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Apr-May 2010
DHRUV SRIVASTAVA
PGDM 2009-11
Roll No. 038
Birla Institute of
Management Technology
Summer Internship Project
Summer Internship Project
Birla Institute of Management Technology Page 2
Summer Project Certificate
This is to certify that Mr. Dhruv Srivastava, Roll No. 038, a student of PGDM has worked
on his summer project titled “Planning& Implementation of Advertising & Promotion
Budgets basis Urban & Rural markets” at Idea Cellular Pvt. Ltd. after trimester-III
in partial fulfilment of the requirement for the programme. This is his original work to the
best of my knowledge.
Date: __________ Signature ___________
Seal: Name of Faculty________
Summer Internship Project
Birla Institute of Management Technology Page 3
Acknowledgement
I take this opportunity to express my deep sense of gratitude to all those who have contributed significantly
by sharing their knowledge and experience in the completion of this project work.
I am extremely grateful to Mr. Ashit Singh, Head- Marketing Communications, my industry guide for
being supportive and for taking out time to help me during my project. His mentorship has set an example
for me.
I am highly indebted to Professor R.J. Masilamani, my Faculty Guide, under whose able guidance this
project was carried out. I thank him for his continuous support, guidance, help and mentoring before, during
the tenure & after completion of the project.
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Birla Institute of Management Technology Page 4
Table of Contents
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Company Background
Idea Cellular is an Aditya Birla Group Company, India‘s first truly multinational corporation. The group
operates in 25 countries, and is anchored by over 1, 30,000 employees belonging to 30 nationalities. The
Group has been adjudged the ‗6th
Top Company for Leaders in Asia Pacific Region‘ in a survey conducted
by Hewitt Associates, in partnership with The RBL Group, and Fortune. The Group has also been rated
‗The Best Employer in India and among the Top 20 in Asia‘ by the Hewitt-Economic Times and Wall
Street Journal Study 2007.
Idea Cellular is a publicly listed company, having listed on the Bombay Stock Exchange (BSE) and the
National Stock Exchange (NSE) in March 2007.
Idea Cellular is a leading GSM mobile services operator in India with over 62 million subscribers, under
brand Idea. It is a pan India integrated GSM operator covering the entire telephony landscape of the country,
and has NLD and ILD operations.
A front runner in introducing revolutionary tariff plans, Idea Cellular has the distinction of offering the most
customer friendly and competitive Pre Paid offerings, for the first time in India, in an increasingly segmented
market. From basic voice & Short messaging Service (SMS) services to high-end value added & GPRS services
such as Blackberry, Data card, Mobile TV, Games etc- Idea is seen as an innovative, customer focus brand.
Idea offers affordable and world-class mobile services to varied segments of mobile users. Be it high end,
or low-end, price sensitive consumers – Idea‘s tariff plans are designed to suit every pocket. With a vision
of delighting its customers while meeting their individual communication needs anytime, anywhere, Idea
offers seamless coverage to roaming customers travelling to any part of the country, as well as to international
travelling customers across 200 countries. Idea Cellular has partnership with over 400 operators to ensure
that customers are always connected while on the move, within the country or other parts of the world.
Idea is the winner of ‗The Emerging Company of the Year Award‘ at the Economic Times Corporate
Excellence Awards 2008-09. The company has received several other national and international recognitions
for its path-breaking innovations in mobile telephony products & services. It won the GSM Association
Award for ―Best Billing and Customer Care Solution‖ for 2 consecutive years. It was awarded ―Mobile
Operator of the Award – India‖ for 2007 and 2008 at the Annual Asian Mobile News Awards.
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Birla Institute of Management Technology Page 6
The chronology of key events of the Company from
incorporation is set out below:
Calendar year Events
2009
Subscriber base as on December 31, 2009:
57,611,872
Idea becomes a pan-India operator
Emerging Company of the Year - fastest growing
mobile operator in the world‘s fastest growing
telecom market
2008
Subscriber base as on December 31, 2008: 40,016,153
Idea acquired 9 licences for Punjab, Karnataka,
Tamil Nadu & Chennai, West Bengal, Orissa,
Kolkata, Assam, North East and Jammu & Kashmir
Acquired Spice Communications with the operating
circles of Punjab and Karnataka
Launched services in Mumbai metro in the largest
single metro city launch, ever
Launched services in Bihar
2007
Subscriber base as on December 31, 2007: 21,054,027
Won an award for the "CARE" service in the "Best
Billing or Customer Care Solution" at the GSM
Association Awards in Barcelona, Spain
Initial Public Offering aggregating to Rs. 28,187
million and Listing of Equity Shares on the Bombay
Stock Exchange and the National Stock Exchange
Merger of seven subsidiaries with Idea Cellular
Limited
Reached the twenty million subscriber mark
Becomes pan-India operator in 2009
Acquired Escotel, incumbent cellular service provider in Haryana, UP(W) &
Kerala and new licensee in HP
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2006
Subscriber base as on December 31, 2006: 12,442,450
Became part of the Aditya Birla Group subsequent
to the TATA Group transferring its entire
shareholding in the Company to the Aditya Birla
Group
Acquired Escorts Telecommunications Limited
(subsequently renamed as Idea Telecommunications
Limited)
Restructuring of debt
Launch of the New Circles
Reached the 10 million subscriber mark
Received Letter of Intent from the DoT for a new
UAS License for the Mumbai Circle.
