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PRICING STRATEGY
REVIEW in TELECOM
SECTOR
CONTENTS
S.No. Topic Page No.
1. Chapter 1: Introduction
2. Chapter 2: Research Methodology
3. Chapter 3: Industry Profile
4. Chapter 4: Analysis & Discussion
5. Chapter 5: Conclusion & Suggestion
7. Chapter 6: References
CHAPTER-1
Introduction
In the global telecommunications industry, the only constant is change. So today’s
telecommunications executive needs to understand the environment in which the
industry operates in order to make key decisions that influence the direction of
their organizations. One of the key challenges for telecommunications executives
is to extract value out of changing markets. In order for executives to forecast
market developments correctly and to determine their organization’s optimal
positioning and pricing strategy, they need a targeted, high-level strategy and
marketing training.
Telecommunications Strategy and Marketing is a programme specifically designed
to meet the needs of telecommunications executives. It helps us to understand key
concepts such as the product and technology evolution curve, the importance of
innovation – both technical and commercial – and the importance of pricing
strategies.
Key Benefits
1. Build strategic planning tools for forecasting telecommunications markets
and designing optimal positioning, pricing and distribution strategies.
2. Develop essential marketing skills targeted for the telecommunications
industry, enabling us to understand and respond to customers’ needs more
effectively.
3. Improve ability to identify opportunities, position business units and assess
the competition.
Steps Involved In Developing a Pricing Strategy
1. Development of marketing strategy
Perform marketing analysis
Segmentation
Targeting
Positioning.
2. Marketing mix decisions
Define the product
Distribution
Promotional tactics
3. Estimate the demand curve
Understand how quantity demanded varies with price. Because there exists a
relation between price and quantity demanded, it becomes quite necessary to
comprehend the impact of price on sales of a good by projecting the demand curve
for the product.
For products available in the market, experiments can be performed at prices above
and below the current price in order to determine the price elasticity of demand.
Inelastic demand indicates that price increases might be feasible.
4. Calculate cost
Include fixed and variable costs associated with the product. If the firm has
decided to launch the product, there likely is at least a basic understanding of the
costs involved; otherwise, there might be no profit to be made. The unit cost of the
product sets the lower limit of what the firm might charge, and determines the
profit margin at higher prices.
The total unit cost of a producing a product is composed of the variable cost of
producing each additional unit and fixed costs that are incurred regardless of the
quantity produced. The pricing policy should consider both types of costs.
The cost that has to be incurred includes marketing strength, access to low cost
materials and effective production. The experience of your enterprise and the
complexity of introduction problems such as lack of adherence to industry
standards, unavailability of materials, poor quality control, regulatory problems
and the inability to explain the benefits of the offering to the prospect are some of
the major problems.
5. Understand environmental factors
Evaluate likely competitor actions, understand legal constraints, etc.
6. Determine pricing
Using information collected in the above steps, select a pricing method, develop
the pricing structure, and define discounts.
These steps are interrelated and are not necessarily performed in the above order.
Nonetheless, the above list serves to present a starting framework.
Pricing Objectives
The firm's pricing objectives must be identified in order to determine the optimal
pricing. Common objectives include the following:
1. Current profit maximization - seeks to maximize current profit, taking into
account revenue and costs. Current profit maximization may not be the best
objective if it results in lower long-term profits.
2. Current revenue maximization - seeks to maximize current revenue with no
regard to profit margins. The underlying objective often is to maximize long-term
profits by increasing market share and lowering costs.
3. Maximize quantity - seeks to maximize the number of units sold or the number
of customers served in order to decrease long-term costs as predicted by the
experience curve.
4. Maximize profit margin - attempts to maximize the unit profit margin,
recognizing that quantities will be low.
5. Quality leadership - use price to signal high quality in an attempt to position
the product as the quality leader.
6. Partial cost recovery - an organization that has other revenue sources may seek
only partial cost recovery.
