Brand Management Project

BRAND MANAGEMENT PROJECT 201 0

BRAND MANAGEMENT PROJECT Category Attractiveness & Product Opportunity Phase- I Submitted to: Prof Saju Epean Thomas

Submitted by: ANINDYA SANKAR KUNDU 08PMP00418 08/12/2009

BRAND MANAGEMENT PROJECT 201 0

Executive Summary

The fast track growth of the Indian telecom industry has made it a key contributor to India’s progress. India adopted a phased approach for reforming the telecom sector right from the beginning. Privatisation was gradually introduced, first in valueadded services, followed by cellular and basic services. An independent regulatory body, Telecom Regulatory Authority of India (TRAI), was established to deal with competition in a balanced manner. This gradual and thoughtful reform process in India has favoured industry growth. Today, there are more than 225 million telecom subscribers in India. Every month, 6-7 million new subscribers are added. Upcoming services such as 3G and WiMax will help to further augment the growth rate. Furthermore, the Indian economy is slated to sustain its 7-9 per cent growth rate in the near future. This is supported by the political stability that the country is experiencing currently. India’s demographic outlook makes it one of the largest markets in the world. A conducive business environment is also created by a favourable regulatory regime. There exists enormous business potential for telecom companies on account of the country’s low teledensity, The report below contains the Category attractiveness and product opportunity for the brand management project submitted in partial fulfillment of the requirements of MBA 2 Program.

BRAND MANAGEMENT PROJECT 201 0 which is close to 19 per cent presently. The Indian telecom industry is growing at the fastest pace in the world and India is projected to be the second largest telecom market globally by 2010.

CHAPTER-I CATEGORY ATTRACTIVENESS

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1.1.1TELECOM SECTOR: A GLOBAL SCENARIO The Indian telecom market has been displaying sustained high growth rates. Riding on expectations of overall high economic growth and consequent rising income levels, it offers an unprecedented opportunity for foreign investment. A combination of factors is driving growth in the telecom market, promising rich returns on investments.  India is the fourth largest telecom market in Asia after China, Japan and South Korea.  The Indian telecom network is the eighth largest in the world and the second largest among emerging economies.  The Indian telecom market size of over US $ 8 billion is expected to increase three fold by 2012. The expansion of the telecom industry in India has been fuelled by a massive growth in mobile phone users, which has reached a level of 10 million users in December 2002, an increase of nearly 100 per cent in 2002.  This exponential growth of mobile telephony can be attributed to the introduction of digital cellular technology and decrease in tariffs due to competitive pressures. For the first time in India, the growth of cellular subscriber base has exceeded the fixed line subscriber base. However, cellular penetration is still 1 per cent as compared to world average of around 16 per cent. 1.1.2 INDIAN TELECOM SECTOR 4

BRAND MANAGEMENT PROJECT 201 0 Indian Telecom sector, like any other industrial sector in the country, has gone through many phases of growth and diversification. Starting from telegraphic and telephonic systems in the 19th century, the field of telephonic communication has now expanded to make use of advanced technologies like GSM, CDMA, and WLL to the great 3G Technology in mobile phones. Day by day, both the Public Players and the Private Players are putting in their resources and efforts to improve the telecommunication technology so as to give the maximum to their customers. The Indian telecom sector can be broadly classified into Fixed Line Telephony and mobile telephony. The major players of the telecom sector are experiencing a fierce competition in both the segments. The major players like BSNL, MTNL, VSNL in the fixed line and Airtel, Vodafone (Hutch), Idea, Tata, Reliance in the mobile segment are coming up with new tariffs and discount schemes to gain the competitive advantage. The Public Players and the Private Players share the fixed line and the mobile segments. Currently the Public Players have more than 60% of the market share. 1.1.3 DEMOGRAPHIC CHARACTERS :-According to the Vision 2020 document of the Planning Commission of India, the country will witness continued urbanization. The urban population is expected to rise from 28 per cent to 40 per cent of total population by 2020. Future growth is likely to be concentrated in and around 60 to 70 large cities having a population of one million or more. This profile of concentrated urban population will facilitate customized telecom offerings from operators. 1.1.4 MARKET-SIZE, PLAYERS AND TRENDS:Both fixed line and mobile segments serve the basic needs of local calls, long distance calls and the international calls, with the provision of broadband services in the fixed line segment and GPRS in the mobile arena. Traditional telephones have been replaced by the codeless and the wireless instruments. 5

