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

� Caters to all segments

� Fastest growing telecom market

� Average of 6 mn new subscribers every

month

Service

Provider

Market Share (May 09)

Airtel 32.48%

Vodafone 24.17%

BSNL 15.72%

Market Share: GSM

month

� 391 mn mobile subscribers

� Teledensity: 36.98% in March 2009

� Both GSM and CDMA

� Big Four hold almost 74% of the mobile

market

Idea 14.84%

Market Share: Mobile

Service

Provider

Market Share (Mar08)

Airtel 24.34%

Reliance 17.74%

Vodafone 17.21%

BSNL 14.37%

BHARTI – BUSINESS PORTFOLIO

Bharti has a diverse product mix

Telecom Related:

� Airtel

� TeleSoft

� TeleTech

� Telecom Seychelles – 3G� 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

Friendz (for youth)

Ladies Special (billing

flexibilities)

Free Voice and Data, extended

validity, offers on VAS, etcE

Airtel – Product Line

- It’s all about providing ‘Value’

AirtelSeniors

(discount on specific

numbers, health

benefits)

Free devotional

songs ( > 60 yrs)

Youtopia (Postpaid/ Friends)

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

• Supply: Decline in ARPU, Infrastructure tenancy costs

Power of the Buyer

• Lack of differentiation

• Intense competition

Supplier Bargaining Power

• Shared towers

• Large number of players

• Lack of

Rivalry among competitors

• High exit barriers

• High fixed cost

• Big 4 in almost

Threat of Substitutes

• VOIP

• Online Chat

• Satellite Phones

• EMailtenancy costs

• Demand: Brand Pull, Customer Switching

• Government Policies: License, Spectrum, Mobile Number Portability

competition

• Low switching costs

• Lack of expertise

• Big 4 in almost all segments

• Less time for innovation – low response time

• Price wars

• EMail

REASONS FOR AIRTEL’S SUCCESS

� Early Entrant

� Established in 1985, Bharti has been a pioneering force in the

telecom sector with many firsts and innovations to its credit

� Forecast the Boom

� 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:

• Waived airtime charges-Incoming CallsBPL and

Hutch

A look at what competitors did4

Hutch

• Ad-spend Rs. 630 million

• SMS 9 languages

• Prepaid roamingIdea

• Contests and reward programsSpice and

Idea

• VAS: Railway inf., Astrology, movie tickets etc.Spice

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: 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 � 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 ValuesValues of the company

Structure

Integrated org structure and

areas of business,

‘OneAirtel’, Better

delivery

System

Customer support (Airtel

Connect) -initiative,

MIS, Internal processes

StrategyClear vision

and able management

Skills

Able to win competition,

but can differentiate

better

Staff

Competency can be

improved, more

subject matter experts needed

Style

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:� Handset strategy:� Low cost handsets for mass market

� High end Blackberry and Iphone for the Niche market

� 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: � VOIP, Internet – chat and email, satellite phones

� One positive aspect: Network sharing among the competitors

PERPETUAL MAPPING - COMPETITORS

Hig

h E

ste

em

Low

Este

em

High connectivity

Airtel

VodafoneIdea

Hig

h E

ste

em

Low

Este

em

Low Connectivity

Virgin

BSNL

Reliance

SUGGESTIONS & ACTION PLAN

� VAS - Saving grace for the operators!!!� 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� At CAGR of 44% (2007 – 2010), VAS revenues will reach USD 2,744 mn

� Revenue share between telcos & content providers is 70:30

� Bharti Telesoft – Software venture of Bharti Enterprises � 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 � 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.