Bharti Airtel

Bharti Airtel Limited, commonly known as Airtel, is an Indian telecommunications

Services Company headquartered at New Delhi, India. It operates in 20 countries across

South Asia, Africa and the Channel Islands. Airtel has GSM network in all countries,

providing 2G, 3G and 4G services depending upon the country of operation. Airtel is the

world's third largest mobile telecommunications company  with over 261 million subscribers

across 20 countries as of August 2012. It is the largest cellular service provider in India, with

186.41 million subscribers as of October 2012. Airtel is the third largest in-country mobile

operator by subscriber base, behind China Mobile and China Unicom.

Airtel is the largest provider of mobile telephony and second largest provider of 

Airtel is credited with pioneering the business strategy of outsourcing all of its business

operations except marketing, sales and finance and building the 'minutes factory' model of

low cost and high volumes. The strategy has since been copied by several operators. Its

network—base stations, microwave links, etc.—is maintained by Ericsson, Nokia Siemens

Network and Huawei, and business support is provided by IBM, and transmission towers are

maintained by another company (Bharti Infratel Ltd. in India). Ericsson agreed for the first

time to be paid by the minute for installation and maintenance of their equipment rather than

being paid up front, which allowed Airtel to provide low call rates of  1/minute

(US$0.02/minute). During the last financial year (2009–10), Bharti negotiated for its strategic

partner Alcatel-Lucent to manage the network infrastructure for the tele-media business. On

31 May 2012, Bharti Airtel awarded the three-year contract to Alcatel-Lucent for setting up

an Internet Protocol access network (mobile backhaul) across the country. This would help

consumer’s access internet at faster speed and high quality internet browsing on mobile

handsets.

1

HistorySunil Bharti Mittal founded the Bharti Group. In 1983, Mittal was in an agreement with Germany's Siemens to manufacture push-button telephone models for the Indian market. In 1986, Mittal incorporated Bharti Telecom Limited (BTL), and his company became the first in India to offer push-button telephones, establishing the basis of Bharti Enterprises. By the early 1990s, Sunil Mittal had also launched the country's first fax machines and its first cordless telephones. In 1992, Mittal won a bid to build a cellular phone network in Delhi. In 1995, Mittal incorporated the cellular operations as Bharti Tele-Ventures and launched service in Delhi. In 1996, cellular service was extended to Himachal Pradesh. In 1999, Bharti Enterprises acquired control of JT Holdings, and extended cellular operations to Karnataka and Andhra Pradesh. In 2000, Bharti acquired control of Sky cell Communications, in Chennai. In 2001, the company acquired control of Spice Cell in Calcutta. Bharti Enterprises went public in 2002, and the company was listed on Bombay Stock Exchange and National Stock Exchange of India. In 2003, the cellular phone operations were rebranded under the single Airtel brand. In 2004, Bharti acquired control of Hexacom and entered Rajasthan. In 2005, Bharti extended its network to Andaman and Nicobar. This expansion allowed it to offer voice services all across India. In 2009, Airtel launched its first international mobile network in Sri Lanka. In 2010, Airtel acquired the African operations of the Kuwait based Zain Telecom.In March 2012; Airtel launched a mobile operation in Rwanda. 

Airtel launched "Hello Tunes", a Caller ring back tone service (CRBT), in July 2004 becoming to the first operator in India to do so. The Airtel theme song, composed by A.R. Rahman, was the most popular tune on that year.

On 26 February 2013, Airtel announced that it had deployed Ericsson’s Mobile Broadband Charging (MBC) solution and completely modernized its prepaid services for its subscribers in India. As a part of the deal, Ericsson’s multi service MBC suite allows prepaid customers to have personalized profile based data charging plans. Prepaid customers will be able to customize their data plans across mobility, fixed line and broadband by cross bundling across multiple domains (2G, 3G, 4G/LTE & Wi-Fi). It will also offer flexible multi service charging in geographical redundant mode, making Airtel the first operator to implement geographical redundancy at such a large scale. In May 2013, Bharti Infotel paid Rs 50,000 as compensation to a customer "for unfair trade practices". The customer alleged that the company continued to aggressively demand payment despite customer requests for disconnection of service.

2

Vision

By 2020 Airtel will be the most admired brand in India:

Loved by more customers.

Targeted by top talent

Benchmarked by more business.

Mission

We will meet global standards for telecom services that delight customers through:

Customer Service Focus

Empowered Employees

Cost Efficiency

Unified Messaging Solutions

Innovative products and services

Error- free service delivery.

 

 

3

ACHIEVEMENTS

First to launch Cellular service on November 1995.

First operator to revolutionaries the concept of retailing with the inauguration of Airtel Connect (exclusive showrooms) in 1995.

First to introduce push button phone in India.

First to expand its network with the installation for second mobile switching center in April, 1997 and the first to introduce the Intelligent Network Platform First to provide Roaming to its subscribers by forming an association called World 1 Network.

First to provide roaming facility in USA. Enjoy the mobile roaming across 38 partner networks & above 700 cities Moreover roam across international destinations in 119 countries including USA, Canada, and UK etc. with 284 partner networks.