BRAND MANAGEMENT PROJECT 201 0 Mobile phone providers have also come up with GPRS- enabled multimedia messaging, Internet surfing, and mobilecommerce The much-awaited 3G mobile technology has entered in the Indian telecom market. The GSM, CDMA, WLL service providers are all upgrading them to provide 3G mobile services. Radio services have also been incorporated in the mobile handsets, along with other applications like high storage memory, multimedia applications, multimedia games, MP3 Players, video generators, Camera's, etc. The value added services provided by the mobile service operators contribute more than 10% of the total revenue. The 2009 budget has brought further relief to the customers with the reduction in the tariffs, both local and long distance, and with slashing down the roaming rentals. This is likely to lead to even more people going for cellular services and more and more use of the value added services. However, landline telephony is likely to remain popular, too, in the foreseeable future. MTNL, the largest landline service provider, has recently taken some bold initiatives to retain its market share and, if possible, expand it. 1.1.5 OPPORTUNITIES:India offers an unprecedented opportunity for telecom service operators, infrastructure vendors, manufacturers and associated services companies. A host of factors are contributing to enlarged opportunities for growth and investment in telecom: an expanding Indian economy with increased focus on the services sector population mix moving favourably towards a younger age profile urbanization with increasing incomes Investors can look to capture the gains of the Indian telecom boom and diversify their operations outside developed economies that are marked by saturated telecom markets and lower GDP growth rates. 6

BRAND MANAGEMENT PROJECT 201 0 1.1.6 COMPETITIVE LANDSCAPE:Demand is driven by technological innovation and by growth in business activity. The profitability of individual companies depends on efficient operations and good marketing. Large companies have big economies of scale in providing a highly automated service to large numbers of customers, and have the financial resources required to build and maintain a large network. Smaller companies can compete effectively only in small markets or by providing specialty services

1.1.7 RESEARCH INDUSTRY GROWTH RATING:The First Research Industry Growth Rating reflects the expected industry growth relative to other industries:-

Ref:-planningcommission.gov.in/reports/genrep/.../1_bg2020.doc

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Ref:-planningcommission.gov.in/reports/genrep/.../2_bg2020.doc

1.1.8 Product‘s Stage in PLC:-

As we can see above the mobile industry graph shows that telecom industry is still at growing phase in the product life cycle. The first operational land lines were laid by the British Government in Calcutta in the year 1881 that was first time Telecom sector introduce and 1985 department of Telecommunication was established. In the year 1997 telecom regulatory authorities of India was created then in 1999 mobile services were launched in India and national new telecom policy is 8

BRAND MANAGEMENT PROJECT 201 0 adopted and in the year 2000 DOT becomes a corporation BSNL. After that telecom industry has been growing like cats and dogs. The mobile industry can be reforms into three phases. Phase I (1998-2003) Actual growth started from this phase. TRAI was set up in 1997 and the first tariff order was issued in 1998. The reforms becomes effective from 1998. Phase II (2003-2005) This phase marked a sustained increase in tele-density each year which can me been in the Graph in chapter 1, the growth in tele-density in 2003-2004 was approximately 2%, a percentage which was greater than the total growth of 1.92% in the 50 year.

Phase III (2005-2007) Every year industry should grow at pace of grater than 4.5% in the tele-density to achieve the target of 250 million subscriber by December 2007, According to a release by TRAI by June 2006 the total subscriber base has reached 153.37 million and teledensity has reached to a level of 13.95%. 1.1.9 Seasonality in sales and sales cyclicity :In the Telecom sector seasonality in sales (mobile subscriber) doesn’t play much role because we have found out since 1998 to 2007 mostly each and every quarter growing and the growth in succeeding quarter is more than its preceding one. 1.2.1 PEST Analysis:Political – As markets are deregulated, both operators and manufacturers are free to act independently of government 9

BRAND MANAGEMENT PROJECT 201 0 intervention. In Countries like India and China where Partial regulations exist, government intervention does take place. Economic – With incomes rising, people have more disposable income, which enables consumers to be more selective with their choice of mobile phone, looking to other factors rather than fulfilling the most basic of user needs (text messaging and phone calls) and price being such a key factor. Social – The rise of the so-called information society has made telecommunications increasingly more important to consumers, both in terms of work and leisure. Users are more aware of mobile phone handset choice and advancements due to increased information availability. Technological – There have been many global advancements in technology such as UMTS,WIMAX, WAP, GSM, GPRS, 3G,4G etc.

