43142911 sales and distribution of vodafone

8/3/2019 43142911 Sales and Distribution of Vodafone

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INDIAN INSTITUTE OF PLANNING AND MANAGEMENT

s

ss

SUBMITTED IN PARTIAL FUFILLMENT OF POST GRADUATE DEGREE

MASTER IN

BUSINESS ADMINISTRATION

7th Nov. 2010

PROJECT REPORT

OF

SALES AND DISTRIBUTION MANAGEMENT OF

VODAFONE

SUBMITTED BY :-GROUP NO. 101

MANOJ KUMAR SHARMA

DINESH JAKHAR

RAHUL SHARMA

KUNAL DABHAI

SUBMITTED TO:-

Prof.

NAVAL ARORA


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ACKNOWLEDGMENT

We are very thankful to the head of sales and distribution manager Mr. Ram

Krishnan Ayer of Vodafone Limitedfor their cooperation, without

whichcompletion of this project would not have been possible.

We are extremely grateful to for sharing with us all the details of the project

andproviding us with valuable insights about sales, distribution function.We

would like to thank them for the patience shown by him and being of such agreat

help to all our queries.

We would also like to express our gratitude towards our professors Naval Arora,

for giving us an opportunity to do this project on sales and distribution andfor

being the guiding light through the completion of this project.


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EXECUTIVE SUMMARY

This project aims to study the distribution channels and the sales network patterns

of the telecom sector through a Live Interview with the sales and distribution

manager of VODAFONE LTD. Companyin Rajasthan. In this project we have

tries to bring out or explained how the sales and distribution network work for the

Vodafone in Rajasthan and around the India.

The project was designed after detailed discussion with the company officialsthat is the Sales and distribution Manager for the distribution and sales

functioning in Rajasthan.

This project is Based on the live Interview which is conducted for collecting the

data /information from the Sales and Distribution Manager that how the sales and

the distribution network is work.The project covers the sales network of the

company with the dealers and that of the dealers with the customers.

In this project we have taken the Interview of the Sales and Distribution ManagerMr. Ram Krishnan Iyer, he had provided and avail the valuable information about

the sales and distribution network of the Sale and Distribution.

Which help us in this project for knowing the sales management? And the whole

project is based on the interview and the Sales and Distribution manager has told

that take the company profile from the Internet and company website.


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Contents

CHAPT

ER NO 1 INT

RDUCT

ION OF PROJECT

06

1.1TELECOMMUNICATION SECTOR IN INDIA 071.2HISTORY OF INDIAN TELECOMMUNICATION 081.3TELECOM SERVICES AVILABLE IN MARKET 111.4GSM V/S CDMA 11

CHAPTER NO 2 INDUSTRY OVERVIEW 12

2.1 BACKGROUND 12

2.2 GROWTH 13

2.3 INDIAN TELECOM MARKET 13

2.3.1 SIZE 13

2.3.2 STRUCTURE 14

2.3.3 SERVICES 14

2.3.4 SECTOR OUTLOOK 15

2.3.5 POTENTIAL 15

CHAPTER NO 3 COMPANY BACKGROUND 17

3.1 COMPANY PROFILE 173.2 DRIVE OPRATIONAL PERFORMANCE 19

3.2.1 VALUE ENHANCEMENT 19

3.2.2 COST REDUCTION 19

3.3 PURSE GROWTH OPPORTUNITIES IN TOTAL

COMMUNICATION 20

3.3.1 MOBILE DATA 20

3.3.2ENTERPRISE 203.3.3 BROADBAND 20

3.4 EXECUTE IN EMERGING MARKETS 21

3.4.1 DELIVERY INEXISTING MARKETS 21

3.4.2 SELECTIVE EXPANSION AND CAUTIOUS APPROACH 21


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CHAPTER NO 4 VODAFONE SALES NETWORK 22

