Introduction to Consumer Behavior: ‘Consumer behavior involves the psychological processes that consumers go through inrecognizing needs, finding ways to solve these needs, making purchase decisions (e.g., whetheror not to purchase a product and, if so, which brand and where), interpret information, makeplans, and implement these plans (e.g., by engaging in comparison shopping or actuallypurchasing a product).’ Consumer behavior reads studies and understands the targeted market inorder to serve them effectively and create the brand loyalty, cultural, social and personal are thethree major influencing factors of consumer behavior.
Industry Profile: Cellular industry which was launched in the year 1999 is a part of the telecommunicationsector of India. It was launched under New National Telecom Policy by Telecom RegulatoryAuthority of India (TRAI). The growth of India’s mobile communication market was rapid, thelower tariffs and the falling prices of the handsets was the major driving factor. The pushtowards the rural and poor market has been the driving force for the mobile service marketsgrowth. Pre- paid and Post Paid are the two subscriptions provided by the cellular companies. Inthe Indian market about 80% subscriber’s base is of Pre-Paid. The services under the cellularindustry are further segmented into two types which are GSM (Global System for MobileCommunications) and CDMA (Code Division Multiple Access). GSM service providers consistsof Airtel, Vodafone, Loop Mobile, Aircel, Idea, BSNL etc. and the CDMA consists of Reliance,Tata etc. In the first three months, India’s mobile customer base has risen by 59.2 Million andreached 584.3 Million in the March, 2010. The penetration rate of India’s mobile had risen to49%. The number of Indian mobile users is continuously declining, and there have been reportsof reduction in the Average Revenue Per User (ARPU). This decline is expected to declinecontinuously as long as the industry is dependent on the low spending rates of the pre-paid users.The issue of licenses for 3G Mobile is a significant implication of India’s mobile sector. The bidfor the issue of license for 3G generated more than double of expected amount to thegovernment, which was participated by the 9 telecom giants of which seven companies wereissued the license; announced by the Department of Telecommunications. In the month of June, along with the issue of 3g licenses, the DoT announced the sale ofnew wireless broadband spectrum had also been completed. Infotel Broadband Services won theBroadband Wireless Access (BWA) license for all the 22 of India’s telecom circles, payingUS$2.74bn (INR 128.48bn), Aircel, won eight licenses, the next largest no. for INR 34.38bn,Tikona Digital Networks paid INR 10.58bn for the five licenses. The bid also included the USbased chipmaker Qualcomm and Bharti Airtel, with the four licenses apiece.
Company Profile: Vodafone the largest telecom service provider of UKhad a market share of about £75bn by the June, 2008.Vodafone has an equity stake in 25 countries around theworld and partner networks in which Vodafone has no equityshare. Vodafone the world’s leading international mobilecommunication company has over 200 million customersworldwide with the 25 operations in the 31 countries acrossthe 40 continents. At the time of acquisition with Hutchison Essar Ltd. (better known as Hutch)for US$11.1bn and 67% controlling interest Vodafone agreed to sell back 5.6% stake of Airtel,back to the Mittals. Vodafone registered increase of 50% during the year followed by the rapid expansion ofcustomer with an average of 1.5mn additions a month from the time of its acquisition. Vodafone in India: The pug in a roaming with a little girl became the brand face of Hutch and him leaving the pink dog house and entering the red house was the indication of a change, claimed ‘change is good’. In the year 207 when the Vodafone acquired Hutch, with 71.5mn subscribers, Vodafone became the second largest mobile service provider in India by revenue. “We have continued to drive penetration in India, generating strong revenue growth from our brand and commercial offers and asubstantial investment in network coverage,” said Vittorio Colao, chief executive, VodafoneGroup, at the announcement of the last quarter results. According to the analysts, Vodafone’smobile user base will continue till 2011-2012. In the year 2009, for the quarter ended onDecember, Vodafone Group India grew about 14% which was £767 million (INR5, 622.7 crore)an increase from its last years revenue £674 million. Vodafone’s revenues from the Indian market are smaller than other markets. During thefinancial year 2009, it added 24.6 million customers in India and reported revenues of £2,689million from £1,822 million in the last financial year. In Europe, organic service revenuesdeclined 1.7%, while in Africa and Central Europe, it grew 3.9%. In Asia Pacific and the MiddleEast, revenues increased 19% on a pro-forma basis, reflecting a strong contribution from India,where revenues grew by 32.9% on a pro-forma basis. Vodafone’s advertising strategies also gave a huge impact on the Indian consumers. Toretain the consumer’s loyalty toward the company, they didn’t drop the idea of using the Pug intheir advertisements, as Hutch had used the man’s best friend (Dog) as a resemblance to their
