AIRTEL
- A PRODUCT MANAGEMENT
APPROACH
Presented by Group 12/ G4 :
Atul Kothiyal, Shipra Bansal, Shriman Kalyan, Vamsee Krishna
Marketing Management 1 | 15 Jun 2009 | Great Lakes Institute of Management
CASE OBJECTIVES
The Airtel Promise:
“We at Airtel always think in fresh and innovative ways about the
needs of our customers and how we want them to feel. We deliver
what we promise and go out of our way to delight the customer with
a little bit more”
In this case analysis, we will go through the
•
position of Airtel in Indian Telecom Industry
•
success factors of Airtel
•
repositioning strategies
•
competition : strategies and counter-strategies
•
suggestions and action plan for Airtel to improvise
INDIAN MOBILE TELECOM SECTOR
Market Share: GSM
Caters to all segments
Fastest growing telecom market
Average of 6 mn new subscribers every
month
Service
Provider
Market Share
Airtel
32.48%
Vodafone
24.17%
BSNL
15.72%
Idea
14.84%
(May 09)
391 mn mobile subscribers
Teledensity: 36.98% in March 2009
Both GSM and CDMA
Service
Provider
Market Share
Big Four hold almost 74% of the mobile
market
Airtel
24.34%
Reliance
17.74%
Vodafone
17.21%
BSNL
14.37%
Market Share: Mobile
(Mar08)
BHARTI – BUSINESS PORTFOLIO
Bharti has a diverse product mix
Telecom Related:
Airtel
TeleSoft
TeleTech
Telecom Seychelles – 3G
Comviva technologies – VAS
Jersey Airtel – HSDPA, 3G
Infratel
Others:
Del Monte India – processed foods and beverages
Retail – Easyday, Walmart/ Best Price Modern Wholesale
AXA Insurance and Investments
Centum Learning
Airtel – Product Line
- It’s all about providing ‘Value’
Friendz (for
youth)
Free Voice
and Data,
extended
validity, offers
on VAS, etcE
Ladies
Special
(billing
flexibilities)
Airtel
Seniors
(discount on
specific
numbers,
health
benefits)
Youtopia
(Postpaid/
Friends)
Free
devotional
songs ( > 60
yrs)
For Magic:
•Free SMS
•Special Night Rates
•Free Talk Time
MAGIC – TOTAL PRODUCT CONCEPT
Future Product(s):
3G Applications
Augmented Product(s):
GPRS, GPS, VAS,
Information content
Formal Product(s):
Network coverage, Portal,
Payment options, Customer
Service, Recharge
Options, SMS
Core Product(s):
Voice service/ Mobile
Telephony
AIRTEL: ‘PORTER’S 5 FORCES’ APPROACH
Threat from New
Entrants
Power of the
Buyer
Supplier
Bargaining Power
Rivalry among
competitors
• Supply: Decline
in ARPU,
Infrastructure
tenancy costs
• Demand: Brand
Pull, Customer
Switching
• Government
Policies:
License,
Spectrum,
Mobile Number
Portability
• Lack of
differentiation
• Intense
competition
• Low switching
costs
• Shared towers
• Large number of
players
• Lack of
expertise
• High exit
barriers
• High fixed cost
• Big 4 in almost
all segments
• Less time for
innovation – low
response time
• Price wars
Threat of
Substitutes
•
•
•
•
VOIP
Online Chat
Satellite Phones
EMail
REASONS FOR AIRTEL’S SUCCESS
Early Entrant
Forecast the Boom
Established in 1985, Bharti has been a pioneering force in the
telecom sector with many firsts and innovations to its credit
By 2004 Airtel deployed around 23,000 km of optical fibre
cables across the country, coupled with approximately 1,500
nodes, and presence in around 200 locations
Network Coverage
Airtel’s high-speed optic fibre network currently spans over
101,337 kms covering all the major cities in the country
The company has two international landing stations in
Chennai that connects two submarine cable systems
REASONS FOR AIRTEL’S SUCCESS
Innovation and repositioning/ adapting
1995-1998 – ‘Power to keep in touch’ positioned in the premium
category aimed at elite class.
1999-2001 – ‘Touch Tomorrow’ started to cater to new segments
by positioning itself as a brand that improved quality of life.
In 2002 - ‘Live Every Moment’ Airtel signed on music composer
A.R. Rahman.
2003-2008 – ‘Express Yourself’ strengthens the emotional bond
that Airtel enjoys with its existing customers
Brand recollection
Airtel is the most recognizable brand in Indian operator space.
40% of respondents able to identify it as a mobile brand.
REPOSITIONING
Need for repositioning in 2002:
A look at what competitors did4
BPL and
Hutch
Idea
Spice and
Idea
Spice
• Waived airtime charges-Incoming Calls
• Ad-spend Rs. 630 million
• SMS 9 languages
• Prepaid roaming
• Contests and reward programs
• VAS: Railway inf., Astrology, movie tickets etc.
REPOSITIONING – AIRTEL’S WAY
Third phase of network expansion
Effective Brand Endorsers:
A.R. Rahman’s -‘Live Every Moment’ campaign.
