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Strategic Mangement Airtel

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					INSTITUTE OF MANAGEMENT TECHNOLOGY GHAZIABAD




    Strategic Management-I Project Report


           AIRTEL
    Contents

    EXECUTIVE SUMMARY ....................................................................................................... 4
    INDIAN TELECOM INDUSTRY ................................................................................................ 6
    COMPETITIVE STRUCTURES PREVALENT IN THE INDIAN TELECOM SECTOR .......................................... 9
    MICRO ENVIRONMENT – AN ANALYSIS ................................................................................... 10
      SUPPLIERS ................................................................................................................ 10
      CUSTOMERS............................................................................................................... 10
    MACRO ENVIRONMENT – AN ANALYSIS .................................................................................. 11
      DEMOGRAPHIC............................................................................................................ 11
      LEGAL ...................................................................................................................... 11
      SOCIO-CULTURAL ......................................................................................................... 11
      TECHNOLOGY ............................................................................................................. 11
      ECONOMIC ................................................................................................................. 11
      POLITICAL .................................................................................................................. 11
    THE GLOBAL ENVIRONMENT ............................................................................................... 12
    PORTER’S FIVE FORCES ..................................................................................................... 13
      BARRIERS TO ENTRY/THREAT OF NEW ENTRANTS ................................................................ 14
      INTENSITY OF RIVALRY AMONG FIRMS ............................................................................... 14
      THREAT OF SUBSTITUTE ................................................................................................ 15
      BUYER POWER ............................................................................................................ 15
      SUPPLIER POWER ......................................................................................................... 15
    AIRTEL – A PROACTIVE APPROACH........................................................................................ 16
      SOME INITIATIVES ........................................................................................................ 16
    BCG MATRIX ................................................................................................................. 18
      BCG MATRIX FOR BHARAT SANCHAR NIGAM LIMITED (BSNL) .................................................. 18
      BCG MATRIX FOR THE BHARTIAIRTEL ............................................................................... 18
      BCG MATRIX FOR RELIANCE COMMUNICATIONS OF RELIANCE ANIL DHIRUBHAIAMBANI GROUP .......... 19
    SEGMENTATION .............................................................................................................. 20
    TARGET MARKET SELECTION PROCESS .................................................................................. 23
    POSITIONING ................................................................................................................. 25
    DETAILEDASSESSMENT OF THE MAJOR COMPETITORS OF AIRTEL AND THEIR PROMINENT STRATEGIES ..... 27
      MARKET LEADER STRATEGIES .......................................................................................... 27
      MARKET CHALLANGERSTRATGIES ..................................................................................... 28
    ENTERING A NEW MARKET: AFRICA ..................................................................................... 29
      TELECOM MARKET SPOTLIGHT: AFRICA .............................................................................. 29
      DEPENDENCE ON 2G .................................................................................................... 31
      MARKET RANKINGS ...................................................................................................... 31
    SCENARIOS FOR AFRICAN MARKET ....................................................................................... 37
      1. MATURING PRODUCTS AND BUSINESS MODELS................................................................ 37
      2. CONVERGENCE OF FIXED AND MOBILE TECHNOLOGY AND PRODUCT OFFERINGS ....................... 38
      3. GREATER STATE INTERVENTION IN DEPLOYING AND CONTROLLING BROADBAND ACCESS ............. 38


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      4. NEW CONSUMER BEHAVIOR AND HIGHER EXPECTATIONS ................................................... 38
    STRATEGIES FOR AFRICAN MARKET ....................................................................................... 39
      CONCLUSION ............................................................................................................. 41




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    EXECUTIVE SUMMARY
           BhartiAirtel provides telecommunication services primarily to corporate, and small and
    medium scale enterprises in India. It offers global system for mobile communication (GSM)
    services, broadband and telephone services, national and international long distance services,
    and enterprise services. The company's mobile communication services include information
    services, short message, and prepaid and post paid services, as well as wireless application
    protocol-enabled Internet access and roaming services. Its telephone services include
    telephone services, dial-up services, special phone plus services, unified messaging, and audio
    conference services; and broadband services comprise integrated services digital network,
    leased line, virtual private networks, and wireless fidelity networks. The company also offers
    long-distance voice and data communication services, as well as enterprise services, such as
    voice services, mobile services, satellite services, managed data and Internet services, and
    managed e-business services.

           We have provided a detailed analysis of the macro, micro and the global environment in
    which Airtel operates and discussed the scenarios for entering the African market. The
    oligopolistic competitive structure prevalent in the Indian Telecom Sector has been highlighted.
    An insight into Airtel’s proactive response to market forces has been discussed and briefed.

           Currently the Indian Telecommunication market is valued at around $100 billion
    (Rupees 400,000 Crore) Three telecom players dominate this market - BSNL, BhartiAirtel and
    Reliance Communication with respective market share of 30, 27 and 20 percent along with
    some other players like MTNL, Hutch, Idea, Tata Indicom and BPL Mobile. The BhartiAirtel
    Limited the Strategic Business Unit of the Bharti group is having the second largest market
    share in a business which is having a very good market growth rate of 21% it is positioned in the
    question mark region of the BCG matrix and the best possible action for this SBU would be to
    expand and build in aspiration to acquire the position of market leader as the telecom sector is
    the booming market and the growth rate is very good in terms of revenue (i.e. 21%) as well as
    in terms of growth of market size (i.e. more than 90% in last five years 2002-07)



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           We had seen that Airtel enjoys the second position in the market & it had segmented
    the market taking in consideration all the requirements of the customers. Airtel had reached
    out to the multiple segments through its specialized products & services through its various
    plans like Ladies Plan, Senior Plan etc. Airtel covers the whole market with its wide range of
    products providing services to the customers like Airtel Landline phones, Mobile Connection
    Schemes & Internet range also. In this project we had seen that how Airtel had positioned its
    brand. Airtel had a huge base of its telecom distribution network, having more than 300000
    retailers for Airtel prepaid connections. Airtel had also come up with many new ideas & they
    had positioned their product keeping in mind the competitive environment & the requirements
    of the customers.