network saying “Where you go the network follows you”. The simple and yet effectiveadvertisements using Zoo-Zoo’s, which was famous in rural as well as the urban market. Major Competitors in Indian Market: “Bharti Airtel” formerly known as Bharti Tele-Ventures Limited (BTVL) is amongIndias largest mobile phone and Fixed Network operators. With more than 60 millionsubscriptions as of 13th February 2008, it offers its mobile services under the Airtel brand. Airtelis the largest cellular service provider in India in terms of number of subscribers. Bharti Airtelowns the Airtel brand and provides the following services under the brand name Airtel: MobileServices (using GSM Technology), Broadband & Telephone Services (Fixed line, InternetConnectivity (DSL) and Leased Line), Long Distance Services and Enterprise Services(Telecommunications consulting for corporate). Reliance Communications (formerly Reliance Infocomm), along with Reliance Telecomand Flag Telecom, is part of Reliance Communications Ventures (RCoVL). According toNational Stock Exchange data, Anil Ambani controls 66.75 per cent of the company, whichaccounts for more than 1.36 billion shares of the company. Reliance Infocomm is an Indiantelecommunications company. It is the flagship company of the Reliance-Anil DhirubhaiAmbani Group, comprising of power (Reliance Energy), financial services (Reliance Capital)and telecom initiatives of the Reliance ADA Group. Reliance Infocomm is currently managed byAnil Dhirubhai Ambani. Reliance Communications has a reliable, high-capacity, integrated (both wireless andwire line) and convergent (voice, data and video) digital network. It is capable of delivering arange of services spanning the entire infocomm (information and communication) value chain,including infrastructure and services — for enterprises as well as individuals, applications, andconsulting.
As Indias leading GSM Mobile Services operator, IDEA Cellular has licenses to operatein 11 circles. With a customer base of over 17 million, IDEA Cellular has operations in Delhi,Maharashtra, Goa, Gujarat, Andhra Pradesh, Madhya Pradesh, Chhattisgarh, Uttaranchal,Haryana, UP-West, Himachal Pradesh and Kerala. Idea Cellular is a wireless telephony company operating in various states in India. Itinitially started in 1995 as a joint venture between the Tata, Aditya Birla Group and AT&T bymerging Tata Cellular and Birla AT&T Communications. On April 10, 2006, the Aditya BirlaGroup announced its acquisition of the 48.18% stake held by the Tatas at Rs. 40.51 a shareamounting to Rs. 44.06 billion. While 15% of the 48.14% stake was acquired by Aditya BirlaNuvo, a company in-charge of the Birla’s new business initiatives, the remaining stake wasacquired by Birla TMT holdings Private Ltd., an AV Birla family owned company. Currently,Birla Group holds 98.3% of the total shares of the company. Tata Teleservices Limited (TTSL) is part of the Tata Group of Companies, an IndianConglomerate. The company forms part of the Tata Groups presence in theTelecommunication Industry in India, along with Tata Teleservices (Maharashtra) Limited(TTML) and VSNL. In December 2002, the company acquired the erstwhile Hughes Telecom (India) Ltd.which was renamed Tata Teleservices (Maharashtra) Limited. Tata Teleservices is part of theINR Rs. 119000 Crore (US$ 29 billion) Tata Group, that has over 87 companies, over 250,000employees and more than 2.8 million shareholders. With a committed investment of INR36,000 Crore (US$ 7.5 billion) in Telecom (FY 2006), the Group has a formidable presenceacross the telecom value chain. Tata Teleservices has created a Pan India presence spreadacross 20 circles that include Andhra Pradesh, Chennai, Gujarat, Karnataka, Delhi, Maharashtra,Mumbai, Tamil Nadu, Orissa, Bihar, Rajasthan, Punjab, Haryana, Himachal Pradesh, UttarPradesh (E), Uttar Pradesh (W), Kerala, Kolkata, Madhya Pradesh and West Bengal.
BSNL is Indias oldest and largest Communication Service Provider (CSP). Currently BSNL has a customer base of 68.5 million (Basic & Mobile telephony). It has footprints throughout India except for the metropolitan cities of Mumbai and New Delhi which are managed byMTNL. As on December 31, 2007 BSNL commanded a customer base of 31.7 million Wireline, 4.1 million CDMA-WLL and 32.7 million GSM Mobile subscribers. BSNLs earnings for theFinancial Year ending March 31, 2007 stood at INR 397.15b (US$ 9.67 b) with net profit of INR 78.06b (US$ 1.90 billion). Today, BSNL is Indias largest Telco and one of the largest Public Sector Undertaking with estimated market value of $ 100 Billion.
