1.1 Problem StatementThe first step in any marketing research calls for the researcher to define the projectscope and then define the problem carefully and then formulate the research objectives.An old age says, “a problem well defined is half solved.” I today’s scenario where wehave numerous telecom players present in the Delhi/NCR region having similar kind ofofferings as their basic service is communication.In this kind of scenario if a new player has to enter a crowded place like this, it has tounder go in-depth market analysis of players already present and of course the customers.Among these studies is the study of positioning. In a telecom market like India wherethere are more than two telecom operators in operations, the brand plays a major role inmaking consumer preference. As more and more operators enter the market, pricing doesnot remain a sustainable lever to play in long term. In order to differentiate, telecomoperators will need to look to their brand’s emotional appeal.Research aims at finding “where and how a new player can position itself” and “what isthe difference between positioning efforts of present players.”Research ObjectiveTo compare the brand positioning of major telecom players having presence inDelhi/NCR.
Sub Objectives a. To find what customers think about various telecom operators on various technical parameters. b. To find an attribute where each operator is leading. c. To find brand personality of major telecom players. d. To find the brand image of major telecom players
INDUSTRY PROFILE & BACKGROUND INFORMATION
2.1 TELECOMMUNICATIONHistory of Indian TelecommunicationThe telecom industry is one of the fastest growing industries in India. India has nearly200 million telephone lines making it the third largest network in the world after Chinaand USA. With a growth rate of 45%, Indian telecom industry has the highest growthrate.History of Indian Telecommunications started in 1851 when the first operational landlines were laid by the government near Calcutta (seat of British power). Telephoneservices were introduced in India in 1881. In 1883 telephone services were merged withthe postal system. After independence in 1947, all the foreign telecommunicationcompanies were nationalized to form the Posts, Telephone and Telegraph (PTT), amonopoly run by the governments Ministry of Communications. Telecom sector wasconsidered as a strategic service and the government considered it best to bring understate.The first wind of reforms in telecommunications sector began to flow in 1980s when theprivate sector was allowed in telecommunications equipment manufacturing. In 1985,Department of Telecommunications (DOT) was established. It was an exclusive providerof domestic and long-distance service that would be its own regulator (separate from thepostal system). In 1986, two wholly government-owned companies were created: theVidesh Sanchar Nigam Limited (VSNL) for international telecommunications andMahanagar Telephone Nigam Limited (MTNL) for service in metropolitan areas.In 1990s, telecommunications sector benefited from the general opening up of theeconomy. Also, examples of telecom revolution in many other countries, which resultedin better quality of service and lower tariffs, led Indian policy makers to initiate a changeprocess finally resulting in opening up of telecom services sector for the private sector.National Telecom Policy (NTP) 1994 was the first attempt to give a comprehensiveroadmap for the Indian telecommunications sector. In 1997, Telecom RegulatoryAuthority of India (TRAI) was created. TRAI was formed to act as a regulator to
facilitate the growth of the telecom sector. New National Telecom Policy was adopted in1999 and cellular services were also launched in the same year.Telecommunication sector in India can be divided into two segments: Fixed ServiceProvider (FSPs), and Cellular Services. Fixed line services consist of basic services,national or domestic long distance and international long distance services. The stateoperators (BSNL and MTNL), account for almost 90 per cent of revenues from basicservices. Private sector services are presently available in selective urban areas, andcollectively account for less than 5 per cent of subscriptions. However, private servicesfocus on the business/corporate sector, and offer reliable, high- end services, such asleased lines, ISDN, closed user group and videoconferencing.Cellular services can be further divided into two categories: Global System for MobileCommunications (GSM) and Code Division Multiple Access (CDMA). The GSM sectoris dominated by Airtel, Vodfone-Hutch, and Idea Cellular, while the CDMA sector isdominated by Reliance and Tata Indicom. Opening up of international and domestic longdistance telephony services are the major growth drivers for cellular industry. Cellularoperators get substantial revenue from these services, and compensate them for reductionin tariffs on airtime, which along with rental was the main source of revenue. Thereduction in tariffs for airtime, national long distance, international long distance, andhandset prices has driven demand.2.1.1 TELECOMMUNICATION SERVICESTelecommunication services include Basic services, Cellular services, and Internetprovider services (ISP). Government of India plans to introduce a unified license for alltelecommunication services in India, and has already allowed full mobility to wireless inlocal loop operators as a first step. Telecom services are growing at an approximate rateof around 5 percent per years in terms of revenue and 10 percent in terms of subscribersbase in last 5 years. Among telecom services, cellular services are the fastest growingover the past 4 years. Telecom regulatory authority of India (TRAI) expected that the
total number of connections would bypass the total number of fixed land line connectionsby the year 2005-2007, and the same happened.Classification of Telecommunication Services a. Basic Services b. Cellular Services c. Internet Services d. Telecommunication Equippments.a. Basic ServicesFixed Service Providers (FSP)Fixed Line Services include basic services, national or domestic long distance andinternational long distance services. The domestic market has been growing more than 5percent annually during the past 5 years, and has a current market size of 30,164 crores ,with a base of 40 billion lines.The state operators (BSNL & MTNL), account for almost 75 percent revenues from basicservices,. Private sector services are presently available in 18 circles and since they offerand focus on the business/corporate sector, and offer reliable, high end services, such asleased lines, closed user groups and teleconferencing, they are growing rapidly and haveacquired about 25 percent revenue generation. As a result, average-revenues-per-user(ARPU) of private operators is more than twice those of state-owned service providers.Growth Drivers