7. Survival - in situations such as market decline and overcapacity, the goal may
be to select a price that will cover costs and permit the firm to remain in the
market. In this case, survival may take a priority over profits, so this objective is
considered temporary.
8. Status quo - the firm may seek price stabilization in order to avoid price wars
and maintain a moderate but stable level of profit.
For new products, the pricing objective often is either to maximize profit margin or
to maximize quantity (market share). To meet these objectives, skim pricing and
penetration pricing strategies often are employed.
Skim pricing attempts to "skim the cream" off the top of the market by setting a
high price and selling to those customers who are less price sensitive. Skimming is
a strategy used to pursue the objective of profit margin maximization.
Skimming is most appropriate when:
Demand is expected to be relatively inelastic; that is, the customers are not
highly price sensitive.
Large cost savings are not expected at high volumes, or it is difficult to
predict the cost savings that would be achieved at high volume.
The company does not have the resources to finance the large capital
expenditures necessary for high volume production with initially low profit
margins.
Penetration pricing pursues the objective of quantity maximization by means of a
low price. It is most appropriate when:
Demand is expected to be highly elastic; that is, customers are price sensitive
and the quantity demanded will increase significantly as price declines.
Large decreases in cost are expected as cumulative volume increases.
The product is of the nature of something that can gain mass appeal fairly
quickly.
There is a threat of impending competition.
As the product lifecycle progresses, there likely will be changes in the demand
curve and costs. As such, the pricing policy should be reevaluated over time. The
pricing objective depends on many factors including production cost, existence of
economies of scale, barriers to entry, product differentiation, rate of product
diffusion, the firm's resources, and the product's anticipated price elasticity of
demand.
Pricing Methods
To set the specific price level that achieves their pricing objectives,
managers may make use of several pricing methods. These methods include:
Cost-plus pricing - set the price at the production cost plus a certain profit
margin.
Target return pricing - set the price to achieve a target return-on-investment.
Value-based pricing - base the price on the effective value to the customer
relative to alternative products.
Psychological pricing - base the price on factors such as signals of product
quality, popular price points, and what the consumer perceives to be fair.
In addition to setting the price level, managers have the opportunity to design
innovative pricing models that better meet the needs of both the firm and its
customers. For example, software traditionally was purchased as a product in
which customers made a one-time payment and then owned a perpetual license to
the software. Many software suppliers have changed their pricing to a subscription
model in which the customer subscribes for a set period of time, such as one year.
Afterwards, the subscription must be renewed or the software no longer will
function. This model offers stability to both the supplier and the customer since it
reduces the large swings in software investment cycles.
Price Discounts
The normally quoted price to end users is known as the list price. This price
usually is discounted for distribution channel members and some end users. There
are several types of discounts, as outlined below.
Quantity discount - offered to customers who purchase in large quantities.
Cumulative quantity discount - a discount that increases as the cumulative
quantity increases. Cumulative discounts may be offered to resellers who
purchase large quantities over time but who do not wish to place large
individual orders.
Seasonal discount - based on the time that the purchase is made and
designed to reduce seasonal variation in sales. For example, the travel
industry offers much lower off-season rates. Such discounts do not have to
be based on time of the year; they also can be based on day of the week or
time of the day, such as pricing offered by long distance and wireless service
providers.
Cash discount - extended to customers who pay their bill before a specified
date.
Trade discount - a functional discount offered to channel members for
performing their roles. For example, a trade discount may be offered to a
small retailer who may not purchase in quantity but nonetheless performs the
important retail function.
Promotional discount - a short-term discounted price offered to stimulate
sales.
CHAPTER-2
Research Methodology
To gain a perspective on the pricing strategies that are followed various firms all
over the world, a basic theoretical knowledge of the pricing strategies will be
discussed with subsequent delving into the intricacies of consumer behavior in a
heavily competitive market like telecom industry.
Objectives of study
This project seeks to fulfill the following objectives:
1. To identify the difference between market performance of Airtel industry and
Vodafone.
2. To study the market of Airtel Industry and Vodafone on big scale
telecommunication sector.
