Airtel STP Analysis Sem1

STP Analysis

Section B: Group 5 Marketing Management – I Faculty: Mr. A. Srikant

MARKETING MANAGEMENT-1

[ STP ANALYSIS] ANALYSIS ]

Table of Contents Executive Summary ................................................................................................................... 3 Brand Airtel ................................................................................................................................ 4 Overview of the Telecom Industry .............................................................................................. 5 Highlights ............................................................................................................................... 5 Competitors ............................................................................................................................ 7 Marketing Strategies .................................................................................................................. 7 Service & Handset- Buy One, Get Other Free ........................................................................ 7 Customer Generation - Tapping in to Internal Resources ....................................................... 7 Advertising – Educating Masses and Evoking Passions ......................................................... 8 Market Segmentation ................................................................................................................. 9 Segmentation Strategy of reliance communications ..................................................................11 Market Segmentation Strategy ..............................................................................................11 Measurable, Accessible, Substantial, Differentiable and Actionable Market .......................12 Targeting...................................................................................................................................15 Targetting Full Market Coverage ...........................................................................................15 Positioning for Competitive Advantage ..................................................................................15 Positioning Strategy...............................................................................................................17 Product Differentiation........................................................................................................17 Service Differentiation ........................................................................................................18 Personnel Differentiation ....................................................................................................18 Channel Differentiation.......................................................................................................19 Image Differentiation ..........................................................................................................19 Conclusion……………………………………………………………………………………………….22

Reliance Communications

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EXECUTIVE SUMMARY

bharti airtel bharti airtel limited is a leading global telecommunications company with operations in 19 countries across Asia and Africa. The company offers mobile voice & data services, fixed line, high speed broadband, IPTV, DTH, turnkey telecom solutions for enterprises and national & international long distance services to carriers. bharti airtel has been ranked among the six best performing technology companies in the world by business week. bharti airtel had 200 million customers across its operations

Sunil Bharti Mittal is the founder, chairman and group CEO of Bharti Enterprises, one of India’s leading business groups with interests in telecom, financial services, retail, realty, manufacturing and agriculture. Sunil started his career at 18 after graduating from Punjab university in India in 1976 and founded bharti. Today, at 52, he heads a successful enterprise which employs over 30,000 people. bharti airtel, the flagship group company, has a market capitalization of approximately US$ 25 billion. Sunil has been recognized with the padma bhushan, one of India’s highest civilian awards. He has also received the Lal bahadur Shastri National Award for Excellence in Public Administration, Academics and Management for 2009. He is a past president of the confederation of Indian Industry, the premier industry body in India (2007-08). Sunil has been awarded numerous awards and recognitions including the Global Economy Prize 2009 by The Kiel Institute, Germany. The US-India business council has also honored him with the 'global vision' award 2008. He has received the GSM association chairman's award for 2008. Sunil was Co-chairman of the World Economic Forum in 2007 at Davos and is a member of its international business council. He is a member of the leadership council of The Climate Group. He is also a member of the Board of Trustees of the Carnegie Endowment for International Peace. He is a member of several premier international bodies – International Advisory Committee to the NYSE Euronext Board of Directors, the International Business Advisory Council of London and the Advisory Board of the Global Economic Symposium. Sunil is also on the Telecom Board of the International Telecommunication Union, the leading UN Agency for Information and Communication Technology. He is also a member of the Indo-US CEOs Forum. He serves as a member of the Executive Board of the Indian School of Business. He is also a member of the Academy of Distinguished Entrepreneurs, Babson College, Wellesley, Massachusetts. Sunil believes a responsible corporate has a duty to give back to the community in which it operates. This belief has resulted in Bharti Foundation, which is committed to providing education to under-privileged.


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INTRODUCTION

our brand airtel was born free, a force unleashed into the market with a relentless and unwavering determination to succeed. A spirit charged with energy, creativity and a team driven ―to seize the day‖ with an ambition to become the most admired telecom service provider globally. airtel, in just ten years of operations, rose to the pinnacle of achievement and continues to lead. As India's leading telecommunications company, airtel brand has played the role of a major catalyst in India's reforms, contributing to its economic r esurgence. Today we touch people's lives with our Mobile services, Telemedia services, to connecting India's leading 1000+ corporates. We also connect Indians living in USA, UK and Canada with our callhome service.