The Government has allowed unlimited competition in the basic sector. Considering theinherent advantage of scale that the incumbent state operators have, the privatecompanies have, and are setting their networks very selectively and targeting corporateclients with value added services. The government has introduced unified license forfixed and mobile service providers. This allows all phone companies to become mobileoperators by offering cellular and land line services under a single authorization, endingservice-specific licensing.b. Cellular ServicesThere are 25 private companies providing Cellular Services in 19 telecom circles and 4metro cities, covering more than 1500 towns across the country. Presently there are 5major private service providers in each area, and an incumbent state operator. Almost80% of the cellular subscribers belong to the pre-paid segment.The DoT has allowed cellular companies to buy rivals within the same operating circleprovided their combined market share did not exceed 67% . Previously they were onlyallowed to buy companies outside their circle.Regulatory StructureThe lack of clarity in the regulatory structure has made it difficult to predict the prospectsof this industry. This uncertainty has been best typified by the issuance of the fourthlicense and the controversies with reference to limited mobility players. The cellularservice was thrown open for third and fourth service providers in 2002.Growth DriversOpening up of domestic and International long distance telephony services are growthdrivers in the industry. Cellular operators now get substantial revenue from theseservices, and compensate them for reducing tariffs on airtime, which along with rentals
was the main source of revenue. This reduction in tariffs on airtime, national longdistance, international long distance and handset prices, has driven demand.c. Internet service ProviderInternet has become very easily accessible with cyber café/kiosks increasing theirdensity, not only in the metro towns but also in semi-urban towns. There is no restrictionon the number of internet companies and more than 185 companies are operational.Internet telephony has been officially allowed since April 1 2002. The growing demandsof corporates for application such as E-commerce, Internet leased lines, etc is driving thegrowth of internet services market. However, the industry continues a number ofbottlenecks in terms regulatory treatment of ISP’s , high bandwidth prices, low PCpenetration, high cost of telephone access,etc.SubscribersThe total number of telephone subscribers has already crossed 241.02 million by the endof the year 2009.as compared to 238.27 million in the year 2008. The overall teledensityhas increased to 21.02% in august 2009 as compared to 20.01% in july 2008.In the Wireless segment,8.31 million subscribers have been added since august 2008while 8.06 million users were added in july 2007.The total wireless subscribers basecrossed 201.29 million at the end of year 2009.d. Telecom in IndiaThe Indian Telecom Market has been displaying sustained high growth rates. Riding onexpectations of overall high economic growth and consequent growing income levels, itoffered an unprecedented opportunity for foreign investors. A combination of factors isdriving growth in the telecom sector, promising rich returns on investment.India is the fourth largest telecom market in Asia after China, Japan, and South Korea.The Indian telecom network is the 8th largest in the world and second largest amongemerging economies. The Industry has witnessed an explosive growth in recent years.Teledensity has more than doubled from 2.3% in 1999 to to 4.8% in 2002. However, the
world average is almost 7.5 times and the Asian average is almost 4.5 times the Indianaverage. The Indian telecom market size of over US $8 billion is expected three fold bythe year 2012.The expansion of telecom industry in India has been fuelled by a massive growth inmobile phone users, which has reached a level of 30million users in December 2009. Thisexponential growth of the mobile telephony can be attributed to the introduction of digitalcellular technology and decrease in tariffs due to competitive pressure. For the first timein India, the growth of cellular subscriber base exceeded the fixed line subscriber base.However cellular penetration is still 1 percent as compared to world average of 16percent.2.1.2 FDI P[OLICY IN THE INDIAN TELECOM SECTORForeign Direct Investment (FDI) was permitted in the telecom sector beginning with thetelecom manufacturing segment in 1991 – when India embarked on economicliberalization. FDI is defined as investment made by non-residents in the equity capital ofthe company. For the telecom sector, FDI includes investments made by Non-ResidentsIndians (NRI’s), Overseas Corporate Bodies, foreign entities, Foreign InstitutionalInvestors, American Depository Receipts, Global Depository Receipts, etc. Present FDIpolicy for the telecom sector : 1. In basic, cellular mobile, national long distance, International long distance, Value Added Service and Global Mobile Personal Communication Satellite, FDI is limited to 49% subject to grant of license from the Department of Telecommunications and adherence by the companies to the license conditions for foreign equity cap and lock-in period for transfer and addition of equity and other license provisions. 2. Foreign Direct Investment upto 74% permitted, subjected to licensing and security requirements for the following : 1. Internet Service(with gateways)
2. Infrastructure Providers. 3. Radio Paging Service. 3. FDI upto 100% permitted in respect to the following telecom services: i. ISP’s not providing gateways. ii. Infrastructure providers providing dark fibers. iii. Electronic Mail. iv. Voice Mail.The above is subject to the following conditions : • FDI 100 percent is allowed subject to the condition that such companies would divest 26 percent of their equity in favour of Indian public within 5 years, if these companies are listed in other parts of the world. • The above series would be subject to licensing and security requirements, wherever required. • Proposals for FDI beyond 49 percent shall be considered by Foreign Investment Promotion Board (FIPB) on a case-to-case basis. • In the manufacturing sector 100 percent FDI is permitted under the automatic route.