4.1 VODAFONE OUTLETS 22

4.2 VODAFONE SHOPS 224.3 VODAFONE TELESHOPS 23

4.4 SALES KIT 23

CHAPTER NO 5 DISTRIBUTION NETWORK OF VODAFONE 24

5.1 DISTRIBUTION NETWORK 24

5.2 SELECTION OF CHANNEL MEMBERS/DEALERS 25

5.3 RESPONSIBILITIES AND FUNCTION OF THE DEALERS 26

5.4 CHANNEL STRUCTURE OF VODAFONE 27

5.5 PREPAID SEGMENT 28

5.6 POSTPAID SEGMENT 28

CHAPTER NO 6 OTHERS ACTIVITY 29

6.1 PERFORMANCE APPRAISAL 29

6.2 MARGINS 29

6.3 PROMOTIONAL ACTIVIES 29

CHAPTER NO 7 ANNEXURE 30

CHAPTER NO 8 KEY WORLDS 32

BIBLOGRAPHY


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CHAPTER 1

INTRODUCTION OF PROJECT

This project aims to study the distribution channels, sales network and

servicepatterns of the telecom sector that is Vodafone Ltd.The project also triesto bring out the shortcomings, if any, in the present system and thusrecommendssuggestions to improve the same. The project also gives insights intothe variousfinancial terms, norms of the sales and service departments as per the

guidelines ofthe telecom industry.

The project was designed after detailed discussion with the company officialsonthree parameters i.e. distribution network, service network and salesfunctioning.

Firstly, the project discusses the distribution network of the company andthefunctions carried out by the channel members. Vodafone Limited beingthelargest services provider in Rajasthan definitely has a wider reach and more

number ofdealers. The project also covers the financial terms of the companywith the dealers andthat of the dealers with the customers.Secondly, the projectdiscusses the sales functioning of the company, whichincludes aspects such as thehierarchy of the sales department prevalent in thecompany; the responsibilitiesand functions of the sales force, their performanceappraisal structure etc.

Finally the project covers the service network of the company which dealswiththe after sale services and their effectiveness provided by the companyandvarious complaints and queries are handled by them.


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1.1INTRODUCTION OF TELECOMUNICATION IN INDIA

The world is waiting at our doorsteps, waiting for us to open the gates to an

economy bubbling with opportunities. The India growth story has already got the

world to sit up and take a note of the changing economic scenario. The Indian

government is doing everything that is possible to ensure that this story remains

intact. Factors, like the liberalization in the government stance and the daring

entrepreneurs of the Indian soils, have helped the sectors achieve the highs like

never before. And currently, the flavor of the month seems to be the telecom

industry.


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1.2HISTORY OF INDIAN TELECOMMUNICATION

History of Indian Telecommunications started in 1851 when the first operational

land lines were laid by the government near Calcutta (seat of British power).Telephone services were introduced in India in 1881. In 1883 telephone serviceswere merged with the postal system. Indian Radio Telegraph Company (IRT)was formed in 1923. After independence in 1947, all the foreigntelecommunication companies were nationalized to form the Posts, Telephoneand Telegraph (PTT), a monopoly run by the governments Ministry of

Communications. Telecom sector was considered as a strategic service and thegovernment considered it best to bring under states control.

The first wind of reforms in telecommunications sector began to flow in 1980swhen the private sector was allowed in telecommunications equipmentmanufacturing. In 1985, Department of Telecommunications (DOT) wasestablished. It was an exclusive provider of domestic and long-distanceservicethat would be its own regulator (separate from the postal system). In 1986,two wholly government-owned companies were created: the Videsh Sanchar

Nigam Limited (VSNL) for international telecommunications and MahanagarTelephone Nigam Limited (MTNL) for service in metropolitan areas.

In 1990s, telecommunications sector benefited from the general opening up of the

economy. Also, examples of telecom revolution in many other countries, which

resulted in better quality of service and lower tariffs, led Indian policy makers to

initiate a change process finally resulting in opening up of telecom services sector

for the private sector. National Telecom Policy (NTP) 1994 was the first attempt

to give a comprehensive roadmap for the Indiantelecommunications sector. In

1997, Telecom Regulatory Authority ofIndia (TRAI) was created.


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TRAI was formed to act as a regulator tofacilitate the growth of the telecom

sector.New National TelecomPolicy was adopted in 1999 and cellular services

were also launched inthe same year.