BHARTI announces agreement with VODAFONE marking   the entry of   the World's Largest Telecom Operator into India

Bharti Enterprises and AXA  Asia Pacific   Holdings Limited announce partnership for a life insurance joint venture in India

Airtel Launches future factory - Centres of Innovation to in cuba tepioneering Mobile Applications

16 states, 600 million people. Only India's leading mobile service offers you the truly 'freedom-packed' Prepaid!

It is also the first company to export its products to the USA.

4

REVENUE ANALYSIS

Mobile/Cellular services

Cellular mobile service providers (CMSP) derive revenues by way of tariff charges for outgoing calls made by subscribers on its network. So basically, the revenue for a CMSP is simply a multiple of average revenue per subscriber per month (ARPU) and number of subscribers.

Subscribers: Growth in a CMSP's subscriber base is dependent on several factors, the key amongst them being:

Economic growth: With growth in the economy, and the consequent increase in activity, it requires people to be in constant touch. Thus, with the tremendous growth in economic activity in India there are more and more people subscribing to telecom services, thus leading to growth in subscriber base for CMSPs.

Rising income level: As the real income levels in a society rise, more and more people are able to afford usage of cellular phone and so the consumer does not feel the pinch of rising telephone bill, thus having the propensity to talk more, thus leading to higher MOUs for telecom services providers.

Affordability: The affordability is interplay of lower tariff charges and availability of cheaper handsets. While lower handset costs make mobile more affordable at the entry level thus allowing more people to be a part of the mobile community, lower tariffs allow for an increased usage of telecom services, while not having such an overbearing impact on telephone bills.

  Fixed line   services

The fixed (wire line) services are dominantly provided for BSNL and MTNL. Although this had been a dominant mode of telecommunication in the past, it is fast being replaced with mobile telephony, which has the advantage of connectivity on the move. The fundamental business of a fixed line operator is almost similar to that of a CMSP, in terms of ARPU and Subscriber base.

Internet/Broadband

The Internet services are provided either by telecom service providers or independent Internet service providers (ISP) who deal exclusively in providing this service. There are two forms of Internet that are currently popular - the dial-up connections and the broadband connections. Apart from the usual - economic growth and rising income levels - the growth of the Internet business is dependent upon:

5

PC penetration: Internet penetration in India is currently at very low levels, as compared to its developing peers. This is set to take off with the rise in PC penetration, which will again be a consequence of affordability in terms of lower PC costs and reduced cost of data transfer.

Parental encouragement: Unlike most products where children are targeted to drive sales of consumer durables, in the case of computers, it is the parents who are going all out to ensure that their child grows up to be a computer literate.

Enterprise services

These services are used by large and medium corporate for data transfer between their offices and their suppliers' offices, which may be spread in a city, or a country, or even across continents. Considering that this business takes care of data transfer needs of corporate, who are not as 'affordability' conscious as the individuals, companies generally earn igher margins on Enterprise services than they earn on any of the other three business lines. IT and BPO sectors, whose business is so data dependent, are the major users of Enterprise services.

6

COST ANALYSIS

The cost heads can be broken up into regulated and non-regulated costs. Entry fee, access deficit charge and license fee are regulated. On the other hand, sales, general and administrative (SG&A) and employee expenses are non-regulated in nature.

Entry fee: The companies providing national and international long distance (NLD and ILD) services are required to pay a flat entry fee of Rs 25 m each (from earlier fees of Rs 1,000 m and Rs 250 m respectively). These fees are to be paid to the central government for obtaining a license for providing these services.

Access deficit charge: The government also collects from the cellular operators an access deficit charge. The charge payable is 1.5% per cent of non-rural annual gross revenue of the telecom service providers and the amount collected is used to subsidise the telecom service provided by BSNL in rural areas.

License fees: Telecom companies are required to pay an annual license fee of 6% of their AGR to the Government of India. Licenses offered to the telecom players are for a limited period of time and these are required to be renewed on expiry.

SG&A expenses: Telecom companies incur expenditure in the form of advertisement costs for enhancing their visibility and also to make their brand more appealing to the consumers. Expenses are also incurred on customer acquisition and on maintenance of telecom equipment and network.

Personnel expenditure: These are costs incurred for maintaining the staff for executing the telecom companies' marketing strategies, for general administrative purposes, for maintenance and repair of telecom infrastructure, and customer relationship management in call centres

7

KEY SUCCESS FACTORS

Airtel has its presence in all 23 circles of the Indian telecom industry. Some of its key success factors are

Brand name

One Step Ahead

A market leader can stay as such only if it stays one step ahead of the rest. The multidimensional expansion of Airtel through different theatres has made it a step ahead of its nearest rival. This can only be executed through a stable and visionary management.

Business Process Outsourcing

Airtel follows the strategy of outsourcing the non-core activities and focus on the core. Airtel is known for being the first mobile phone company in the world to outsource everything except marketing and sales.

 

The firm outsources many of its most fundamental functions andinfrastructures, including its information technology (IT) operations to IBM, Nortel andWipro; its communications networks to Ericsson and Nokia Siemens; and its contact centre operations to Nortel and Wipro and recently with Cisco and Servion to provide hosted contact centre services.

Innovations in VAS

Airtel has separate value added services for consumers, small business and businessenterprises. Airtel’s online desktop for airtel broadband users provides free online space for storing , editing and sharing data and also free antivirus package, free software and updates on rental basis for small businesses and this is one of the VAS which is not provided by other service providers.