           The Indian Telecommunications network with more than 200 million connections is the
    fifth largest in the world and the second largest among the emerging economies of Asia. Today,
    it is the fastest growing market in the world and represents unique opportunities for
    international companies in the stagnant global scenario. The total subscriber base is expected
    to be more than 450 million in 2011. The wireless subscriber base has jumped from 1.6 million
    in 1999 to 150 million in 2009. In the last 3 years, two out of every three new telephone
    subscribers were wireless subscribers. BhartiAirtel, the strategic business unit selected by us,
    make it more interesting as it is neither market leader which can make it complacent nor
    follower which tried to adjust itself in the prevailing market condition.


           Strategy of an organization defines the overall plan to deploy strategic resources
    towards achievement of long-term goals and objectives of the organization. The external
    environment of a firm consists of the moves and counter moves executed by its competitors.
    Also the industry analysis is conducted by Porter’s Five Forces Analysis that studies the effect of
    five different environmental forces on an organization. These five forces are bargaining power
    of suppliers and buyers, threat of substitute products or services, and threat of new entrants. In
    the case of Indian telecom industry these forces play a major role as the competition is very
    intense and one wrong move by any company can cause major decline in its market share.




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                            INDIAN TELECOM INDUSTRY
    The Indian telecommunication Industry is one of the fastest growing telecom markets in the
    world. The mobile sector has grown from around 10 million subscribers in 2002 to reach 150
    million by early 2009 registering an average growth of over 90% year after year.The two major
    reasons that have fuelled this growth are low tariffs coupled with falling handset prices. The
    other reason that has tremendously helped the telecom Industry is the regulatory changes and
    reforms that have been pushed for last 10 years by successive Indian governments. According
    to Telecom Regulatory Authority of India (TRAI) the rate of market expansion would increase
    with further regulatory and structural reforms. Even though the fixed line market share has
    been dropping consistently, the overall (fixed and mobile) subscriber has risen to more than
    200 million by first quarter of 2009. The telecom reforms have allowed the foreign
    telecommunication companies to enter Indian market which has still got huge potential. The
    Ministry of Communications and Information Technology (MCIT) has very aggressive plans to
    increase the pace of growth, targeting 250 million telephone subscribers by end of 2009 and
    500 million by 2010. Most of the expansion in subscribers is set to occur in rural India. India’s
    rural telephone density has been languishing at around 1.9%. So, if 70% of total population is
    rural, the scope for growth in this Industry is unprecedented.

    Though there is an average growth of more than 90% in terms of number of users the average
    growth in the revenue is nearly 21% which is not a small figure by any industry standards. The
    significant difference in the growth of number of users and the revenue is due to the fact that
    the new users are mostly the consumers at the lower income level who are not able to afford
    these services at the higher rates which was existing prior to 2002 and their contribution to the
    total revenue is not equal to their proportion to total the total number of consumers. Currently
    the Indian Telecommunication market is valued at around $100 billion (Rupees 400,000 Crore)
    Three telecom players dominate this market - BSNL, BhartiAirtel and Reliance Communication
    with respective market share of 30, 27 and 20 percent along with some other players like
    MTNL, Hutch, Idea, Tata Indicom and BPL Mobile.




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        Table 1.0List of top telecommunication companies in India and their market share

          Telecom companies              Market share in Rupees     Market share in US $
                                         (Crore)                    (Billion)

          BSNL                                    120000                        30.0

          Airtel                                  108000                        27.0

          Reliance Communications                  80000                        20.0

          Idea Cellular                             NA                           NA

          Hutch                                     NA                           NA

          Tata Indicom                             36000                         7.5

          MTNL                                      NA                           NA

          BPL Mobile                                NA                           NA

          Total                                   400000                        100.0
        NA* Data not available



    Table 1.1List of Strategic Business Units of Bharti Group

    Strategic Business Units(SBU) of         Share of the SBU in Rupees   Share of SBU in US $
    Bharti group                             (Crore)                      (Billion)

    BhartiAirtel Limited                               108000                      27.0

    Bharti Tele Tech Limited                               NA                       NA

    Telecom Seychelles Limited                             NA                       NA

    BhartiTelesoft Limited                                 NA                       NA

    Tele tech Services (India) Limited                     NA                       NA

    Field fresh Foods Private Limited                      NA                       NA




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    Bharti Retail Private Limited                       NA                             NA

    Bharti AXA Life Insurance Company                   NA                             NA

    JersyAirtel Limited                                 NA                             NA

    Total                                             162800                         40.7

    NA* Data not available



    Table 1.2Table showing the total market value of Bharat Sanchar Nigam Limited (BSNL)

    Name of the company                                        Market share in US $ (Billion)
                             Market share in Rupees (Crore)
    BSNL                                120000                             30.0

    Total                               120000                             30.0




    Table 1.3List of Strategic Business Units of Reliance Anil DhirubhaiAmbani Group

    Strategic Business Units(SBU) of         Share of the SBU in Rupees Share of SBU in US $
    Reliance group                           (Crore)                    (Billion)

    Reliance Communications                            80000                         20.0

    Reliance Energy                                    10800                           2.7

    Reliance Capital                                     NA                            NA

    Reliance Natural Resources                           NA                            NA

    Reliance Health                                      NA                            NA

    Reliance Entertainment                               NA                            NA

    Total                                              100000                        25.0

    NA* Data not available




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    COMPETITIVE STRUCTURES PREVALENT IN THE INDIAN
    TELECOM SECTOR




           The Indian Telecom industry is dominated by a small number of big players
    (oligopolists). Because there are few participants in this type of market, each oligopolistic is
    aware of the actions of the others. Oligopolistic markets are characterized by interactivity. The
    decisions of one firm influence, and are influenced by the decisions of other firms. Strategic
    planning by oligopolists always involves taking into account the likely responses of the other
    market participants. This causes oligopolistic markets and industries to be at the highest risk for
    collusion. In short, we can say that the Indian Telecom Industry is characterized by “an
    oligopolistic competitive structure”.


