mk443 - services marketing management

MK443 - Services Marketing Management Professor: Rod MCCOLL

Semester 4 – 2015/2016

Adrien PAUTY – PGE2 ETU 20151558

MK443–ServiceMarketingManagementAdrienPAUTY-Semester4PGE2–2015/2016

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Table of content of the case study • Blank page available for note taking………………………………………… • Introduction and objectives of the case study ……………………………….. • Overview of the company……………………………………………………. • Strategic Service Vision of the OT Group…………………………………… • Positioning map of the OT Group……………………………………………. • Dimensions of the service quality…………………………………………….

• Focus on the articles: ………………………………………………………… How the company faces its environment and the evolutions of the industry?

• Conclusion and recommendations ……………………………………………

• Appendices: the articles studied………………………………………………

Around 2400 words

p.2p.4p.5p.6p.7p.8p.9p.13p.14-22


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Introduction and objectives of the case study

For this final case study, I decided to choose the web hosting industry. I will develop this case

study by using the “Analytical Case Method”. Indeed, I will try to analyze the evolution of the

industry I chose and explain how the actors of the industry and especially one of the leader on

the French market (the OT Group) is evolving and adapting its marketing and more precisely,

its marketing strategy.

First, I would like to highlight something; the web hosting industry is very interesting because

it concerns all the industries in the market place. In fact, all the companies need the services

provided by the companies that belong to the web hosting industry. Why? Nowadays, the

companies have a website, some of them have an intranet or an extranet, they all use some

mail softwares and so on… The companies like the Group OT we are going to focus on,

provide this kind of services.

During my analysis, I will highlight 3 issues and finding that I find interesting to understand

how the industry is going toady, and also to understand what are the keys and solutions that

the Group OT uses to perform on its market.

First, I will speak about the company itself. Secondly, I will expose a factor that come from

its macro-environment, then a factor related to the industry and the competitors as a micro-

environment factor, finally I will focus on the company itself to try to see what strategic and

marketing choices they decided to make to counter or to fit with the previous elements.

Company chosen: Oceanet Technology Group Industry chosen: Web hosting

“Hosting and managed services”


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Overview of the company

With 20 years of experience, Oceanet Technology is specialized in the Hosting and the

Managed services. The company meets the needs of hosting, servers outsourcing,

interconnection of computing networks and administration of secure Internet services. The

company is one of the national leaders of the industry in France. The headquarters of the

company are located in the city of Nantes (west of France), but the company has people and

offices in many cities (Paris, Lyon, Rennes, La Roche s/Yon, Lausanne, Geneva…). It’s also

important to note that the company owns a lot of datacenters that are the heart of the activity

of the company. The datacenters are the main part of the Internet Technology System that the

company has to manage (managed services) and that enable the company to offer high

qualitative service to its customers.

There, it is important to observe something decisive for the analysis. As the customers

externalize a part or the whole IT system of their company, they must choose an IT provider

that is extremely focus on security. Indeed, we know that nowadays one of the most important

challenges for companies is the Big Data. If a company choose an IT provider that is not able

to secure the data of its customers, then the customer takes a huge risk concerning its critical

data for instance.

1/ThecustomerexternalizeitsITsystematOT,intheirDatacenters

2/PeopleinchargeofITsystemsandinfrastructuresmanagedthe

customer’sdata

3/TheOTGroupprovidesaservicetothecustomerbasedonreports,availabilityofthe

service,securityofthedata…

Thecustomer

GroupOTteams

GroupOTDatacenters


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This point explain one of the most important point of the case, which is the relation between

the OT Group and the price strategy that they practice. In fact, the cost of security is

something tangible. You need to buy the best machines (hardware), the best softwares and

hire IT engineers who will be able to manage problems requiring a huge amount of skill.

This table is dedicated to the strategic vision of the OT Group.