M-Commerce

Airtel has an idea of introducing m-commerce as one of its value added service. According to its CEO Sanjay Kapoor there is an 80 to 85 per cent of the population which is still unbanked and looking to do financial transactions using mobile technologies. By providing- commerce Airtel plans to bring a revolution by making mobile phones work as ATM machines.

8

Network 

Airtel packs a punch when it comes to network coverage. The aims of Sunil Bharti Mittal were to create a network which is clear even when in the basement. Airtel has done just that and beyond.

Declining ARPU

With more than 10 million subscriber additions a month, the Telecom Sector continues to maintain its growth momentum. Due to the entry of new players in the market a high level of competition prevails and this has lead to a decrease in the Average Revenue per User.

9

The "Value Added Services" provided from Airtel are:

1. Voice Mail service

 This system is similar to the answering machine - if the user isnot able to answer a call for some reason the caller can leave messages in the voice mail box which can be later retrieved by the user.

2. Short Message Service

 The short message service is like a two-way pager. It gives anoption of sending and receiving text messages directly from one mobile phone to another without the intervention of an operator

3. Mobile Fax 1 Data Service 

 This service helps the subscriber to send and receive Faxes,access E-mail, download computer files from other systems and remotely log on to another computer and surf the Internet.

4. Cash Card 

The cash card is a pre-paid and pre-activated card which allows the buyers to buy air time in advance. All it requires is the payment of an initial amount. This is a useful service for people who travel to Delhi often and those who want to control the expenses on their calls.

5. Caller ID

Displays calling person's number.

6. Outgoing call restriction 

To prevent or limit outgoing calls, for example, in peak hours.Also possible to exclude one or several countries, or anygeographical region, to permit only local calls, or to limit the outgoing calls to a listed number.

7. Call forward

Incoming calls can be forwarded to another fixed or mobilephone.Besides these some other services provided by Airtel are - Call conferencing, Call broadcast et cetera. 

It is in the operators -Interest that they not only get manysubscribers but also get them to use the mobile facilityfrequently. In the early stages getting increases to subscribe may be easier than getting them to talk since they will find it costlier to use the mobile phone as compared to a conventional phone [if is believed that initially cell phones would be used buy]

10

8. Roaming Facility

Roaming facility is available while the subscriber is travelling. The billing is done in the home network (Delhi). Roaming facility is available manually

* As well as semi-automatically. Once subscriber is In any other city or country, where a GSM networks available, simply insert the SIM card of the local operator Into your handset and start talking.

*Manual Roaming means a separate SIM card is provided for each city

**Semi-automatic roaming means one card has the facility for different cities.

11

INDUSTRY LIFE CYCLE

Looking at the market condition and regulatory framework policies made by the government the telecom industry appears to be in a growth stage this would be a long term look at the lifecycle of the industry.

Untapped rural market:

Telecom has penetrated only 44.87% of the Indian market out of which rural marketconstitutes only 15%. DoT has called for Private telecom operators for providing wireless broadband in rural areas and the selected private telecom operator would be providedfinancial assistance through its Universal Service Obligation (USO) Fund.

Favourable Regulatory Environment:

The Government’s Telecom Policy initiatives have been growth-oriented and forwardlooking. Various incentives such as increase in foreign investment limits up to 74%, implementation of the Unified Access Licensing Regime (UASL), availability of the Universal Service Obligation (USO) fund for enabling expansion in rural areas and introduction of MNP have led to the proliferation of mobile services in the country. TRAI has slashed the termination fee paid by operators by 33%, which will help Telecom companies reduce their Local as well as National Long Distance (NLD) tariffs by up to 20%.

Decreasing Cost of Subscription:

The fall in subscription costs and rising incomes has increased the affordability of mobile services. The cost of life-time prepaid cards has fallen from Rs.999 to Rs. 99. The availability of low denomination pre-paid vouchers, bundled offerings and other product innovations have made mobile services affordable in semi-urban and rural markets

Technology and increasing subscriber base:

The Indian telecom industry with its intense competition is able to add minimum 10 million customers every year. The 3G subscriber base is expected to reach 90 million by 2013 with revenues touching Rs.80, 000 crs, and would account for 46% of the total wireless revenues. Mobile Number Portability feature is to be provided very soon. Because of these factors the industry appears to be in a growth stage

12

BUSINESS MODEL OF AIRTEL

Airtel is probably one of the best run companies in the world (most definitely in India). It is the largest telecom player in the country and has the advantage of both massive size and a very high-growth industry. It’s worth about $25 billion and growing fast. The secret of its success has been its business model. Airtel focuses only and solely on two things: Customer acquisition Servicing (Retention) and business development/expansion All other functions i.e. hardware, network management, backend applications (billing etc.), value added services and even telecom infrastructure – are outsourced. Airtel pioneered this in the Telecom game. In February 2004, Sunil Mittal, the CEO of Airtel took a bold step in outsourcing itscellular network operations and network management to companies like NokiaSiemens and Ericsson, IT and backend applications to IBM, billing to someone else etc.

Innovative Business Model:

Bharti Airtel Limited and IBM India Pvt. Ltd have established an Innovative Business Model that is now setting new standards across industries around the world. In March, 2004, in what became a globally historic, first of its kind deal, Bharti outsourced all of its IT to IBM.