The August of 1995 saw the launch of the firstmobile service in India, ModiTelstra in Calcutta. However, the callrate structure; with an outgoing call rate of

Rs.16 a minute, incomingcall rate of Rs.8 a minute and cell phones costingaround Rs.15,000were the prime reasons why the cellular communication did not

get thedesired popularity. The New Telecom Policy in 1999 introducedseveralconsumer-friendly initiatives. Only after the entry of privateoperators likeBhartiAirtel, Hutch, Reliance, Tata, BPL, Idea, etc.,who created a competitivemarket which further reduced operationalcosts, did the upward trend in thenumber of mobile subscribersstarted. The tariffs have come down substantiallywith Indian Mobilerates being the lowest in the world. The number of wirelesssubscribersrose from 16 million in 2003 to 317 million at the end of May

2008.With this, India has become one of the fastest growing mobile marketsin theworld. Already, The Indian market leader, BhartiAirtel hasalready crossed the 50million customer mark to become one of theworlds top 10 operators and has

become the fastest private telecomcompany in the world to achieve this

milestone.


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1.2TELECOM SERVICE AVAILABLE IN INDIA:-The telecom services available in India include-

1. Basic Fixed Line Services2. Mobile Services (GSM & CDMA)3. Internet Services4. International Long Distance Services5.National Long Distance Service

1.3GSM vs. CDMA

GSM and CDMA are the two main competing network technologies deployed bycellular service providers world over. GSM(GlobalSystemforMobileCommunications) Originated in Europe in 1990. The GSM Association is

an international organization founded in 1987, dedicated to developing, providingand overseeing the worldwide wireless standard of GSM.

While CDMA (Code Division Multiple Access) is a proprietary standarddesigned by Qualcomm Inc in United States and has been the dominant networkstandard for North America and parts of Asia. It became an international standardin 1995.

However now, GSM networks have penetrated the United States and the CDMA

networks have spread in other parts of the world. People of both the camps claim

that their architecture is superior to the other.


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CHAPTER NO 2

INDUSTRY OVERVIEW

2.1Background

The Indian Telecommunications network with 203 million connections is thethirdlargest in the world and the second largest among the emerging economies

of Asia.Today, it is the fastest growing market in the world. Thetelecommunication sectorcontinued to register significant success during the year

and has emerged as one of thekey sectors responsible for Indias resurgent Indiaseconomic growth.

Telecom sector accounts for 1 percent of Indias GDP. Likely to double in2-3 years.

Telecom services contribute 30 percent to Indias total service tax revenue.The Indian telecom sector gives direct employment to more than

4,00,000people, compared to about6,00,000 people in China.

Not just the enabler of software, BPO and IteS companies, it is alsothelifeline of a fast growing E-commerce space.

State-of-the-art telecom infrastructure has led to the rise of cities likeMysore,Mangalore, Jaipur, Ahmedabad, Kochi on the software services

map.

This has helped spread the benefits of a booming Indian economy tobeyondmetros and large cities, and wealth creation is happening in tier-2cities.


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2.2Growth

The sector, which was growing in the range of 20 to 25 per cent up to the year

2002-03,has moved to a higher growth path of an average rate of 40-45 per cent

during the lasttwo years.

2.3 Indian Telecom Market

2.3.1 SIZE

India is the fifth largest telecom services market in the world; $17.8 billionrevenues in 2005.

Industry grew by about 36% in 2005 over 2004. The Indian telecom market size of over $8.3 billion is expected to treble

itselfbyyear 2011-2012, accordingto Ernst & Young. Financial year 2012.Thusthere is a significant opportunity for telecom players.

Telecom market has grown at about 25% p.a. over the last 5 years. Wireless segment subscriber base grew at 85% p.a.: fixed line segment

atabout 10% p.a.


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2.3.2 STRUCTURE

The Indian telecom market has both public and private sectorcompaniesparticipating:

Public sector has over 60% market share, down from 90% in 2000. Private companies have added subscribers at a CAGR of 192% since 2000. Mobile operators have deployed both CDMA ( 16 million users) and

GSM(55 million users) wireless networks

Value added service features constitute 10% ofrevenue today (2 % in2001)POLICY.

74% to 100% FDI permitted for various telecom services. FIPB approval required for foreign investment exceeding 49% in all

telecom.

2.3.3Services

100% FDI permitted in telecom equipment manufacturing. India has a telecom policy aims to encourage private and

foreigninvestment.

An independent regulator the Telecom Regulatory Authority ofIndia(TRAI).

Revenue-share model for license issued by the Government fortelecomservices in India. Unified access licenses are available for

providing telecomservices on a pan-India basis.

Planned opening up of National Long Distance (NLD), International LongDistance (ILD) and other value added services.