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OVERVIEW OF THE TELECOM INDUSTRY HIGHLIGHTS

Indian Telecom services industry accounts for 1.5 per cent of GDP. Telecom services market is growing at 20 per cent per annum. Cellular segment growing at 70 per cent. Major Segments of Telecom Services – Basic Fixed Line services, National Long Distance, International Subscriber Dialing and Cellular Mobile services. Policy framework for this segment governed by the National Telecom Policy (NTP). NTP 1994 allowed private participation. NTP 1999 set target of tele-density of 15 telephone connections per 100 persons by 2010. Basic services still largely monopolized by state owned players - MTNL and BSNL, even though private participation allowed in 1994. Total fixed line connections are estimated at around at 28 million as on 31 October 2000. They are expected to go up to 75 million by end of March 2006. National Long Distance (NLD) service was opened up for private participation during FY2001. The revenue from this service is expected to be INR 151 billion in FY2002 and INR 239 billion by FY2005. Overseas service is monopolized by VSNL at present. However VSNL which is already an internet service provider will also participate in NLD and other broadband services. Cellular mobile services, started in 1995, are amongst the fastest growing segment. After a slow start, this sector grew at compound annual growth rate of more than 70 per cent. Future issues include implementation of Calling Party Pays principle, passage of the Convergence bill and greater consolidation through mergers and acquisitions.


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Figure 1

Figure 1 shows the structure of the Indian Telecom Industry. The Company Reliance Communications that we are focusing on lies under Private operators providing fixed line and cellular services.


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Competitors The major competitors of Reliance Communications are as follows: 

Airtel

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Vodafone

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IDEA:

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BSNL

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Tata Indicom

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Spice

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Virgin

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Aircel



Alkatel

MARKETING STRATEGIES

Reliance Communication radically redefined marketing models in India and engaged homes and enterprises directly by having the ability to deliver physical and virtual products and services as part of one system. Reliance Communication through its aggressive, unconventional tactics changed the rules of the mobile marketing game.

Service & Handset- Buy One, Get Other Free

Handsets were to be purchased separately since the operators until then offered only services, and never dealt with handsets. For a customer this meant dealing with two suppliers – one for the service and another for the handset. Reliance Communication, for the first time in India, offered handsets free of charge, along with the service.

Customer Generation - Tapping in to Internal Resources


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Reliance targeted internally as it looked for the first set of customers. Officials of Reliance Communication realized that an employee base of more than 50,000 and a shareholder base of about 3.3 million was the best place to start as far as customers were concerned.

Advertising – Educating Masses and Evoking Passions

The Reliance mobile brand was branded as IndiaMobile to cash in on patriotic feelings. Bundling of handsets along with the service – a first time in India – allowed Reliance Communication to resort to a co-branding exercise with the handset makers.

Business Units of Reliance Communication

Wireless

GSM

Broad Band

Global

Internet Data Center (IDC) Services

ILD*

RTIL

Tower Business

CDMA

Internet Bandwidth (ISP)

Voice Carrier

PCO

Core Strengths:


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[STP ANALYSIS]

Brand:

provides high level of branding and visibility

Distribution:

Retail presence through 16,50 exclusive stores in 700 towns

Contact Centers :

6000 seat multilingual, multi location

Continuous Innovation:

e.g. innovative lifetime plan, all India Plan

Network architecture and capability Strongly positioned for accelerating market growth

(*ILD – International long distance calling )

MARKET SEGMENTATION

a. Markets consist of buyers. These buyers may differ in their wants, resources, locations, buying attitudes, and buying practices. Through market segmentation , companies divide large, heterogeneous markets into smaller segments that can be reached more effectively with products and services that match their unique needs. Segmenting Consumer Markets b. There is no single way to segment a market. Marketers must try different segmentation variables, alone and in combination, to find the best way to view the market structure. 1. Geographic segmentation divides the market into different geographical units, such as nations, regions, states, counties, cities, or even neighborhoods. A company may operate in one or a few geographic areas, or it may operate in all areas but pay attention to geographical differences in wants and needs. 2. Demographic segmentation divides the market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality. Consumer wants, needs, and usage rates often vary with demographic variables. Demographic variables are also easier to measure than other variables.


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Psychographic segmentation divides buyers into different groups based on social class,

lifestyle, or personality characteristics. People in the same demographic group can have very different psychographic makeups, and marketers often segment by common lifestyles. 7. Behavioral segmentation divides buyers based on their knowledge, attitudes, uses, or responses to a product. i. Occasion segmentation groups buyers according to occasions when they get the idea to buy, actually make the purchase, or use the purchased item. ii. Benefit segmentation requires finding the major benefits people look for in the product class, the kinds of people who look for each benefit, and the major brands that deliver each benefit. iii. User status groups buyers according to whether they are nonusers, ex-users, potential users, first-time users, or regular users of the product. iv. Markets can also be segmented according to usage rate—light, medium and heavy product users. v. Loyalty status looks at the level of loyalty to brands, stores, and companies.