    The major players in the telecom sector are: Reliance Communications, BhartiAirtel, Hutchison
    Essar, Idea Cellular, Aircel Ltd, MTNL, BSNL VSNL and Sify Ltd.


    Example of oligopolistic structure: An example of the same is the introduction of the “lifetime”
    easy life offer and how all players followed suit.




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     MICRO ENVIRONMENT – AN ANALYSIS

     Suppliers
     The main raw materials for the telecommunication industry are telecom equipments, telecom
     tools, telecommunication products, circuit breakers, relay switches, electronic wires, cables &
     electric conductors.




     Customers
     Airtel is a customer centric organization. Airtel has launched all its products and services
     keeping in mind the customer point of view.Airtel’s customer centric Visio : By 2010
     Airtel will be the most admired brand in India: loved by more customers, targeted by top talent,
     benchmarked by more business




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                    MACRO ENVIRONMENT – AN ANALYSIS
     Demographic
     Airtel is targeting all age groups gender, income groups, and occupation with a host of schemes.
     Legal
     Airtel abides by the rules of TRAI, consumer protection act, company’s act. Airtel has a 24/7
     dedicated customer care centre. It has abided by the state laws and other regulatory agencies.



     Socio-Cultural
     Airtel has been successful in creating a brand image among its customers. It has such a large
     customer base due to the belief in the people that airtel is value for money. It received an
     award for “the most trusted brand of 2009”
     Attitudes and lifestyle: Airtel has launched blackberry India
     Also, the punch line of Airtel “express yourself” also very much a part of its brand equity.
     Technology
     The innovative products and services initiated by Airtel would not have been successful had it
     not been for the extensive R&D by Airtel and the sophisticated technological equipments used.
     Examples: submarine cable systems, i2i software etc, partnership with IBM etc


     Economic
     The Indian economy is on a boom with an average gdp growth of 9.4%.                    A significant
     percentage of this can be attributed to the booming wireless and mobile sector.
     Wireless penetration increased 16% in the year 08-09, compounded annual growth rate of 33%
     with Airtel having a customer base of 42.7 million.


     Political
     Airtel has got all the necessary licenses to operate on a national as well as international level
     Fortunately, there have been no recent political unrests to hamper the telecom sector.


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                           THE GLOBAL ENVIRONMENT




        Airtel has spread its wings all over Asia, Africa, Europe, North America and is even
         expanding in Latin America


        Some of Airtel’s global clients are :
        IBM DAKSH, NOKIA, FORD, GE ,ORACLE, MICROSOFT, AMERICAN EXPRESS




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                                PORTER’S FIVE FORCES
     The model of pure competition implies that risk-adjusted rates of return should be constant
     across firms and industries. However, numerous economic studies have affirmed that different
     industries can sustain different levels of profitability; part of this difference is explained by
     industry structure.

     Michael Porter provided a framework that models an industry as being influenced by five
     forces. The strategic business manager seeking to develop an edge over rival firms can use this
     model to better understand the industry context in which the firm operates.

     On the following page, we have shown it with the help of a diagram.



     Diagram of Porter's 5 Forces




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     Barriers to Entry/Threat of New Entrants
     It is not only incumbent rivals that pose a threat to firms in an industry; the possibility that new
     firms may enter the industry also affects competition. In theory, any firm should be able to
     enter and exit a market, and if free entry and exit exists, then profits always should be nominal.
     In reality, however, industries possess characteristics that protect the high profit levels of firms
     in the market and inhibit additional rivals from entering the market. These are barriers to entry.
     The various barriers to entry are economies of scale, product differentiation, high capital cost,
     patents, government policies etc.


     Airtel operate in telecom industry which has high barriers to entry. Firstly, to enter this sector a
     company needs high amount of capital for setting up connection towers, and then the
     companies also have to pay high initial fees to enter into any region for business. Also the
     government has a policy of awarding license to only 3-4 operators to carry on business in any
     region which also acts as a deterrent for any new company setting up its operations. So we can
     safely conclude that Airtel with its pan India presence definitely has an advantage with regards
     to barriers to entry.


     Intensity of Rivalry among Firms
     In the traditional economic model, competition drives profit to zero. But competition is not
     perfect and firms are not unsophisticated price takers, rather they strive for competitive
     advantage. The industry concentration or the number of business units operating within a
     particular industry indicates the rivalry among them. If the number of businesses operating in a
     industry is small that means that rivalry among them will also be low and vice versa. In the case
     of telecom sector there are only few major pan India operators like Airtel, BSNL, Reliance, Tata
     Indicom, Hutch etc. but rivalry among them is very high. Each operator is trying to grab the
     maximum market share and they even try to woo the customers of other operators to join their
     network. Also there is very little product differentiation between different operators. If one
     operator introduces a new scheme then with a few days or in some case the next day similar
     schemes are offered by the rival operators. This almost negates any first mover’s advantage


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     which any operator may have. But telecom industry has a major advantage as it is one of the
     fastest growing sector of the country (growing in the range of 20-40% in past 3 years) so all the
     operators can stay in the industry without any shakeout happening. Also India has a huge
     untapped rural market which Airtel can exploit


     Threat of Substitute
     In porter model substitute products refer to products of other industry. As more substitutes
     become available, the demand becomes more elastic since the customers have more choice.
     Also the presence of substitutes constraints the ability of firms in industry to raise price. Airtel
     also faces threat of substitution from different products. Airtel operates in mobile telephony
     and the substitutes of mobile telephony are landlines, broadband and internet. Major chunk of
     India’s landline is under state owned BSNL and MTNL where as internet is serviced by BSNL,
     MTNL and Tata Indicom. Presently Airtel is also trying to enter into these sectors.