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2.3.4 Sector Outlook

India expected to be among the fastest growing telecom markets intheworld.

Projected growth of 30-40% p.a. to reach 250 million subscribers by2009-2010.

Over 3 million new users are added every month mostly in wireless.2.3.5 POTENTIAL

1. Favorable demographics and socio economic factors leading to highgrowth:

Growth of disposable income combined with changes inlifestyleIncreasing affordability-low tariffs, easy payments

plans and handsetfinancing.

Increased coverage and availability of mobile services.

2. Investment opportunity of $22 billion across many years: T

elecom Devices and Software for Internet, Broadband andDirect ToHome Services. Set Top boxes, Gateway exchange,

Modem, Mobile handsets andconsumer premise equipments,

Gaming Devices, EPABX, Telecom Software.


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Telecom Services for voice and data via a range oftechnologies.

Applications and Content development ranging from gamingto education.

Nokia, LG, Ericsson are all investing in India.


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CHAPTER 3

COMPANY BACKFROUND

3.1 COMPANY PROFILE

Vodafone limited

Vodafone, the worlds leading international mobile communicationscompany,

has fully arrived in India. Vodafone Essar announced today thatthe Vodafonebrand will be launched in India from 21

stSeptemberonwards.

The popular and endearing brand, Hutch, will be transitioned to VodafoneacrossIndia. This marks a significant chapter in the evolution of Vodafoneas a dynamicand ever-growing brand. The brand change over the next fewweeks will beunveiled nationally through a high profile campaign coveringall important media.

Vodafone, the worlds leading mobile telecommunication company,completedthe acquisition of Hutchison Essar in May 2007 and thecompany was formally

renamed Vodafone Essar in July 2007. AsimGhosh,Managing Director,Vodafone Essar, said Weve had a great innings asHutch in India and todaymarks a new beginning for us. Not as a departurefrom the fundamentals thatcreated Hutch, but an acceleration into thefuture with Vodafones globalexpertise.


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HaritNagpal, Marketing and New Business Director, Vodafone Essar, said, This

transition is probably the largest brand change ever undertaken in this country

and arguably as big as any in the world. It is even larger than our ownpreviousbrand transitions as it touches over 35 million customers, across 400,000

shops and thousands of our own and our business associates employees.

The Vodafone mission is to be the communications leader in an increasingly

connected world enriching customers lives, helping individuals, businessesand

communities be more connected by delivering their total communication needs.

Vodafones logo is a true representation of that belief The start of a newconversation, a trigger, a catalyst, a mark of true pioneering.

Vodafone established its presence in India in 1994 by acquiring the cellularlicense for Mumbai. It now has operations in 16 circles accounting for 70% ofIndias mobile customer base. With over 27.7 million customers, it is one ofIndias most reputed telecom companies.

Vodafone, under the Hutch brand, over the years, has been named the MostRespected Telecom Company, the Best Mobile Service in the country, and theMost Creative and Most Effective Advertiser of the Year.

Hutchison Essar is now part of Vodafone the worlds leading internationalmobile communications company. Vodafone now has operations in 26 countriesacross 5 continents and 36 partner networks with about 225 million proportionatecustomers worldwide. Vodafone has tied up with Essar as its principal jointventure partner for the Indian operation.The Essar Group is one of Indias largestcorporate houses with interests spanningthe manufacturing and service sectorslike Steel, Oil & Gas, Power, Telecom & BPO, Shipping & Logistics andEngineering & Constructions. The Group has an asset base of over Rs.20 billion(US$ 4.4.billion) and employs over 4000 people.


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3.2 DRIVE OPRATIONAL PERFORMANCE

3.2.1 VALUE ENHANCEMENTThey will drive operational performance through customer valueenhancement (which replaces revenue stimulation) and cost efficiency.Value enhancement involves maximizing the value of their existingcustomer relationships not just the revenue. They will move away from

unit pricing and unit-based tariffs to propositions that deliver much morevalue to our customers in return for greater commitment, incremental

penetration of the account or more balanced commercial. This will requirea more disciplined approach to commercial costs to ensure their investment

is focused on those customers with higher lifetime value.T

hey areconfident that by targeting their offers, they can deliver more value to ourcustomers and have a better financial outcome for Vodafone.