3. Understand the basic concepts of pricing strategy as an effective weapon in the
arsenal of producer.
3. To compare various parameters of pricing strategies of Airtel and Vodafone.
4. To study the various kind of pricing strategies being implemented in the market
for telecom industry.
5. To study customer buying behavior and factors which influence the purchase
decision process.
6. To know how the company has been successful in encountering the aggressive
Pricing Strategies of competitor’s.
7. To research the basic consumer perception and reaction to such pricing
strategies
Data Collection Method
Secondary Data
Secondary Data refer to the data that has been already collected and readily
available from other sources. The secondary data which has been used to carry out
this study are as follows:
Books
Company’s Profile
Newspaper
Internet
CHAPTER3
Telecom Sector In India
World telecom industry is an uprising industry, proceeding towards a goal of
achieving two third of the world's telecom connections. Over the past few years’
information and communications technology has changed in a dramatic manner
and as a result of that world telecom industry is going to be a booming industry.
Substantial economic growth and mounting population enable the rapid growth of
this industry. The telecom industry is one of the prime contributors to India's GDP.
The once monopolistic market is today, highly competitive. This has necessitated
the growth of India telecom infrastructure. The world telecommunications market
is expected to rise at an 11 percent compound annual growth rate at the end of year
2010. The leading telecom companies like AT&T, Vodafone, Verizon, SBC
Communications, Bell South, Qwest Communications are trying to take the
advantage of this growth. These companies are working on telecommunication
fields like broadband technologies, EDGE (Enhanced Data rates for Global
Evolution) technologies; LAN-WAN inter networking, optical networking,
voiceover Internet protocol, wireless data service etc. Economical aspect of
telecommunication industry: World telecom industry is taking a crucial part of
world economy. The total revenue earned from this industry is 3 percent of the
gross world products and is aiming at attaining more revenues. One statistical
report reveals that approximately 16.9% of the world population has access to the
Internet. Present market scenario of world telecom industry: Over the last couple of
years, world telecommunication industry has been consolidating by allowing
private organizations the opportunities to run their businesses with this industry.
The Government monopolies are now being privatized and consequently
competition is developing. Among all, the domestic and small business markets are
the hardest. Than 125 million telephones network is one of the largest
communication networks in world, which continues to grow at a blistering pace.
The rapid growth in the telecom sector can be attributed to the various pro-active
and positive policy measures taken by the government as well as the dynamic and
entrepreneurial spirit of the various telecom service providers both in private and
public sector. The telecom sector has shown impressive growth during the past
decade.
Today, two striking features of this growth viz. increasing preference for mobile
phones and higher contribution of private sector in the incremental growth have
predominated the telecom sector. The share of mobile phones (including WLL
mobile) has overtaken the share of landlines with 62% in the total number of
phones. The private sector's contribution is also increasing rapidly. Currently more
than 30 lakh phones are being added each month and it is targeted that by the end
of 2008 the total number of phones may reach a level of350 million taking the tele-
density to more than 30% which is currently at 24.63%.
Network Expansion: The total number of telephone subscribers has reached
281.62million at the end of January 2008 as compared to 232.87 million in July
2007. The overall tele density has increased to 23.63% in January 2008 as
compared to 21.20% in August2007.
Wireless Service: The wireless segment saw a surge of 8.77 million subscribers
last month compared to 8.17 million in December2007. This pushed the total
wireless subscribers base to 242.40 million by Jan 31 2008.
Wire line Subscribers: The wire line segment subscriber base stood at 39.73
million with a decrease of 0.16 million at the end of January 2008.
Teledensity: The gross subscriber base reached 206.83 million at the end of March
2007.The Teledensity is 24.63%at the end of January 2008 as compared to 18.31%
at the end of March 2007, registering an increase of 6%.
Increasing Role of Private Sector: The private sector has played a significant role
in the growth of telecom sector. The share of private sector has risen to 85 per cent
in December2007 from 64.14 per cent in November 2006.
