Market Driven Innovations in Telecom Industry

Published: 07th May 2009
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With consequences on the market structure, as a result The current article would deal of competition and the innovative schemes of the players to capture market shares.

The GoI's decision to liberalize the telecom sector in 1994 transformed the entire telecom industry, with many private companies foraying into the sector. With the consequent grant of licenses for providing cellular services, there was a surge in the number of cellular services providers which continued till the late 1990's. By the year 2000, stiff competition between players in the cellular market prompted each player to formulate more novel strategies in order to retain their market share.

There are 9 major players in the market. The market is dominated by Airtel and Hutch (now Vodafone) and BSNL over the last 3 yrs, but even for players like BPL, MTNL and Spice the share is growing. There have been various promotional strategies implemented by the major cellular service

providers in the Indian cellular market.

Promotional Strategies to capture market share:

Most of the promotional strategies revolve around capturing the younger generation who formed a major part of the target market. Prominent among these were - celebrity endorsements, loyalty rewards, discount coupons, business solutions and talk time schemes. The most important consumer segments in the cellular industry are the youth segment and the business class segment.

The youth segment is the largest and fastest growing segment and is therefore targeted most heavily by cellular service providers. Bharti Tele-Ventures adopted celebrity endorsement as its chief promotional strategy. By 2007 it emerged the unprecedented leader commanding the largest market share in the cellular service market.

Hutch implemented the celebrity endorsement strategy partially, relying primarily on its creative advertising for the promotion of its brand. BSNL, on the other hand, attracted the consumer through its low cost schemes. Being a state owned player, BSNL could cover rural areas, and this helped it increase its subscriber base.

Aimed mainly at youth, Idea Goodies card will facilitate easy download of ring tones, logos, wallpapers, games etc. It comes in two denominations of Rs 22 and Rs 55 each and offers full rupee value to the customers. All the content through this card is available at a price tag of almost 33 per cent less as compared to what the customers would usually pay, according to a company press release.

AIRTEL launched special mobile packages targeted at the youth, women and senior citizens as part of its market segmentation strategy. While women can get a new post-paid connection with a monthly rental of Rs 150, students will be able to make calls for as low as 50 paise a minute from predetermined areas such as universities and popular hang outs.

Airtel has also introduced a `Friendz' package for the youth whereby subscribers are allowed to transfer mobile recharge - both talktime and validity - from their phone to another phone. The package allows subscribers to form a Closed User Group of up to 5 friends and make calls at 50 paise a minute.

Customers opting for the Ladies plan would be able to call three local Airtel numbers at just 50 paise per minute and send SMS to them at 50 paise per message, subject to a maximum of 25 messages per month. Airtel has tied up with women's magazines, offering discounts on subscription. For subscribers who are over 60 years old, Airtel has launched the `Seniors Plan' with a monthly rental of Rs 150 which offers discount on one STD number and one local Airtel number.

Innovative Handsets for Rural India

In India -- where large numbers of the rural population do not have electricity, and power cuts are commonplace even in the cities -- having a torch built into a mobile phone is a distinct and tangible benefit. The Nokia 1100 (launched with the tag, "Made for India) incorporates a torch, an alarm clock and a radio.

Similar plans are in the works at Nokia's three India R&D labs. Nokia is, working on "shared" phone. For reasons of affordability, in rural areas a phone may be shared by several people. The models being launched to cater to this need will

have separate address books, individual billings and more. This is supposed to hit the market in mid of 2009.

Two basic things are still missing to boom a mobile telephony market in India, and these are network access and financially sustainable costs.

Overall growth statistics tell a compelling story: India is the second-largest telecommunications market in terms of sheer numbers of potential subscribers, and one of the fastest growing in the world. In late November 2005, the nation had some 71 million mobile subscribers, more than 50 million of them using GSM networks, the nation's dominant mobile standard. And with net additions per month of approximately three million mobile subscribers, few markets in the world can match India's growth. But these numbers only tell part of the story. Looking at most of the growth, it becomes apparent that the increases have been clustered in and around India's urban centers. And while mobile penetration has served to catalyze business growth, a widening gap has opened up between urbanites and the 70 percent of the population that lives in the rural heartland. This is a cause of concern for national planners. According to the Telecom Regulatory

Authority of India (TRAI), overall (fixed and mobile) teledensity in rural India stands at approximately 1.94 percent today, in stark contrast to 31.1 percent in urban areas. As a matter of national priority, efforts have been redoubled to address this gap in new ways other than happened mainly because mobile tariffs became equal to fixed-line tariffs, making them affordable to everyone. The Indian government also brought handset import duties down, helping boost mobile penetration. This market growth has also convinced handset manufacturers to open production facilities in India. To lift mobile penetration rates in rural areas, new approaches are now under consideration. that run up the cost of service to unattractive levels.

There has been huge inflow of FDI and coupled with the government reforms and policies which are pro telecommunication, there has been unprecedented growth in the subscriber base in India in last 5 yrs. Due to heavy competition and favorable market, there has been a heavy decline in tariff plans provided by the service providers and the decreasing price of handset has added to the growth story of telecom. Due to coupling of all these factors, the

mobile penetration has increased even to the rural areas making owning a mobile really affordable for a common man.

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