Sales promotion in

telecom sector
How does sales promotions affect switching
This research paper is an effort to understand the consumer behavior in the pre-paid
connection segment. It highlights the effects of sales promotions on customer switching.
Group 10
Shwetabh Chandra
Tanay Chitre
Spandana G
Purva Ganediwal
Harsh Shah
Mats Fournier-Fach
Mathilde Houtart

G012
G013
G019
G020
G052
P070
C070

Sales promotion in telecom sector

Sales promotion in telecom sector

How does sales promotions affect switching

Index
Contents
Index .............................................................................................................................................................. 1
Abstract.......................................................................................................................................................... 2
Introduction/Background ............................................................................................................................. 2
Limitation of the study ................................................................................................................................. 2
Literature Review.......................................................................................................................................... 2
Formulation of hypothesis ........................................................................................................................... 3
Methodology for study ................................................................................................................................. 4
Analysis ......................................................................................................................................................... 5
Findings and conclusions ............................................................................................................................. 6
References ...................................................................................................................................................... 8
Annexures ..................................................................................................................................................... 9

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Sales promotion in telecom sector

Abstract
In todays highly competitive telecom industry in India, customer acceptance is very important. With
the launch of 4G services by limited players in the industry, the way the telecom companies will
approach the customers would be interesting. Telecom companies have relied heavily on promotions to
engage their consumer and to draw new customers. The aim of this research paper is to determine the
impact of sales promotion on the customer switching behaviour. The research included qualitative as
well as qualitative surveys. A sample of 79 was studied through this method. The results highlight the
fact that sales promotions do not have a significant impact in the switching behaviour of the customers.

Introduction/Background
The Indian telecom subscriber base has crossed the 988.6 million mark in August 2015 according to
data made available by TRAI. It is the second largest subscriber base in the world after China. The
major reasons that have led to this growth low handset prices combined with low tariffs for usage. In
the mobile users of India, in the year 2014, 21.2% of the mobile phone users in the country used a smart
phone. 84% of all the smartphone owners and 92% of the feature phone owners have prepaid
connections.
The industry has put in a lot of resources to improve the telecommunication technology so as to give
best possible service to the telecom customer. However, this has now plateaued as every major
provider in the country offers the same level of facilities. In a bid to distinguish themselves from one
another, telecom providers are now resorting to sales promotions. Sales promotion, from the
customers perspective is a marketing activity to improve temporarily the value of the brand by
offering a short-term additional incentive to buy. Sales promotions therefore identify some specific
consumer need and meet the need with corporate products and promotional activities. As the
customers who buy a prepaid connection are thought to be sensitive to price, the study on sales
promotion in the telecom industry forms an interesting study.

Limitation of the study

The consumers surveyed were majorly of the Sec A of the SEC classification. 80 respondents were
surveyed for the qualitative and quantitative research. The results that have been proved for the
sample have been assumed true for the population.

Literature Review
According to Kotler (2003), Sales Promotion is a key ingredient in marketing campaigns and consists of
a diverse collection of incentive tools, mostly short term designed to stimulate quicker or greater
purchase of particular products or services by consumers. Whiles Haugh (1983) Sakara & Alhassan
defined sales promotion as a direct inducement that offers an extra value or incentive for the product
to the sales force, distributors, or the final consumer with the primary objective of creating an
immediate sale.

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Sales promotion in telecom sector

Monetary sales promotions provide the instant benefits to the customers while non-monetary are nontransactional in nature and tend to be more relationship based (Campbell & Diamond, 1990). Monetary
sales promotions have a negative impact on the brand value of a product. The price reductions may
enforce the customer to switch to other brand and thus it may eliminate the criteria of the quality and
develop price elasticity in the purchase of the product (Aaker, 1996). The monetary promotions are
more preferred over non-monetary because of their power to persuade the customer to change their
purchase decisions (Luk and Yip, 2008). Sales promotion also has an impact on the level of commitment
shown by the customer. Mariole and Elina (2005) argues that the customers who are less committed
exhibit the high level of attention towards the sale promotion and those who are highly committed
show lower level of influence.
However, the true results of a sales promotion are still under debate by many researchers. Dodson &
Taybout, (2001) that promotion acts as an external stimulus and there is less probability that the
customers will repurchase the products after the campaign is over. It may change the customer attitude
to purchase the product on the normal price. Price discounts may also encourage low-probability
purchasers to try. However they are customers who are not likely to make repeat purchases and thus
the promotions have a negative impact on long-term sales. Price is used as a measure of quality for
many service consumers. In certain situation, the price cuts sometimes devalue the worth of brand in
the mind of the customers.