3.2.2 COST REDUCTIONCost efficiency requires them to continue to deliver scale benefits byoptimizing operating and capital expenditure. Across the Group they havea significant number of cost programmers, which they expect to reduce

current operating costs by approximately 1 billion per annum by the2011 financial year. This will offset the pressures from cost inflation andthe competitive environment and enable investment in revenue growthopportunities. As a result, on a like-for-like basis, we are targeting broadlystable operating costs in Europe and for operating costs to grow at a lower

rate than revenue in ACE (Africa and Central Europe) and APME (AsiaPacific and Middle East) between the 2008 and 2011 financial years.Capital intensity is expected to be around 10% over this period in Europeand to trend to European levels in emerging markets over the longer term.

3.3 PURSUE GROWTH OPPORTUNITIES IN TOTAL


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COMMUNICATION

3.3.1 MOBILE DATA

They have made significant progress on mobile data, with 20nnualizedrevenue of 3 billion. This is still a large opportunity, with the penetrationof data devices relatively low in Europe and almost nil in emergingmarkets.

3.3.2 ENTERPRISE

They have a strong position in core mobile services and they have built asolid presence in 18 months in multi-nation accounts through VodafoneGlobal Enterprise. They will make the most of this strength to expand ourofferings into the broader enterprise communications market locally. Thismeans serving small and home offices (SOHs) and small-to-mediumenterprise (SMEs) with shared platforms and services, supported by our

local sales forces.

3.3.3 BROADBAND

They will adopt a market-by-market approach focused on the service,rather than the technology. It will be targeted at enterprise and high value

consumers as a priority.


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3.4 EXECUTE IN EMERGING MARKETS

3.4.1 Delivery in existing markets

They are represented in most of the key emerging markets where

significant growth is expected in the coming years. Our main focus now ison execution in these markets, particularly in India, Turkey and Africanfootprint, following their agreement to acquire control of Vodacom.

3.4.2 Selective expansion and cautious approach

They will also try to maximize the mobile data opportunity. There are few

potential large new markets of interest to us and they will be cautious and

selective on future expansion.


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CHAPTER NO 4

VODAFONE SALES NETWORK

4.1 VODAFONE OUTLETS

You want to go Vodafone and stay connected anytime, anywhere? Just visit aVodafone outlet in your neighborhood and choose from a range of affordablePostpaid or Prepaid connections.

4.2 VODAFONE SHOPS

Whether youre looking for a new Vodafone connection, or a fresh handset,youll find it here. You can also subscribe to any of our value added services orget more information on them. Pay your bills, get your queries answered, and lotsmore. Hutch Shops are located at very convenient locations around the country.Select your region to find one near you. Mobile Vodafone Shops Vodafone

Shops are going on the move, to bring our services closer to you and to providefaster online service, right at your doorstep. You can visit a Mobile VodafoneShop near you for:

Postpaid connections and add on cards. Prepaid connections and recharge cards Information on the latest talk plans. Bill payments via cash, cheque or credit card Demos and activation of our Value Added Services Queries, SIM replacements and much more.


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4.3 VODAFONE TELESHOPS

Did you know that a range of Vodafone services are available in your very ownneighborhood? Just walk into a Vodafone Teleshop, just round the corner, for

anything you need. At a Vodafone Teleshops you can buy a new postpaid or

prepaid card, pay your bills, reactivate your connection, and much more.

4.4 SALES KIT

A dealer should carry the following in his sales kit:

a) All products leaflets (adequate quantities).

b) List of prospects with their addressesc) Information about the competition in the market

d) Price list of Vodafone product and corresponding prices of competitor

products.


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CHAPTER NO 5

DISTRIBUTION NETWORK OF VODAFONE

1.3DISTRIBUTION NETWORK

A supply chain is described that consists of all the parties and their supplied

activities that help us to create and deliver services to the final customer.

The front channels are specially kept in mind.

ACTIVITIES:

Order Handling Storage Display Promotion Selling Information and feedback

1.4SELECTION OF CHANNEL MEMBERS/DEALERS


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Vodafone follows a strict policy in selection of the dealers, and therefore it is

necessary to fulfill the following pre- requisites to be eligible to become a dealer:

I. The dealers should have a sound financial background. The financialcapability of a dealer is solely depended on the discretion of the company

officials.

II. The dealers should have a good market reputation, since the dealers helpthecustomers in forming the first impression a customer has about the

company.

