Contents

THE PRODUCT - Airtel Mobile Services .................................................................................................. 4

OBJECTIVES ....................................................................................................................................... 5
Corporate Objectives ....................................................................................................................... 5 Marketing & Sales Objectives............................................................................................................. 5 Financial & Operational Objectives ..................................................................................................... 5 Customer Retention ......................................................................................................................... 5 SITUATION ANALYSIS ........................................................................................................................... 6

SWOT: ........................................................................................................................................... 6
PORTERS 5 FORCES ......................................................................................................................... 8 COMPANY & COMPETITOR ANALYSIS .................................................................................................... 11 Product features matrix...................................................................................................................... 11 Objectives of Competitors: .................................................................................................................. 13 COMPETITOR ANALYSIS ...................................................................................................................... 14 COMPETITOR STRATEGY ..................................................................................................................... 17 Applying 4P Marketing Mix to Airtel

..................................................................................................... 18

Profits.......................................................................................................................................... 21
Value Chain Analysis .......................................................................................................................... 22 Differential Advantages .................................................................................................................. 23 Maintain Specialty ......................................................................................................................... 23 Hope for Market Growth ................................................................................................................ 24 Maintain Cost Advantage ................................................................................................................ 25 Outstanding Success ...................................................................................................................... 26 Market Segmentation ........................................................................................................................ 27

Targeting ......................................................................................................................................... 28
Evaluation of Market segments ........................................................................................................ 28 Selecting a targeting strategy ........................................................................................................... 29 The Target Market Segments ........................................................................................................... 29

Positioning ...................................................................................................................................... 31
CONSUMER BEHAVIOUR ..................................................................................................................... 33

ASSUMPTION IN PLANNING PROCESS ................................................................................................. 38

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THE PRODUCT STRATEGY .................................................................................................................... 44

Strategy Marketing Communications Programmes ............................................................................ 46 Integrated Marketing Communications Programs............................................................................. 46

Pricing Strategy .............................................................................................................................. 47 Channel Strategy ............................................................................................................................ 48

Research Strategy .......................................................................................................................... 49 MONITORING & CONTIGENCY PLANS .................................................................................................... 50

Recommended Marketing Strategies for Airtel .................................................................................... 51

REFERENCES .................................................................................................................................... 53

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THE PRODUCT - Airtel Mobile Services

Airtel Mobile services is one of the four strategic business units of Bharti-Airtel limited formerly known as Bharti-Tele Ventures LTD (BTVL). The mobile services division of the company is branded as Airtel. Going by the subscriber base Bharti is the fifth largest mobile operator in the world, with an estimated base in about 18 countries. Airtel currently offers both 2G and 3G services depending on the country of operation. It has recently secured the 3G licenses in 13 telecom circles of India and plans to launch 3G services by the month of October this year.2 The cellular services division of Airtel has also entered the smart phone market segment. On 19th October 2004 Airtel announced the launch of Black Berry Wireless Solutions in India. By August 2008 Airtel had signed up with Apple for the launch of Apple 3G iPhone services. It has however been unable to capitalise and emulate the success of Apple iPhone on the account of high pricing and contract bond accompanying these services. Considering the fact that India is now the second largest telecom market in the world and more importantly the fastest growing market globally (about 19 million additions a month), there have been several new entrants in the markets lately.3 This has led to ever lowering tariffs and a decrease in the revenue of existing players. Fresh acquisition of customers is then no longer a guarantee to increase in revenue. As a consequence in addition to the lower calling rates, the operators have been forced to provide a host of value added and auxiliary services. Here Airtel is already leading the way in areas of mobile commerce, banking etc. As the Indian telecom industry enters its third phase, growth in the markets are bound to mirror the growth in the economy. This provides valuable pointers to the next driver of growth the rural India where mobile penetration levels still remain an abysmal 15%.4 Airtel has been looking to expand to learn and expand in the rural/low income market segment. In this regard Airtel has already ventured into providing mobile financial services, mobile money transfers to customers in rural areas, further leveraging its existing base of cellular subscribers.