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SEGMENTATION STRATEGY OF RELIANCE COMMUNICATIONS In the words of Dhirubhai Ambani himself, “My vision is to provide the latest telecommunication facilities to every Indian at the price of a post card”.

Market Segmentation Strategy

Reliance has always been known for its ―unconventionalism‖ in dealing with various activities of

the management, from advertisement and promotion to identifying potential customers to the actual selling of the product. It was also instrumental in increasing the mobile phone penetration in India to grow from 0.25 percent in early 2001 to about 7.53 percent till date. Reliance Communication stimulated telecommunication growth in India by challenging many of the conventional practices in product design, distribution, sales, advertising and pricing. Reliance Communication fashioned a strategy which was conceptually simple but sweeping in its impact. While the competitors focused on the top segment of the market, by charging a premium, Reliance Communication sought to reduce the cost to the consumer, thus focusing on a market driven by volume. While others saw weaknesses of India as a market – widespread poverty and low levels of telecommunication penetration – and Reliance as an old economy firm focusing on oil production and business-to-business clients – Reliance Communication realized that these actually were strengths which it could tap into. Reliance Communication’s managers saw that telecommunications would be much valued by the poorer sections of society if it could be used to create opportunities and offered at affordable prices. The company tapped into its strong political and financial clout to build up a strong organization that could push it through the legal and regulatory system.


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Measurable, Accessible, Substantial, Differentiable and Actionable Market

Reliance estimated that there are around 320 million [people in] households with an annual income of Rs 1.5 lakh (US$3,333) [and above]. Of that, half are in rural areas with similar purchasing power. And this segment is expected to grow to 500 million by 2008 and to 602 million by 2010. This presented a substantial chunk of potential buyers for Reliance products. Besides, the segment was also easily accessible, that is, it could be easily sought and encouraged to buy Reliance mobiles considering their extremely economical cost. Since its very inception to becoming one of the market leaders in the field of telecommunications, Reliance has adopted a number of strategies and introduced a variety of products to cater to the needs of various market segments. On a broader note, Reliance has segmented the market on the following major criteria: Geographic Segmentation

On the basis of geography Reliance Communication has always believed in uniting India as a whole and considering it as a single entity and consequently divided it’s services under two major broad categories (in

both prepaid and postpaid) schemes --- National and International. One of the best examples in this context is that of the ONE India Plan which allows you to call any phone, anywhere in India for just ONE RUPEE per min. Besides, it also come up with national and international roaming plans and STD and world calling cards to cater to the needs of different people spread across different geographical locations. The Reliance Global Calling Card is available in 5 denominations — Rs.115, Rs.225, Rs. 575, Rs.699, Rs.1,130, Rs.1,900, Rs.2250. You can make ISD calls from any Reliance phone, be it postpaid (Reliance Mobile / Fixed Wireless phone) or Reliance Mobile prepaid. The prepaid Reliance STD Calling Card offers very affordable rates for local and national long distance (NLD) calls. This is a rechargeable account-based prepaid card that can be used from Reliance phones (Reliance fixed, fixed wireless and mobile – postpaid or prepaid) only and cannot be used from a PCO. With this card, NLD calls can be made even from Reliance phones without an NLD facility.


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Demographic Segmentation

Reliance has also segmented the market based on the demographic attributes of the customers such as age, gender, income group, occupation, etc. Thus it has come up with a variety of plans such as the JOY PLANS on postpaid which can help in significantly cutting call costs and the ON –NET TALKTIME PACK which allows 1000 min. of free usage to all reliance mobiles and wireless phones within circle absolutely free. This allows it reach a large chunk of population with different needs and different financial backgrounds and in the process, makes its services affordable to everyone. Psychographic Segmentation

Different people have different value systems, varying personality traits, beliefs, attitudes, separate self image or self concept and an altogether different way to look at life (lifestyle). As a result their needs and preferences also differ accordingly. Reliance Communication has kept this aspect in mind while designing it’s wide range of mobile phones to appeal to different

audiences and in a way suit their self – image (self concept). From lower end simple and sober handsets like the CLASSIC series to the little stylish multimedia enabled handsets such as LG, Kyocera and Nokia to the ultra – stylish UT Star PPC and TELESON handsets, Reliance offers something for everyone.