     Buyer Power
     The power of buyers is the impact which the customers have on any industry. If there are few
     buyers and large number of supplies then buyers set the price. The customers that are the
     buyers of telecom industry are fragmented which means that no buyer has any particular
     influence on product and price. The same is the case with Airtel, as no one particular buyer can
     influence the product and prices of the different product profile of the company.


     Supplier Power
     Similar to buyer power, suppliers also exert pressure on companies. If there is only one or two
     supplier of the major raw material for any industry then suppliers can exert great pressure on
     the firms. The main raw materials for the telecommunication industry are telecom equipments,
     telecom tools, telecommunication products, circuit breakers, relay switches, electronic wires,
     cables & electric conductors. But there are many suppliers of all these products in India and
     moreover they are not organized well enough to exert great deal of pressure on any particular
     company. So Airtel does not face great deal of pressure on account of its suppliers.


15
                      AIRTEL – A PROACTIVE APPROACH




     Some Initiatives

             First private basic telephone service provider in India
             Airtel announces significant commitment to innovations, partners with IBM to
              deliver India’s first ‘service delivery platform.
             BhartiAirtel joins the global club of telecos with more than 25 million customers.
             Airtel launches Airtel-Mega –The new innovative wireless home phone service.
             First to launch full time roaming services in the country.
             The first to launch the multi brand feature in a wireless network for the efficient
              usage of the spectrum
             It was the first company in the world to receive the ISO 9001:2000 certificate from
              the British Standard Institute




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        With its nationwide presence and world class infrastructure, Airtel was the chosen
         telecommunications vendor for two of the country's most popular reality TV shows
         — KaunBanegaCrorepati (KBC) and Indian Idol.
        Other initiatives include the “song catcher” which has gained enormous popularity
         amongst the youth.
        Airtel was the first to launch blackberry in India. With blackberry on airtel, one can
         send emails and Receive emails instantly
        The first to launch full roaming service on prepaid in the country
        The first to launch 32k sim cards
        The first to deploy voice quality enhances to improve voice quality and acoustics
        All the emails you've read, deleted or moved to a folder will show on both your
         handset device and your desktop. It uses over-the air technology so there's no need
         to manually synchronize your message activity.




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                             BCG MATRIX

     BCG Matrix For Bharat Sanchar Nigam Limited (BSNL)




     BCG Matrix For The BhartiAirtel




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     BCG Matrix for Reliance Communications Of Reliance Anil
     DhirubhaiAmbani Group




     While plotting the BCG matrices in case of BSNL as it is market leader we consider BhartiAirtel is
     having second largest market share at the position X on the horizontal axis representing the
     relative market share so the position of BSNL in the matrix will be at 1.11X. While plotting the
     market challengers like BhartiAirtel and Reliance Communications on the BCG matrix we
     consider the market leader BSNL at the position X on the horizontal axis and the position of
     BhartiAirtel and Reliance Communications will be 0.9X and 0.66X respectively. On vertical axis
     we are measuring the market growth rate which is 21% in case of the telecommunication
     sector. The sizes of the circles are directly proportional to the relative market share of these
     companies.

                   The BhartiAirtel Limited the Strategic Business Unit of the Bharti group is having
     the second largest market share in a business which is having a very good market growth rate
     of 21% it is positioned in the question mark region of the BCG matrix and the best possible
     action for this SBU would be to expand and build in aspiration to acquire the position of market
     leader as the telecom sector is the booming market and the growth rate is very good in terms
     of revenue (i.e. 21%) as well as in terms of growth of market size (i.e. more than 90% in last
     five years 2002-07)

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                                        SEGMENTATION
     Segmentation can be defined as the process of dividing the market into customers with similar
     tastes & preference into one segment. It’s all about dividing the market to serve its better.

     There are basically 4 levels of Segmentation. And Airtel segments the market as:

               Segment Marketing: Here the marketers divide the target market into different
                segments on the basis of homogeneous needs. Airtel had also broadly divided the
                whole market into 2 Categories, basically Prepaid, Post paid& Life Time Validity
                Customers. There are different schemes for the different types of customers in
                Prepaid & Postpaid Connections.
               Niche Marketing: It can be defined as the marketers’ efforts to position their
                product or service in smaller markets that have a similar attributes & have been
                neglected by other marketers. These have the smaller segment but are profitable
                one. Airtel had also launched its product its BlackBerry in this category. BlackBerry
                device with up to 10 supported business or personal email accounts, receive and
                send instant messages, and browse web content while on the go. The BlackBerry is
                particularly focuses on the upper business class who have to be in touch with the
                world every time.




         Individual Marketing: In this segmentation marketers focus on Individual Customers &
            they try to be in touch with the customer by phone call, emails etc. Airtel call every
            individual customer and tell about its new features & schemes, which are available with
            them.


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         Local Marketing: In this segmentation, companies have to focus on the requirements of
           the Local Markets to be successful. Airtel is also focusing on local marketing by their
           different low tariffs plans in rural sector & even in urban cities. They had started Rs 99
           scheme, in the villages & also in most of the cities to have their product available to
           almost every Indian.

     They had segmented the market on the basis of

        1. Geographical Segmentation: In this segmentation, the market is divided into groups
           based on demographic attributes based on such as localities, regions, cities, states,
           density etc. Airtel segment the market on the basis of states, as they have different
           plans for different states. Like the tariffs of South India are different to the tariffs of the
           North India.
        2. Demographic segmentation: In this type of Segmentation the market is divided into
           groups based on Demographic attributes such as age, gender, income, occupation,
           religion, family life cycle etc.