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OBJECTIVES
Corporate Objectives
To dominate the cellular services industry by being the market leader in products and services category in wireless market and lead on all important fronts viz. market share, brand loyalty and customer satisfaction.

Marketing & Sales Objectives

1. To achieve higher penetration in rural markets by capitalising on the existing base to reach out to new subscriber markets. 2. To create markets for Value added services by integrating more features into the existing scheme of things. 3. To reach out to different market segments with products and services customised to cater to the segment specific needs. 4. To study the brand loyalty within the existing set to better understand and appreciate our product differentiation. And also how we can build upon it further. 5. To engage with customers continuously to be able to adapt to the changing market needs and consumer behaviour. 6. To explore the potential for broadband data markets by exploring the scope of 2G and 3G cellular services in urban/rural markets.

Financial & Operational Objectives

1. To expand and outsource capital intensive tasks (involving building & maintenance). 2. To be able to break even on the capital spent in securing 3G licensing services by improving on the ARPU and ensuring better penetration into the SaaS market by broadband data services. 3. To ensure 3G services usage generates enough revenues per annum to enable normal pay back and returns.

Customer Retention
1. To leverage the existing base of customers by engaging them with new products and services launches on a periodic basis 2. Empower and engage with consumers on a regular basis to ensure customer satisfaction and value delivery.

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SITUATION ANALYSIS
SWOT:
Strengths 1. It is the largest cellular service provider in India with a subscriber base of over 135 million (June 2010) and market share of 29.2%. 2. Airtel is currently operating in 18 different countries in Asia and Africa which reflects its global presence. 3. Airtel is in with strategic alliance with majors from other telecom leaders like Ericsson, Nokia Siemens Network and Sing Tel which gives insight into other areas of telecommunication. 4. Mobile Business Unit of Airtel is a profit making division where profits soared by 3% to Rs. 8227 crore giving enough cash in hand. 5. Tie-ups with BlackBerry Wireless Solution, Apple Iphone 3G and Facebook give access to emerging new growth markets. Weakness 1. Airtel outsources everything except marketing and sales which makes it dependent on other players. 2. Dominance within India is limited to circles in Northern and Eastern India with high competition in Southern India. 3. Airtel focuses on nationwide advertisement strategies which give other regional players to dominate in several regions. 4. Bharti did not own majority of its own network towers which hampers the coverage area and give advantage to its competitors. Opportunities 1. With the help of its wide national presence Airtel can aggressively venture into new emerging areas like mobile banking, 3G Technology 2. Strategic position of Airtel in international market can help to acquire new business divisions in other countries to expand the business horizontally. 3. With the huge cash base Airtel can hugely invest in innovative products like Airtel Worldwide SIM and Airtel App Central which is Indias first mobile app store. 4. The company can promote its worldwide presence by sponsoring more international events like Twenty-20 World Cup and UEFA Champions League.

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5. With the right regional marketing strategies Airtel can acquire the dominance in regional market and increasing the market share of the company. Threats 1. Companies like Virgin and Tata Docomo are aggressively targeting younger generation with there new innovative products and applications, thereby reducing the market share of Airtel. 2. There is always a potential for entry of foreign player or revival of domestic competitor like Vodafone from Hutch.

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PORTERS 5 FORCES
Mobile Services Industry Structure: Mobile services in India are fast growing with a YoY growth rate of 58.17% in 2008 and 50.06% in 2009. There are multiple service providers with as many as 12-13 service providers in all circles.6 While Circle A, Circle B and Metro circle is already nearing very high penetration levels, Circle C subscription base is increasing at the fastest rate, ensuring a high rate of increase in the overall subscription base.9 Subscriber base of mobile services (GSM and CDMA): 2007-2009 Service Providers Bharti BSNL Reliance Vodafone Tata Idea/Escotel Aircel Others TOTAL 2007 37.14 30.99 28.01 26.44 16.02 14.01 5.51 6.99 165.11 2008 61.98 40.79 45.79 44.13 24.33 24 10.61 9.44 261.07 2009 93.92 52.15 72.67 68.77 35.12 38.89 18.48 11.76 391.76 Source: TRAI YoY over 2009 51.53% 58.70% 55.84% 27.85% 44.35% 62.03% 74.18% 10.76% 50.06%