Innovation Highlights:

The agreement was the largest ever IT deals in India and at the time of signing, was estimated to be of an order of US$ 750 million in value.

AIRTEL PROPOSED BUSINESS MODEL

Airtel has already established itself as the leader in the market by differentiating itself with its focus on building a strong brand through innovation in sales, marketing, and customer service, and an innovative cost effective business model.

Bharti Airtel should partner with existing players in Africa to share infrastructure to reduce operational costs for Zain. They should go for country level discussions for collaboration on fibre optic sharing and tower sharing. Extension into smaller towns will be at lower capital expenditure through sharing.

Airtel was among the first operators to start infrastructure sharing in India which has helped it to sustain a low cost tariff business model. Hence, they should follow somewhat similar strategy for Africa.

The idea is to engage with Tier two operators and form a new company and share Radio Access Network (RAN) and related cost burdens. This move will help at achieving some leverage against MTN the market leader in some of these geographies.

Airtel has proven that it will do whatever it takes to make Africa a success and will not necessarily just replicate its Indian models but use innovation and leverage

13

MARKETING STRATEGY ADOPTED BY BHARTI

Bharti has spent a considerable amount on advertising its mobile phone service, Airtel. Besides print advertising, the company had put up large no of hoardings and kiosks in and around Delhi. The objective behind designing a promotion campaign for the ‘Airtel’ services is to promote the brand awareness and to build brand preferences. It is trying to set up a thematic campaign to build stronger brand equity for Airtel.

 Since the cellular phone category itself is too restricted, also  the  fact  that  a Cellular  phone is a highinvolvement product, price doesn't qualify as an effectivedifferentiator. The image of the service provider counts a great deal. Given the Cell phone category, it is the network efficiency and the quality of service that becomes important.

 What now the buyer is looking at is to get the optimum price-performance package. This also serves as an effective differentiator Brand awareness is Spread through the' campaigns and brand preference through brand stature. Airtel's campaign in the capital began with a series of 'teaser' hoardings across the city, ‘bearing just the company's name and without explaining what Airtel was. In the next phase the campaign associated

Airtel withCellular only thereafter was the Bharti Cellular connection brought up. Vans with Airtel logos roamed the city, handing out brochures about the company and its services to all consumers. About 50,000 direct callers were sent out. When the name waswell entrenched in the Delhiites’s mind, the Airtel campaignbegan to focus on the utility of Cell phone. In the first fourmonths alone Airtei's advertisement spend exceeded Rs. 4crores.As of today the awareness level Is 60% unaided. This implies that if potential or knowledgeable consumers are asked to name Cellular phone service provider that is on the top of his/her mind 60% of them would name Airtel. As for aided it -is 100 %( by giving clues and hints etc.).Brand strength of a product or the health of a brand is measured by the percentage score of the brand on the above aided and the unaided tests. 

The figures show that Airtel is a healthy and thriving brand. Every company has a goal, which might comprise a sales target and a game plan with due regard to its competitor. Airtel 'campaign strategy is designed keeping in mind its marketing strategy. The tone, tenor and the stance of the visual ads are designed to convey the image of a market leader in terms of its market share. It tries to portray the image of being a "first mover every time" and that of a "market leader".

 The status of the product in terms of its life cycle has justreached the maturity stage in India. It is still on the rising part of the product life cycle curve in the maturity stage. The diagram on the left hand side shows the percentage of the users classified into heavy, medium and low categories. The right hand side shows the revenue share earned from the three types of users. Airtel, keeping in mind the importance of the customer retention,values its heavy users the most and constantly indulges inservice innovation. But,

14

since heavy users comprise only 15 -20% of the population the other segment cannot be neglected. The population which has just realised the importance of cellular phones has to be roped in. It is for this reason that the service provider offers a plethora of incentives and discounts. Concerts like the "Freedom concert" are being organised by Airtel in order to promote sales. The media channel is chosen with economy in mind. The target segment is not very concrete but, there is anattempt to focus on those who can afford. The printadvertisements and hoarding are placed in those strategic areas which most likely to catch the attention of those who need a cellular phone. The product promise (which might cost different1 higher)

 is an important variable in determining the target audience.

Besides this, other promotional strategies that Airtel has adopted are .

(i)People who have booked Airtel services have been treated to exclusive premiers of blockbuster movies. Airtel has tie-up with Lufthansa to offer customer bonus miles on the German airlines’ frequent flier's programs.

(ii) There have been educational campaigns, imagecampaigns, pre launch advertisements, launch advertisements, congratulatory advertisements, promotional advertisements, attacking advertisements and tactical advertisements

15

PROMOTIONAL STRATEGY 

Airtel to “Touch Tomorrow” with a new brand vision

 The Bharti Mobile promoted Airtel cellular service will go in for positioning of its brand image. 

The new brand ethos isportrayed in two distinct fashions - the tag line "Touch Tomorrow", which underscores the leading theme for the new brand vision, followed by "The Good Life", which underscores a more caring, more customer centric organization. Aimed at re-engineering its image as just simply a cellular service provider to an all-out information communications services provider, Touch Tomorrow is meant to embrace the new generation of mobilecommunication services and the changing scope of customerneeds and aspirations that come along with it The new communication is about a new dimension in the cellular category that goes beyond the Internet, SMS, roaming, IVRS, etc. but which engulfs the whole gamut of wireless digital broadband services that will constitute tomorrows cellular services.