Important regulations and their impact on the Indian telecom industry Unified Access Service License Regime (UASL) Unified licensing marked the end of the license regime in the Indian telecom industry. It helped in aligning convergent technologies and services. The establishment of the Unified Access Licensing Regime (2003) eliminated the need for different licenses for different services. Players are now allowed to offer both mobile and fixed-line services under a single license after paying an additional entry fee. This does not take into account 10

BRAND MANAGEMENT PROJECT 201 0 national and international long-distance services and Internet access services. Access Deficit Charges (ADC) ADC makes it mandatory for a service provider at the caller’s end to share a percent of the revenue earned with the service provider at the receiver’s end in long-distance telephony. This subsidises the infrastructure costs of the service provider enabling access at receiver’s end, especially because rental for fixed-line services is low. Revision in the ADC regime is expected to be followed by further tariff reduction in telecom services. In a move to bring down telecom tariffs drastically, TRAI has phased out access deficit charges from this year. Universal Service Obligation (USO) The USO policy was laid along with NTP ’99 to widen the reach of telephony services in rural India. All telecom operators are bound to contribute 5 percent of their revenues to this fund. This system was put in place to bridge the wide gap between urban and rural teledensity, bringing it down from the current 31 percent. Initially, only basic service providers were under the purview of USO. Later, its scope was expanded to include mobile services also. Although it increases the cost burden for the telecom companies, USO helps in building the telecommunication infrastructure in the rural areas.

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CHAPTERII COMPETITOR ANALYSIS

2.1.1 PORTER’S FIVE FORCES 12

BRAND MANAGEMENT PROJECT 201 0 The nature of competition in an industry is strongly affected by suggested five forces. The stronger the power of buyers and suppliers, and the stronger the threats of entry and substitution, the more intense competition is likely to be within the industry. In concentrated industries, according to this model, organizations would be expected to compete less fiercely, and make higher profits, than in fragmented ones.

Main Aspects of Porter’s Five Forces Analysis The original competitive forces model, as proposed by Porter, identified five forces which would impact on an organization’s behaviour in a competitive market. These include the following: •

The rivalry between existing sellers in the market

•

The power exerted by the customers in the market

•

The impact of the suppliers on the sellers

•

The potential threat of new sellers entering the market

•

The threat of substitute products becoming available in the market

Understanding the nature of each of these forces gives organizations the necessary insights to enable them to formulate 13

BRAND MANAGEMENT PROJECT 201 0 the appropriate strategies to be successful in their market (Thurlby, 1998). We will examine these concepts as described by Porter’s 5 force model and as applied to Indian telecom industry simultaneously. Force 1: The Degree of Rivalry The intensity of rivalry, which is the most obvious of the five forces in an industry, helps determine the extent to which the value created by an industry will be dissipated through head-tohead competition. The most valuable contribution of Porter's “five forces” framework in this issue may be its suggestion that rivalry, while important, is only one of several forces that determine industry attractiveness. • This force is located at the centre of the diagram • Is most likely to be high in those industries where there is a threat of substitute products; and existing power of suppliers and buyers in the market Now let us understand the implication of degree of revelry in Indian telecom sector. The dimensions of this parameter are determined by: High Exit Barriers: In any industry, if the exit barrier is high it increases the difficulty of any organization to leave the industry sector. So it makes any difficult to any willing to leave company to leave the industry. The telecom industry suffers from high exit barriers, mainly due to its specialized equipment. Networks and billing systems cannot really be used for much else, and their swift obsolescence makes liquidation pretty difficult. High Fixed Cost: The industry also suffers from high fixed cost which makes the entry barrier also very high for the industry. It comes as no surprise that in the capital-intensive telecom industry the biggest barrier to entry is access to finance. To cover high fixed costs, serious contenders typically require a lot of cash. When capital markets are generous, the threat of competitive entrants escalates. When financing opportunities are less readily 14