1. Threat of new entrants-HIGH a. Department of Telecom and the Telecom Regulatory Authority of India (TRAI) are the policy formulating and regulatory bodies. TRAIs stated objective is to encourage greater competition in the telecom sector together with better quality and affordable prices and in line with that, has been following a liberal regulatory regime b. The government presently allows FDI of 76% in the sector, encouraging foreign players to enter the Indian market. c. The sector offers tremendous growth opportunity. By 2012, total telecom penetration in rural markets is expected to reach 40% compared to the current tele-density of 16.6%.7 Given the profit opportunities and regulatory environment, threat of new entrants is high. 2. Bargaining Power of buyers- VERY HIGH a. Lack of product differentiation- The product offering is similar from almost all players with the same basic product and similar value added services. There are short term gains that one player may have from innovation/ first mover advantage into a new value added service, but these are soon offered by competitors as well b. Extremely low switching costs in moving from 1 service provider to another 8|Page

c. Multiple service providers- very wide variety of choice for the customers. d. Competitive landscape implies consistently better offers and deals for customers.

3. Bargaining power of suppliers-VERY LOW Airtel outsources most of its operations. Since contracts are allocated to the highest bidder, Airtel only looks at getting the best deal. This mechanism provides Airtel with a high degree of flexibility. a. Network outsourcing/maintenance partners: Ericsson(15 circles), Siemens(7 circles), Huawei. b. IT system partner: IBM c. Tower maintenance and other infrastructure: BhartiInfratel and Indus towers d. Call center partners: IBM Daksh, Nortel, Hinduja TMT, Teleperformance, Mphasis, Firstsource& Aegis

4. Pressure from substitutes-HIGH The communications space is very dynamic with new technology (3G and 4G) and products flooding the market. Mobile services are competing with products such as a. Wired-lines b. CDMA c. Video telephony d. Tata/ Reliance- Walky phones e. Internet telephony- Skype, google, fringetc f. VSAT phones

Additionally, data services on cellular phones have become an essential product feature. On this front, mobile services face a significant threat from local ISPs, broadband service, leased lines, Blackberry and iPad. 5. Current Rivalry Airtel is the current market leader in the mobile service (GSM) sector with 31% market share. Vodafone, BSNL, Idea are its major competitors.6

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6. Category Capacity: As of January 2010, the overall tele-density was recorded at 49.5 per cent with a total telephone subscriber base of 581.81 million.6 By 2012, the total telecom subscriber base is expected to reach approximately 700 million to include about 650 million wireless users and approximately 50 million fixed line users, driven by a rise in the demand for communications from semi-urban and rural India.7

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COMPANY & COMPETITOR ANALYSIS

Product features matrix

Table 1 depicts the product feature matrix to simplify the difference between the product features or services offered by Airtel Mobile as compared to other competitors in the market. By analyzing the table we can get a very clear idea of the strength and weakness of Airtel product relative to the other competitors. Notes (As mentioned in Table below): 1. Process of receiving updates automatically on your phone without the need of initiating a request every day. 2. It includes services like Call Conferencing, Call wait, Call Hold, Call Divert, Missed Call Alert 3. It includes service like Send/Receive Emails, Mobile Office, Fax and Data 4. mVoip or mobile Voice over Internet Protocol is an extension to VOIP through which a mobile handset can be integrated into a VoIP network 5. Apple IPhone is available in India either through BhartiAirtel or Vodafone service provider. No other service providers has given right to sell IPhone in India. 6. Service that provides instant chat with friends with any mobile number, anywhere in India. A user can exchange text, photos and emoticons. 7. Customers can SMS to multiple contacts, anywhere in the world. Users can create their own groups, communities in order to SMS all of them at the same time with reduced rates per SMS

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Various Operators

Mobile

Normal Users GPRS Prepaid Service Postpaid Service Subscription 1 Service Call Management 2 Service 3 Data Service SMS Directory Language SMS MMS Service National Roaming E-Recharge Business Users Blackberry
m VOIP
4

