MARKETING PLANNING

AND

STRATEGY

A

Project Report

On

AIRTEL

Presented By :

Ghanshyam Gupta

ghanshyamgupta7@gmail.com

EXECUTIVE SUMMARY

In this project we have studied and analyzed the various aspects related to how Airtel has become a market leader in India. The telecom industry is a booming sector in our country and airtel has rightly exploited the needs and preferences of the customer. We have performed a STP & SWOT analysis of the company. We have also explained the marketing mix of the company w.r.t 7P’s. The strengths and weaknesses of the company are explained with the help of the BCG and the ANSOFF matrix. The five porters model gives an indepth insight as to how things should be dealt with. Lastly we have analysed the pricing and the marketing strategies adopted by the company and recommended that if the company wants to prosper more it should innovate its products and services in such a way that it is unique to its competitors. The large untapped rural market of India is also an opportunity for the company.

INTRODUCTION

The telecommunications sector is one of the fastest growing sectors of our country. It is also the fastest growing telecom market in the world . Indian tele-density is very low compared to other nations. Its rural tele-density is about 2%. This presents an excellent opportunity for the telecom companies to expand their business and reap benefits. The entry of foreign giants like Vodafone into the market is a testimony for the attractiveness of Indian telecom sector. In the initial stages, Indian telecom sector was a monopoly of the Department of Telecom. But with the government allowing private participation in the sector the growth has been phenomenal.

Over the past 10 years, India has registered the fastest growth among major democracies, having grown at over 7 per cent in four years during the 1990s. It represents the fourth largest economy in terms of Purchasing Power Parity. According to a recent Goldman Sachs report, over the next fifty years, Brazil, Russia, India and China - the BRIC economies- could become a much larger force in the world economy. It reports, “India could emerge as the world’s third largest economy and of these four countries; India has the potential to show the fastest growth over the next 30 to 50 years”. The report also states that, “Rising incomes may also see these economies move through the ‘sweet spot’ of growth for different kinds of products, as local spending patterns change. This could be an important determinant of demand and pricing patterns for a range of commodities”. The share of the services sector as a percentage of total GDP is also predicted to rise from the current 46 per cent to about 60 per cent by 2020. The boom in the services sector is slated to come from India, emerging as a chosen destination for software and other IT enabled services, tourism etc. According to a Nasscom- McKinsey & Co. Study, by 2008, the Indian IT software and services sector will account for US$ 70-80 billion in revenues; it’ll employ 4 million people, and account for 7 per cent of India’s GDP and 30 per cent of India’s foreign exchange inflows.

India's tele-density fell a shade short of the half-century mark, at 49.50 for the end of January 2010 according to information provided by the Ministry of Communications and IT. The total number of telephone subscribers in India was at 581.81 million at the end of January 2010, up 3.49 per cent over 562.21 million at the end of December 2009. Wireless tele-density in India stood at 46.37 in January 2010, with the addition of 19.9 million new connections in the month. The total number of wireless or mobile phone subscribers in India was at 545.05 million by the end of January 2010 compared to 525.15 million by the end of December 2009, posting a 3.79 per cent increase.

Bharti Airtel remained the leader in wireless segment with 22.3 per cent market share, followed by Reliance and Vodafone with 17.72 per cent and 17.27 per cent respectively.

YEARS

1851 First operational landlines introduce

1881 Merger with postal system

1947 Merger of ETC and IRT into IRCC

1985 DOT established

1986 Conversion of DOT into VSNL and MTNL

1992 Private players were allowed in VAS

1994 National Telecom Policy (NTP) was formulated

1997 Independent regulator, TRAI, was established

1999 NTP-99 led to migration from high-cost fixed license fee to low-cost revenue sharing regime

2000 BSNL was established by DoT

2002 ILD services was opened to competition, Go-ahead to the CDMA technology, Internet telephony initiated, Reduction of licence fees