Tariff Rebalancing Measures: There has been a dramatic fall in the tariffs due to
increased competition. The minimum effective charges for local calls have fallen
considerably in recent months especially for cellular service. The long distance
domestic as well as international charges have also fallen considerably.
Telecom Regulatory Authority of India (TRAI): TRAI was established under
the Telecom Regulatory Authority of India Act, 1997 enacted on March 28, 1997.
The goals and objectives of TRAI are focused towards providing a regulatory
framework that facilitates achievement of the objectives of New Technology
Policy (NTP) 1999.TRAI has endeavored to encourage greater corporation in the
telecom sector together with better quality and affordable prices.
AIRTEL
Airtel is a brand of telecommunication services in India operated by Bharti Airtel.
Airtel is the largest cellular service provider in India in terms of number of
subscribers. Bharti Airtel owns the Airtel brand and provides the following
services under the brand name Airtel: Mobile Services (using GSM Technology),
Broadband& Telephone Services (Fixed line, Internet Connectivity (DSL) and
Leased Line), Long Distance Services and Enterprise Services
(Telecommunications consulting for corporate). It has presence in all 23 circles of
the country and covers 71% of the current population (as of FY07).
Leading international telecommunication companies such as Vodafone and
SingTel held partial Vision "As we spread wings to expand our capabilities and
explore new horizons, the fundamental focus remains unchanged: seek out the best
technology in the world and put it at the service of our ultimate user: our
customer."These are the premise on which Bharti Enterprises has based its entire
plan of action. Bharti Enterprises has been at the forefront of technology and has
revolutionized Tele communications with its world-class products and services.
Established in 1985, Bharti has been a pioneering force in the telecom sector. With
many firsts and innovations to its credit, ranging from being the first mobile
service in Delhi, first private basic telephone service provider in the country, first
Indian company to provide comprehensive telecom services outside India in
Seychelles and first private sector service provider to launch National Long
Distance Services in India. Bharti had approximately 3.21 million total customers –
nearly2.88 million mobile and 334,000 fixed line customers. Its services sector
businesses include mobile operations in Andhra Pradesh, Chennai, Delhi, Gujarat,
Haryana, Himachal Pradesh, Karnataka, Kerala, Kolkata, Madhya Pradesh circle,
Maharashtra circle, Mumbai, Punjab, Tamil Nadu and Uttar Pradesh (West) circle.
In addition, it also has fixed-line operations in the states of Madhya Pradesh and
Chhattisgarh, Haryana, Delhi, Karnataka and Tamil Nadu and nationwide
broadband and long distance networks.
Bharti has recently launched national long distance services by offering data
transmission services and voice transmission services for calls originating and
terminating on most of India's mobile networks. The Company is also
implementing a submarine cable project connecting Chennai-Singapore for
providing international bandwidth.
Bharti Enterprises also manufactures and exports telephone terminals and cordless
phones. Apart from being the largest manufacturer of telephone instruments, it is
also the first telecom company to export its products to the USA. Bharti Tele-
Ventures' strategic objective is “to capitalize on the growth opportunities that the
Company believes are available in the Indian telecommunications market and
consolidate its position to be the leading integrated telecommunications services
provider in key markets in India, with a focus on providing mobile services”.
The Company has developed the following strategies to achieve its strategic
objective:
Focus on maximizing revenues and margins;
Capture maximum telecommunications revenue potential with minimum
geographical coverage;
Offer multiple telecommunications services to provide customers with a
"one-stop shop “solution;
Position itself to tap data transmission opportunities and offer advanced
mobile data services;
Focus on satisfying and retaining customers by ensuring high level of
customer satisfaction;
Leverage strengths of its strategic and financial partners; and
Emphasize on human resource development to achieve operational
efficiencies.