Behavioral Segmentation

Customers exhibit varying behavioral patterns towards different products. Different customers have different perceptions about different products and hence weigh the value derived from each product differently. Reliance was quick to realize this and hence tried to segment the market on the basis of the behavioral patterns of its customers. Here it looked at whether there was increased buying during special occasions, whether a substantial chunk of population looked for a specific class of benefits to be derived from its products, what was their user status (current or ex user of its products), how heavily or lightly was a specific product used (usage


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rates), loyalty towards a particular category or product, readiness to adapt to new technology and the general attitude towards the product. Subsequently on 20 September, 2003, the 1st day of Navaratri, --- a multimedia mobile phone service offering ringtones, greeting cards, pictures and video clips of Navaratri Festival was introduced on R- world and over 10 million downloads were reported. Other than this Reliance also continues to offer several schemes to customers based on their usage rates such as small amount prepaid tariff cards for lower end users to Broadband services for corporate and high – end individual users. Further it also offers plans of free subscriptions, gifts and extra talktime to regular (loyal) users of its products.


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TARGETING Target Marketing involves breaking a market into segments and then concentrating your marketing efforts on one or a few key segments. Target marketing can be the key to a small business’s success. The beauty of target marketing is that it makes the promotion, pricing and

distribution of your products and/or services easier and more cost-effective. Target marketing provides a focus to all of your marketing activities.

TARGETING FULL MARKET COVERAGE Today Reliance Communications has established itself as one of the top telecom service providers in India offering a wide range of services such as CDMA and GSM services in both prepaid and postpaid flavours, Broadband services through R – Connect, Reliance Hello schemes, Reliance PCO, interactive TV, Data Center, etc. Because of the enormous gamut of services offered across various product categories, (be it selling mobile phones or new connections or broadband services) and market segments (both high end commercial usage to lower end individual use), the Strategic Business (SBU) Units caters to almost all product categories across all market segments. Thus the company targets the full Telecom Industry market rather than any specific segment leaving no segment untargeted. Hence we can safely conclude that the market segment targeted by the SBU is that of FULL MARKET COVERAGE.

Positioning for Competitive Advantage a. A product’s position is the way the product is defined by the consumers on important attributes; it is the place the product occupies in consumers’ minds relative to competing products. It involves implanting the brand’s unique benefits and differentiation in customers’

minds. b. To simplify the buying process, consumers organize products, services, and companies into categories and ―position‖ them in their minds. A product’s position is a complex set of

perceptions, impressions, and feelings that consumers have for the product compared with competing products.


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c. Consumers will position products with or without the help of marketers. So marketers must plan positions that will give their products the greatest advantage in selected target markets, and then must design marketing mixes to create these planned positions.


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POSITIONING STRATEGY

As already mentioned before, Reliance Communications (previously Reliance Communication) has believed in introducing innovative techniques and practices in all its marketing strategies --be it segmenting, targeting or positioning itself in the market. Starting from the 1 st of its kind --the Dhirubhai Ambani offer to the present day offer of connecting the entire India through ONE INDIA PLAN, Reliance has always believed in making its services affordable to the people while not compromising on the services offered and at the same time getting substantial profit margins to sustain its growth. This principle forms the primary basis of Reliance Communications product’s positioni ng strategy.

Among the major positioning strategies adopted by Reliance are: Product Differentiation

Reliance offers its customers a wide range of products such as both high end and low end mobile phones at prices which are much less costlier than its competitors. A few of these mobile phones have already been shown in the previous pages. These handsets differ both in their looks as well as their style quotient when compared to other brands and are available with a variety of schemes and features which are substantially different from other products of the same range offered in the market. Thus both form and design differentiation can be easily made out. Other than this, Reliance Communication used was product differentiation by mixing data applications with voice. Through RWorld – an inbuilt Java enabled data feature of all Reliance phones - the company guaranteed download speeds of up to 144 kbps from an applications suite which has over 120 applications ranging from interactive Guides such as TV programme guides and City Guides, Live News and TV news clips from channels like NDTV, CNBC, Aaj Tak and India TV to contests, video songs, Ring Tones, Cricket Information, Women's World and KidzWorld. It introduced numerous applications like news, streaming audio and video of movies and music clips, city & TV guides, exam results, astrology and stock prices.