The new campaign is in two phases - the first of which will communicate overall brand philosophy and the second products and services.

According to Mr. Jagdish Kini, Chief Operating Officer, BhartiMobile Limited, Karnataka "We are adopting a new brand-platform - Touch Tomorrow - not only to reflect our corporate ethos but also business strategy". The new identity will have the logo in Red, Black and White colours along  with lower case typography to convey warmth.

AirTelwill incorporate the latest branding in all of itscommunication and will soon be going in for an enhancedpromotional drive to establish the brand's presence.

LIFE TIME PLAN

PRE-PAID card users need not worry anymore about recharging their coupons every month. Company has launched a plan that allows users to take a pre-paid connection with lifetime validityfor a one time payment of Rs. 999. Subscriber’s availing themselves of this scheme will also get full talk time for their charge coupon they purchase and also have the option to buy Taiwanese manufactured Bird mobile handsets for as low as Rs.1, 399. 

The move is aimed at stopping the churn in the pre-paidsubscriber base. Once a subscriber takes this plan, he will always be an Airtel subscriber whether the mobile is being used or not.

these Innovative Business Model three pan-Asia awards in the last two years including the MIS Asia IT Excellence Award for Best Change Management in2005, the MIS Asia

16

IT Excellence Award for Best Bottom Line IT in 2006 and the MIS Asia IT Excellence Award for Best Knowledge Management in 2006. 

IBM assumed responsibility for all of Bharti’s IT systems, Applications, infrastructure, operations and people with the agreement coming into force. The agreement entailed Bharti paying IBM a percentage of its revenues, which directly linked IT cost to business performance. The agreement construct was innovative not only from the Perspective of the remuneration model for IBM, but also in terms of the Scope of the delivery, which was comprehensive and included practically all of IT—current and future. It made innovation all pervasive as IBM introduced changes in the area of processes; people andsystems to usher in business transformation improve operational excellence andefficiency and optimize performance. Having seen Airtel succeed with this, a number of the other operators are now trying to follow in some way or the other. E.g. Hutch followed a similar model by outsourcing their network operations to Nokia .It was also the first to divest its hard assets, i.e. – its telecom towers – to a separate company and lease them back themselves as well as monetize surplus bandwidth by selling to other operators. This was the ultimate act in putting the faith in the brand rather than in iron and steel. Because of focus on customer experience and on business development, Airtel has been not only the fastest growing but the most innovative of operators. It has realized the importance of having access to the consumer at all levels, and therefore is going from core mobile to landline internet, Digital TV (DTH) and even digital cinema(theatres)It is also one of the few companies that have realized the importance of value added services (VAS) early on in the game.

17

MARKET SITUATION

At the time of launch

 The first mover in the market was Airtel which launched itsservices in Delhi in Aug 1995 (Informal launch). Essar Cell phone followed by launching its services informally in Oct 95. At this point of time, the market was at a nascent stage, awareness level was low and both operators independently tried to spread awareness and educate the peopleOnce the networks were commercially launched, it became anumber game with a multitude of schemes being offered to woocustomers Initially the cellphone was perceived as a statussymbol and utility took a back seat The target segment in Delhi were corporate and the high income group. The average capacity installed was for 1.5 lakh subscribers. This coupled with the steep license fee paid to DOT put pressure on the operators to break-even by rapidly expanding their markets. In the first two years, this led to a number of schemes being offered and prices crashing.

COMPETITIVE SITUATION

Airtel launched its services before Essar and skimmed the market picking up the bulk of the high usage premium clients. This is a very competitive industry with the two companiesdifferentiating either on value-added services or price. Airtel is perceived as the high quality provider and has a premium image. Essar, on the other hand, is perceived as the lower end service provider. Airtel positions itself as the market leader on the basis of the number of subscribers. Essar is trying to counter this by emphasising on the reach of its network and the quality of its service. However, Essar is somewhat not been very successful largely due to the inconsistency in advertising To promote themselves, both the players have been dependent on tactical advertising However, they have restrained from sing comparative  advertising  Hoardings have  been a very popular medium  for carrying the advertisements Airtel has also been advertising on television using the Bharti Telecom name.

18

Market share

Private operators hold 88.02% of the wireless market share (based on subscriber base) whereas BSNL and MTNL, the two PSU operators, hold only 11.98% market share.

The graphical representations of market shares and shares in net additions of all the service providers during the month of April.

As per the TRAI data, by the end of April 2013, about 91.73 million subscribers have submitted their requests to different service providers for porting their mobile number. In MNP Zone-I (Northern & Western India) maximum number of requests have been received in Rajasthan (8.80 million) followed by Gujarat (7.85 million) whereas in MNP Zone-II (Southern & Eastern) maximum number of requests have been received in Karnataka (10.90 million) followed by Andhra Pradesh Service area (8.30 million).

19

What is STP?

STP or segmentation targeting positioning is a marketing tool with the help of which marketers differentiate, attract, retain and grow customer base for their respective products.

SEGMENTATION

Segmentation is the procedure that an organisation goes through to segregate the market into different groups according to the different characteristics which might need different products. The Marketer, groups various people into segments on the basis of similar characteristics, tastes, perception etc. so that they will have a similar view/response to a particular product launched specifically for each segment.