        3. Age & Life Cycle Stage: Recognizing that senior citizens have the need to keep in touch
           with their children and relatives who may often be located far away, the seniors plan
           offers a discount on one STD number and one local Airtel number. This special plan
           comes with a monthly rental of Rs 150.
        4. Gender: The Company had also launched special packages to target the women. Airtel
           had started the Ladies Special Plan targeted at women comes with a monthly rental of
           Rs 150 and allows subscriber to receive special beauty and lifestyle tips, apart from
           special discounts on subscription to Cosmopolitan and Good Housekeeping magazines.
        5. Income: Airtel had also segmented the market on the basis of income through their
           corporate plans. They had started off the corporate scheme on the basis of the higher
           usage rate & higher income persons.
        6. Generation: Airtel had started "Friendz" pre-paid connection,                          various
           SMS Plans & Value added services like Hello tunes, which                               is
           segmented to attract those between 15-25 years of age.


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        Psychographic segmentation: In this segmentation, marketers segment the market on
           the basis of Motivation, values, belief, lifestyle, personality etc.
     i.    LifeStyle: Airtel had come with the Black Berry phone for those customers who want to
           be in touch with their peers or their subordinates, colleagues etc.
     ii.   Personality: Airtel last year had also started Life Time Validity
           scheme for the persons who are not financially strong &can’t afford
           the normal schemes. The schemes provided typically suit the
           personality of the customer.


        Behavioral segmentation: Organization also divides market on the basis of behavior that
           customer shows towards the usage of products. Various variables for segmenting
           market on the basis of purchase behavior of customers are Occasions, Benefits, User
           status, Usage Rate, Loyalty etc.

       1. Occasions: Recently Airtel on the occasion of the 60th Independence day, introduced a
           recharge coupon of Rs 1,947 with two years validity for its Delhi and NCR prepaid
           customers.
       2. Benefits: Airtel also provide various tangible & intangible benefits for its customers. Like
           Airtel launch various tangible benefits like full validity schemes for its customers &
           intangible benefits like Roaming, Voice mail, Fax mail etc, Close User group etc.
       3. Usage Rate: Airtel very often comes up with schemes like Get the talk time of 1111 on
           the recharge of 1000 or more than talk time value for which customers are paying.




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                  TARGET MARKET SELECTION PROCESS
     After the process of market segmentation marketers focus their attention on targeting the
     market segments that are relevant to their products & likely to respond positively to their
     marketing strategies. As targeting the customers in a highly competitive environment is a
     complex process.

     Airtel covers the whole market coverage related to telephone sector. It has spreaded its
     business in all the Market segments & covers all the type of Product Category. Airtel had
     focused on the Prepaid




               Normal Speed Internet     Broad Band Internet      Wireless Internet




              Home Fixed Line Phone Home Wireless Phone            Calling Cards
Product
Category




              Mobile Prepaid Scheme Mobile              Postpaid Mobile Lifetime Scheme
                                         Scheme




                                        MarketSegment



23
     Scheme, Post Paid Scheme & Life Time Validity Scheme. In prepaid scheme, Airtel have a huge
     base of prepaid customer and it provides different schemes for different customers in Prepaid
     by its various easy recharge. On the basis of Heavy usage of Mobile, Airtel had segmented the
     market on the basis of the postpaid scheme. And Airtel had also come up with its Lifetime
     Validity scheme for the persons who can’t afford high prices. Into its other product category,
     Airtel have a range of Landline phones, in which it had started with Airtel Home fixed line
     phone, home wireless phones catering to the needs of the customers. It had also come up with
     the Calling cards, in which the customers can talk to their relatives residing abroad at a cheap
     rate. Into its other product category Airtel had come up with the Internet, in which it had
     segmented on the Normal Speed Internet for those users who don’t use internet much & for
     that they have to pay a minimal charge for the service. Then Airtel had also segmented on
     those customers who are the heavy users or they want to download a lot of data and that too
     at a high speed, and for them they had come up with the broad band. Finally Airtel had also
     targeted the Corporates Offices or Institutions who want to work without any wire jam &Airtel
     had come up with the Wireless Internet for those individuals.

     So we can say that Airtel have a full market Coverage with its all variety of products.




24
                                          POSITIONING
     All the marketers try to position the product in such a manner, that it seems to possess all the
     desired characteristics. Airtel also position its product in the
     same manner. It differentiates its product on the basis of
     Product, Service, Personnel, and Channel & Image. In the
     Product differentiation, Airtel was the first company, who
     started its e-recharge (Small & Big), apart from the paper
     recharge. It also provides the BlackBerry mobile for corporate,
     which is differentiated on the basis on design & various other features. In the Service, it
     differentiates the market with its huge telecom distribution network, having more than 300000
     retailers for Airtel prepaid connections, more than 800000 retailers for Airtel easy recharge. It
     also provides easy financial arrangements like for Life Time Validity, we can pay even in 12
     installments of Rs 99 each & it had also started its maintenance & repair centers for its
     handsets throughout the city. In the personnel differentiation it has a 24*7 helpline, which
     provides the solutions to the customers in a very courteous way. Airtel also have a wide
     coverage of its network, which can be taken under the channel differentiation. Airtel had also
     signed contract with many celebrities Like Shahrukh Khan & Amitabh Bacchan for its product
     promotion, even Company Founder &Chairman also have a very good image, as he is also
     heading the CII (Confederation of Indian Industry).