Businesses
Bharti Tele-Ventures current businesses include -
Mobile services
Fixed-line
National and international long distance services
VSAT, Internet services and network solutions
Broadband services with DSL and Wi-Fi network
Competitive Strengths
Bharti Tele-Ventures believes that the following elements will contribute to the
Company's success as an integrated telecommunication services provider in India
and will provide the Company with a solid foundation to execute its business
strategy:
Nationwide Footprint - approximately 92% of India's total mobile
subscribers resided in the Company's fifteen mobile circles. These 15 circles
collectively accounted for approximately 56% of India's land mass;
Focus on telecommunications to enable the Company to better anticipate
industry trends and capitalize on new telecommunications-related business
opportunities.
The strong brand name recognition and a reputation for offering high quality
service to its customers;
Quality management team with vision and proven execution skills; and
The Company's strong relationships with international strategic and financial
investors suchas SingTel, Warburg Pincus, International Finance
Corporation, Asian Infrastructure Fund
VODAFONE ESSAR
Vodafone was formed in 1984 as a subsidiary of Racal Electronics Plc. Then
known as Racal Telecom Limited, approximately 20% of the company's
capital was offered to the public in October 1988. It was fully demerged
from Racal Electronics Plc and became an independent company in
September 1991, at which time it changed its name to Vodafone Group Plc.
Following its merger with Air Touch Communications, Inc. (Air Touch), the
company changed its name to Vodafone Air Touch Plc on 29 June 1999
and, following approval by the shareholders in General Meeting, reverted to
its former name, Vodafone Group Plc, on 28 July 2000.
Vodafone Essar, previously Hutchison Essaris a cellular operator in India that
covers 16telecom circles in India Despite the official name being Vodafone Essar,
its products are simply branded Vodafone. It offers both prepaid and postpaid
GSM cellular phone coverage throughout India and is especially strong in the
major metros. Vodafone Essar provides 2G services based on 900 MHz and 1800
MHz digital GSM technology, offering voice and data services in 16 of the
country's 23 license areas. Vodafone Essar, previously Hutchison Essaris a cellular
operator in India that covers 16telecom circles in India. Despite the official name
being Vodafone Essar, its products are simply branded Vodafone. It offers both
prepaid and postpaid GSM cellular phone coverage throughout India and is
especially strong in the major metros. Vodafone Essar provides 2G services based
on 900 MHz and 1800 MHz digital GSM technology, offering voice and data
services in 16 of the country's 23 license areas stakes in Bharti Airtel.
Airtel v/s Vodafone
Airtel and Vodafone are major players in telecommunications sector in India and
abroad. Whereas Airtel is owned by Sunil Bharti Mittal, Vodafone in India is a
joint venture between Vodafone and Essar, but people know it as Vodafone only.
Airtel is far ahead of Vodafone in terms of number of customers, presence in
circles, and variety of services offered, it is Vodafone that is ahead of Airtel when
it comes to luring customers with aggressive marketing ploys. The use of the now
legendary zoozoos (animated characters) in commercials has won Vodafone
millions of new customers and admirers who don’t’ even subscribe to the
company. On the other hand, Airtel relies on superstars like Sachin Tendulakar,
Shah Rukh Khan, Kareena Kapoor, and A R Rehman to promote its services.
Airtel provides GSM, broadband internet, IPTV, DTH and telecommunications
solutions to large corporations whereas Vodafone is mainly involved with mobile
telephony. While Airtel has presence in all 23 telecom circles of the country,
Vodafone has presence in 16 circles only. Both Airtel as well as Vodafone offer
prepaid and postpaid services and both are providing 2G and 3G services to its
customers.
Strategies of Airtel and Vodafone
Target the rural India
The main targeted customers of Vodafone are from rural India. By offering cheap
and light mobile sets Vodafone attracts most of the customers of small villages and
towns.
Offering cheap handsets
Vodafone offers cheap and free connections to all customers. The cost for these
sets was Rs-799-849-1099\set and onward.
Free support and services
In every district and big towns Vodafone opens its service centers to provide better
support and services.
Strong logistics and supply chain
Vodafone has a strong logistic and supply all over India.In every small town the
potential customers can easily purchase the Vodafone SIM & Sets.