Received Letter of Intent from the DoT for a new
UAS License for the Bihar Circle through Aditya
Birla Telecom Limited. ABNL, the parent of Aditya
Birla Telecom Limited, pursuant to a letter dated
November 22, 2006, agreed to transfer its entire
shareholding in Aditya Birla Telecom Limited to the
Company for the consideration of Rs. 100 million.
2005
Subscriber base as on December 31, 2005: 6,473,962
Reached the five million subscriber mark
Turned Profit Positive
Won an Award for the "Bill Flash" service at GSM
Association Awards in Barcelona, Spain
Sponsored the International Indian Film Academy
Awards
2004
Completed debt restructuring for the then existing
debt facilities and additional funding for the Delhi
Circle.
Acquired Escotel Mobile Communications Limited
(subsequently renamed as Idea Mobile
Communications Limited)
Brand IDEA launched Delhi operations commence (Nov)
Acquired RPG Cellcom, service provider in Madhya Pradesh (Feb) Awarded
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Reached the four million subscriber mark
First operator in India to commercially launch
EDGE services 2005
2003
Reached the two million subscriber mark
2002
Changed name to Idea Cellular Limited and
launched "Idea" brand name
Commenced commercial operations in Delhi Circle
Reached the one million subscriber mark
2001
Acquired RPG Cellular Limited and consequently the
license for the Madhya Pradesh (including
Chattisgarh) Circle
Changed name to Birla Tata AT&T Limited
Obtained license for providing GSM-based services in
the Delhi Circle following the fourth operator GSM
license bidding process
2000
Merged with Tata Cellular Limited, thereby
acquiring original license for the Andhra Pradesh
Circle
1999
Migrated to revenues share license fee regime under
New Telecommunications Policy ("NTP")
1997
Commenced operations in the Gujarat and
Maharashtra Circles
1996
Changed name to Birla AT&T Communications
Limited following joint venture between Grasim
Industries and AT&T Corporation
1995
Incorporated as Birla Communications Limited
Obtained licenses for providing GSM-based services
in the Gujarat and Maharashtra Circles following
the original GSM license bidding process
MoU for merger between Birla AT&T and Tata Cellular Limited Andhra Pradesh
signed (Jan)
Birla AT&T commence Cellular operations Maharashtra & Gujarat
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Telecommunications Industry in India
India is among the fastest growing mobile markets in the world: India, the second largest mobile market
in the world, is also among the fastest growing mobile markets globally. The total number of mobile
subscribers in India (i.e., the subscriber base) has increased from 6.4 million in March 2002 to around
350 million in December 2008, at a compounded annual growth rate (CAGR) of 81%, aided by a
significant increase in network coverage and a continual decline in tariffs and handset prices.
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India, a relatively late entrant into mobile services, has benefited from a significant decline in mobile
network costs during the last three to four years. As compared with a capital cost of US$50-90/subscriber
to provide mobile service, it costs as much as US$200-350/subscriber to provide fixed-line services. This
and the added benefit of mobility have led to stagnation in the total fixed line subscriber base, which along
with the significant growth in the mobile base has translated into India having one of the highest ratios
globally of mobile subscribers to total telecom subscribers.
Despite the growth, mobile penetration remains moderate: As on end September 2008, India had a mobile
penetration of around 27%, which is relatively lower as compared to other countries as depicted in Chart 2.
Given the moderate penetration levels at present, mobile growth in India is expected to continue in the short to
medium term albeit at a lower level because of the larger base effect.
Growth expected to be led by B and C Class circles: The growth in the domestic telecom industry has
largely been concentrated in the Metros and Class A circles in the past decade, with coverage reaching
around 90% and 35%, respectively. However, coverage in the Class B and Class C cities is still low at
15-25%.