     The main strength of Airtel Positioning lies in their recent advertisements & Taglines, which had
     changed according to the environment. Like Airtel in the starting before 1999, when the call
     rates were high they had started ‘Leadership Series’ campaign, which featured successful men
     and women with their deluxe cars, carrying laptops and using cell phones. The campaign was
     aimed at positioning Airtel as an Aspirational brand, which was meant for leaders and
     celebrities. Then after 2000, Bharti realized that its existing customer base could be used to
     promote the brand and expand its market (as these customers could endorse the brand) and
     thus focused on building a close relationship with them. So Bharti decided to go for campaign
     having tagline “Touch Tomorrow”.     In 2002 When Bharti realized that they had done good in


25
     Relationship Marketing, they started the new campaign with the new punch line “Live Every
     Moment” & it was also accompanied by a change in the logo as well. The idea behind the new
     logo was to give Airtel a younger look. The logo (with new design and color pattern) symbolized
     innovation, energy and friendliness. After developing the spirit of energy & friendliness Bharti
     again in 2004, changed their Tagline from “Live Every Moment” to “Express Yourself” to attract
     more public, in which they use only gestures to show that Public want to express their opinion
     &Airtel can help them to do so. They come up with the new ad, in which, Airtel had convinced
     most of the people to use more of Airtel to express their feelings, which remain inside them.
     They had shown their ad having, deaf and dumb boy expressing his feelings to his teacher, then
     a boy leaving after dropping his girlfriend at home & at an instinct he runs back & kisses her, An
     athlete being trained in gymnastics falls in the middle course of action& then motivated by the
     coach, & then she now shows herself as a skilled gymnast. And till now Airtel is coming up with
     the new ideas, innovation & good healthy spirit & they are positioning their product keeping in
     mind the competitive environment & also the requirements of the customers.




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     DETAILED ASSESSMENT OF THE MAJOR COMPETITORS
       OF AIRTEL AND THEIR PROMINENT STRATEGIES

     In formulating business strategy, managers must consider the strategies of the firm's
     competitors. While in highly fragmented commodity industries the moves of any single
     competitor may be less important, in concentrated industries, like telecom competitor analysis
     becomes a vital part of strategic planning.

     Competitor analysis has two primary activities, 1) obtaining information about important
     competitors, and 2) using that information to predict competitor behavior. The goal of
     competitor analysis is to understand:

     With which competitors to compete,

     Competitors' strategies and planned actions,

     How competitors might react to a firm's actions,

     How to influence competitor behavior to the firm's own advantage.

     The major competitors of Airtel are BSNL, Reliance, Hutch, Tata Indicom etc. As we have seen
     before while doing the BCG matrix BSNL is the market leader of the telecom industry followed
     by Airtel and then other companies come.

     Now let us look at the different strategies adopted by the market leader i.e. BSNL

     Market Leader Strategies
     A market leader has got considerable market share, a significant presence in industry. In the
     Indian telecom industry currently BSNL holds this position. A market leader has to constantly
     guard itself from other competing firms. It adopts various strategies to expand its total market
     share. Also at the same time it also tries to hold on to its existing customers by using various
     defensive strategies like position defense (build a impregnable fortress around ones territory) ,
     flank defense (erect outpost i.e. new products/alternatives) , preemptive defense, counter
     offensive defense, mobile defense and contraction defense (strategic withdrawal).




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     The various strategies adopted by a market leader is explained below-:

     New demand               Win market share         Improve productivity     Defend position

     New users                Win customers            Improve costs            Defend staticly

     New users                Win competitors          Improve product mix      Defend proactively

     More usage               Win loyalty              Improve added value      Defend reactively



     BSNL is also trying to follow all these strategies to hold on to its market share. BSNL has the
     lowest call rates in relation to any operator in the industry. Also BSNL is also providing lowest
     roaming charges in the country. This strategy can come under preemptive strategy adopted by
     BSNL. BSNL has also expanded its market share by reaching out to rural population. This can
     come under mobile defense and also come under market expanding strategy. Also a strategy
     adopted by BSNL is that it has made itself available to every nook and corner of India which
     helps BSNL to expand its network much faster.




     Market Challenger Strategies
     Airtel, Reliance communications, Hutch, Tata Indicom are currently the market challenger as far
     as telecom industry of India is considered. The strategies adopted by market challengers are
     offensive strategies against the market leader that is BSNL. The private companies are attacking
     the market leader at its weak spot which is in its customer care relation. They are also trying
     different schemes like wide availability of their products, online bill payment facility, new
     attractive schemes, and different value added services.




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                     ENTERING A NEW MARKET: AFRICA

     The rapid growth of the African telecom industry over the past few years, has remarkably
     transformed communication infrastructure on the continent. Just a decade ago, Africa’s
     telecom industry accounted for only 2% of the world’s phone lines. Fast forward to the 21st
     century and the continent is almost unrecognizable. Mobile phones are ubiquitous and if
     current trends are anything to go by, 2010 is the year in which the continent’s nascent but
     burgeoning mobile telecom industry receives a massive technological upgrade.



     Telecom Market Spotlight: Africa
     Like that of the Middle East, with which it is often coupled by analysts, Africa’s telecom
     environment has become hugely active in recent years. This activity has been largely triggered
     by the rapid take up of mobile services in many African countries. A rapid growth in mobile
     subscribers has led to a flurry of interest in the acquisition of African mobile assets by various
     operators, both from within and without Africa, as they perceive the region to be one of last
     remaining big potential telecom markets.


     The $9 billion deal between India's BhartiAirtel Ltd. and South Africa's MTN Group Ltd. alone
     represents about 25 percent of the total telecom M&A activity in the first half of 2009, so there
     is a lot of money riding on a looming reorganization and consolidation of large swathes of
     Africa’s telecom.


     Another very big name to plunge into the region’s consolidation is Vodafone Group plc (NYSE:
     VOD), which in May 2009 achieved its long-held ambition of acquiring a controlling stake in
     South Africa’s largest mobile operator, Vodacom, previously an equal joint venture with the
     country’s former incumbent, Telkom. Given Vodacom’s existing presence in the region (it has
     operations in DRC, Lesotho, Mozambique, and Tanzania, for example) the deal gives Vodafone a




29
     considerable boost there. Vodafone itself already had operations in Egypt, Ghana (where it
     acquired a controlling stake in Ghana Telecom in August 2008), and Kenya.