2003 Unified Access Licensing (UASL) regime was introduced

2004 Broadband policy 2004 was formulated—targeting 20 million subscribers by 2010

2005 FDI limit was increased from 49 to 74 percent

2006 Number portability was proposed

2007 Decision on 3G services

EVOLUTION OF TELECOM INDUSTRY IN INDIA:

ABOUT THE COMPANY

Bharti Airtel formerly known as Bharti Tele-Ventures LTD (BTVL) is the largest cellular service provider in India, with more than 124 million subscribers as of February 2010[update]. With this, Bharti is now the world's third-largest, single-country mobile operator and sixth-largest integrated telecom operator. It also offers fixed line services and broadband services. It offers its TELECOM services under the Airtel brand and is headed by Sunil Bharti Mittal. The company also provides telephone services and broadband Internet access (DSL) in top 95 cities in India. It also acts as a carrier for national and international long distance communication services. The company has a submarine cable landing station at Chennai, which connects the submarine cable connecting Chennai and Singapore.

The businesses at Bharti Airtel have always been structured into three individual strategic business units (SBU's) - Mobile Services, Airtel Telemedia Services & Enterprise Services. The mobile business provides mobile & fixed wireless services using GSM technology across 23 telecom circles while the Airtel Telemedia Services business offers broadband & telephone services in 95 cities and has recently launched a Direct-to-Home (DTH) service, Airtel Digital TV. Shahrukh Khan is the brand ambassador of the mobile company and Kareena Kapoor and Saif Ali Khan are the brand ambassadors of the DTH company. The company provides end-to-end data and enterprise services to the corporate customers through its nationwide fiber optic backbone, last mile connectivity in fixed-line and mobile circles, VSATs, ISP and international bandwidth access through the gateways and landing station.

Globally, Bharti Airtel is the 3rd largest in-country mobile operator by subscriber base, behind China Mobile and China Unicom. In India, the company has a 24.6% share of the wireless services market, followed by 17.7% for Reliance Communications and 17.4% for Vodafone Essar. In January 2010, company announced that Manoj Kohli, Joint Managing Director and current Chief Executive Officer of Indian and South Asian operations, will become the Chief Executive Officer of the International Business Group from 1st April 2010. He will be overseeing Bharti's overseas business. Current Dy. CEO, Sanjay Kapoor, will replace Manoj Kohli and will be the CEO with effective from 1st April, 2010.

VISION and MISSION

VISION 2010

• By 2010 Airtel will be the most admired brand in India:

– Loved by more customers

– Targeted by top talent

– Benchmarked by more businesses

VISION 2020

• To build India's finest business conglomerate by 2020

• Supporting education of underprivileged children through Bharti Foundation

• Strategic Intent:

– To create a conglomerate of the future by bringing about “Big Transformations through Brave Actions.”

MISSION

• “We at Airtel always think in fresh and innovative ways about the needs of our customers and how we want them to feel. We deliver what we promise and go out of our way to delight the customer with a little bit more”

OBJECTIVE / GOALS

• To undertake transformational projects that have a positive impact on the society and contribute to the nation building process.

• To Diversify into new businesses in agriculture, financial services and retail business with world-class partners.

• To lay the foundation for building a “conglomerate” of future.

MARKET SHARE OF BHARTI AIRTEL

vodafone; 20.70%

Bharti airtel; 33.38%BSNL; 10.20%

RELIANCE COM; 11.50%

Idea cellu-lar; 12.10%

Vodafone; 18.80%

Bharti airtel; 24.30%

BSNL; 12.70%

Reliance com; 18.90%

Idea cellu-lar; 11.20%

CUSTOMER MARKET SHARE

REVENUE MARKET SHARE

MARKET SEGMENTATION

1) DEMOGRAPHIC SEGMENTATION: Airtel has divided its market on the basis of following variables

Age: 18 to 40 years Gender: Male and FemaleIncome: More than 60000 per annum

2) GEOGRAPHIC SEGMENTATION: Country: India State: Delhi, Maharshtra, Gujarat, Andhra Pradesh, Tamil Nadu, Punjab,etc District: Mumbai, Kolkata, Delhi, Ahmedebad, Chennai, etc.