Targeting youngsters in metropolitans
Vodafone attracts youngsters by offering colorful handset at very low prices.
Market segmentation
Geographical segment (rural India)
Demographic segment - middle income groups
Target marketing
People living in small towns and villages.
Poor and middle income groups.
Youngsters in big cities.
Businessmen
Positioning
Creating brands
Ads and promotions
Marketing mix
Price : low price strategy
Place : maximum outlets and service centers
Product : verities available for various groups
Promotion: various schemes for pre-paid and post-paid
Services Provided
By Bharti Airtel
Mobile services with GSM technology
Fixed-line connections
National and international long distance services
VSAT, Internet services and network solutions
Broadband services
By Vodafone
mobile services with GSM technology
fixed-line telephone services
Universal Internetworking
VoIP (Voice over Internet Protocol)
Interactive Television
Visual Communication
Broadband Portal
Brand associations:
Airtel: It is perceived to be reliable player which has good connectivity and an
India roll-out. People value it for its consistency in providing network services. It
scores high on internet usage and easy recharge facility too. But it fares poorly on
flexibility in plan change and call cost are considered to be on higher side.
Vodafone: it also scores high on the connectivity option but also has a good public
image of providing VAS. It scores low on call rates (it means high call rates), on
internet usage and plan flexibility.
Market Share
These are the total market share of mobile user or people captured by the mobile
provider company. There two major company in mobile phone service sector
Vodafone and Airtel who respectively hold the market share with other company
as 17% and 20% of total market user segment of mobile customer.
CRITERIA AIRTEL VODAFONEMinimum recharge voucher
Rs-15/Talktime-Rs8
Rs-10/Talktime-7
Minimum message card coupon
Rs-34340 messages per month
Rs-35350
Message card Rs-8816000msg per month
Rs-89
New SIM card cost(minimum)
Rs-60 With talk time of Rs-
Rs-40 to 60
Airtel 5 and Vodafone Bonus
Airtel Special Five Plan:
Airtel Special 5 is a new product from Airtel Mobile which offers very low calling
rates for your Special 5 Airtel Mobile numbers. You can maintain your Special 5
numbers, which could be those Airtel mobile numbers you call the most. Up to 5
Airtel mobile numbers can be enrolled as Special 5 feature.
For prepaid connections, Local Airtel to Airtel calls are charged 20 paisa per
minute and STD Airtel to Airtel calls are 50 paisa per minute. Special Five tariffs
are not applicable while roaming. Prepaid Customer can change his special 5
mobile numbers up to 5 times in a Month. Rs 5 will be charged for every number
change.
Postpaid is available only on Special 5 bill plan. Benefits will be applicable post
bill plan migration which will take effect from the nearest next bill cycle.
Vodafone Daily Bonus (Rs-4)
This is a typical brainchild of telecom czars to have come up with innovative usage
plans that slowly and gradually sucks up Rs.4 on a daily basis from your talk time.
For the subscribers of Mumbai, Delhi, Rajasthan, Tamil Nadu, Gujarat and some
other circles Vodafone has come out with four different plans of Rs.4 each,
dedicated to SMS and Call services, both.
Vodafone Rs. 4 Tariff Plan
Tariff Plans (All schemes of Rs.4/-) Validity
100 local / national SMS 1 day
8 local / STD minutes (Any network) 1 day
Local Vodafone calls @20 ps/minutes 1 day
Night Calling 40 minutes (11 pm to 8 am) 1 day
For the above tariff schemes, the Vodafone customers can subscribe to any of the
plans priced at Rs.4/- with validity of 1 day, depending upon their desirable usage
profile. You simply need to have a minimum balance of Rs.4 in your prepaid
account to activate this daily validity pack. But, are such budget chota packet
recharge plans really cheap? Not really, if you calculate Rs.4 deduction from your
overall balance spanning across the month, it sums up to Rs.120 for a 30 day
period. Your prepaid balance will be lower by Rs.120/- per month, irrespective of
whether you use the desired plan on a daily basis or not.