No

Product Features

No

No

No

No

No No

ISD Calling Cards Operator Services Just Dial Conversion from Prepaid to Postpaid or vice versa Customer Care Caller Tunes Voice SMS Additional Features 5 Apple Iphone 6 PC2Mobile Corporate Group 7 Messaging Customized Chatting Client m-Commerce Phone Backup

No

No No

No

No

No No

No No

Table: Product feature matrix of Airtel Mobile

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Objectives of Competitors
Below are the current objectives of the competitors, an assessment of these objectives can give a brief idea about the current strategy of the competitors and how aggressive it will be in future. 1) Vodafone Essar: Vodafone Essar is the Indian subsidiary of Vodafone group; previously it was Essar who was in the telecom area since 1994.Companys main objective is to leverage the global position of Vodafone n India as well and become the top player in terms of market share as well as revenue in Indian circle.

2) Reliance:ADA Groups flagship company, Reliance Communicationss objectives include focus on customer delight and hence business productivity and to offer communication services in all sphere to all individual customers and business in India.

3) Idea: Idea is one of the few companies that are seen as an innovative, customer focused brand. Its vision is to expand its mobile operations to all sectors of people according to their individual needs. It also aims to expand its coverage area nationally as well as internationally to cater to more consumers.

4) Aircel: Aircel is one of the recent entrants into the telecom sector with the aim of becoming Indias pioneer in mobile technology and mobile services. With its aggressive marketing campaign it has already gained a significant amount of market share. And hence company is aiming to continue its growth in whole of India. 5) Tata Docomo: Docomo is the global leader in Value Added Services. Its collaboration with Tata as Tata Docomo was launched in 2009. Despite its late entry into telecom sector Tata Docomo is aiming at broaden its telephone services to include Mobile Services, Wireless Desktop Phones, Public Booth Telephony and Wire-line Services.

6) BSNL:BSNL is World's 7th largest Telecommunications Company providing comprehensive range of telecom services. With its wide coverage area in terms of rural penetration in not only Mobile Telephony but also in broadband has contributed in achieving top position. BSNL is looking forward to maintain this position in coming years.

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COMPETITOR ANALYSIS
Presented below is the pictorial representation of Airtel's market share in Indian telecommunication market from January 2009 through April 2010.

Vodafone Essar 32.99% BSNL IDEA Aircel Reliance Telecom MTNL BPL

23.64%

January 09
4.01% 6.26%
14.94%

1.49%

0.75% Bharti Airtel

15.93%

April 2009
1.48% 2.13% 6.57% 29.38% 17.10% 0.78% Bharti Airtel Vodafone Essar BSNL IDEA Aircel Reliance Telecom 21.82% MTNL 20.75% BPL

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July 2009
4.07% 1.33%

0.72%
Bharti Airtel

7.08% 32.25%

Vodafone Essar BSNL

IDEA Aircel Reliance Telecom

14.88%

15.55%
24.12%

MTNL

Loop Mobile

October 2009
4.11%

1.25%

0.72%

Bharti Airtel 7.80% 31.83% 15.00% Vodafone Essar BSNL IDEA Aircel Reliance Telecom 15.17% 24.13% MTNL Loop Mobile

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January 2010
1.17% 4.00% 0.69% 0.64% 0.13% Bharti Airtel Vodafone Essar 8.38% 30.86% 15.08% IDEA BSNL Aircel Reliance Telecom MTNL 15.19% 23.87% Loop Mobile Uninor STel

April 2010
3.77%

1.11%

1.16%

0.67%

0.26% 0.00%

Bharti Airtel Vodafone Essar

8.88% 30.16% 14.95%

IDEA BSNL Aircel Reliance Telecom MTNL

15.08% 23.96%

Uninor Loop Mobile Stel

Source of Figures: www.coai.com

Looking at the above market share data, it is clear that BhartiAirtel has been losing market share over the last one year. This can be attributed to the entry of new payers in the cellular market. However, it is important to note that while all other players have been losing market share over the period, Airtels closest competitor Vodafone Essar has been able to hold on to its market share.

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