Airtel - A Case Study

Airtel – A Case Study Presented by G2:7 Abhishek Kekre Bharath Kumar Gulab Nebhani Lalima Dutta Choudhury Tanya Dutta

Introduction 

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Telecom giant Bharti Airtel is the flagship company of Bharti Enterprises. Airtel comes to you from Bharti Airtel Limited, India’s largest integrated and the first private telecom services provider with a footprint in all the 23 telecom circles. Bharti Airtel is structured into three strategic business units Mobile services, Telemedia services and Enterprise services. The mobile business provides mobile & fixed wireless services using GSM technology. Airtel was voted as the ‘Best Cellular Service’ in the country for four consecutive years.

Cellular Market Analysis Early 2000 

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International Telecom Union (ITU), EMC – Cellular mobile telephony tariffs in India lowest in the world in 2002. 300-minute basket for cellular service rates  India - USD 16/month  China - USD 21/month  Thailand - USD 29/month  Malaysia - USD 40/month  Indonesia - USD 42/month Average monthly rental and airtime for cellular services: Rs. 202 and Rs. 1.99 per minute respectively. Prepaid services introduced by all operators at an extremely affordable tariff of Rs. 300 per month.

Cellular Market Analysis Early 2000 

Indian cellular sector Compound Annual Growth Rate (CAGR) of 109% in cellular subscribers from 1995-2001.

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Explosive growth driven by the low tariffs, rapid expansion of infrastructure and robust competition.

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Heavy customer base in rural India.

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In 2002, 51 cellular mobile networks or air serving 80 lakh consumers in almost 1500 cities and towns, covering 60,000+ villages.

Magic launch-2002 Porter’s Five forces

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er Pow - Low r e y Buy nsitivit ving li e er f S o e oth Pric andard ing to aid st stp tch swi nd po y s a rs Ea paid e to vide wer du o r pre p po tition e ain arg comp b h Hig tense in

Prepaid Cellular Competition Analysis 51 Cellular networks in 2002 Major Competitors in 2002 – Hutchinson BATATA-BPL Aircel Koshika Spice Communication Reliance Telecomm BSNL MTNL

B La ar r ck ier La o s He c f t i av nf k o aw o E a r f y as n re nt Ac ce an usa tru etw ne ry pr ss d ge ct or ss ep t po o ur k ai o d st f la e d p co istr oid nd lin nn i bu e ec t i o tio n ns of

NL tes /MT u t L i et N st ub – BS ntern s I f ne ers er to ea epho n ov rovid r Th tel atio e p ail ine nic vic l M d l mu ser iona e Fix Com DMA radit C T

Entry Reasons for Success Easy Usage Easy to acquire connection Pre-activated SIM Instant connectivity No rental hassles No security deposits

Easy Recharge International ‘scratch system’ for Magic Cards

Effective Distribution

Reasons for Success

Easily available in departmental stores, gift shops, ‘kirana’ shops, retail outlets, telephone booths etc Doorstep delivery in 2002

Customer Satisfaction Affordable Easily accessible Strong customer relationship

Features STD/ISD Facility Voice Mail Short Message Services Free CLIP Balance Enquiry

CRM at Airtel Vision To provide AirTel services anywhere and at any time. A customer should get the same quality of service no matter which of call centre he contacts. The implementation of CRM also helped Bharti in having a unified workflow and unified processes across the country. Benefits  Understand and segregate customer needs - With the help of CRM, they are able to provide customers different schemes and services depending on airtime usage.  The CRM strategy at Airtel revolves around two aspects:  Operational CRM - Helping call centres with workflow and day-today activities.  Analytical CRM - Provides staff with the required information on customers; this is used for business development activities.

Bharti Magic – 3 Cs •Leading Competitors – Hutchinson and BATATA-BPL •Competitive price, distribution and customer satisfaction strategies

Top moves to target customers •‘Airtel Connect’ showrooms •Home Delivery •First player to launch roaming cellular services and Smart Mail, Web Message, Call hold etc •Attractive pricing strategies •Focus on Youth

Bharti Airtel, is Asia’s leading integrated telecom services provider with operations in India and Sri Lanka. Services are offered under the brand name Airtel: •Broadband & Telephone Services •Long Distance Services •Enterprise Services •Mobile Services using GSM

Attributes          

Maximizing Customers’ product and service experiences. In touch with current market trends. Cost optimization. Understanding of customers’ likes and dislikes. Proper positioning of brand in the market. Brand Consistency. Value Addition to products and services. Targeting the infrequent users. Differentiating itself from other players. Promotional offers.

