TELECOM REPORT

MARKETING PROJECT

Submitted by

Vinamrata Gandhi (B14060)

Aayush Sharma (B14126)

Akshay Pandita (B14129)

Gagandeep Singh (B14143)

Karan Chhabra (B14149)

Mugdha (B14157)

1

Contents INTRODUCTION TELECOM SECTOR ....................................................................................... 2

MAJOR PLAYERS .............................................................................................................................. 4

Airtel .................................................................................................................................................. 4

Vodafone ............................................................................................................................................ 4

Idea Cellular ...................................................................................................................................... 4

ENVIRONMENTAL ANALYSIS ....................................................................................................... 5

Political .............................................................................................................................................. 5

Economic ............................................................................................................................................ 5

Social .................................................................................................................................................. 5

Technology ......................................................................................................................................... 5

Environmental ................................................................................................................................... 6

Legal ................................................................................................................................................... 6

MARKETING MIX OF VODAFONE ............................................................................................... 7

Product ............................................................................................................................................... 7

Price .................................................................................................................................................... 7

Place ................................................................................................................................................... 7

Promotion .......................................................................................................................................... 8

BUSINESS MODEL ............................................................................................................................. 9

Airtel .................................................................................................................................................. 9

Vodafone ............................................................................................................................................ 9

TRENDS IN TELECOM INDUSTRY .............................................................................................. 11

MARKETING STRATEGY OF VODAFONE ................................................................................ 12

Segmentation ................................................................................................................................... 12

Targeting .......................................................................................................................................... 12

Positioning ....................................................................................................................................... 12

COMPETITOR ANALYSIS .............................................................................................................. 14

Wireless Market share .................................................................................................................... 14

Threat of a fresh entrant ................................................................................................................ 15

Competition in the 3 g network ..................................................................................................... 15

Number portability ......................................................................................................................... 15

LATEST NEWS AND ARTICLES ................................................................................................... 17

CONCLUSION ................................................................................................................................... 19

REFERENCES .................................................................................................................................... 20

2

INTRODUCTION TELECOM SECTOR

Globally the telecom industry is in the midst of a transformational shift, driven by a huge

surge in data traffic on telecom networks. A number of mobile operators are rolling out 4G

networks across the globe. A number of wireline operators are rolling out Fiber to the

home, providing enormous bandwidth up to 100 Mbps to the subscribers. Users will be able

to gravitate to fastest, most reliable and best priced wireless networks available. The

migration of speed seeking data users to 4G may be accompanied by a rise in volume of

voice calls on legacy 2G and 3G networks. Operators are offering very competitive tariffs to

encourage more of their subscriber base to use mobile data services. 4G customers are likely

to generate higher Average Revenue Per User (ARPU) than 3G customers.

Major Achievements and Underachievement of India Telecom sector (Comparing with

National Telecom Policy 1999)

ACHIEVEMENTS UNDERACHIEVEMENTS

Tele density of 7 by 2005 and 15 by

2010.

Achieved 78.5 by June 2013

Making tariff structure more

affordable.

Lowest tariffs in the world

Increase rural tele density from 0.4 to

4 by 2010.

Achieved rural tele density of 41.9

by June 2013

Achieve telecom coverage of all

villages.

Achieved coverage of 97.6% by

June 2011

High speed data and multimedia

capability provided to all towns with a

population greater than 2 lakhs.

Strengthen R&D efforts and provide an

impetus to build world-class

manufacturing capabilities.

Achieve efficiency and transparency in

spectrum Management

Provide reliable media to all exchanges

by 2002.

Encourage development of telecom

facilities in

Remote, hilly and tribal areas of the

country.

Sector related skill development.

> Broadband penetration.

3

Market Size

Indias GSM operators added 2.58 million rural subscribers in April 2014, taking the total to

297.16 million. Also, Cellular Operators Authority of Indias (COAI) data suggests that the

overall GSM subscriber base increased by 4.97 million in April 2014 taking the total GSM

subscriber base to 726.90 million customers.

The COAI data also suggests that telecom provider Bharti Airtel provided the most number

of customers in the month of April, about 990,000 new subscribers followed by Vodafone

and Idea Cellular.

Data traffic powered by third-generation (3G) services grew at 146 per cent in India in 2013,

higher than the global average, according to an MBit Index study by Nokia Siemens

Networks (NSN).

With Bharti Airtel becoming the second largest telecommunications provider in Nigeria and

Tata Communications entering into strategic partnerships with countries such as Australia,

Germany, Austria and Malaysia, it can be observed that Indian telecommunication providers

are doing quite well in the global market.