Market segmentation is a two-step process of: naming broad product markets, and segmenting those markets in order to select target markets. Most segmentation efforts fail because inexperienced marketers attempt to find one or two demographic characteristics to segment a mass market. Generally, customer needs and behaviours do not fit nicely into one or two demographic characteristics. This section of the report will outline Best Practices related to segmenting our various product markets.

20

Defining Generic and Product Markets

A market is a group of potential customers who have similar needs and are willing to purchase goods or services to satisfy those needs. Good marketers focus on the customer and develop marketing mixes for very specific target markets. On the other hand, poor marketers focus on their products when defining markets, leading to missed opportunities and questionable customer satisfaction. The point here is that a market is external to an organization; it doesn’t make sense to segment potential markets based on the features contained in our products or services.

When narrowing down the mass market, it is helpful to think of two basic types of markets: generic markets and product markets. A generic market is a market of customers with generally similar needs, which organizations satisfy in a variety of ways. An example of a generic market would be the transportation market for a city; buses, trains, cars, bicycles, and walking, are all methods of getting around town.

Contrastingly, a product market is a market of customers with very similar needs. An example of a product market would be for laptop computers, where customers have the choice between products from Fujitsu, Dell, Apple, Lenovo, HP etc.

When evaluating potential market opportunities, we look for a definition that is broader than our firm’s current product market, but not so broad that our firm cannot handle the demand if it were generated. Work to establish a slightly broader definition for our current product markets.

When defining our product market, there are four important aspects:

1. What - Product Type2. To Meet – Customer Needs3. Who - Customer Segments4. Where - Geographic Region

An example of a product market might be “Financial Consulting services in Western parts of India”, where once we have defined our product markets, we are ready to continue the segmentation process to identify potential target markets.

21

Types of segmentation

1) Geographic variables:

A. Region of the world or country: East, West, South, North, Central, coastal, hilly, etc.B. Country size/country size: Metropolitan Cities, small cities, towns.C. Density of area: Urban, Semi-urban and Rural.D. Climate: Hot, Cold, Humid, Rainy.

2) Demographic variables:-

A. AgeB. GenderC. Family sizeD. EducationE. IncomeF. OccupationG. EducationH. Socioeconomic statusI. Religion J. NationalityK. Language

3) Psychographic variables

A. PersonalityB. Life styleC. ValueD. Attitude

4) Behavioural:

A. Website VisitsB. Responses to MarketingC. Purchasing MethodsD. Association MembershipsE. Internet UsageF. Social Media GroupsG. Collateral Views/Downloads

22

Following are 4 criteria that strong market segments have in common:

1. Homogeneous - customers in a market segment should be very similar in both their segment dimensions and their likely response to a marketing mix.

2. Heterogeneous - customers in different market segments should be as divergent as possible with other segments.

3. Economic Upside - the segment needs to be large enough, or predicted to grow sufficiently, to be profitable.

4. Operational - the segment dimensions should be helpful for understanding & identifying customers and making decisions regarding the marketing mix.

It is essential that market segments are operational. The whole point of segmenting is to assist with better targeting, positioning, and decision-making; be sure that our segment dimensions are extremely relevant.

Once we have established distinct market segments based on various dimensions, we are ready to start targeting our potential customers. The next section of the report provides advice pertaining the effective target marketing techniques.

23

Segmentation of Airtel

Segmentation is very important because of the better predictability of the target consumer group and to design the proper marketing mix strategy.

 

On the basis of Geographic variables:- 

Region wise

East Region (West Bengal, Assam, Arunachal Pradesh etc.)

West Region (Gujarat, Rajasthan, Maharashtra etc.)

South Region (Andhra Pradesh, Karnataka, Kerala etc.)

North Region (Punjab, Haryana, Himachal Pradesh etc.)

Central Region (Madhya Pradesh, Chhattisgarh, Jharkhandetc)

 

 Density of area

Urban (Cities Such As Mumbai, Delhi, Pune, Jaipur etc.)

Semi-urban (Nasik, Aurangabad, Ahemad nagar etc.)

Rural (Baramati, Khed, Saswad etc) 

On the basis Demographic variables:- 

 Age

From age group 18 to 35

As most of the people start using a mobile from the age of 18 sowe may make a segment of a age group 18 to 35 as most of the will be students and remaining will be fresher’s working in the industry. So they need SMS plans for chatting and they also need cheap calling rates. We may provide the FRINDZ card to them

35 and above

As most of this group will be working and don’t use mobile for SMS and chatting. So this group needs only the calling facility at reasonable rate. This Group may continue using the general plan. 

24

Income

Prepaid & post-paid

Generally the mobile service providers plan their marketing strategies according to the prepaid market and post-paid market. So it is basically depends upon the income of the consumer that whether he selects the prepaid or post-paid. Generally the consumers with low income choose prepaid and consumers with high income choose post-paid.

 On the basis of Behavioural variables

  Brand Loyalty

We can also segment it on the basis of the loyal customers and on loyal customers of the brand. We can provide various schemes and offers to the loyal customers to retain him with our product.

Good use of marketing strategy is well represented by the example of Airtel in India. India is the world’s fastest growing telecom market, and has one of the largest mobile phone subscribers in the world. A slew of mobile services companies have cropped up, but Airtel continues to remain a dominant player in the market with the maximum market share.