Brand Resonance Pyramid

Brand Magic 

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New Celebrity endorsers (Sachin Tendulkar & SRK) who projected a fresh and youthful image were chosen to reflect Magic’s brand values of energy, hope, optimism and achievement. Special features for Magic Subscribers like free caller line identification, and innovative services like balance on screen. Bharti came up with many ad specific taglines like: ‘Kabhi bhi, Kahin bhi’, ‘Jahan Chaho, Airtel Magic Pao’ Conducting contests for its’ subscribers through SMS. For Instance the ‘Khulja Sim Sim’ contest launched in April 2002. Bharti Airtel, Asia’s leading integrated telecom service provider, announced the launch of the “Magic Dekho, Talktime Pao” offer on its DTH service – digital TV last month. This is an exclusive offer for Airtel Prepaid Mobile customers across the country where on buying a digital TV connection at Rs. 2000 with 3 months of Super Value Pack, the Airtel Prepaid Mobile customer receives 1000 minutes of local Airtel to Airtel talktime.

Marketing Revamp Need 2002 Sources of new product development     

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Radical transformation in cellular industry Intensifying competition in light of immense market potential To retain its position as market leader Forecast of higher market growth Estimated number of subscribers to reach over 25 million by the year 2004 Customers exposure to media, raised expectations

Target Customer  

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Magic was positioned as friendly, mass-market brand Targeted the youth, stood for simplicity and attitude – ‘anything is possible’ Aimed at attracting infrequent and non-interested users of the mobile phones Cellular services dropped in prices and target new customer segments As the category developed with prices going down sharply, Airtel began talking to a wider spectrum of potential users “The aim is to be relevant to the masses and make all their dreams, hopes and desires come true at Rs 300 per month” Hemant Sachdev, Director, Marketing

Identifying the success factor Concept development  The idea demanded a high brand image.  Magic was brought under the umbrella brand Airtel, renamed as Magic Airtel.  The name Airtel brought positive associations to the mind of the customer.  Bharti changed the logo, the new logo reflected the new brand values of energy, hope, optimism, achievement and friendliness.  Old logo New logo

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New celebrity endorsers (Shahrukh Khan and Kareena Kapoor) projected a fresh and youthful image

Identifying success factor 

Rediffussion DY&R, which is the ad agency that took charge of revamping Airtel’s brand image by giving a better tagline which caught some emotional appeal. SIGNIFICANCE—  -- This was the first time A R Rehman had agreed to work for any brand, anywhere in the world. The music from the commercial became the most downloaded ring tone in the history of telecommunications. 

-- Tagline denotes that each and every person in India live every moment (emotions, feelings etc.) of the life with Airtel.

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Magic was successfully relaunched taking the ownership of the entire space of communication and strengthening the emotional bond Airtel enjoys with its customers

The differentiation factor 

Offered many special features for subscribers

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Free caller identification, services like balance on screen and balance on demand

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Doorstep delivery of Magic cards

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Regional roaming network launched in Asia for the subscribers, regional roaming facility offered to customers within the country as well

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Waiver of airtime charges on incoming calls between Airtel cellular customers

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Ease of operation, affordability and ready availability

Commercialization – the strategy 

Aimed at the non-interested customers, perceiving unanticipated needs

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Entered into strategic tie-up with ICICI Bank to offer recharge facility for Magic users at the ATMs

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Established easy accessibility and availability by providing recharge cards at departmental stores, gift shops, retail outlets, telephone booths and also ‘kirana’ stores

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Airtel started talking to new segments by positively positioning and establishing itself as a brand that improved the quality of life

Positioning – “the battle for the customers’ mind” 

Focus on distribution base in all circles

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Availability of Magic cards in the remotest parts of operating circles

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Positioned the brand against competing ones on several value added service features

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Emphasized on one-on-one relationship with the customers

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Communicated with vibrant colors, local language and simplicity that captured customers minds

Pricing Strategy   

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Revamped pricing strategy Varied call charges based on the time when the call was made E.g. – Delhi users were charged Rs. 1.35(per 30 secs) and Rs 0.99 (per 30 secs) for incoming calls in the time slot of 8.00 A.M – 10.00 P.M. The rates were lowered at nights to Rs. 0.67 and Rs. 0.49 respectively Magic was also made available in Rs 290 as against Rs 300 previously Launched special offers – free talk time worth Rs 290 to new subscribers, Free voice mail service for a period of three months also offered

Competitors strike back Competitors adopted following techniques: • • • •

Price reductions New service additions Value additions Focussed advertising and promotional campaigns