Questionnaire:Name: Age:A. Which mobile network do you use? Airtel Aircel BPL – LOOP BSNL Idea Reliance Tata VodafoneB. What kind of subscription do you have? Prepaid Post-paidC. How many mobile networks do you use at a time? 1 2 3 More than 3D. How long have you been using this network service? 0-1 Month 1-6 Months 6-12months 12 Months and MoreE. What is the monthly expenditure on the mobile bill or refill? Rs. 500/- and less Rs. 500/- to Rs. 1000/- Rs. 1000/- and MoreF. Have you ever used any other mobile network? If yes, please mention the company names.Yes, ______________________ No G. Are you satisfied with the service provided by the company? Very Satisfied Satisfied Not Satisfied Doesn’t MatterIf not satisfied kindly mention the problems:
Analysis:The uses of vodafone mobile network users are higher in the survey near the college of MIT.The basic reason given by the network users was just that they are happy with the high networkand the campus pack which attracts a group of people who contact and communicate majority ofthe times with each other. Airtel, Aircel, Idea and the Tata DoCoMo are the other networks usedby the students surveyed. The factor on which the competitors have the edge over Vodafone isthe mobile internet charges which are higher than others. Vodafone has been the highly popular mobile communication service provider in India.The reason of its popularity is its constant efforts towards innovations and reaching the end userswith advertisements and the promotional activities it does. A small girl and the pug followingher and the very famous Zoo-Zoo’s have become the face of Vodafone. Vodafone is famous inthe students as company sponsors the sports events and the teams. In the survey people couldidentify the Vodafone just looking at the photo of a Pug and that of a Zoo-Zoo. In the competitive scenario of mobile network market in India the tariff rates are fallingday by day at it’s lowest as of now. Majority of the students prefer the pre-paid subscription anduse it for SMS which costs less than a call. Hence the Vodafone’s, per call charge is attempted toattract and retain the users. The one day usage packs for Internet, SMS, and Call Charges are thenewest attractions for the users. The Vodafone’s promotion with Blackberry for a combined saleis a path Vodafone is using for better opportunities to reach the fashionable and snobby studentsand the working class. Vodafone has the largest no. of consumer services centers in India in the variouslocations working from 8am to 8 pm. The consumers using Vodafone have been loyal to thecompany even after the company’s change from Orange to Hutch to Vodafone. The availability of the networks at cheaper rates and with only one or two documentsmakes the market more fluctuating. With every new promotional offer by the company peopletend to opt for new no. utilize the no. for a month and two and then opt for new service provideragain. Being a student, where retaining the mobile no. for long is not necessary, changing thenetwork service provider in a group affects the purchase and the company in a small proportion.Such small proportion will impact the company to have a check at the overall consumers. Airtel stood as the best competitor in the survey as it has also got the best plans in themarket and has the lowest mobile internet charges. The group calling availability provided by theAirtel is another attraction to the students and it has got the lowest call rates for the internalgroup talk. Idea is also used by the numerous students basically because of its network at the endareas, where other networks may fluctuates, but Idea do not offer a variety of offers in it thataffects in turn reduces the consumers.
Idea, Airtel, Reliance and Tata do not charge the roaming for the Mumbai networks usedin Pune or rest of the Maharashtra, but Vodafone does the same; complained a student. There isalso discomfort in using any of the networks as the networks promotions are continuously donevia messages and the pre recorded calls at any time of the day as well as the night. Hence manycompanies now have also started the Do Not Disturb service for the users who do not wish tohave any promotional offers. The companies have been trying to imply different tariff offers in their network andvariety of voucher packs for availing the offers of call rates and the SMS as per the need. But,Uninor, the recent entrant in the market came up with the distinct offer which has the offerschanging with the time and cut in the tariff rates up to 60%. With the entry of the company manyplayer took it as a tough competition but the low quality network provided by the Uninor becameits drawback and many students switched from Uninor to other available networks. 4% Market share % 1% 1% 7% 32% 15% 16% 24% Bharti Airtel Vodafone Essar BSNL IDEA Aircel Reliance MTNL Loop Conclusion: The Vodafone has been a preferred brand in the market, with less complaints and asteadily growing in the services provided. The mobile market is still headed by the Bharti –Airtel and has been improving in targeting and reaching the inner India- rural India after servingits urban market for long time now. With the increase in no. of the service providers the marketshare of these companies if affecting, as it is getting divided in the small parts held by these newplayers. The Indian market has more potential to grow as the population is high and the peoplealso like change and better services. Very few customers like to be loyal to the company, butmajority prefer to try other services and keep on changing the mobile no’s.