III. The dealer should have a good previous track record,i.e of timelypayments, nocriminal background etc.

IV. The dealers should have good market penetration. The companys abilityto gainmaximum customers in this era of competition solely depends on

the penetrationthe dealers have in the market.

V. The last criterion of dealers selection for Vodafone is the area the dealerscover.This would include different geographical areas which are covered

by a dealer.


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1.5RESPONSIBILITIES AND FUNCTIONS OF THE DEALERS

Vodafone believes in Customer Loyalty and thus Vodafone expects that their

dealers apart from selling paint products should perform the following functions

for better customer relations management:

I. Sales promotion through regular promotional schemes, road shows,campaigns etc. the expenses incurred by the dealers is shared by thecompany only if these activities are for promotion of the company and notof the dealer.

II. Recruitment- done under the guidance of certain Vodafone officials.

III. Training and development of manpower with company assistance.

IV. Servicing according to the size of orders.

V. Customer relation management.

VI. Promote other products of the company


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The dealer should be in regular touch with the customer, keep taking his feedbackand ensure maximum customer satisfaction. The dealer shouldalso try andconvince the customer to try newer products of the company.

The dealer has to thus cater to 3 major areas:

a) Pre saleb) Sellingc) Post sale service

1.6 CHNNEL STRUCTURE OF VODAFONE

CHNNEL STRUCTURE

Co. or direct salesIndirect salesMisc. sale

Business head DSA/DST DealersG.M. Sales Manager Shop OwnersShop Owners TLS Metro ShopsSales Consultants Telemarketing Executives Vodafone ShopsExecutives Field Executives

Tele Marketing ExecutivesField Executives


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Prepaid segmentation

Individual bronze Individual silver Individual gold Individual platinum

IB IS IG IP

Postpaid segmentation

Individual bronze Individual silver Individual gold Individual platinum

IB IS IG IP

(co.owned/co. paid)(co. owned indvl. Paid)


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CHAPTER NO 6

OTHER ACTIVITIES

1.7PERFORMANCE APPRAISALFor the dealers-

Vodafone involves both external and internal agencies which conduct this survey

on a monthly basis.

1.8MARGINS

The company gives margins at the time of sale of the product. The margin variesaccording to the type of the product.

1.9PROMOTIONAL ACTIVITIES

Vodafone actively supports its cannel members with promotional activities.Vodafone helps performing these activities on a daily basis.Further these aredividing in to different levels which are:-

Zonal level-zonal staff is involved in this. These include various kinds ofroad shows.

Circle level-This has the FM radio and local newspapers.CHAPTER NO 7


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ANNEXURE

QUESTIONNAIRE

1) What type of sales organization structure do you possess?2) What are the various channel structures in which you operate?3) What are the various criterion/terms and conditions of selecting your

channel members?

4) What is the average Inventory Size you keep?5) What is the average Order Cycle time?6) What are the various modes of transportation adopted and cost incurred?7) What are the methods of measurement and frequency of providing

appraisals to channel members?

8) What are the modes of by which you receive your payments:I. Advance payment

II. Payment on DeliveryIII.

Credit Payment

9) In case you provide the credit period, what is the time limit?I. upto15 days

II. 15-30 daysIII. >30 days


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10) How frequently do you collect the feedback from your channelmembers?

11) What are the margins you provide to your Channel Members?12) Do you support your Channel Members by promotional activities?


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CHAPTER 8

KEY WORLDS

SALES

In bookkeeping, accounting, and finance, Net sales are operating revenues earned

by a company when it sells its products. Revenue (net sales) are reported directlyon the income statement as Sales or Net sales.

DISTRIBUTION CHANNEL

A way of selling a company's product either directly or via distributors; "possibledistribution channels are wholesalers or small retailers or retail chains or directmailers or your own stores".

POST PAID

A model of cellular service whereby the customer is charged for usage in theprior month (hence 'post' usage), and hence does not feature any limitations on

volume of service used.

PREPAID

A model of cellular service whereby the customer is charged for usage in prior

month and pay before using the services.


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BIBLIOGRAPHY

collegesavings.about.com wikipedia.org www.st-patricks.ac.uk www.sba.gov www.pinsentmasons.com wordnetweb.princeton.edu

43142911 sales and distribution of vodafone

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