BRAND MANAGEMENT PROJECT 201 0 available, the pace of entry slows. Meanwhile, ownership of a telecom license can represent a huge barrier to entry. • 6-7 players in each region • 3 out of 4 BIG-Four present in each region Very less time to gain advantage by an innovation: Every company in this industrial sector in investing a huge amount in research and development and marketing strategy. That is why we see any offer launched by any company is counter attacked by other companies very soon. This makes the industry rivalry most prominent. Eg. Caller tunes, life time card Price wars: The price war is really very fierce in this industry. Price war in telecom industry has commoditized the market that branding has taken a backseat.

Force 2: The Threat of New Entrants Both potential and existing competitors influence average industry profitability. The threat of new entrants is usually based on the market entry barriers. They can take diverse forms and are used to prevent an influx of firms into an industry whenever profits, adjusted for the cost of capital, rise above zero. In contrast, entry barriers exist whenever it is difficult or not economically feasible for an outsider to replicate the incumbents’ position. The most common forms of entry barriers, except intrinsic physical or legal obstacles, are as follows:

• Economies of scale: In telecom industry the economies of scale exists from the supplier side. That is why 15

BRAND MANAGEMENT PROJECT 201 0 companies try to increase their subscriber base at drastic rate. • Distribution channels: Distribution channels are also providing a major determining factor. These channels are not loyal to any company and competitors can easily access them and make out work for them. • Customer Switching Costs: Customer switching cost is very low, as cost of new connection is really low. And new connection offers more benefits to the customers. Force 3: The Threat of Substitutes The threat that substitute products pose to an industry's profitability depends on the relative price-to-performance ratios of the different types of products or services to which customers can turn to satisfy the same basic need. The threat of substitution is also affected by switching costs – that is, the costs in areas such as retraining, retooling and redesigning that are incurred when a customer switches to a different type of product or service. It also involves: • Product-for-product substitution (email for mail, fax); is based on the substitution of need; • Generic substitution (Video suppliers compete with travel companies); • Substitution that relates to something that people can do without (cigarettes, alcohol). Now let us discuss this concept for telecom industry. The potential major substitutes for telecom industry are as follows:   16

VOIP (Skype, Messenger etc.) Online Chat

BRAND MANAGEMENT PROJECT 201 0  Email  Satellite phones All of these technologies have a huge potential, though none of the above a major threat in current scenario. So the telecom industry has to keep a close look on these substitutes. Force 4: Buyer Power Buyer power is one of forces that influence the appropriation of the value created by an industry. The most important determinants of buyer power are the size and the concentration of customers. Other factors are the extent to which the buyers are informed and the concentration or differentiation of the competitors. Kippenberger (1998) states that it is often useful to distinguish potential buyer power from the buyer's willingness or incentive to use that power, willingness that derives mainly from the “risk of failure” associated with a product's use. • This force is relatively high where there a few, large players in the market, as it is the case with retailers a grocery stores; • Present where there is a large number of undifferentiated, small suppliers, such as small farming businesses supplying large grocery companies; • Low cost of switching between suppliers, such as from one fleet supplier of trucks to another. In the context of Indian telecom industry we can say that the following points influence the buyer power:     17

Lack of differentiation among the service provider Cut throat competition Customer is price sensitive Low switching costs

BRAND MANAGEMENT PROJECT 201 0  Number portability to have negative impact Force 5: Supplier Power Supplier power is a mirror image of the buyer power. As a result, the analysis of supplier power typically focuses first on the relative size and concentration of suppliers relative to industry participants and second on the degree of differentiation in the inputs supplied. The ability to charge customers different prices in line with differences in the value created for each of those buyers usually indicates that the market is characterized by high supplier power and at the same time by low buyer power. In the drawback of Indian telecom industry the following should be kept in mind:  Large number of suppliers: The industry basically has a large number of suppliers, which helps them to choose from a lot of options. So they try to select the best option to deliver the value to the customers and to have a competitive advantage from their competitor.  Shared tower infrastructure: Technology has helped them to share the tower infrastructure. This basically helps them to reduce the initial investment a lot.  Limited pool of skilled managers and engineers especially those well versed in the latest.  Medium cost of switching since changing their hardware would lead to additional cost in modifying the architecture.  Overall influence on the industry – medium.