3) BEHAVIORAL SEGMENTATION: Occasions: Birthday, Marriage, Anniversary, etc. Festivals: Rakshabandhan, Diwali, Christmas, etc.

4) PSYCOLOGICAL SEGMENTATION Lifestyle: Based on people’s way of living. Values: According to the values of an individual.

MARKET TARGETING

121.63 million subscriber by 2010 elite class up market professionals women & senior citizen by postpaid connection

PAN-INDIA targeting High corporate clients Low income group people Youth with youth club

POSITIONING

TAGLINE: “Express Yourself”

The product is sought to be positioned as a business efficiency tool. A lifestyle revolution and a status symbol the emphasis is to remove misconception that the cell phone is an expensive means of communication and drive home the point that the cell phone is actually a day-to-day utility.

Airtel has been successful in positioned itself as an efficient and good service provider. This can be clearly seen as Airtel is the market leader in Mobile services in India.

Very focused on telecom.Leadership in fast growing cellular segment.Pan-India footprint.The only Indian operator, other than VSNL, that has an international submarine cable.

Price Competition from Vodafone and RelianceUntapped Rural market

The fast-expanding IPLC market.Latest technology and low cost advantage.Huge market.

Competition from other cellular and mobile operators.Saturation point in Basic telephony service

SWOT ANALYSIS

STRENGTH WEAKNESS

OPPORTUNITIES THREATS

STRENGTHS:

VERY FOCUSED ON TELECOM: Bharti Airtel is largely focused on the telecom, around 93% of the total revenue comes from telecom(Total telecom revenue Rs 3,326).

LEADERSHIP IN FAST GROWING CELLULAR SEGMENT: Airtel is holding leadership position in cellular market.. Bharti Airtel is one of India's leading private sector providers of telecommunications services based on an aggregate of 27,239,757 customers as on August 31, 2006, consisting of 25,648,686 GSM mobile and 1,591,071 broadband & telephone customers.

PAN INDIA FOOTPRINT: Airtel offers the most expansive roaming network. Letting you roam anywhere in India with its Pan-India presence, and trot across the globe with International Roaming spread in over 240 networks. The mobile services group provides GSM mobile services across India in 23 telecom circles, while the B&T business group provides broadband & telephone services in 92 cities.

THE ONLY OPERATOR IN INDIA OTHER THAN VSNL HAVING INTERNATIONAL SUBMARINE CABLES: Airtel, the monopoly breaker shattered the Telecom monopoly in the International Long Distance space with the launch of International Submarine cable Network i2i jointly with Singapore Telecommunications Ltd. in the year 2002. This has brought a huge value to the IPLC customers, delivering them an option besides the incumbent carrier, to connect to the outside world.

WEAKNESS:

PRICE COMPETITION FROM VODAFONE AND RELIANCE: Airtel is tough competition from the operators like Vodafone and Reliance as these two operators are offering services at a low rate.

UNTAPPED RURAL MARKET: Although Airtel have strong presence throughout the country but still they are far away from the Indian rural part and generally this part is covered by BSNL so indirectly Airtel is loosing revenue from the rural sector.

OPPORTUNITIES

THE FAST EXTENDING IPLC MARKET: An IPLC (international private leased circuit) is a point-to-point private line used by an organization to communicate between offices that are geographically dispersed throughout the world. An IPLC can be used for Internet access, business data exchange, video conferencing, and any other form of telecommunication. Airtel Enterprise Services and SingTel jointly provide IPLCs on the Network i2i. The Landing Station in Singapore is managed by SingTel and by Airtel in Chennai (India). Each Landing Station has Power Feeding Equipment, Submarine Line Terminating Equipment and SDH system to power the cable, add wavelengths and convert the STM-64 output to STM-1 data streams respectively.