Moreover, within these circles growth has largely been concentrated in the urban areas while penetration
in the rural areas remains lower. Thus future growth is likely to come largely from Class B and C circles
and rural areas. Keeping this in view, larger players like Bharti Airtel Limited, Reliance Communications
Limited, and Bharat Sanchar Nigam Limited (BSNL) are largely focusing on increasing their geographical
coverage in Class B and C circles.
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Addition of low usage subscribers and competitive pressures lead to fall in ARPUs: With growth
coming from the lower economic strata and on account of strong competition in the mobile industry,
average revenues per user (ARPUs) have moved south over the years. The movements in the ARPUs
and minutes of usage (MoUs) for global system for mobile communications (GSM) and code division
multiple access (CDMA) operators are presented in Charts 5 and 6.
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Conservation of capital
In the past, with costs being amortised over a larger base and steps being taken to rationalize costs, most
telecom operators were able to improve their earnings before interest, taxes, depreciation and amortisation
(EBITDA) margins. However, in the current market conditions, the margins and return indicators may come under
pressure as ARPUs continue to fall.
The chart broadly illustrates the impact of declining ARPUs on the internal rate of return (IRR) at different
EBDITA margins. Thus, for new operators especially whose margins are low because of the high set-up costs,
operations can be unviable at the current level of incremental ARPUs.
Competition set to intensify further with market liberalization:
The Indian mobile sector is an intensely competitive industry, featuring 10 mobile operators of which
four, namely Bharti Airtel Limited, Reliance Communications Limited, Vodafone Essar Limited and
BSNL together account for almost three-fourths of the entire mobile market share. This is also the partly
on account of the fact that these operators have their presence in a larger number of circles as compared
with other players. With licences being granted to some of the existing operators for new circles and also
to new entrants, competition is expected to intensify further.
This is also leading to increasing load on the existing infrastructure of towers and stations. With most tower
companies like Indus towers being joint ventures between the competing cellular service providers, the sharing of
the cost is also going to determine the future profitability of the companies.
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Service Provider wise market Share as on 28-02-2010
Mobile penetration as on Jun 2009 for each circle
Circle Category Mobile Penetration
Delhi Metro 138%
Mumbai Metro 112%
Kolkata Metro 102%
Maharashtra A 37%
Gujarat A 45%
Andhra Pradesh A 41%
Karnataka A 46%
Tamil Nadu A 52%
Kerala B 55%
Punjab B 56%
Haryana B 44%
Uttar Pradesh (W) B 31%
Uttar Pradesh (E) B 24%
Rajasthan B 40%
Madhya Pradesh B 25%
West Bengal B 24%
Himachal Pradesh C 55%
Bihar C 20%
Orissa C 27%
Assam C 22%
North East C 29%
Jammu & Kashmir C 37%
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Telecom Subscription Data as on 28th February 2009
Total Telephone subscriber base reaches 413.85 Million
Wireless subscription reaches 376.12 Million
13.44 Million new additions in wireless
Overall Tele-density reaches 35.65
Telecom Subscription Data as on 28th February 2010
Total Telephone subscriber base reaches 600.69 Million
Wireless subscription reaches 563.73 Million
18.76 Million new additions in wireless
Overall Tele-density reaches 51.05
Total Subscriber base (Maharashtra-Goa Circle) – 42,233,290 (Excluding Mumbai)
Idea Cellular customer base- 9,146,389 Idea’s Market Share (%) - 21.66 %
Tata Customer base- 7,570,932
Vodafone customer base- 6,908,481
Reliance- 6,871,987
Airtel customer base- 6,601,480
Aircel customer base- 279,055
MTNL customer base- 2,639,506
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Review of Literature
When it comes to promo tools, there is a strong misconception they are tailor-made only for tactical objectives
— while promos may be primarily used for immediate activation of the brand, there is more than enough
opportunity to simultaneously build equity for the brand. Promotions globally as well as in India have the
potential of being a strategic and brand building tool.
Any work that needs to be evaluated will have to take into account whether the promotion activity has managed
to activate the brand promise and will keep up the brand equity in the long term. This is best done by ensuring
that promo and activation is well-integrated with the advertising strategy for the brand. In India the integration
of promotion with other communication is mostly done on the recommendation of the brand owner / the client.
Forrester and the Association of National Advertisers (ANA) surveyed 104 US advertisers representing nearly
$14 billion in measured media budgets. More than half of them — 62% — told them that TV advertising is less
effective than it used to be. That's in line with what they told in 2008. Advertisers want more accurate
measurement and the option for more targeted and clutter-free ad inventory. Meanwhile, US marketers are
willing to explore alternatives to the 30-second TV commercial as they shift budget from TV to social media,
banners, and search. More forward-looking marketers are ready to experiment with online video ads, branded
entertainment, and interactive TV. They recommend that advertisers get ready for the future of television, by
preparing to deliver targeted commercials, delivering true branded entertainment experiences, and embracing
the connected TV.