     Other substantial international operators recently bulking up their African interests and
     services include:


     AT&T: Appointed in November 2008 a new regional vice president of Middle East & Africa,
     based in Dubai, as part of the expansion of its regional management to handle AT&T ’s strategic
     investment in the region for its global business customers. Later, in April 2009, AT&T and South
     Africa’s Telkom SA Ltd. (NYSE/Johannesburg: TKG) signed a Memorandum of Understanding,
     aimed at improving the connectivity between the companies’ networks, thereby giving
     businesses in Sub-Saharan Africa improved global communications.
     France Telecom/Orange: Having acquired a controlling stake in former incumbent Telkom
     Kenya in December 2009, France Telecom SA (NYSE: FTE) launched Orange as the commercial
     brand for Telkom Kenya in September 2008, and claimed that the new GSM service would make
     Orange the first integrated operator in the country. Meanwhile, France Telecom started
     negotiations with Togo to acquire new licenses to allow an Orange-branded mobile service to
     begin in that country. But, to show that everything is not necessarily sweetness and light in
     Africa’s mobile expansion, France Telecom has spent many months in a bitter dispute with
     Orascom Telecom over control of Egypt’s Mobinil, the joint-venture holding company for ECMS,
     the country’s largest mobile operator. Although Orascom said in July 2009 that it would end its
     legal action, the dispute still seems to be unresolved.


     Tata Communications. Tata took a controlling stake in South Africa's second national operator
     Neotel (Pty) Ltd. in January 2009, following its move to become the majority shareholder six
     months earlier.


     And it isn’t just the extra-regional operators that are involved. Telkom itself, for example,
     acquired in January 2009 the final 25 percent slice that it did not already own of the Nigerian


30
     operator Multi-links Telecommunications Ltd. , which provides fixed, mobile, data, long-
     distance, and international telecom services throughout Nigeria.

     Dependence on 2G

     However, like the Middle East, much of the current telecom interest still lies in 2G and
     (somewhat) 3G mobile -- in terms of impact in developing mass-market telecom in the region,
     2G has had more effect than any other technology. This Market Spotlight consequently
     concentrates on this current aspect of mobile. And it is important to understand how massively
     dominant mobile is in African markets -- typically, it accounts for about 70 percent to 80
     percent-plus of telecom revenues.



     Market Rankings

     Data Sources: All data in the Tables are sourced from Pyramid Research, which operates an
     ongoing and phased program of country research, data collection, and forecasting. Figures for
     2008 are actuals released as part of Pyramid’s Q1 2009 Forecast Release in March 2009 or the
     second quarter of 2009 Forecast Release in June 2009, as indicated. Revenues are given in U.S.
     dollars, converted at the average exchange rate for the year concerned.


     Table 1: Key Africa Markets Ranked by Population, 2008


     Market Population, 000
     Nigeria        146,255
     Egypt          77,090
     DRC            64,706
     South Africa   47,800
     Tanzania       40,380
     Kenya          38,550
     Algeria        33,770

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     Uganda         31,930
     Morocco        31,579
     Ghana          23,949
     Cote d Ivoire 19,568
     Cameroon       18,958
     Senegal        11,615
     Tunisia        10,438
     Botswana       1,900
     Mauritius      1,268


     Table 2: Key Africa Markets Ranked by Nominal GDP, 2008


     Market         Nominal GDP, $M
     South Africa   284,754
     Nigeria        179,747
     Egypt          161,370
     Algeria        159,890
     Morocco        87,009
     Tunisia        38,852
     Kenya          34,366
     Cote d Ivoire 25,640
     Cameroon       22,021
     Tanzania       16,442
     Uganda         15,831
     Ghana          14,393
     Senegal        13,334
     Botswana       12,164
     DRC            10,619
     Mauritius      9,297



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     Table 4: Key Africa Markets Ranked by Total Mobile Revenues, 2008


     Market         Total Mobile Revenues, $M
     South Africa   9,735
     Nigeria        6,945
     Egypt          4,057
     Algeria        3,002
     Morocco        2,812
     Tunisia        1,284
     Ghana          1,193
     Kenya          1,146
     Cote d Ivoire 970
     Tanzania       936
     DRC            878
     Cameroon       758
     Senegal        629
     Uganda         541
     Botswana       230
     Mauritius      151




     The apparently anomalous appearance of Nigeria in second place in Table 4 is due to the large
     number of mobile subscribers there -- nearly 63 million (see Table 7). This is the largest in
     Africa, despite a relatively low penetration rate of 43 percent and is the result of Nigeria having
     by far the largest population in Africa and having experienced a huge surge in the number of
     mobile subscribers recently.




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     Table 5: Key Africa Markets Ranked by Per-Population Total Mobile Revenues, 2008


     Market         Per-population Total Mobile revenues, $
     South Africa   204
     Tunisia        123
     Botswana       121
     Mauritius      119
     Morocco        89
     Algeria        89
     Senegal        54
     Egypt          53
     Ghana          50
     Cote d Ivoire 50
     Nigeria        47
     Cameroon       40
     Kenya          30
     Tanzania       23
     Uganda         17
     DRC            14


     Table 6: Key Africa Markets Ranked by Per-Population Mobile Subscribers, 2008


     Market         Per-population mobile subscribers, %
     South Africa   105%
     Botswana       90%
     Algeria        89%
     Tunisia        82%
     Mauritius      81%
     Morocco        72%


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     Egypt          54%
     Cote d Ivoire 49%
     Ghana          48%
     Senegal        46%
     Nigeria        43%
     Kenya          42%
     Tanzania       31%
     Cameroon       30%
     Uganda         27%
     DRC            15%


     Table 7: Key Africa Markets Ranked by Total Mobile Subscribers, 2008


     Nigeria        62,988
     South Africa   50,051
     Egypt          41,272
     Algeria        26,923
     Morocco        22,816
     Kenya          16,377
     Tanzania       12,589
     Ghana          11,425
     DRC            9,678
     Cote d Ivoire 9,574
     Uganda         8,688
     Tunisia        8,569
     Cameroon       5,711
     Senegal        5,388
     Botswana       1,702
     Mauritius      1,030


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     Mode of Entry for Airtel: Acquisition


     In early 2010, Airtel acquired Zain to enter African telecom market.