Formulation of hypothesis
Significance of the study
The study on the impact of the sales promotion on the customer loyalty in the telecommunication
industry is of significant value because:
It is very useful for the telecom service providers to recognize how their sales promotion campaigns
influence customer behaviour
It may provide support to the academic researchers to understand the customer behaviour of the
telecom industry by filling the gap in the literature by investigating the relationship between sales
promotion and customer loyalty.
Research Hypothesis
The sales promotion seems to have double edged impact on consumer behaviour that merely depends
on the level of commitment of the consumer on a certain brand/product. The certain kind of response
opens a new insight into the effect of sales promotional efforts. Gedenk, K., & Neslin (1999) further
explored that the sales promotion can create a decrease in the brand loyalty and led the customers to
display more variety seeking behaviour. This thought has created the need for more research.

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Thats why it is propose that:

Ho: Sales Promotion influence switching operators in the telecom industry
Ha: Sales Promotions does not influence switching operators in the telecom industry

Methodology for study

The carried out study is based on the quantitative research. The survey research design is intended to
collect samples from a particular population for the purpose of analyzing the behavior and interaction
of the variables that are relevant to a specific study. The study started by going through research
papers on telecom and sales promotion based on which the hypotheses were framed. This was
followed by a questionnaire-survey and qualitative interviews.

Target Population and sampling method

The sampling framework of this study was drawn from the prepaid users of telecommunication
services. The target group for the study are SEC A categorized. Simple random sampling was used as a
sampling method in order to ensure equal participation apart from gender, age and background biases.
Data Collection methods
Self-administered questionnaire served as a research instrument that was distributed among 79
respondents. Options for the questions were not shared with the respondents and their responses were
recorded by our teammate on the basis of his/her answer. The survey was filled as if it were an
interview with the respondent. This was done to avoid any biases that would have been formed in the
mind of the respondent after looking at the options. First part of the questionnaire was about his
switching behavior w.r.t network service and promotions. The second part dealt with questions like
places where he gets his recharge, his perception about sales promotion and questions on hedonic and
utilitarian benefit. Top-of-the-mind responses were recorded. 4 questions regarding sales promotions
offered by the telecom companies were non-compulsory. Every respondent was asked about just one of
the sales promotion activity from price-offs, free coupons, free talk-time and free data.
Data Analysis methods
The data was analyzed using Microsoft Excel. 1-dimensional and 2-dimensional results were analyzed
by using pivot tables. For questions regarding switching behavior w.r.t network coverage, customer
service and the sales promotions, which were on a likert scale of 1-5, the mean was taken for
interpretation of results. On the question regarding hedonic and utilitarian benefits, the options were
identified as H (hedonic) or U (utilitarian) and the mean of the likert scale responses were taken. Based
on this it was identified whether a particular respondent feels he gets more of H over U or vice-versa.
For the qualitative responses, all the qualitative responses were analyzed and clubbed together based
on their similarity with each other and then presented.

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Sales promotion in telecom sector

Analysis
The survey was floated to 79 people belonging to SEC-A category, 59% of which were male. Majority
(~96%) of the respondents lied in the age group of 22-30 years.

The survey covered consumers from all the major telecom operators of India with a majority of them
being Vodafone customers.

The initial part of the questionnaire asked the customer about what are the good features that their
telecom operator offers them and why are they associated with the brand, almost half of them said it is
because of the network coverage.

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Sales promotion in telecom sector

Free data and free talktime were the top recalls when consumers were asked about what kind of
promotions

do

the

telecom

operators

currently

offered

them.

Findings and conclusions

Network coverage and customer service have a higher impact on customer switching as compared to
sales promotion offers. The importance of the following factors when it comes to switching in the
telecom sector is as follows:
Network coverage>Customer Service>Free Data>Free talktime>Price-offs>Free coupons
Among the sales promotion options given to the respondents, we found that free talktime and free data
had a much higher impact on switching as compared to price-offs and coupons.
The primary reason for this being that talktime and data are related to the product itself whereas priceoffs and coupons have no benefits associated with the product.
Another reason for this is that the customers get instant gratification on receiving free talktime and
data whereas in case of coupons, the gratification is delayed and the customer has to make higher
efforts.
Thus, the above conclusion negates our null hypothesis H0. Sales promotions do not influence
switching in the telecom sector.
73.42% of our respondents realized utilitarian benefits over hedonic benefits while availing promotions
in the telecom sector. The reason being that the price-offs and other promos offered per recharge are of
a very small value which does not translate into a hedonic benefit.
We expected that the ladies would get a hedonic benefit from the sales promotion while the males
would get a utilitarian benefit. However, 81% of the ladies said that they got utilitarian benefits out of
the sales promotions. We dug deeper to find out why. A response from a consumer was "yeh 10-15 rs