4

MAJOR PLAYERS

Airtel

Bharti Airtel Limited is a leading global telecommunications company with operations in 20

countries across Asia and Africa. Headquartered in New Delhi, India, the company ranks

amongst the top 4 mobile service providers globally in terms of subscribers. In India, the

company's product offerings include 2G, 3G and 4G wireless services, mobile commerce,

fixed line services, high speed DSL broadband, IPTV, DTH, enterprise services including

national & international long distance services to carriers. In the rest of the geographies, it

offers 2G, 3G wireless services and mobile commerce. Bharti Airtel had nearly 287 million

customers across its operations at the end of Dec 2013.

Vodafone

British multinational telecommunications company headquartered in London and with its

registered office in Newbury, Berkshire. It is the world's 2nd-largest mobile

telecommunications company measured by both subscribers and 2013 revenues (in each case

behind China Mobile), and had 434 million subscribers as of 31 March 2014. In India it is

the second largest mobile network operator in India after Airtel by subscriber base. It is based

in Mumbai, Maharashtra. It has approximately 160 million customers as of December 2013.

It offers both prepaid and post-paid GSM cellular phone coverage throughout India with good

presence in the metros

Idea Cellular

Idea Cellular is an Aditya Birla Group Company, India's first truly multinational corporation.

Idea is a pan-India integrated GSM operator offering 2G and 3G services, and has its own

NLD and ILD operations, and ISP license. With revenue in excess of $4 billion; revenue

market share of nearly 15%; and subscriber base of over 121 million in FY 2013, Idea is

Indias 3rd largest mobile operator. Idea ranks among the Top 10 country operators in the

world with a traffic of over 1.5 billion minutes a day.

http://en.wikipedia.org/wiki/Multinational_corporationhttp://en.wikipedia.org/wiki/Telecommunicationshttp://en.wikipedia.org/wiki/Londonhttp://en.wikipedia.org/wiki/Newbury,_Berkshirehttp://en.wikipedia.org/wiki/List_of_mobile_network_operatorshttp://en.wikipedia.org/wiki/List_of_mobile_network_operatorshttp://en.wikipedia.org/wiki/China_Mobilehttp://en.wikipedia.org/wiki/List_of_mobile_network_operators_of_Indiahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Bharti_Airtelhttp://en.wikipedia.org/wiki/Mumbai,_Maharashtrahttp://en.wikipedia.org/wiki/List_of_mobile_network_operators_of_Indiahttp://en.wikipedia.org/wiki/Prepaid_mobile_phonehttp://en.wikipedia.org/wiki/GSMhttp://en.wikipedia.org/wiki/Cellular_phone

5

ENVIRONMENTAL ANALYSIS

Macro environments are hard to control for any business organization. PESTEL analysis will

help to find out the external factors which affect the potential of Vodafone.

Political

Political factor is one of the macro factor which play important role to develop

telecommunication operating business in any country. It may include from the government

licensing process, legal issues, regulation etc. to various pressure of pressure group. These

factors play vital role to build infrastructure for any network operating industry.

Economic

The rates of economic growth, inflation, income distribution process etc are the economic

factors which also influence the growth of telecommunication operating network. Growing

income or increase in purchasing power (Rs 12000 in 2002 to Rs 3300 in 2008) which may

help to increase in the usage of Vodafone. Similarly falling prices of handset could affect the

market of Vodafone. Rising in telecommunication density which will target 45% by 2010 is

also challenge.

Social

Growing demand for broad band services among youth which affect the level of competition

in telecommunication sector. Increase in urban population which may affect the market of

Vodafone. Rapid urbanization and rapid increase in income increase more competition for

Vodafone in India.

Technology

Some of technological advancement in India is CDMA- there are already three big players in

this segment Reliance, Tata. 3G- value added services potential still to be tapped fully.

2G/3G- GSM currently commands 70% of mobile subscribes in India. These current

scenarios of technological advancement in Indian telecommunication market could pressure

Vodafone also. Vodafones competitors are now offering the same GSM hand set as

Vodafone. So these all prove more external pressure and new challenge for Vodafone.

6

Environmental

The Indian government is forcing Vodafone and other telecommunication operators to be

environmental friendly. Like while putting up towers any negative externalities given out will

have to be paid by a fully social cost by Vodafone.