25

Airtel meticulously segments its market. Apart from the geographic segmentation, which divides the Indian market into east, west, south, north and central regions, the market is also segmented in each region on the basis of age and income. The different geographic regions are handled independently and different campaigns are run according to the tastes and preferences of people in each region. Under each region, age and income play an important role in determining the extent of mobile usage.

Hence Airtel caters to two different categories each in age and income. It targets younger population by providing them cheap call/msg rates at night and also cheap SMS plans, while the elder population is targeted by plans for calls at reasonable rates. In the income categories, the lower income people are targeted by offering them cheap and affordable lifetime validity prepaid cards, that can be used for incoming calls; while the higher income groups are targeted by offering them premium services like VAS(value added services), GPRS plans and 3G technology.

26

TARGETING

Targeting evaluates the attractiveness of each segment of its buying power, size, growth of the market, competitiveness etc. Defending a target market requires market segmentation, “the process of pulling apart the entire market as a whole and separating it into manageable, disparate units based on demographics”. We then choose or come up with a particular strategy or a product itself for each targeted segment.

Target marketing makes the promotion, pricing and distribution of the products or services in a particular segment. Target marketing provides a focus to all marketing activities.   Market targeting means to choose one’s target market.

PROCESS OF CHOOSING TARGET MARKET:         We must make sure that target market is not synonymous to segmentation. Segmentation is just the first step of the target market. Target market follows different basis of segmentation. We must view each segment as a distinct marketing opportunity and continuously evaluate the worth of each segment (sales/profit potential).

Estimating whether the segment is:

Distinguishable. Measurable Sizable. Accessible. Growing. Profitable Compatible with the firm’s resources Checking out if the firm has the differential advantage.    Distinctive capability for serving the selected segments.

   At the end choose those segments which the most appropriate for the company.

27

DECISIONS INVOLVED IN TARGETING STRATEGY INCLUDE

Which segments to targeting? How many products to offer. Which products to offer in which segments.

After evaluating different segments, the company can consider five patterns of target market selection. They are:-

Single Segment concentration

We have brands in the market which concentrate only on one segment. For example, Zodiac brand concentrates on formal wear for executives and professionals. Farm Equipment Division of M&M concentrates on tractors.        Through concentrated marketing, the firm gains a strong knowledge of the segment needs and achieves a strong market presence. But, a particular market's growth can deteriorate or a competitor may invade the segment. For example, when Digital camera technology took off, Kodak's market share started to fall gradually and they could not regain their dominance as new competitors like Sony and Nikon had arrived.

Selective Specialization

A firm selects the number of segments, each objectively attractive and appropriate. There may be little or no synergy among them but each promises to be a money-maker. For example, Cadbury's advertising targets audience of a wide range with one select ad for each segment.

Product Specialization: A microscope manufacturer makes different microscopes for different customer groups such as University, Govt., Hospitals and commercial laboratories and builds a strong reputation in that product area. The risk is that the product may be replaced by newer technologies.

Market Specialization

A firm gains strong reputation in serving a customer group and becomes a channel for additional products the customer group can use. For example, ITC first concentrated only on tobacco related products, and later they moved into the field of FMCG and IT services. The downside is that the customer group suffers budget cuts or shrink in size.

Full Market Coverage: The firm attempts to all customer groups will all the products that might be needed. Only very less firms like Microsoft(Software), General Motors(Vehicle), Dell(Electronics) etc. can undertake a full market coverage strategy.             They can cover the whole market via Undifferentiated Marketing, where the firm ignores segment differences and Differentiated marketing, where the firm offers different products for different segment.

28

Targeting of Airtel

Airtel has targeted the premium and upper middle class. The motto behind this this only those segments should be targeted who value time and have the paying capacity. During the introduction stage there was a huge pressure to get consumers across to hook up with their brand, because getting them to Airtel by their earlier brand and switching their brand loyalty was too tough. Airtel marketers have been concentrating totally on the business executive class but now that the basic viable volumes has been built up and prices have declined to a certain extent they are planning to venture further field.

TARGETING AREAS

:Professionals by giving free calls in post-paid connections. Entrepreneur by giving various plans in which they may get internal calling free. Youth with The „FRIENDZ‟ Scheme. Targeting Students by introducing post-paid connection only for students and with zero rentals.

29

POSITIONING

Positioning “has come to mean the process by which marketers try to create an image or identity or value in the minds of their target market for its product, brand, or organization.”

Positioning involves on affecting the target. The example can be Apple Computer has chosen itself as user-friendly computers.  Thus, Apple advertising itself as a computer for “non-gigs”.

Positioning of a product is a sum of the attributes which are normally described by the customers.  Describe its standing, target market, quality, strengths, weaknesses, prices and any other values the product represents.

There are three types of positioning concept:

   Functional position

Solve problems.

Provide benefits to customers.

Get favourable perception by investors (stock profile) and lenders.

   Symbolic positions

Self-image enhancement.

Ego identification.

Belongingness and social meaningfulness.

Affective fulfilment.

  Experiential positions

Provide sensory stimulation.