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2.1.2 Major Players

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S. No.

Wireless Group

Market share (%)

Revenues Million

1 2 3 4 5 6 7 8

Bharti Reliance Vodafone BSNL Tata IDEA Aircel Miscellaneo us

23.97 18.56 17.55 13.31 9.93 8.96 4.73 2.99

36962 12501 21742 10873 96752 97616 3804 2717

Revenue % of total market revenue 34 11.5 20.7 10.2 8.9 9.0 3.5 2.5

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http://www.indianomics.com/2009/07/15/top-12-wireless-operators-in-india-bysubscribers/

Review of Wireless (GSM and CDMA) Services The Wireless Industry crossed 452.91 million-subscribers mark as by end of May 2009. This total subscribers base of 452.91 million comprise of 298.15 million GSM and 105.51 million CDMA subscribers. During the financial year 2008-09 around 130.67million subscribers were added with a growth rate of 50.00% as compared to 58.12% growth during the year 2007-08. The Department of Telecommunication (DoT) is has very aggressive plans to increase the pace of growth, targeting 500 million by 2010. Most of the expansion in subscribers is set to occur in Rural India. India’s rural telephone density has been languishing at around 16.54. The subscriber addition rate has been strong in the last 12 months but the regulatory developments will increase competition and thus curtail the long-term growth rates of individual companies. The savings through the setting of tower companies will partly go towards the higher capex and opex costs from more stringent spectrum allocation norms for the incumbents. The Telecommunications sector has been consistently adding more than 10 million subscribers every month. All the

private operators GSM as well as the CDMA operators have been very consistent in their performance. However the recent regulatory developments have been negative for the telecom companies as it has increased the number operators per circle which intensified the competition. The addition of players like Aircel, Loop Telecom (formerly BPL), Tata Docomo, Virgin Mobile and a few more yet to roll out their services like Swan Telecom, and Unitech Telecom the pressure on 20

BRAND MANAGEMENT PROJECT 201 0 established players is set to increase. So also with the implementation of MNP and 3G spectrum allocation the Service providers have to be the best service caterers to hold on to their market shares.

GSM and CDMA Market Occupancy CDMA 26%

GSM 74%

www.reportbuyer.com/.../mobile-services-to-mobilise-the-indiantelecom-sector

The market share of different GSM operators as on May 2009 is displayed below:

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BRAND MANAGEMENT PROJECT 201 0 www.reportbuyer.com/.../mobile-services-to-mobilise-the-indian-telecomsector

The Market leader in GSM sector being Bharti Airtel with 32% of Market share followed by Vodafone at 24%. The state owned BSNL is third in the competition with 16% of the share in the GSM market. CDMA market majors Reliance has got licence to operate(in 14 circles and 4 metro cities) in the GSM band and they have launched their services in the market. The existing players face a tough competition as Reliance and Tata (with Docomo) have existing distribution channels and brand name, and can be a potential threat to Airtel and Vodafone. So is the case for Tata Indicom which recently launched its GSM services by the name Tata Docomo in 18 circles in India. Tata Docomo: Tata Docomo, the latest entrant into the GSM market had to get some innovative and low priced packs to attract customers to switch to Tata Docomo even before the actual implementation of MNP. As a part of this they are offering 1paise calling per second for local( and STD calls as a limited period offer). The success for Tata Docomo lies in winning third generation(3G) airwaves in as many circles as possible and bringing their internationally famed expertise into the domain. The innovativeness here is they are branding their service on the basis of “value for each second”, and “pay for only what you have used”. Thus they are trying to attract customers even before the implementation of MNP. As Toshinari Kuneida- M.D.of Docomo their target is to achieve 100million customers in the next three years. The market share of different CDMA operators as on May 2009 is displayed below:

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www.reportbuyer.com/.../mobile-services-to-mobilise-the-indian-telecomsector

Coming to the CDMA market, Reliance Communication is a tough market player to challenge with around 59.82% of the total CDMA market, followed by Tata Teleservices(Tata Indicom and Virgin together) which has a share of 33.67%. Virgin Mobile : Virgin Mobile as it says is “India’s ‘first’ national youthfocused mobile service”. Virgin Mobile branded services are being offered to the Indian consumers by Tata Teleservices through a brand franchise with Virgin Mobile. Virgin Mobile India will provide Tata Teleservices with experience and expertise in designing, marketing and servicing of “Virgin Mobile” branded products for the youth segment. They are targeting the Youth segment by offering schemes like get paid for incoming calls, pay for the first message and get 100 messages free for that day. Industry Revenue (2002-2010) According to a Frost & Sullivan industry analyst, by 2012, fixed line revenues are expected to touch US$ 12.2 billion while mobile revenues will reach US$ 39.8 billion in India. India has 23

BRAND MANAGEMENT PROJECT 201 0 become the second country in the world to have more than 100 million CDMA-based (code division multiple access) mobile phone subscribers after the US, which has 157 million CDMA users. The Indian telecommunications industry is on a growth trajectory with the GSM operators adding nearly 9 million new subscribers in April 2009, taking the total user base to 297 million, a growth of 3.11 per cent over the additions made the previous month. The figures, however, do not include the GSM subscriber additions made by Reliance Telecom. Year 2002-03 2003-04 2004-05 2005-06 2006-07 2008-09 200910(forecasted) a.

Revenue(US$ billion) 9 10 11 15 20 32 43

http://www.cellular-news.com/story/37761.php

2.1.3 Strategy Competition:Airtel (market leader) With a 32% market share. Airtel has emerged as a market leader, Bharti televentures have positioned themselves as intergrated players with desire to have a presence in basic (wire line and wireless) as well as national and international long distance.

Vodafone/ BSNL (market challengers) Vodafone with a 24% market share has followed a differentiations strategy by offering its customers value added services (VAS). They have followed a top down approach, tapping category a cities, BSNL is a state owned 24

BRAND MANAGEMENT PROJECT 201 0 player with market share of 16% and has been able to leverage its low cost position in small towns and B and C category cities. IDEA (market follower) With a 15% market share it has positioned itself as a ‘value for money’ brand. It simply follows the leader and the challenger after the technology becomes successful. Reliance/TaTa/ Aircel/Shyam Telecom/ Spice/TaTa DO CO MO/ (market Nichers) They are the niche players who cater to very small niche markets, which are not served by the big players.

2.1.4 SWOT ANALYSIS The SWOT analysis provides information that is helpful in matching the firm's resources and capabilities to the competitive environment in which it operates. As such, it is instrumental in strategy formulation and selection. The following diagram shows how a SWOT analysis fits into an environmental scan:

SWOT Analysis Framework

Strengths

Environmental Scan / Internal Analysis /\ Strengths Weakne sses | SWOT Matrix

\ External Analysis /\ Opportunities Th reats

Here we will analyze the strengths of the telecom industry as a whole. The most important factors are:

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BRAND MANAGEMENT PROJECT 201 0 • Technology is advanced and easy to implement: For telecom industry the technology is really advanced and more and more investment is done on technology to get world class infrastructure and knowhow to put in this field. Recently the telecom sector is going to add 3G spectrum as its latest up-gradation.

•

Management Team has prior experience: The management team controlling Indian telecom sector in really efficient. Thank goes to the IITs which produce world class engineers. So Indian telecom sector has abundance of technological knowhow.

Weakness The weaknesses of the Indian telecom sector are as follows. • High Cost of Infrastructure: The infrastructure cost of telecom industry is very high. • Low customer retention power: The customer retention power for telecom industry is really low and the customer changes their service provider company very soon. Opportunity •

Population: The population of India is really an opportunity of telecom service providers, as the number of population without telecom service is also very high. The industry has to target India’s huge population to grow.