Legal

Vodafone is in only one legal force that it is to provide safety in the use of its services

through the handsets they sell and provide. So this means that development cost will need to

be done to produce handsets that attract low radiation.

Vodafone is one of the popular brand in telecommunication industry of Indian and able make

different position in the mind of Indian customers. However the telecommunication is one of

the most competitive businesses in India but Vodafone seem quite successful to fulfil the

requirement of various customers by offering different services in India. Technology is one of

the crucial factors for this industry and growing demand of young customers are increasing

day by day so company should try to follow the more latest technology which will help them

to be more strong among competitor.

7

MARKETING MIX OF VODAFONE

Product

Product is the major variable in marketing mix, because without product no other

variables can work. Product refers to tangible, physical products as well as services

(netmba.com).

The brand Vodafone was itself able to sell its products in the Indian market but

Vodafone introduced various suitable and affordable ranges of products and services

for the various range of customers in India.

For the low income customers, Vodafone provided facilities of pre-paid mobiles and

for the high income customers, Vodafone served with their post-paid mobiles.

Vodafone also introduced easy to use, low cost handsets addressing the rural

community of India who cannot afford mobile phones at high prices.

Price

Price plays an important part in the buyer/seller relationship. A trust develops

between seller and buyers, who mutually agree that prices will be set at a fair level. A

significance of price can be reduced when the factors such as quality and reliability of

service delivery is equal or greater than the price buyer is paying for the product

(Lancaster and Reynolds, 2004).

In case of India, Vodafone is in a low price strategy to gain high market share of the

people who are in the rural areas of India and cannot afford higher or premium prices.

As 71% of total population of India lives in rural part (CIA, fact-book 2008),

Vodafone has taken this strategy to reach out to the higher volume of people.

Vodafone has introduced various products with the range of prices which a customer

has option to choose and customers also receive the quality service they pay for their

products.

Place

Vodafone has opened maximum number of outlets in each and every part of India.

The outlets are direct distribution through their own distributors, indirect distribution

through associate distributors to the local retailers, who provide products and services

to the local customers.

8

Vodafone has also established many service centres in almost every part of India, so

that the customer is always satisfied with the products and services of Vodafone and

we can see that the customers of Vodafone are significantly increasing every month.

Vodafone is also selling their products and services through their own website as well.

Promotion

The promotional mix comprises of advertising, sales promotion, selling and public

relations (Lancaster & Reynolds, 2004). Promotion refers to the method used to

inform the customers about the products and convincing them to buy. Vodafone has

used this strategy since its inception in India as Vodafone Essar.

Vodafone's advertisements and promotions were hearty welcomed by the audiences.

Introduction of the advertisement of Zoo Zoos and pug was a great sensation which

also got popularity in many social networking sites like Facebook etc.

Actor Irfan Khan's advert was highly popular due to his style. Vodafone also

sponsored many sporting events and Indian Premier League helped Vodafone to

create attraction in customers. Other sponsorship like MTV reality show named Splits

villa which was famous in the circle of Indian youngsters also helped Vodafone to

gain good success in a very short span of time.

Vodafone has introduced various new beneficial schemes/offers to attract the

customers like various talk time offers, validity offers, Bonus Cards, Tariff offers, low

cost handsets etc. for the prepaid users and ISD, STD, SMS, MMS offers, iPhones

and Blackberry handsets to the post-paid users.

9

BUSINESS MODEL

Airtel

Diverse portfolio of services and presence in:

MOBILE

SERVICES

TELEMEDIA

SERVICES DIGITAL TV

TOWER

INFRASTRUCTURE

AIRTEL

BUSINESS

Wireless Mobile

services in 20

countries

Fixed

telephony and

broadband

internet (DSL

+ IPTV)

Pan India DTH

operations

Bharti Infratel owns

35,515

towers 1 across 11

circles

Services to

large

enterprises

and carriers

Market leader in

India, both in

revenue and

number of

subscriber

3.3M

broadband &

internet

customers

Amongst the top

three players

with 8.8 M

3subscribers

Bharti Infratel owns

42% stake

in Indus Tower which

has

112,615 towers

across 15 circles

Single point

of contact for

all

telecom needs

Vodafone

Shareholder renumeration

Customers

Revenue

Cash FlowReinvestment

in business

Assets

10

Assets

Vodafone considers the following components as its assets- Supplier relationships,

Networks, Distribution, People & Brand.

Reinvestment in the business:

Vodafone takes pride in having balance between capital expenditure and cash return

to shareholders

Customers:

Vodafone is one of the biggest mobile operators in the world with customer base of

404 million customers, out of which 90% are consumer customers, balance being

enterprise customers.