As the Indian telecom sector which registered a robust growth rate of 38.51 per cent in 2008-09 as against the
previous year by adding nearly 10 million subscriber month on month. India‘s largest telecom sector company
Bharti Airtel added 32.38 million subscribers in 2008-09. Reliance Telecom added 26.88 million subscribers
while Tata Telecommunications added 14.56 million subscribers in the last fiscal. The telecom sector firms,
which used to be fervent advertisers in the past, have marginally lowered down their advertisement,
sales promotion and marketing budget by 3 per cent. However, their net sales increased by 26.9 percent
despite the decline in their advertisement expenditure.
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Marketing communication programmes and campaigns can be built around a host of different communications
options. Keller (2001) for example, highlights the major communications options in the following way:
In orchestrating these options and tools in marketing communications campaigns and programmes, each
needs to be considered to achieving brand objectives in both short and long term. In particular, the
relationship between contributions to overall long term brand equity (perceptions of brand quality, levels
of brand recognition and recall, competitive positioning of the brand, etc.) needs to evaluated and considered.
For practitioners, integrated marketing communication (IMC) has
1. Become widely accepted
2. Has pervaded various levels within the firm
3. Has become an integral part of brand strategy that requires extensive brand development
activities within the firm before beginning any external brand communication efforts.
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Regarding academics, Vargo and Lusch (2004) argued in a recent paper that marketing is evolving towards
a dynamic and evolutionary process-one that is based on a service-centred view. In keeping with this
evolution, Vargo and Lusch (2004) suggest that
1. IMC should replace diverse, limited-focus promotional tools.
2. Brand management should be used for initiating and maintaining a continuing dialogue with
the customer and for enhancing relationships.
Kitchen et al. emphasize that ―strategically oriented integrated brand communications can help business move
forward in the highly competitive world of the 21st century‖ (2004, p.28, italics added). For Schultz (1998),
brands are central to this integrated marketing communication. Keller (1993) points out that customer-based
brand equity emanates from the consumer‘s familiarity and strong, favourable associations with the brand.
For Keller, ―marketing communications represent the voice of a brand and the means by which companies can
establish a dialogue with consumers concerning their product offerings‖ (2001, p. 823).
The focus on IMC is also being driven by ongoing global changes in marketing communications environment,
and the need for improved effectiveness of marketing communications. These global changes include the
development of sophisticated customer databases, fragmentation of mass media, cost of new customer
acquisition and customer defection, the relationship between below and above the line activities, and changes
in consumer‘s response to traditional communications tools and approaches, amongst others. Shimp (2000)
further qualifies the changes affecting marketing communications as:
1. Reduced faith in mass marketing as communications channels proliferate and customer and
consumer loyalties diminish or dilute.
2. Increasing reliance on more highly targeted communications methods to reflect an emerging
relationship marketing orientation in business.
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3. Greater Demands placed on marketing communications suppliers, such as agencies, to become
more of a brand custodian or guardian than just a transaction based supplier of communication
services.
4. Increased efforts to access communication ‗return on investment‘ reflecting greater demands by
managers (marketers) for accountability and measurement of alternative customer acquisition and
relationship activities.
When people think of advertising, they usually think of traditional media, such as newspapers, magazines,
television, radio, billboards, yellow pages, and perhaps direct mail. As consumers grow numb (and eventually
immune) to the ads that inundate them through traditional media channels, advertisers seek new formats to
distribute their messages. Increasingly, marketers are looking for new, unexplored ways to reach their target
audience. Sometimes it also makes sense to capitalize on existing non traditional approaches that they may not
have previously considered. Below is a list of media options that have found some acceptance as an advertiser
continue their never-ending search to reach elusive consumers.
Transit- Car cards, ads on outside of public transportation, clocks, framed displays, air terminal posters
In-Store media- POP banners, cash register units, counter units, floor stands, aisle displays, racks,
testers/sampling, interactive units, electronic displays, in-store television and radio.
Sports & Theatrical Events- programs, poster type ads, revolving banners, stadium score boards, signs
Non traditional Out of Home- Audience segment ―hangouts‖, truck stops, painted walls, kiosks, rest room
advertising, bus shelter displays, inside taxi cabs, in-flight advertising, free standing inflatable, shopping mall
displays, banner pulling, moving bill boards.
Speciality advertising- Calendars, writing instruments, business gifts, desk accessories, wearable items, airline
ticket envelopes, trade shows.