Saurav Ganguly, Madhvan and Kareena for Magic
Percept Advertising: TVC- Shah Rukh Khan
and Kareena Kapoor
Tag lines:
You can do the magic (Magic hai to mumkin hai)
Anything is possible
Jahan Chaho Airtel Magic Pao
Express Yourself (2003 till date)
Customer Delight
Innovative marketing
Continuous technological up gradations
New VAS (Value Added Services) offerings
Efficient customer service
REPOSITIONING – AIRTEL’S WAY
First in:
32K SIM cards
Roaming cellular services
Smart mail, Fax Facility, Call hold, call waiting and web message
Easy activation and recharge: Scratch System, ICICI ATM
Distribution facilities:
Company outlets
Departmental stores, gift shops, retail outlets
Telephone booths and even kirana stores
Magic : Mass market and friendly; targeted the youth
Portal Improvisation
Pricing strategies:
Free voice mail service
Night differential prices
Door step deliveries for magic cards
CURRENT POSITION
Improved Brand Image and recognition
85,650,733 customers as on 1st Jan 2009
Bharti Airtel : Business Week IT 100 list 2007
3 SBUs:
Mobile services: GSM
Telemedia services: Broadband and telephone
Enterprise services: Telecom solutions – corporate and B2B.
Airtel's HS optical fiber network : 101,337 kms
PRODUCT MANAGEMENT ANALYSIS:
MCKINSEY’S 7S MODEL APPROACH
Shared Values
Values of the company
Structure
System
Strategy
Skills
Staff
Style
Integrated org
structure and
areas of
business,
‘OneAirtel’,
Better
delivery
Customer
support
(Airtel
Connect) initiative,
MIS, Internal
processes
Clear vision
and able
management
Able to win
competition,
but can
differentiate
better
Competency
can be
improved,
more
subject
matter
experts
needed
Aspirational
and lifestyle
brand, able
leadership,
COMPETITION & STRATEGIES
“Where there is innovation, there is scope for competition; and vice-versa”
Providing Value and not just products and services
Portal experience: From Mega-Portals to customer-centric Portals. Vodafone and
Airtel.
Global Brands: Vodafone-Hutch Essar, Virgin
Handset strategy:
MVNO like Virgin Mobile
Segmented targets: Value and Pricing for Youth and Corporates
Marketing strategies: Mobile telecom - almost like FMCG!
Technological upgradations:
Matching the innovations in the handset industry
Services for Mobile OS, Java applications and other VAS in the handset market
Specific examples: Blackberry, Apple IPhone
Substitutes:
Low cost handsets for mass market
High end Blackberry and Iphone for the Niche market
VOIP, Internet – chat and email, satellite phones
One positive aspect: Network sharing among the competitors
PERPETUAL MAPPING - COMPETITORS
High connectivity
Airtel
Virgin
Reliance
BSNL
Low Connectivity
Vodafone
High Esteem
Low Esteem
Idea
SUGGESTIONS & ACTION PLAN
VAS - Saving grace for the operators!!!
Bharti Telesoft – Software venture of Bharti Enterprises
Examples: Mobile Music, ticketing, bill payments, phone backup, mobile
banking, maps, internet
At 14 cents per minute, some VAS services make much more money than the
average 3-4 cents per minute that voice does.
Typically, data sells at anywhere between 4-65 cents
VAS constitutes 7% of total telecom revenue
SMS constitutes 55% of VAS revenue
At CAGR of 44% (2007 – 2010), VAS revenues will reach USD 2,744 mn
Revenue share between telcos & content providers is 70:30
Architect and deploy operator’s VAS service delivery platform and collaborate
with key players in the VAS value chain.
Broadband
63 million urban Indians accessed Internet using their phone in February,
2009.
16 million urban Indians access Internet on their phone almost on a daily basis
SUGGESTIONS & ACTION PLAN
Continuous improvement - IT support/ technology
Bharti Airtel entered into a comprehensive 10-year agreement with IBM to transform
& manage its IT infrastructure.
Exploit the technology expertise to provide better value. E.g. Tariff Check Up. This
will help in customer retention.
Rural Segment
Near - saturation in the urban markets
Rural markets will drive 35 to 38 % of the handset market growth
A mix of economical handsets (simple, durable, longer batter life), lower voice call
rate, flexible payment options can be formulated
MVNO:
Proactive strategic alliances so that market share is not eaten up
Airtel has to further improve it’s network infrastructure
3G: Tap the market at the initial stages (New Products)
Rural health care, education, Governance,
END NOTESE
“It took us 15 years to get our first 100 million
subscribers... but we are looking at acquiring our next
100 million customers in India within the next three
years.”
— Sunil Bharti Mittal on May 15, 2009
Airtel has been successful in the long run by focusing on
the customers’ needs rather than just being ‘just another’
service provider.
The scenario is optimistic, market has potential for
growth in specific segments and the company can
achieve even greater heights by targeting value-addition
to its products in strategic ways.
~
References: Official website of Airtel and other sources from the Internet.