CHAPTER 4
ANALYSIS AND DISCUSSION
Implications for consumers
2%
87%
9% 2% 1%
Age Group
UNDER 1515-2525-3535-4545+
The population that mainly of the age group from 15-25. The primary reason that
this group came to be the biggest contributor is that people belonging to this age
group are the ones who actively engage in deciding their choices. Mainly
constituting of students going to schools and colleges these are the ones who are
most aware of the currently available plans, different pricing schemes from
different operators and are most susceptible to changing operators if and when they
get a better choice based on their criterion like call rates, network connectivity and
several other reasons.
People belonging to age group 45 and above are the ones who are quite set in their
routine; they had taken their connection based on advice and were unaware of
better schemes available from other operators. They seemed to be quite happy with
their operators and were not interested in changing their service providers once
MNP (Mobile Number Portability) sets foot in India
63%
37%
GENDER
MaleFemales
Majority of males who were interested in knowing more about the currently
prevailing plans and showed more knowledge of the schemes than their female
counterparts. Female population was less knowledgeable about the different
operator plans currently available in the market but was major spenders compared
to their male counter parts. The average billing estimate for female population was
more than Rs. 500 per month while the average bill/recharge for male population
lied in the range Rs. 200-500. This showed overall indifference of female
population towards the advertising campaigns from various operators therefore
special steps can be taken to take them active consumers as in they decide in the
process of choosing an operator according to their needs.
73%
15%
10% 2%
Occupation
StudentSelf-EmployedSalariedOther
Majority of students and not the salaried category though general sense dictates
that it should be the other way round. A reason that can be given about the above
phenomenon is that salaried consumer working in a firm is provided with a
connection by the company itself and therefore has no say in buying the
connection. Students on the other hand, mainly staying away from homes for
studying purpose, take a better informed decision after consulting with their peers.
They are more engaged in the process of choosing the best plan for themselves to
minimize costs.
Implications for Industry
AIRTEL
VODAFONE
IDEA
MTNL
RELIANCE
TATA DOCOMO
OTHERS
0 5 10 15 20 25
1
SERVICE PROVIDER
SERVICE PROVIDER
Bharti Airtel emerged as the major player in the market wide ranging popularity
from students as well as working population. It is the largest cellular provider in
India, and also supplies broadband and telephone services - as well as many other
telecommunications services to both domestic and corporate customers. It has
found acceptance from corporate sector using the blackberry services right up to
the lowly skilled labor class which has to move a lot depending on the work. It
shows that the brand image of Airtel is more of reliability operator which provides
excellent service. This is in spite of the fact that call rates for Airtel is at a premium
compared to other emerging operators like idea and reliance.
Vodafone is the next big operator which has a good market share. It lags behind
Airtel because it is perceived to have less no. of plans and schemes which alienate
people. An effective strategy here for Vodafone would be better market penetration
tactics which will build its image as Vodafone already has competitive services
available to counter Airtel.
Bharti Airtel is embarking on another joint venture with Vodafone Essar and Idea
Cellular to create a new independent tower company called Indus Towers.This new
business will control more than 60% of India's network towers. IPTV is another
potential new service that could underpin the company's long-term strategy.
55%
25%
15% 5%
Monthly Usage
< Rs 200Rs 200-500Rs 500-1000> Rs 1000
Monthly usage pattern of the consumers that vary from Rs.50–500 with Rs, 500-
1000 being the next most popular category. It shows that the respondents were
users with good income or family support and were able to spend more.
60%25%
15%
AMOUNT OF RECHARGE
Small Top Up (<= Rs. 50 )Medium Top Up ( Rs. 50-500 )Large Top Up (>= Rs. 500 )
Moreover the trend showed that people in favor of weekly or monthly recharges.
On basis of this the pricing strategy can be improvised to provide support packs
with higher call value available for weekly duration so that the consumer get an
incentive to purchase more talk time.