Now, as we know more about the situation of the company, it seems interesting to understand

how the company evolves comparatively to the other actors of the market. First let me show

you this positioning map:

Strategic service vision of the OT Group TARGET MARKET of

the OT Group VALUE PROPOSITION of

the Group OPERATING STRATEGY

they deploy to meet the demand

Medium size and big companies in need of IT services People in charge of IT systems (in the targeted companies) must be aware of the added value provided by a company such as the OT Group

Externalize a part of the IT infrastructure of the customer and manage it as well as possible (optimization) to fit with their needs Offer a system of recurrence service (renewal every years for instance) High quality service at quite high price (you pay for a very high secured service) Peace of mind for the customer, the administration of the IT system is in the hand of OT.

Product: an efficient service (technical and security level) People: High experienced technicians + employees who are customer focus (the baseline is “the human touch” Pricing: quite high prices Physical environment: The facilities of the group and the datacenter are very modern (Datacenters new generation TIER IV) Process: First contact done with the sales department to evaluate the needs of the customer Then, the IT and technical service answer the demand in terms of technology and externalization Regular exchanges to optimize the services delivered to the customer (technology used, dematerialization of the data …)


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As we can see, the OT Group as a particular positioning. The group chose to provide a high

quality service and that has a repercussion on its services final prices. Some of its direct

competitors such as OVH decided to get a different approach. They offer lower quality

service at a lower price. But in these companies there is not the idea of “managed services”

like OT does. Indeed, if the customers have a problem with OT systems, he can reach really

easily. The human factor is what you get when you choose an OT solution.

But this positioning must find an answer, must be credible for the customers. The customers

of the group must be aware of the added value of the service provided by the OT Group.

Indeed, it is interesting to have a look on different criteria to obtain the dimensions of Service

Quality of the OT Group. The idea there, is to understand how the Group uses its own

competitive advantages and force to offer a service that cost a bit more than the majority of its

direct competitors but that fit with the needs and the expectations of the market.


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Dimensions of OT Group Service Quality

• The facilities and the datacenters of the Group OT are well designed and extremly modern to fit with its image Tangibles

• Works with the best IT hardware providers to offer the best quality service to its consumers Reliability

• Once the order is done the deployment of the service can be done in a few hours or a few days regarding the size of the project. Responsiveness

• Competence : the teams of OTG are very experienced in IT fields, • Courtesy : the whole strategy if based on "The Human Touch" • Credibility : 20 years of experience, one of the french leader • Security : the main objective of the company (source of investments)

Assurance

• The consumer can easily come to the datacenters to check how is managed its infrastructure. An efficient hot desk generates a good communication and enable the customer to reach IT people of OT Empathy


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How the company faces its environment and the evolutions of the industry?

Now let’s focus on a particular element

from the macro-environment (state/legal

level) of the company. In 2015, the French

government (in collaboration with the

European-Union) started to implement a

law called “Loi sur le renseignement” that

looks like the “patriot act" in the USA.

What is the impact for the web hosting

companies? Some of them such as Gandi

strongly disagree with this law because of the fear of loosing its American customers. Indeed,

we saw before that one of the most important competitive aspects of the web hosting industry

is the “security”. Behind this concept, you have some companies that do not want their data to

be freely available to the states. In fact, the big data is one of the great challenges for the next

decades in the market place because this will be the main generator of wealth for a lot of

companies. This law plans to enable an access to the datacenters (and then, tot the data inside)

of the web hosting industry by the governmentsand by the national services of security to

fight against terrorism. If the intention seems to be noble, some people fear some excesses

about the use of there data and the security which is a promise of the service provided by the

hosting companies.

This external factor has an impact on the internal service quality of the companies (based on

the security and the privacy of the data. As a solution, the companies must be very

educational with their actual and future customers by explaining to them that this law is not


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here to penetrate their data, but to prevent terrorism for instance (by a system of key words

detection). This will be a part of the marketing approach of the OT Group (The Human

Touch) to personalize and customize the relationship that is the total opposite of many

competitors’ strategy (some competitors will administrate the sales and orders by a website

with no direct communication in face to face with the customer).

Now, let’s focus on a micro-environment factor that has an impact on the company’s strategy.

Indeed, the article published in “journal du net” explains what are the main features that

make a company choose or not a provider of hosting. The results of many studies prove that

the security of the data hosted is the main factor that the customers are expecting from a

company like the OT Group.

Two other factors are interesting, the fact that the customers are observing the prices of the

services and also the quality of the relationship that are the two last points of the article.