Cash flow

Vodafone accounted for 16 billion pounds for past three years. It has a strong cash

flow.

Revenue

Within mobile business, 51% of annual service revenue arises from consumers

monthly price plans, called in-bundled revenue. In-bundled revenue is an increasing

proportion of Vodafones business and is relatively stable compared to out-of-bundle

revenue, which is much more vulnerable to competitive and economic pressure.

11

TRENDS IN TELECOM INDUSTRY

Subscriber numbers de-grew at the end of 2012 due to new customer information regulations which forced millions of disconnections.

Even in 2013 the subscriber base grew only by 5%, as compared to 19% in 2011, and over 40% in 2010.

Slowdown in subscriber growth

Capex was estimated to shoot up by 40% in 2013 compared to the doldrums of 2012, but capex/sales were still low at 12%.

This is way below the 20% to be expected for a country where network roll out is still underway.

The network comes back to life

Despite capex constraints as well as debt reduction, the industry is still relentlessly pursuing growth.

Return on invested capital increased from around 3% last year to a forecast of 5% in 2013.

EBITDA margins are at 29.5%, thereby approaching the emerging Asia average of 35%

Focus on return on capital

From 3G roaming to arbitrary penalties and fines, sometimes in 10 year old cases, all fuelled uncertainty for operators.

For 2014, positive steps are expected to streamline the regulatory and legal landscape.

Litigation

12

MARKETING STRATEGY OF VODAFONE

Segmentation

Vodafone Essar is seen as much focused in segmentation in India. Vodafone as

segmented Indian Market as geographical segment where rural part of India is at

much attention because of the huge potential market for telecom.

Secondly, it has focused on the demographical segment where the middle and low

income group falls. Both the segment comprises the major population of the country.

Vodafone has also segmented the customer in terms of psychographic (students,

professionals etc.) and behavioural aspects (high users and low users) and have

provided the services as per the needs of the market and customers.

Targeting

After the segmentation, Vodafone has selected the target customers which it is

focusing on to sell its product and services.

Vodafone's is targeting its marketing strategy to the people living in small towns and

villages, lower or middle income group of population, youngsters and Business

peoples.

Vodafone's good network of distribution channel is helping to reach and provide

services to the people living in remote villages and areas of India.

Their prepaid service has attracted the lower or middle income group customers and

the youths. Products like iPhone and Blackberry are targeted towards the high income

people or business persons in India. They are offering series of differentiated products

to their respective markets.

Positioning

Vodafone has been successful to position itself in almost every part of India with its

excellent channel of distribution. And for creating sales and enquiry, it has introduced

various exciting advertisements and sales promotional activities.

The tag line used by Vodafone says wherever you go, our network follows, also

creates good image in customer's mind about the network coverage which is superior

and consistent.

13

By the introduction of the advertisement character like Zoo Zoos also helped

Vodafone to position because the advert was highly appreciated by the customers and

was a great hit.

Cricket is thought as a religion in India, sponsorship in IPL 2020 cricket also

positioned Vodafone very well in the Indian market.

14

COMPETITOR ANALYSIS

At first glance, the major Competitor are Bharti Airtel Ltd, Vodafone India Ltd, Idea Cellular

Ltd, Reliance and BSNL, but take a deeper dive into the numbers and it reveals a landmark

shift in Indias telecom sector: GSM incumbentsBharti Airtel, Vodafone and Idea

Cellularhave jointly crossed 56% in market share in terms of subscribers.

Source: TRAI

database

Wireless Market share

There are a total of 910 million wireless subscribers in India. Vodafone has the second largest

market share. The top 5 wireless players as of May 2014 , as per TRAI database are

15

Threat of a fresh entrant

The competitive nature of Indian telecom industry has moderated post the cancellation of

telecom licenses of various operators in Feb 2012, however the entry of Reliance Jio

(services expected to be rolled out in 2015) is an imminent risk to competitive intensity

Competition in the 3 g network

Source: http://telecomblogs.in/blog/2010/05/21/3g-network-map-of-india/

Number portability

Number portability is expected to have severe effect on the loyalty of customers to brand. It

is expected that the service providers will have to make etra effort in terms of scheme and

services to not only woo new customers but more importantly to retain existing customers.

Idea was the first player to promote MNP through its 'No Idea, Get Idea' campaign that

highlighted the company's strength in network coverage, customer service delivery,

customised products and services and accurate billing.