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Sales promotion in telecom sector

mein paise bach jaate hai thode se. agar kuch contest mein trip de ya spa treatment de de toh maza aa
jaaye"
When asked about what kind of sales promotion do you think your telecom operator gives you, free
talktime and free data had the maximum recall. Thus, it is evident from this that these two are the most
likely of the sales promotions offered by telecom operators.
Majority of the people get their recharges done at online platforms like PayTM, Freecharge or the
telecom operators app. The combined percentage of users using these platforms to recharge is 78%.
Contrary to popular belief, users get recharges done at online platformd because of the convenience
and trust. 50% of the consumers cited this as a reason. Coupons and cashback came next in the list
From our analysis, sales promotions are not effective in getting customers to switch networks.
However, that being said, it is necessary to maintain parity with competitors when it comes to sales
promotions or pricing. Our qualitative survey gave us the insight that one Vodafone loyalist customer
while purchasing a new SIM card, opted for Airtel over Vodafone because the monthly charges for
airtel were lesser for Airtel than Vodafone. This might happen for sales promotions too where a
customer might opt for a network that offers better promotions.
We also found out that sensitivity to sales promotion decreases with age.
Some of the major consumer insights that we derived as a part of this exercise are:
Changing the telecom operator just for the network coverage is too a lengthy process. The
customer service eats up my head when I am changing it. Better stick to the same operator
If network coverage and customer service is same, I will change the operator if I m getting
more talktime in the other connection. but the switch from one operator to another has to be
hassle-free
Thus, the customer wants to avoid the long procedure and the paperwork involved in switching a
telecom network. Thus, switching is far too less in this industry.

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Sales promotion in telecom sector

References
Abedin, Z., & Ferdous, L. (2015). Promotional Strategies of Telecommunication Industries and Customers
Perception: A Study on Airtel Bangladesh Limited (Vol. 15).
Adjei, K., & Denanyoh, R. (2014). Determinants of Customer Loyalty among Mobile Telecom Subscribers in
the Brong Ahafo Region of Ghana. International Journal of Business and Social Research (Vol. 4).
Retrieved from http://www.thejournalofbusiness.org/index.php/site/article/view/366
Gautam, A., & Group, I. (2013). A study on ( below the line ) promotion strategies of telecom industry in
western ( Up ) circle ( India ) with special reference to Reliance Communications (Vol. 5).
Nalini, K., A, S. T., & Karthikeya, S. V. (n.d.). Impact Of Sales Promotional Activities Of Airtel Broadband.
Saeed, Dr. Rashid, Fareeha Nisar, Rab Nawaz Lodhi, D. M. A., & Arshad, D. H. M. (2013). Impacts of
Sales Promotion on the Consumer Loyalty in the Telecommunication Industry in Pakistan (Vol. 3).
Retrieved from http://www.textroad.com/pdf/JBASR/J. Basic. Appl. Sci. Res., 3(5)901-907, 2013.pdf
Vandana Mittal, & Brijesh Kishor Goswami. (2013). Sales Promotion in Telecom Industry of India. BEST:
International Journal of Management, Information Technology and Engineering (BEST: IJMITE) (Vol. 1).
Retrieved from
http://www.bestjournals.in/view_archives.php?year=2013_14_2&id=14&jtype=2&page=2

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Sales promotion in telecom sector

Annexures
Questionnaire

Sales Promotion | Group 10 9

Sales promotion in telecom sector

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Analysis details
Row Labels Count of Telecom
operator
Airtel
22
BSNL
3
Idea
8
MTNL
1
Reliance
2
Tata
5
Vodafone
38
Grand Total 79

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Sales promotion in telecom sector

Row Labels

Count of Gender of the

respondent

Female
Male
Grand Total

32
47
79

Respondents asked about:

price-offs
free tt
free data
free coupons
Total

23
20
20
16
79

Switching because of:

network coverage
customer service
price-offs
free tt
free data
free coupons

Mean
3.21
2.62
1.875
2.09
2.3
1.75

Row Labels

Price-offs

Free TT

Female

2.125

1.428571429

Neetwokr
coverage
3.5625

Male

1.75

2.428571429

2.978723404

Grand Total

1.875

2.095238095

3.215189873

Free data
2.222222
222
2.363636
364
2.3

Coup
ons
2
1.4285
71
1.75

Custo
mer
2.7187
5
2.5531
91
2.6202
53

Row Labels

Count of PayTM, Free

charge

Count of
Telecom
operator app

Count of
Local shops

Cashbacks/Discount/scheme
s
Ease of Recharge
Free coupons
Trusted source
(blank)

37.29%

27.27%

36.36%

Count of
Telecom
operator'
s store
0.00%

47.46%
11.86%
3.39%
0.00%

20.45%
9.09%
0.00%
43.18%

22.73%
9.09%
0.00%
31.82%

60.00%
20.00%
0.00%
20.00%

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Sales promotion in telecom sector

I get my recharges
at:
PayTM
telecom app
local store
telecom store
Total

Row Labels
Customer
Care/Service
Good deals
Network coverage
Nothing is good
Pocket friendly
Value added
services
Grand Total

No.