Competitors strike back To counter Bharati’s waiver on airtime charges for incoming calls and 32K SIM cards in Mumbai, BPL Mobile and Hutchison. • Made incoming calls free in Mumbai • Launched 32K SIM cards • Cut call charges by 50% from Rs 3 to Rs 1.49 (60 seconds) MTNL slashed tariff rates of its Dolphin cellular service in Mumbai and Delhi Escotel, leading service provider in UP (West), launched roaming services for its prepaid customers

Competitors strike back Spice •

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Allowed national roaming named Spice Quickly on its prepaid card Awarded free talk time to winners of a Soccer World Cup related promotional event Reduced tariff rates on its prepaid cellular cards in Karnataka Offered useful information such as train timings, astrology, news, movie tickets, cricket updates, and stock market news through its band Genie

Competitors strike back Idea cellular •

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Invested 7% of its net revenue to focus on creating brand awareness and launched an aggressive advertising campaign Announced to offer value added services such as games on mobiles, SMS in 9 languages and prepaid roaming facility

Idea ChitChat in Andhra Pradesh offered to win gold coins, watches and talk-time under a special scheme

Competitors strike back Hutch •

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With aggressive marketing and promotional campaigns was becoming a formidable competitor to Bharati in many circles. Through its advanced 16K SIM it offered many value added services. Announced a new scheme ‘Go Hutch for Rs. 74’ in Andhra Pradesh and offered Rs 175 of talk-time for a prepaid card of Rs 249.

Competitors strike back Between January and August 2002 competitors recorded substantial growth in Kolkata: • • • •

Hutchison’s Command: 55.03% Orange: 46% Essar: 36.67% Fascel: 46.29%

Airtel- Future prospects: 

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According to market researches, after China, India would be the fastest growing mobile telephony market in Asia Pacific with revenues slated to increase at a CAGR of 18.4% to reach $25 billion in 2011 from current $9 billion. Cellular penetration would increase to 38.6% in 2011 with 58% of rural families and 95% of urban families possessing mobile phone. The market will be driven by prepaid connections, which will account for more than 93% connections. It is expected that the penetration will be driven by an increased focus on rural market, cheap handsets, aggressive promotions and handset bundle offers. The low rural mobile penetration of 2% represents an immense opportunity for cellular players. Large players will have an advantage as they expand their presence and take advantage of economies of scale. But they will face tremendous challenges owing to intensifying competition. With the entry of BSNL/Vodafone, the market will become more dynamic.

Airtel- Future prospects: 

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In the current scenario, as the Indian telecom market attracts huge funds of several global telecom giants, Bharti’s higher profitability and strong liquidity position serves as a twinedged weapon to expand the market & combat the growing competition. In the wireless segment, a further gain in market share appears well within Bharti’s scope, given its aggressive pace of net adds, till the time Idea and RCOM go full throttle on their pan-India GSM roll-outs. In the non-wireless segment, the Company is looking for new growth opportunities—its entry in the media space by launching the DTH service is one such example. In the long distance business, the Company’s network quality and captive in-house volume gives it a significant competitive advantage over other carriers.

Airtel- Issues to work on: 

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Due to lack of visibility, one cannot factor the upsides from the Sri Lanka rollout ,rural markets, the DTH business, and the 3G services. An increase in network costs (due to rural penetration) and additional advertising spends (to combat increasing competition) seem inevitable. Airtel must work on handling these properly. Though initially airtel had the upper hand in advertising, now Vodafone has gathered advantage by using the creative and innovative ‘ZooZoo’ advertisement. Airtel’s ringtone with endorsement from AR Rahman was a sensational hit and Airtel needs to come up with a similar advertisement now to win the lost battle.

Airtel- Issues to work on: 

Type www.airtel.com in your browser and you will be directed to guess what?

Vodafone Spain! 

www.airtel.com was owned by Airtel Spain. Later Airtel spain was acquired by Vodafone. It was in the year 2000 when Vodafone completed the acquisition. But what about lazy branding of airtel? Despite knowing millions of people will actually come and visit and inquire about their company in that domain (airtel.com) directly, Airtel never ever asked Vodafone to sell it to them. In this hugely growing internet world, how can you be so relaxed after seeing that the most important domain name of your company redirects you to

the rival's site!

Airtel- Issues to work on: 

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According to TRAI, Airtel is the most congested telecom network. As per the analysis by the Telecom Regulatory Authority of India (TRAI), Airtel had 14 congested (POI) - the geographical location where two networks inter connect and exchange traffic. Against this, Vodafone had 12 POIs, followed by Reliance Communications and Idea with 11 each, and Dishnet Wireless with eight. Trai confirms that Airtel also tops the list of call drop as well. This is something airtel has to look into. The company in the future plans to expand its network in order to establish its presence in more than 500,000 villages all across the country by 2010. Along with this the company must improve existing regions also.