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Service Differentiation

Reliance has also differentially positioned its products in the market through an entire range of services offered by it which includes the ability to procure its products easily (ordering ease), easy delivery mechanisms, installation procedures, appropriate guarantee/ warranty associated with its products, financing schemes, appointment of customer training personnel, and adequate after sales services. To achieve this, Reliance Communication started retail outlets in prime commercial and residential areas ranging between 800 and 2000 sq ft, in major Indian cities, district headquarters and towns that would number over 500, and set up WebWorlds. At the WebWorlds the customer could interface directly with the company officials, see, touch and try the products and then buy. At the phone stores, the customers could buy the phones directly across the counter. The company envisaged that ultimately there would be at least one WebWorld in all the towns where Reliance Communication has a presence. To ensure that the product was available at the customer's doorstep, Reliance stocked its handsets in about 15,000 outlets across the country, while 70,000 outlets sold the recharge coupons. It also appointed 600 exclusive distributors who sold only the pre-paid offering. Retailers like FabMall, PlanetM, HP, Music World and Timex started to bundle their products along with Reliance India Mobile. Phones were distributed at discount prices with many products the consumer bought. Additionally the company conducted nationwide product demonstrations and announced that the Pioneer Scheme would be a limited period offer, which further enhanced the interest of the consumers. Personnel Differentiation

Reliance ensured that the staff at Webworlds was competent and courteous enough towards customers besides being well – trained, responsive and reliableand possessing good communication skills. In essence it ensured that the customer went satisfied after each visit and this gave it sufficient competitive advantage over its competitors.


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Channel Differentiation

In the case of marketing channels, instead of resorting to the tried and tested means, Reliance Communication created a completely new model. As a tribute to Dhirubhai Ambani, Reliance Communication fostered a new breed of entrepreneurs, as channel partners. The Dhirubhai Ambani Entrepreneur Programme began with an aim of enrolling 200,000 individuals who are committed to acquiring new customers and creating a new experience for them, based on flawless service and feelings of satisfaction. About 50,000 individuals were recruited in a matter of weeks who were guided and supported by 900 Reliance executives across the country. In 673 towns and cities, Reliance trained these entrepreneurs in basic skill sets, so that they are able to deliver value to customers at their doorsteps. Reliance Communication envisaged spending over Rs.1000 million (US$22.2 million) per year in training and competency building programmes for these entrepreneurs. Through this programme, in addition to contributing to society by encouraging other enterprises, and creating economic opportunities for millions of young Indians, Reliance leveraged goodwill and networks. Image Differentiation

The Reliance mobile brand was positioned as IndiaMobile to cash in on patriotic feelings. The Reliance Communication brand name embossed on every handset gave it a unique cachet, while the costs of many of the advertisements were discounted since they were also borne by the handset makers. A mega advertising campaign was launched across the media to mark the launch. The blitzkrieg coincided with the world cup cricket tournament, ensuring a huge audience. The main theme of the first campaign built on the vision of Reliance Communication in bringing the power of telecommunication to every person. This campaign helped to educate people on the importance of telecommunication services. The next set of campaigns talked about the innovative product features which differentiated Reliance Communication from its competitors. The advertisements announced that Reliance IndiaMobile was 'Kabhi mobile, kabhi computer' (Sometimes Mobile, Sometimes Computer). In the subsequent campaigns Reliance started riding on movies and cricket as themes.


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CONCLUSION

Market segmentation, target marketing and Positioning are the key factors for any service or product to be successful. A mélange of consumer segmentation variables, including geographic, demographic, psychographic and behavioral characteristics is a prerequisite for any product/service to reach out to its customers, as it is the use of multiple segmentation bases. The importance and reasons for segmentation, targeting and positioning can be very well portrayed through several examples of Fortune 500 companies. Segmentation outlines the company’s opportunities, but target marketing is where the marketing manager makes his or her

money. Turning the segmentation opportunities into real markets is the real focus. Methods of evaluating the market segments are the various levels of targeting: undifferentiated or mass marketing; differentiated marketing; concentrated marketing; and micromarketing. Choosing the target marketing strategy is described as dependent on many variables, such as company resources, how variable the product is, and the stage of the product life cycle. But while a company is targeting important segments, it must take care not to cause any controversy or concern. For instance, companies that have targeted their premium cereals primarily to children have been called to task for their practices, as have cigarette companies that seem to have targeted the youth market in their chosen advertising vehicles. Finally, a company has to figure out the best way to position itself for competitive advantage. Positioning involves implanting the brand’s unique benefits, and differentiation in customers’ minds.


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Airtel STP Analysis Sem1

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