These three factors are relevant in the situation of the studied company. Oceanet Technology

is now 20 years old. It was born with the arrival of Internet in France in 1996. In such an

industry with a fierce competition, only the best providers with a clear global strategy and an

effective marketing strategy can stay alive and keep winning market shares. As we said

before, the sales activities of the company are mainly based on the renewal of the contract

after 12, 24 or 48 months for instance. This renewal is mainly based on the customer loyalty.

Let’s have a look on the Operating strategy and service delivery system:

If we make it fit with the example of Oceanet Technology, the customer makes a contract at

year one with OT. Then, at the end of the period related to the contract, the customer has the


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choice to change its IT provider or stay. We observe that more than 90% of OT’s clients make

a renewal. This is the most important signal of satisfaction. This satisfaction generates loyalty

and two things happen. First, this generates revenue growth for the company OT (like in the

scheme) because once the customer's data is in the company’s datacenter; the sales

department just has to maintain the relationship with the customer. Secondly, this generates

profitability because if the customer decides to renewal the services with OT Group, the IT

people in charge of the deployment of the hardware and software do not need to make a new

deployment every time. In the other hand, the IT teams can use their precious time to deploy

new projects for new customers (virtuous circle).

To finish with this point, the article mentions that a “relationship of trust” is needed to

perform on this industry. This is clearly one of the objectives of the marketing department

(thanks to the communication of the company). The OT Group uses a strategy of

differentiation based on the human touch, which is a concept that has the aim of humanizing

the technology. This is a major point of their identity and a piece of uniqueness in the

industry.

TheOTGroupcommunicationusesalotofmembersoftheOTteamstopromotethe

HumanTouchstrategy

(PictureextractedfromthewebsiteoftheOTGroup)


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Finally let’s focus on a final aspect that is related to Oceanet Technology itself. How can the

company succeed more? How can it gain more market share? For now 4 years, the company

decided to make strong external investments to buy direct competitors (external growth

strategy). These fusions and acquisitions enabled the company to implant itself on new

markets (Switzerland after 2012 for instance) but also to improve its image on the

marketplace. Indeed, facing companies such as Amazone (7 billions dollars turnover on the

hosting activity in 2015), OT Group has to keep developing itself by emphasizing on its

competitive advantage we developed before. Recently, they acquired the company NBS

system that was the leader of the security in France. This is a great event to support the idea

that security is the big challenge in this industry.


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Conclusion and recommendations

To sum up and conclude the points we saw during this case study, I would say that we have

here a very good example of industry in which the competition is fierce. We saw that some

actors of the industry adopt a specific positioning based on a volume approach (OVH, 1&1..)

but some other companies such as OT decided to adopt a strategy based on the quality of the

service (security) and the creation of a strong relationship with its customers. Both approach

meet a specific demand with different standards.

As a result, the company develops a strong loyalty and this enables an excellent renewal of

the activity and of the contracts year after year. The combination of multiple factors such as

the external growth, the hard focus on the competitive advantages of the company, a strong

and clear global and marketing strategy made the OT Group a serious leader of the industry in

France in 2016.

For the future, we can imagine a few recommendations. First, the company must keep what

constitutes its forces, but must stay aware of the evolutions of the technologies related to its

activities in terms of hardware (new generation of servers…) and in terms of software

(virtualization…). The company is now strong enough on its mother market to try to conquer

new marketplace abroad. The Human Touch concept mixed with a high level of quality

service is totally able to seduce companies abroad. The company must keep alive its strategic

alliance with its providers such as DELL or IBM to maintain a great technology watch to

offer the best service as possible to its consumers.


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Appendices Article 1 http://www.journaldunet.com/solutions/cloud-computing/loi-sur-le-renseignement-l-impact-

sur-les-hebergeurs-francais.shtml


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Article 2

http://www.journaldunet.com/solutions/expert/63195/la-securite---premier-critere-pour-

choisir-son-hebergeur.shtml


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Article 3

http://www.latribune.fr/regions/pays-de-loire/avec-l-acquisition-de-nbs-system-oceanet-

technology-joue-la-securite-546279.html


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