•

Changing Population psychograph: Population psychograph is also changing. Previously telecom service 26

BRAND MANAGEMENT PROJECT 201 0 was thought as an emergency service, now it has become an essential part of life in our country.

•

Increased Penetration Level: All the organizations of the industry are trying to increase their penetration level, in other word to increase the tele-density of the country. The urban Indian population gives a real growth prospect to the industry.

•

FDI: The foreign direct investment in telecom has been hiked up from 49% to 74%. This move is positive for the sector, as it requires investments of Rs 700 –900 million over the next 5 years. FDI inflow by 2004 was 9950.94 cores in telecom. Countries like Europe, Korea, and Japan telecom are likely to enter India, as India is seen as fastest growing telecom market in world.

Threats The treats to the industry are the following: • Government Policies – Government may provide licenses to many foreign operators, which may already have pose a threat for the existing players in the industry. • New Technology can change the market dynamics: A lot of new technologies are coming. Then even have the potential of changing the entire industry dynamics or even create substitute of the telecom services existing. Some of the examples are follows:  VOIP (Skype, Messenger etc.)  Online Chat  Email 27

BRAND MANAGEMENT PROJECT 201 0  Satellite phones To summarize the SW0T analysis we can draw the following framework for telecom industry:

CHAPTERIII Customer Analysis

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3.1. Need-gap Analysis: 3.1.1. Customer Analysis: • We can divide customers into various segments based on their needs. o Segment 1: this segment of customer wants latest innovations in their mobile phone. They pay premium for it. This group is interested in experimenting. For them it is their status symbol. They know almost all the latest thing in telecom industry. o Segment 2: Particular customer segment wants value for money in terms of effective call rates. They utilize some value added services. Their major focus for telephone is just to communicate. o Segment 3: This customer segment telecom product is luxury. It is a large segment. We can term it as BOP. Effective call rates and customized plan can work well. o Business segment: This segment’s needs are distinctly different from other segments. They want customized features and services. 3.1.2. Description of customer Problem: 29

BRAND MANAGEMENT PROJECT 201 0 •

Major problems of customer

o

Hiding of information (regarding charges)

o

Lack of advance technology

o

Value proposition is less

o

Promotional calls

o

Expensive Value added services

o

Offerings are not communicated properly

o

Poor after sales services for major players

o

Network jam

o

Call getting disconnected

o

Varying schemes and amount of schemes available

o

Lack of personalized product

3.1.3. Profiling of new customers for a new product: • Our customers are first movers in technology. They are innovators and early adopters. Our customer belongs to cadre, who spend more money on gadgets, life style and quality of life. • Another profile which we want to target is business class. We provide business solutions with technology. We provide high end service to industry for networking. • We target youth customers those want to obtain every advanced technology available into the market. 30

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3.2. Sales Potential: Indian Telecommunication industry, with about 464.82 million mobile phone connections (June 2009), is the third largest telecommunication network in the world and the second largest in terms of number of wireless connections. For the past decade or so, telecommunication activities have gained momentum in India. Efforts have been made from both governmental and non-governmental platforms to enhance the infrastructure. The idea is to help modern telecommunication technologies to serve all segments of India’s culturally diverse society, and to transform it into a country of technologically aware people. •

•

Teledensity: 41.08% (July 2009)

Projected teledensity: 626 million, 46% of population by 2010. • •

Yearly Cell phone Addition: 113.26 million (2007)

•

Monthly Cell phone Addition: 14.38 million (July 2009)

612 million mobile subscribers, accounting for a teledensity of around 51 per cent by 2012. •

According to survey conducted by Nokia, telecom sector is expected to emerge as single largest component of Country’s GDP with 15.4% contribution by 2014. •

3.3 Basic/ Product Idea • 31

Superior technological service to customers

BRAND MANAGEMENT PROJECT 201 0 •

Broad band facility

•

Television facility

•

Advanced gaming facility

•

No network jam

•

No call getting disconnected

•

Personalized Services for premium class customers.