Implications for Business Managers
SWOT ANALYSIS
Strengths
Being one of the largest companies in India the company has achieved a
degree of focus in its core business of its products.
It has a strong brand name, superior quality products and an enviable
distribution network.
It has a clear and well-defined organization structure and limits of financial
authority.
Increase in advertisement spends affect the company’s margins.
The company‘s bottom line falls victim to the bloated and highly paid
workforce, which affects its margins.
Weakness
Little efforts over the Advertising of products.
Distribution channel is not accurately categorized.
Premium priced products, hence can’t compete in low price segment.
No separate strategy for rural market.
Opportunities
The company's financial performance can receive a major boost from its cost
reduction efforts.
There is a lot of scope of product and market diversification.
Exports of products will also have huge chances in the coming years.
Airtel’s business has ample scope for gaining market share from the
unorganized sector. Rural penetration too holds vast potential to bring about
growth.
Threats
The slowdown in the economy has restricted topline growth of most FMCG
majors and for Airtel also it will be difficult to maintain historical growth
rates in such a depressed scenario.
Company’s major raw materials are influenced by government policies /
controls as well as vagaries of the monsoons. Fluctuations in the prices of
raw materials would have significant impact on costs and margins of the
company.
Moreover, inordinate hike in Broad Band Internet products would also
increases company’s production and distribution cost.
CHAPTER-5
Conclusion & Suggestions
Conclusion
Based on the study the following points can be concluded:
After analyzing the findings of the study we concluded that Airtel emerged has the
clear cut market leader with well thought out segmentation of market i.e. the target
is business person but lagged behind its competitors as far as customer service and
availability is concerned. Maximum no. of people spends RS 500 on their
connections. As Airtel is the only company having the maximum no of mobile
connections so it must seriously look into the loop holes of the existing customer
service department.
As we know that now Airtel has already launched its product with logo “Aisia
zaadiaurkahan” has already became popular in market. So we can say that in spite
of so many competitors in the market Airtel is having a good position just because
every time, it tries its best to understand the need of its important customers.
From the comparison and deep analysis of every aspect of business of both the
companies we can conclude that Bharti Airtel has to more work in every field of
communication business.
It is the time not only to survive but to sustain in the market for a long time.
For this Airtel has to work on its all marketing strategies, marketing, promotion,
brand image.etc.
Airtel has to take Vodafone. Very seriously and update its own strategies from
time to time and when the need arises.
With aggressive marketing strategies Airtel has to target rural India as 70% of
population of India lives in these areas. The other segment may be costumers of all
age groups.
There are specific set of targets that a company needs to achieve e.g. Airtel fares
well on connectivity option but low on call rates. Therefore a well thought out
strategy needs to be evaluated by each operator to achieve maximum possible
expansion.
Value added propositions like weeklong-extra value add-on packs can prove to be
successful strategy to boost revenue. It may help company expand and once the
market matures, the move towards higher revenue services can be made.
Suggestions
Following are the few suggestions for improving the market share and image of the
products concerned.
Modification must be brought about in AIRTEL, in terms of quality. Its
demand should be increased.
The brands must be made available easily in, PCO & general stores.
Company must undertake extensive promotional activities like
advertisements must be released in different Medias to create brand
awareness.
Free samples should be distributed among the prospects. Sales promotion
tools like gifts, contests and coupons must be given to retailers as well as
customers and prospects.
Catalogues should be distributed among customers.
Price should be as competitive as other company maintains
Distribution of new connection should be in reach of customer pocket
CHAPTER-6
References
Book:
Principles of Marketing –Philip Kotler & Kevin keller
Websites:
http://www.airtel.in/wps/wcm/connect/about+bharti+airtel/bharti+airtel/
about+bharti+airtel/
http://en.wikipedia.org/wiki/Vodafone_Essar
http://marketingteacher.com/lesson-store/lesson-pricing.html
http://www.differencebetween.com/difference-between-airtel-and-vs-
vodafone/