LATEST TECHNOLOGY AND LOW COST ADVANTAGE: The costs of introducing cellular services for Airtel are marginal in nature, as it needs only to augment its cellular switch/equipment capacity and increase the number of base stations. The number of cities, towns and villages it has covered already works to its advantage as putting more base stations for cellular coverage in these areas comes with negligible marginal cost. Besides such cost advantages, it has also other cost advantages for the latest cellular technology. As a late entrant into the cellular market, it has dual advantage of latest technology with modern features, unlike other private cellular operators who started their service more than 4-5 years back and low capital cost due to advantages of large scale buying of cellular switch/equipment.

HUGE MARKET: The cellular telephony market is presently expanding at a phenomenal / whopping rate every year and there is still vast scope for Airtel to enter /expand in this market. Besides there is a vast rural segment where the cellular services have not made much headway and many customers are looking towards Airtel for providing the service to them. With its wide and extensive presence even in the remotest areas, Airtel poised to gain a big market share in this segment when it expands cellular services into the rural areas.

THREATS

COMPETITION FROM OTHER CELLULAR OPERATORS: Airtel is facing stiff competition from Vodafone, Reliance and other service providers in the market. Hence it must provide unique and beneficial services to retain its position at the top. If it fails in doing so it might lose its customers to its competitors.

MARKET MATURITY IN BASIC TELEPHONY SEGMENT: Although Airtel entered in the basic telephony market there is little or no use as the basic telephony market has reached its maturity stage. And BSNL is the market leader in India as far as basic telephony services are concerned.

MARKETING MIX:

1) PRODUCT:

MOBILE SERVICES: Bharti Airtel offers GSM mobile services in all the 23-telecom circles of India and is the largest mobile service provider in the country, based on the number of customers.

- PREPAID- POSTPAID- BLACKBERRY- SMART PHONES- CALLING CARDS

AIRTEL TELEMEDIA SERVICES: The group offers high speed broadband internet with a best in class network. With Landline services in 94 cities we help you stay in touch with your friends & family and the world. Get world class entertainment with India’s best direct to home (DTH) service digital TV in more than 150 cities

- BROADBAND- FIXED LINE

ENTERPRISE SERVICES: Enterprise Services provides a broad portfolio of services to large Enterprise and Carrier customers. This division comprises of the Carrier and Corporate business unit. Enterprise Services is regarded as the trusted communications partner to India's leading organizations, helping them to meet the challenges of growth.

DIGITAL TV SERVICES: Discover the magical experience of digital entertainment with Airtel. From DVD quality picture and sound, the best and widest variety of channels and programmers to the best on-demand content on Airtel Live, your TV viewing experience change forever with digital TV from Airtel!

- DIGITAL TV- DIGITAL TV INTERACTIVE

2) PLACE

Distribution channel

Under the company

DSA FSA (Franchisee selling association)

(Direct selling association) CSA

(Corporate selling association)

ARC (Airtel relationship center)

3) PRICE:

Airtel has customer base pricing strategies.

PREPAID TARIFF:

ONE TIME CHARGESPulse Rate Per Minute

Price of Pack (Rs.) 31Free Airtime on Pack (Rs.)

0

Incoming Calls (Rs.) Free

CALL CHARGES  Airtel GSM/CDMA Landline

Local Rates

.50 .60 .60

STD Rates

.50 .60 .60

SMS

Local 1

National 1.5

International 5

POSTPAID TARIFF:

ONE TIME CHARGESActivation Charges 500

Membership Fee 0

Security Deposit 0

MONTHLY CHARGES (FIXED) (Rs.)Bill Plan Charge 233

CALL CHARGESCLIP 00

  Airtel

GSM/CDMA

Landline

Local Rates 0.5 0.5 0.5

STD RATESSTD Rates 1.51.5 1.5

SMSLocal 0.5

CDMA 0.5

National 1.5

International 5

VAS 3

There pricing mechanism is flexible that is Price elasticity (highly elastic)

PRICE

PER UNIT

QUANTITY OF UNITS DEMANDED

4) PROMOTION

Large scale print and video advertising.