Vodafone, for its post-paid users, has an 'Earn and Burn' programme that is open to premium

cardholders of Stanchart and HSBC; the scheme helped the operator add over 1.3 lakh new

users last year. It has also been running the 'My Delights' scheme that offers best deals and

discounts on restaurants, health & beauty and travel.

16

17

LATEST NEWS AND ARTICLES

Ericsson wins Vodafone India's contract for payment solutions

Network solutions major Ericsson today said it has won a contract from Vodafone India to

deploy its payment solutions in seven circles for the country's second largest telecom

operator. The system enables a host of new services like flexible refill, community charging

and real time balance notifications among several other different voice and data offerings for

over 75 million prepaid customers

http://articles.economictimes.indiatimes.com/2014-08-12/news/52727736_1_vodafone-india-

uttar-pradesh-five-new-circles

Vodafone launches 'Vodafone RED' for retail and enterprise customers

Vodafone India has launched a new postpaid plan called 'Vodafone RED' for retail and

enterprise customers. The company claims that the product is an industry's first-of-its-kind

initiative that goes beyond the conventional tariff plan with need for multiple rentals for voice

and data.

http://timesofindia.indiatimes.com/tech/tech-news/Vodafone-launches-Vodafone-RED-for-

retail-and-enterprise-customers/articleshow/40606654.cms

Vodafone India Q1 revenue up 10% at Rs 10,323 crore

Telecom operator Vodafone has reported increase of about 10% in its services revenue at Rs

10,323 crore in first quarter ended June 30, 2014-15.

The company had registered revenue of about Rs 9,375 crore in the April-June period of the

last fiscal, 2013-14.

http://timesofindia.indiatimes.com/tech/tech-news/Vodafone-India-Q1-revenue-up-10-at-Rs-

10323-crore/articleshow/38995891.cms

Vodafone's 3G user base triples in MP & Chhattisgarh

http://articles.economictimes.indiatimes.com/2014-08-12/news/52727736_1_vodafone-india-uttar-pradesh-five-new-circleshttp://articles.economictimes.indiatimes.com/2014-08-12/news/52727736_1_vodafone-india-uttar-pradesh-five-new-circleshttp://timesofindia.indiatimes.com/tech/tech-news/Vodafone-launches-Vodafone-RED-for-retail-and-enterprise-customers/articleshow/40606654.cmshttp://timesofindia.indiatimes.com/tech/tech-news/Vodafone-launches-Vodafone-RED-for-retail-and-enterprise-customers/articleshow/40606654.cmshttp://timesofindia.indiatimes.com/tech/tech-news/Vodafone-India-Q1-revenue-up-10-at-Rs-10323-crore/articleshow/38995891.cmshttp://timesofindia.indiatimes.com/tech/tech-news/Vodafone-India-Q1-revenue-up-10-at-Rs-10323-crore/articleshow/38995891.cms

18

Telecom services provider Vodafone India's 3G user base in Madhya Pradesh and

Chhattisgarh circle has tripled to over 30,000 during the first quarter of this fiscal. Vodafone

India has 48.7 lakh customers in the Madhya Pradesh and Chhattisgarh circle.

http://timesofindia.indiatimes.com/tech/tech-news/Vodafones-3G-user-base-triples-in-MP-

Chhattisgarh/articleshow/37775848.cms

http://timesofindia.indiatimes.com/tech/tech-news/Vodafones-3G-user-base-triples-in-MP-Chhattisgarh/articleshow/37775848.cmshttp://timesofindia.indiatimes.com/tech/tech-news/Vodafones-3G-user-base-triples-in-MP-Chhattisgarh/articleshow/37775848.cms

19

CONCLUSION

Vodafone has been fully successful in applying their marketing mix strategy and STP

strategy in the vast Indian market; they are now securing their second place every year and

seeking opportunities to be the number one. As per the mission statement of Vodafone to be

the world leader in the field of communication, Indian market will surely help them to grow

the base of it as India has a huge potential in the telecommunication sector.

20

REFERENCES

http://telecomblogs.in/blog/2010/05/21/3g-network-map-of-india

TRAI database

http://www.netmba.com

http://www.coai.com

http://www.vodafone.in

http://www.airtel.in

http://www.ideacellular.com

http://telecomblogs.in/blog/2010/05/21/3g-network-map-of-indiahttp://www.netmba.com/http://www.coai.com/http://www.vodafone.in/http://www.airtel.in/http://www.ideacellular.com/