very elastic towards the
demand. As shown in the chart 1, there are 60% of respondents which are a large
percentage will buy more services when the income increases while there are
only 40% of the respondents who will refuse to use Digi services.
Besides, when the income level of respondents increases,
directly, the demand on Digi services will increases as they can afford more.
Bar chart 1.3 : If the services provided
by Digi increased in price, will you continue to using it? Why?
The reason that respondent who choose “YES” is :
- because it’s good service
- because it is cheap
- many friends using same service with me
The reason that respondent who choose “NO” is :
- because I would change to substitute services.
- because I enjoy using low rates
- it’s not worth it to pay the services
- because too expensive
-will have to decide on another lower price service offered
Based on bar chart 1.3, there are
80% of the respondents that refuse to use the services provided by Digi when
the price that Digi offered increases. This shows that the elasticity of demand
on Digi’s services are very elastic because most of the customers are very
concern about the price. The consumers are very sensitive to the price changes.
The higher the price, the lower the quantity demanded from digi customer. When
the services and coverage are not that efficient even when the price increase,
people will reject even more on Digi services.
Bar chart 1.4 : If there is another
telecommunication company offers services at a much lower price, will this
change your choice to use Digi? Why?
The reason that respondent who choose “YES” is :
- depend on their
plan offered
- because is cheaper and can save money than digi
- because it is cheap
The reason that respondent who choose “NO” is :
- because I’m a loyal user
Based on bar chart 1.4, there are
70% of the respondents will change their choice to use digi if there’s another
telecommunication company that offers services at a much lower price. This
shows that the elasticity of demand on Digi are very high. When the other
company gives promotion, there will be a big percentage of customers who will
change their choice to use digi. The lower the price in another company offers,
the more the quantity demanded. Besides, it also depends on customers’ decision
as to whether they want to stay loyal to Digi or not , as now it is possible to
switch to other telecommunication company and keep the same phone number at the
same time.
Conclusion
In conclusion, there are 10 respondents in this survey
form. The survey is conducted in Taylor’s University Lakeside. In this survey,
the highest demand is the price whereas the lowest demand is the coverage and
services. The higher the price, the lower the quantity demanded. The consumers
attracts more on the price compared to the others factors. Coverage and
services has the lowest demand because the consumer is not satisfied with these
services as their competitors provide a better coverage and services. The
elasticity of demand on Digi are very high. Customer will tend to purchase more
in Digi when the income increases. However, the availability of substitute are
the more substitutes the services is, the more elastic the demand. As shown in
the bar chart, the consumers are very sensitive to the price changes.
However, this survey only consists of 10 respondents. For
our future study, survey form can extend more questions and more respondents to
understand the customer’s satisfaction and also their demand on Digi.
There are few
ways of suggestion, one of them is to improve on their coverage and services
because many customers complain about their services. Customers will tend to
refuse to use Digi even though the price is very low. Other than that, from
this survey will tend to improve and promote more promotion and offers of Digi
to the customers to attract them and increase customer’s purchasing power on
Digi.
In addition, in this blog, the majority readers are the
students. This finding will benefits students on the demand and supply and also
firms to identify the factor of demand on telecommunication.
References
Tan, J. (1995) DiGi Background. [online] Available at:http://www.scribd.com/doc/58786058/DiGi-Background [Accessed: 6 May 2013].
tungwc (1964) DiGi Strategic Management. [online] Available at :http://www.scribd.com/doc/40379775/DiGi-Strategic-Management[Accessed: 6 May 2013].
Scribd.com (1995) digi edit 2. [online] Available at:http://www.scribd.com/doc/76564720/digi-edit-2 [Accessed: 6 May 2013].
McConnell, C. and Brue, S., et al. (2012) Economics. 19th ed. United States of America: McGraw-Hill Irwin