59
44
22
5
130

45.38461538
33.84615385
16.92307692
3.846153846
100

Count of What's so good about your telecom

operator?
16.07%
12.50%
50.89%
0.89%
10.71%
8.93%
100.00%

Row Labels

Cashbacks
Contests/Road
Shows/Sweepstakes
Free data
Free gifts
Free restaurant coupons
Free talktime
None
Other

Row Labels
Cashbacks
Contests/Road
Shows/Sweepstakes
Free data
Free gifts

Count of What kind of promos do

you think your telecom operator
does to influence your recharge?
13.73%
7.84%
29.41%
1.31%
5.88%
37.25%
2.61%
1.96%

Count of What kind of promos do you think your telecom operator does
to influence your recharge?
13.73%
7.84%
29.41%
1.31%

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Sales promotion in telecom sector

Free restaurant coupons

Free talktime
None
Other

5.88%
37.25%
2.61%
1.96%

Qualitative responses
Qualitative. Ask whatever you want to
promotions aren't very attractive
Network coverage is most important to me. I don't care much about any kind of sales
promotion.
No, I would not like to change the operator, because I get the best deals such as free
talkative and free data
No, I wont switch the telecom operator, because the network coverage is good
Sales promotion is less important to me than network coverage.
I prefer PayTM over Freecharge, because Freecharge has lot of issues while transacting. I
will not switch the operator because I have been using this for more than 5 years and its a
good deal.
More full talktime offers on reacharges
Network coverage is the main reason for sticking to Airtel currently
Good deal in the corporate plans of Idea
Loyal with Airtel just because of network coverage. Network coverage is main criteria and
more important than any other sales promotion
Customer service of Vodafone is irritating and DnD does not work..so dont want
promotions information by calling frequently
Difference between two operators is negligible in terms of promotion so dont want to take
the hassle to switch
Changed from Vodafone to airtel only coz of customer service
Ability to have custom made plans influence me a lot
Ease of switching is very important
have often changed telecom operator if the customer service pisses him off. has seen this in
the case of data card.
Changing the telecom operator just for the network coverage is too a lengthy process. The
customer service eats up my head when i am changing it. plus the formalities. better stick
to the same operator
network coverage is the only thing that matters. no other promotions define loyalty to
him. isiliye for all the utilitarian and hedonic benefits, he said it's 1 for all.. it hardly
mattered to him
Airtel has not tied up with Freecharge and PayTM, so no cash back is offered for any
recharge.
I wont change the telecom operator unless I shift to an area where there is a network
coverage issue
Got back lost sim card in 3 hours, Plans are very customer centric, n I wont change the

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Sales promotion in telecom sector

telecom operator
I would not change my telecom operator, because network coverage is what is important
to me and I am satisfied with it. Sales promotions does not matter to me much now. Its
because I am earning and don't think much on where I can save 10 or 20 rupees..
Don't care much about sales promotions. Just want ease of recharge, good coverage.
Happy with network coverage
Network coverage, good deals on talktime on my current operator so dont want to switch
Happy with the services of current operator
The local recharge shops are convenient for me as he knows my needs and informs me of
schemes that suit them.
I do not think any of the above promotions could make me change my network provider. I
have been with airtel from the start, won't change unless I fsce network issues and I am
hence unable to use their services
Good is Pan India coverage. Don't like call drops
Pretty satisfied with the current operator. Haven't found any major flaw to change it.
Customer service is good of current operator and Not likely to switch due to promotions
as others also do the same
Not switching due to inconvenience in changing
using it just coz it was her first connection. network and customer servie acha hain toh
promoions doesnt matter. promotions are temporary
using it just coz it was her first connection. switching in telecom is a pain. wont take the
pain to switch.
Not many promotional schemes for STD calls for current operator, not changed it yet
because of good network
I think current operator overcharges me at times..but there is no viably different option..all
are more or less the same..so sticking with it
Great network and good schemes already
Higher data recharges price is not good with current operator
Want more sales promotion activity from Airtel
Promos dont matter! the hassles of switching a telecom operator, nobody wants to go thru
it
dont think too much. my father pays the bill currently. it is too costly. extremely low
involved customer. his opinions dont matter much. as good as zero
for me call rate is most important. call rate acha ho, toh switch maruga. vodafone currently
offers me awesome plans
i am unhappy with airtel. Its network coverage is poor but so is the case with all the
operators. So makes no point switching networks even though some operators are offering
me promotions
if network coverge and customer serivce is same, i will change the operator if i m getting
more talktime in the other connection. but the switch from one operator to another has to
be hassle-free

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