Provide cognitive stimulation

30

Product positioning process generally, the product positioning process involves:

Defining the market in which the product or brand will compete (who the relevant buyers are)

Identifying the attributes (also called dimensions) that define the product 'space'\

Collecting information from a sample of customers about their perceptions of each product on the relevant attributes

Determine each product's share of mind

Determine each product's current location in the product space

Determine the target market's preferred combination of attributes (referred to as an ideal vector)

Examine the fit between:

The position of your product

The position of the ideal vector

31

Approaches of positioning

The main approaches to positioning are

The product class approach.

The cultural symbol approach. - It is based on showing the cultural symbol which helps stand out from other competitors. The example of this can be the MALBORO brand.

Customer benefit approach- involves putting the brand behind the competitors. It can be a single product which can solve many problems e.g.  Procter & Gamble’s Head & shoulder shampoo functions as anti-dandruff and anti-hair fall shampoo.

The price-quality approach- some brands have higher price to cover the cost of the product and to give the customer message that this product is on a high level and quality.

The competitor approach

       To effectively understand repositioning, it is important to understand how one’s brand and those of competitors are perceived.  This let identify how products are perceived by the consumers.  After that the company can attempt to move the brand in more desirable directions by promoting other, certain points.   

Targeting of Airtel

Airtel has targeted the premium and upper middle class. The motto behind this this only those segments should be targeted who value time and have the paying capacity. During the introduction stage there was a huge pressure to get consumers across to hook up with their brand, because getting them to Airtel by their earlier brand and switching their brand loyalty was too tough. Airtel marketers have been concentrating totally on the business executive class but now that the basic viable volumes has been built up and prices have declined to a certain extent they are planning to venture further field.

TARGETING AREAS

:Professionals by giving free calls in postpaid connections. Entrepreneur by giving various plan in which they may get internal calling free. Youth withthe „FRIENDZ‟ Scheme. Targeting Students by introducing postpaid connection only for students and with zero rentals.

32

DISTRIBUTION

The company whose operations are concentrated in and around Delhi. It 27 Franchisees and 15 Distributors- They also have 8'instant access cash card counters- Each franchises or distributor can have any number of dealers under him as long as the personas approved by the Airtel authority. 

Each franchise has to invest Rupees Ten Lakhs. To obtain a franchise and should employ an officer recruited by Airtel. This person acts as a liaison between the company and the franchises. The franchises can it any number of dealers as long as their territories do not overlap. But unfortunately Airtel has not been very successful in controlling territorial overlaps of dealers. The franchises can carry out his 1her own promotional strategy. For this the Company contributes

75% of the money and the franchises contribute 25% of the money. The dealers under the franchisee receive the same commission. The franchises and the dealer obtain the feedback from the customers and they are sent through the liaison officer on a day-to-day basis to Airtel. The dealer has to invest Rupees. One Lakh as an initial investment. The dealer of Airtel is not allowed to provide any other operators' service. Target set for distributors and the dealers is 100 -150 activations per month. Hence the dealers can also go for their own promotions like banners and discounts on festivals etc. The dealer provides service promptly. The consumer on providing the bill of purchase for the handset and proof of residence has only to wait an hour before getting connected. The staffs of the dealers and the franchisees are provided training by the Airtel personnel. The complaints encountered by the franchisees and dealers are either handset being non-functional or the SIM Card not getting activated. Anything more complicated is referred to the main Airtel office in Delhi.

33

Company

Franchisee

Dealer

CustomerCustomer

Dealer

Distributor

SWOT ANALYSIS

STRENGTHS

Cost advantage

Current leaders in quality service

Largest distribution network

Ability to constantly innovate

Highly skilled workforce

Entrepreneurial zeal

Airtel’s increased equity and market cap.

WEAKNESSES

To prove credibility

Price pressures

Need for Government support

Awareness

Sales and Marketing

34

OPPORTUNITIES

To sustain passion and commitment

Airtel’s market share increasing at other service providerexpense. Thus opportunity to wipe it out.

Attain higher value services

Collaborative business needs to be explored

Vertical repeatable solutions.

Low penetration level in rural markets.

THREATS

Foreign investment

Global trends moving from GPS to WLL.

Lack of global parity in telecom tariff 

Other competition

35

CONCLUSION

From above the details I conclude that 70% Airtel users preferred to remain with Airtel. Also good no. of users who werewilling to switch from their respective subscribers showed interest in Airtel. Hence, these statistics imply a bright future for the company. Also the company is now providing more services like the door to door services which is you dial the Airtel customer care and would like to send someone flowers the Airtel Company delivers those flowers to the person concerned. Also Airtel is providing free text messaging service and free voicemail service. Call conferencing is also another feature Airtel provides.

36

BIBLIOGRAPHY

http://www.ibef.org/industry/telecommunications.aspx

http://business.mapsofindia.com/india-industry/telecom.html

http://www.thehindubusinessline.com/2010/05/13/stories/2010051352981000.htm

http://www.equitymaster.com/research-it/sector-info/telecom

http://www.thinkdigit.com/Mobiles-PDAs/Telephone-subscriber-base-in-India-slips-to_15272.html

http://www.scribd.com/doc/49246309/Marketing-Segmentation-Targeting-And-Positioning-pf-AirTel

http://www.dnaindia.com/money/report_mukesh-cleans-out-bharti-s-fieldfresh-hires-almost-70-people_104154

37