In 2002 Airtel got its Signature tune from A.R. Rehman, this signature tune is perhaps the most downloaded tune in India.

Provides innovations such as Bollywood movie premiers, music services such as ring back tones & many more.

Special discounts in calling rates & SMS services. Providing wallpapers and screensavers on website.

5) PROCESS:

Process for availing services is very easy and customer can avail it very easily.

121 is the customer support no. which can be dialed from anywhere in India.

6) PHYSICAL EVIDENCE

Customer touch points are extravagant and appealing Large showrooms and customer care centers. Unique and appealing brand logo.

7) PEOPLE

Dedicated and passionate workforce. Has various attractive schemes and plans for all the market segments. Good and effective customer service.

8)

LEASED PRIVATECIRCUIT

ISPCELLULAR SERVICE

BASIC TELEPHONE(Fixed Line)

STARS QUESTIONMARKS

COWSDDDDDDOGS

HIGH

LOW

LOW

GROWTH %

BCG MATRIX

RELATIVE MARKET SHARE

BCG Matrix is used to find out the relative growth prospects of the product line. Within the Airtel product line leased, private, circuit are among star.

Airtel is having a submarine cable between Singapore and Chennai with the collaboration of SingTel. Bharti Airtel has launched an undersea cable between Japan and the west coast of the US, providing high-capacity bandwidth access across the Pacific. Besides Bharti Airtel, the other partners of the Unity consortium include Global Transit, Google, KDDI Corp, Pacnet and SingTel. These will help airtel to maintain its position in IPLC market. Right in India only VSNL have such cables.

HIGH

MARKET PENETRATIONENTERED IN BROADBAND AND FIXED LINE MARKET

PRODUCT DEVELOPMENT

IPLC PRODUCTS

MARKETDEVELOPMENTLOOKING FOR OVERSEAS MARKET

DIVERSIFICATION

OUTSOURCING

ANSOFF MATRIX

To portray alternative corporate growth strategies, Igor Ansoff conceptualized a matrix that focused on the firm’s present and potential products and markets / customers. He called the four product-market strategic alternatives

market penetration [existing market + existing product], market development [existing product + new market], product development [existing market + new product], and Diversification [new product + new market].

The company should follow all four strategies depending on the demand and product as indicated in the matrix. The company perhaps needs to focus more on the comparatively neglected area of diversification.

MARKET PENETRATION: Airtel entered in broadband and fixed phone line market. PRODUCT DEVELOPMENT: IPLC products MARKET DEVELOPMENT: Airtel is now looking for overseas market. Company has

already make his presence in Nigeria and Seychelles DIVERSIFICATION : Airtel has now outsourcing sum of its services like customer

services with IBM

PORTERS FIVE FORCES MODEL

The industry structure has become relatively unfavorable compared to earlier monopolistic times

The earlier pattern used to be that the national telecom company used to own every segment of the value chain till the international gateway. With liberalization there was competition in virtually every segment. There are companies that provide local connectivity, those that function as long distance carriers, and those that provide only gateway links. Some integrated players operate in all segments. The intensity of competitive pressures across the chain is reflected in the downward spiral being witnessed in tariffs and prices to customer.The value chain for cellular mobile service and Internet Service Providers (other than cable based net connections) are similar in as much as the calls reach the destination through similar local loop, long distance and international gateway.

PRICE AND PRICING POLICY

AIRTEL has realised that the Indian market is price sensitive. Therefore it care of the has come up with various innovative tariff schemes to take needs of different category of customers- Generally, the cellular services are more expensive than the land line based telephone services. This is due to the reason that the operating companies are required to pay a fee to the government for using airtime.