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CHAPTERIV General Comments

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4.1. General Comments Description of the opportunity The Indian telecommunications industry is one of the fastest growing in the world and India is projected to become the second largest telecom market globally by 2010. India added 113.26 million new customers in 2008, the largest globally. The country’s cellular base witnessed close to 50 per cent growth in 2008, with an average 9.5 million customers added every month. According to the Telecom Regulatory Authority of India (TRAI), approximately 14.25 million telephone connections, including wireline and wireless, were added during July 2009, taking the total number of telecom subscriber base at the end of July 2009 to 479.07 million from 464.82 million a month before. According to Business Monitor International, India is currently adding 8-10 million mobile subscribers every month. It is estimated that by mid 2012, around half the country's population will own a mobile phone. This would translate into 612 million mobile subscribers, accounting for a tele-density of around 51 per cent by 2012.

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BRAND MANAGEMENT PROJECT 201 0 It is projected that the industry will generate revenues worth US$ 43 billion in 2009-2010. 

New Technology for Indian market.



Bidding process is likely to start soon.



None of the existing player is providing 3G facilities.



No additional advantage for the existing player.



Focusing on future market.

4.1.2 Feasibility:The telecom sector is one of the fastest growing sectors. It offers three categories of services. Fixed line services, wireless services and cellular services, the cellular services is called as mobile service because of its nature of usage . there are two types of mobile services networks- Global system for mobile (GSM) and code division multiple access(CDMA). According to available data the tele-density was only 0.02% in 1948, now in the year 2007 the tele- density has reached by 22.5% and the subscriber base has crossed 250 million mark. This is very significant indicator. And almost 70% of our population living in rural and semi-urban areas. We have an opportunity because still rural and semi rural is covered only 15%-20% by the Telecom companies. Huge untapped market is available so there is great scope of improvement.

4.1.3 Possible Hurdles:Regulatory uncertainty surrounding limited mobility and unified licensing casts doubt on the future direction of the India 35

BRAND MANAGEMENT PROJECT 201 0 telecom industry Regulatory battles are not new to India and the latest one to grab the headlines surrounds 'limited mobility'. Through the use of WLL (wireless local loop) technology, basic fixed-line operators can use limited mobility to broaden their service portfolio, often with tariffs significantly lower than that offered by the cellular operators. The telecom sector is also afflicted by a number of restraints such as sluggish pace of reform process. Lack of infrastructure in semirural and rural areas, limited spectrum availability, more over huge initial cost to take the telephony in rural and semi-rural market impede the telecom service providers to tap the huge rural market.

Conclusion

Telecom industry is seeing a rise as the trend goes and has potential for growth. Taking into account the tele-density of 38.88% there is still unexplored market. The competition is fierce with around 10 Service providers in most of the 18 circles and also the implementation of MNP. The service providers have to be different and have to stick to strict service norms and provide excellent customer service in order to hold on to the market share. Thus there is intense competition in the market but at the same time scope for development in rural areas. Airtel,Idia and Vodafone have taken up initiatives to provide customized connections to Rural customers like Motor pumps control system, loud speaker phone for illiterates and so on. In a few words Telecom sector has a lot of scope for growth and the customers at the same time have the benefit to choose from a wide range of service providers offering various plans targeted to specific customers.

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BRAND MANAGEMENT PROJECT 201 0

Annexure:REFERENCES:b.

http://www.indianomics.com/2009/07/15/top-12-wireless-operators-inindia-by-subscribers/ c. http://www.cellular-news.com/story/37761.php

d. www.efytimes.com/efytimes/fullnews.asp?edid=30375 e. www.bharatbook.com/productdetail.asp?id=82391 f. http://www.pdfcoke.com/doc/15684486/Marketing-Report-on-Bharti-Airtel g. http://www.slideshare.net/goel.gauravgoel/study-of-telecom-sector h. http://www.icmrindia.org/casestudies/catalogue/Business%20Strategy/Bharti %20Airtel%20Limited%20and%20the%20Indian%20Telecom%20Sector.htm i.

http://www.bharatbook.com.

j.

planningcommission.gov.in/reports/genrep/.../1_bg2020.doc

k. www.reportbuyer.com/.../mobile-services-to-mobilise-the-indian-telecom-sector-infuture/ l.

www.ficci.com/telecom.htm

m. tutor2u.net/business/strategy/competitor_analysis.htm n. http://www.airtel.in/

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