     Bharti Airtel Ltd. Completed its acquisition of Zain Group’s mobile operations in 15 countries
     across Africa for an enterprise valuation of $10.7 billion. With this acquisition, Airtel became
     the first Indian brand to go truly global with a footprint that covers over 1.8 billion people.
     Bharti also became a major Indian MNC with operations in 18 countries across Asia and Africa
     with a customer base of over 180 million.


     The transaction was the largest ever cross-border deal in emerging markets and resulted in
     combined revenues of over $12.4 billion and EBITDA of over $4.7 billion, based on the last
     audited results. Bharti is now among the five largest mobile operators in the world.




36
                        SCENARIOS FOR AFRICAN MARKET

      This section of the report highlights the future scenarios and developments in the evolution of
      telecom sector in Africa.

      There are three main macroscopic trends in the telecom market:

      1. A focus on improving the reach and profitability of existing network in developed countries
      like South Africa, especially with the advent of inexpensive mobile data, and new methods of
      monetizing the network through wholesale options, value-added services and better
      segmentation;

      2. Deployment of next-generation very high-speed broadband, and the building of business
      models and services to support this investment, typically involving video services and/or state
      backing for nationally-critical infrastructure projects;


      3. Continued steady rollout of broadband in Africa, balancing theoretical gains in social and
      economic utility against the practical constraints of affordability, PC/device penetration and the
      need for substantial investment.


      These three trends in future can give rise to the following five scenarios:




     1. Maturing products and business models

      The global telecom market is maturing fast. Baseline penetration rates will start to level off as
      saturation approaches. Coupled with price erosion and increasing capacity demands, this
      deceleration will pressure margins, especially in the recession.




37
     2. Convergence of fixed and mobile technology and product
        offerings

      The impact of mobile broadband, either as a substitute or a complement to fixed broadband.
      This will go hand-in-hand with the advent of more powerful personal devices such as
      Smartphone and netbooks.


     3. Greater state intervention in deploying and controlling
       broadband access

      Increasing intervention of African government in areas, such as broadband roll-out and
      strategy, outside the (traditional) scope of the regulatory authorities, will help the telecom
      companies. This will be conducted either through subsidy and stimulus programmes, or broader
      initiatives relating to national efforts on energy, health, education and the like:

      A growing belief that broadband networks should also support ‘infrastructure' services which
      may not be delivered by the public Internet - for example, remote metering and ‘smart grid'
      connectivity, support for healthcare or e-government, or education services. A major battle
      over the next 10 years will be whether these are delivered as ‘Telco services', ‘Internet services'
      or as distinct and separately-managed network services by providers using wholesale access to
      a Telco network.



     4. New consumer behavior and higher expectations

      With the changing user behavior over the period, even a premium service will become a basic
      expectation (or a government-mandated right). There will be rising pressure of expectations
      with the mass uptake of new applications and the added benefits of mobility.




38
                        STRATEGIES FOR AFRICAN MARKET


     The split that has emerged between the broadly more- and less-developed mobile markets
     presents operators with different issues and challenges. The more-developed markets, such as
     South Africa, Botswana, and those of North Africa, are beginning to face a challenge common to
     mature or maturing mobile markets everywhere. However, as far as internal instability of the
     entire continent is concerned, these are the market best suited for Airtel to begin their
     operations with.


     ARPUs are going down, even if subscriber numbers are not. Penetration is high in some of these
     markets, and there is intense competition. The problem isn’t churn, it is just that subscribers
     are taking, say, three or even four different mobile phones, and this is driving ARPUs down.


     The natural response is to try to boost ARPU by making services stickier through added value,
     and this is what is happening in a variety of ways. One of the most striking characteristics of the
     region is that operators are looking at both high- and low-tech possibilities for doing so. In
     North America, for example, any corporate strategist not thinking in terms of 4G (and 3G as a
     stepping stone) broadband apps would be fired; in Africa, although 3G and 4G WiMax are being
     rolled out, the bulk of mobile will be under-3G for a considerable time, so exploiting the existing
     mass market technology is going to be key for operators.




39
     Ansoff Matrix




     The options available with Airtel in Africa are:

           Market development
           Diversification

     Now, as far as execution of these steps is concerned, every step of Airtel will be in congruence
     with the strengths Airtel has acquired through the acquisition of Zain (African telecom major).

     Market Development:

     Strengths of Zain in Africa:

           Financial status
           Strong brand recognition
            Zain Group Synergies



     Hence, Airtel, by leveraging the strengths possessed by Zain in telecom market can develop a
     market by providing services, which will be combination of strengths of both Zain and Airtel.

     These may include:

40
           Targeting areas which are difficult to be targeted by competitors due to infrastructural
            inability
           Providing new innovative plans which are tried tested in parent market of Airtel.
            However, a slight deviation to cater African people can be accommodated
           Develop new, innovative plans

     Diversification

     This option can be focused on later stage as Airtel provides gamut of services. All of which can
     be explored later on by Airtel.

     These may include:

           VAS for mobile phones
           Broadband services
           DTH services


     As a matter of fact, Africa may be new market for Airtel, but for Zain , Africa is an existing
     market. This means that the other two options to develop new product or protect/build
     market are also available. But at the same time, Airtel now being parent company will govern
     the entire policies of the company and will try to align in the same direction as Airtel wants it to
     be.




     Conclusion

     An entire generation has been transformed as technology slowly merges with culture. In Kenya
     for instance, a goat herder in a rural area can now negotiate the sale of his animals on a mobile
     phone. Continued technological development and the emergence of e-business could
     eventually decrease the importance of the size of an enterprise, as people promote
     and market their goods using e-business tools on mobile phones.
     Africa does not have a Silicon Valley from which lots of companies are conquering the world
     with the latest software and hardware, but the increased use of mobile phones with their
     plethora of functions has empowered people and could close the digital divide between
     developed and developing countries.


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