MARKETING STRATEGY ADOPTED BY BHARTI AIRTEL

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 a stronger brand equity for Airtel. Since the cellular phone category itself is too restricted, also the fact that a Cellular phone is a high involvement product, price doesn't qualify as an effective differentiator. 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 with Cellular 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 was well entrenched in the Delhiites’s mind, the Airtel campaign began to focus on the utility of Cellphone. In the first four months alone Airtei's advertisement spend exceeded Rs. 4 crores.

As of today the awareness level Is 60% unaided. This implies that if potential or knowledgeable consumers are asked to name a 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 a thriving brand.

Every company has a goal, which might comprise a sales target and a game plan with due regard to Its competitor. Airtel 's 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 just reached 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 in service innovation. But, 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 an attempt to focus on those who can afford. The print advertisements 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 different 1 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 tied up with Lufthansa to offer customer bonus miles on the German airlines frequent flier's programs.

(ii) There have been educational campaigns, image campaigns, pre launch advertisements, launch advertisements, congratulatory advertisements, promotional advertise-ments, attacking advertisements and tactical advertisements.

Strategies

Product Offer a basic

product/ service.

Offer value added

services

Increase in number

of value added

services.

Price Charge cost- plus Price to penetrate

market

Price to match or

best competitors

Distribution Build selective

distribution

Build Intensive

distribution.

Build more

intensive

distribution.

Advertising Build product

awareness among

early adopters and

dealers.

Build awareness

and interest in the

mass market

Stress brand

differences and

benefits.

Sales Promotion Use heavy sales

promotion to entice

people to subscribe.

Increase to build

and maintain

relationships with

customers.

Increase to

encourage brand-

switching.

PERFORMANCE TILL DATE:

Bharti Airtel has enjoyed an excellent run ever since the telecom sector opened.

It has managed to hold on to its leadership position inspite of the presence of other players with deep pockets – Ambani’s, Tata’s, Birla’s and Vodafone.

Has coped well with regulatory changes.

Continues to attract and delight customers.

CURRENT HAPPENINGS:

Dow Jones and Bharti Airtel Partner for Launch of The Wall Street Journal India Mobile

Airtel Broadband - official Broadband Sponsor of Cricket on YouTube

Bharti Airtel makes its Media & Entertainment debut – launches Digital Media Business

Bharti Airtel Completes Deployment of the Bangalore Traffic Police Enforcement Automation System on BlackBerry Smartphones.

Bharti enters into exclusive discussions with Zain for the acquisition of Zain Africa BV.

Telecom service provider Bharti Airtel on Thursday said a global consortium of which it is a part has launched an undersea cable between Japan and the west coast of the US, providing high-capacity bandwidth access across the Pacific.

STRATEGIC OBJECTIVES OF BHARTI AIRTEL

Sustain revenue share in mobile profitably Achieve deeper penetration in home and SMB Product & vertical focus to gain client Revenue Market Share (cRMS) in Enterprise

business Become a benchmark in customer experience through servicequality & innovation Build a robust leadership pipeline to support growth Benchmark in cost efficiency & productivity.

RECOMMENDATIONS:

Innovate products and service which are unique to its competitors Vodafone, Reliance.etc Focuss on rural market: The rural market has great potential and is largely untapped. Pricing to be competitive to its competitors.

CONCLUSION:

Market leader among Mobile service providers in India. Most successful brand in India with largest market share. Success is based on three pillars- connectivity, affordability and innovation. The core is

connectivity, i.e. the network Doesn’t promote its product always by celebrities. Pre paid services are more expensive than post paid service.

BIBLIOGRAPHY:

www.airtel.in www.moneycontrol.com www.google.com Services Marketing by Lovelock. Prentice Hall India Ltd.