2. International Journal of Marketing and Human Resource Management (IJMHRM),
ISSN 0976 – 6421 (Print), ISSN 0976 – 643X (Online), Volume 4, Issue 1, January - April (2013)
1. INTRODUCTION
The impact technology has had on India cannot be denied. It is observed that in the
last two decades, there have been many technological advancements happening all over the
World. With the entry of World Wide Web (www) in the early 1990’s, the huge potential of
growth was foreseen by the experts. Such advances in the technology have enabled the
Organizations not only to serve the customers in a better way with increased customer
services, and streamlines processes but also pave way to foster new collaborative partnerships
with other Organizations.
Introducing products and services to the consumer has come a long way since
Montgomery Ward carried his catalogue of products from door-to-door in 1872 (Schneider,
2009). Service providers have evolved in their service promotions channels with multiple
advancements in the technical devices that they are infinite to count on. In 2005, Information
today reported that cell phone use in India already surpassed cell usage in the United States
(159 million).
Service providers have realized that it is beyond customer expectation he has to reach,
to ensure the customer does not deflect, thereby controlling the churn ratio. VAS like the
SMS, MMS, Voice-calling, Mobile Banking etc to name a few, are the key elements in the
VAS, which the customer looks out for today. Hence conveying about this VAS to the
customers is equally important. The global VAS industry is growing at about 40-50 per cent,
but the Indian VAS market has seen growth rates of 60 percent in recent years. It is estimated
to touch 251 billion rupees ($5.5 billion) in 2009/10, on the back of a pool of more than 500
million mobile customers.
1.1 Department of Telecommunications (DOT) categorizes different VAS as under
Electronic mail: The Electronic mail is the email service that the subscriber can avail. Using
this service the user can automatically receive his emails on his mobile phone, as a normal
SMS and does not require any GPRS connectivity.
Voice mail: Voice mail facilitates the customers to connect to their contacts through Voice.
This can be for a temporary phase or permanently, unreachable via SMS, such as on landline
phones and mobile phones on networks without SMS messaging.
Audiotex service: Audiotex services are, as a rule, provided at nine-digit numbers in the
following format: 90X AB CD ZZ, where: X defines the type of the provided service and can
be any number between 0 and 9 in accordance with the numbering plan. AB determines the
per-minute rate charged to the end user including VAT, the rate may also be charged per
call.CD ZZ these numbers are allocated by the Czech Telecommunications Office.
Direct Access Code Dialing: With Direct access Code dialing, the access is provided for the
subscriber to prefix the required code to follow by the number, to call from one country to the
other.
Bulletin Board Service: A bulletin board system is software which enables the customers to
connect and login to the system that uses the terminal program. After successfully logging
onto this software’s, the user can download content, read news and bulletins, send and
receive e mails, through live chat.
22
3. International Journal of Marketing and Human Resource Management (IJMHRM),
ISSN 0976 – 6421 (Print), ISSN 0976 – 643X (Online), Volume 4, Issue 1, January - April (2013)
Videotex Service: Videotex service is a system that enables users to have interactive content
and displays it on a television, typically using modems to send data in both directions.
Videotex can be used to refer to services, including the Internet, bulletin boards, online
service providers, and even the arrival/departure displays at an airport.
Video Conferencing: Videoconferencing is the system which allows communication
between two or more locations simultaneously.
Morning Alarm Service: Morning Alarm service allows the users to download their favorite
ring tones and set them for morning alarm.
2. OBJECTIVES
a. To understand role played by handset manufacturers and mobile phone operators in
value chain
b. To understand challenges faced for providing VAS
c. To determine the benefits derived from VAS by consumers in India.
3. LITERATURE REVIEW
Turel et al. (2007) found that customers’ adoption decision of the service provider
depends on the quality offered and the price of the service provided.
Researchers and experts have different reports regarding the relationship between
dimensions of Value added Services and customers satisfaction. Kim et al. (2004) discovered
that core quality, value added services and customer support had a definite impact on the
level of satisfaction of customers in cellular service companies which finally brings loyal
customers to the company.
Since it is the overall Service quality that determines the customer satisfaction, it is
only through Value added Services which act as a rationale of differences between
expectation and competence along the important quality dimensions. Parasuraman, Zeithaml
and Berry, identified ten requirements useful for customers’ evaluation of the quality of
services: reliability, responsiveness, tangibles, communication, credibility, security,
competence, courtesy, understanding the customers and service accessibility.
Liberalization has paved ways to the Indian economy. The process of liberalization in
the country began in the right earnest with the announcement of the New Economic Policy in
July 1991. Telecom equipment manufacturing was de-licensed in 1991 and value added
services were declared open to the private sector in 1992, following which radio paging,
cellular mobile and other value added services were opened gradually to the private sector.
This has resulted in large number of manufacturing units been set up in the country. As a
result most of the equipment used in telecom area is being manufactured within the country.
Basically, the Cellular Mobile, Paging and Value Added Service, and Global Mobile Personal
Communications by Satellite, Composite FDI permitted is 74% (49% under automatic route)
subject to grant of license from Department of Telecommunications subject to security and
license conditions, as per FDI Policy circular 1/2010 of DIPP.
23
4. International Journal of Marketing and Human Resource Management (IJMHRM),
ISSN 0976 – 6421 (Print), ISSN 0976 – 643X (Online), Volume 4, Issue 1, January - April (2013)
• FDI up to 100% permitted in respect of the following telecom services: -
• Infrastructure Providers providing dark fibre (IP Category I):
• Electronic Mail; and
• Voice Mail
Subject to the conditions that such companies would divest 26% of their equity in favor of
Indian public in 5 years, if these companies were listed in other parts of the world.
Telecom Sector has witnessed significant growth in the last two decades. The increase in the
subscriber base from 22.8 million in the year 1999, it has grown today to 926.53 million in
December 2011, which is 78.86% of Tele-density, according FICCI report on Content
Technology.
With Low tariffs, Low ARPU and with advancement in Technology, subscribers are
motivated to upgrade the VAS from the service providers. Adding to this is the significant
proof of the value of technological advancement it the growth in world economies. In 2005,
India had one of the lowest per-capita annual income ratings in the national rankings;
however, as access to technology increased annual incomes increased as well.
Economists are now viewing India not as a developing country but as an "emerging
economic superpower”. In spite of growth observed in the telecom sector through VAS, its
application and opportunities that prevail a challenge to identify the impact that VAS has on
customer satisfaction. This fact can further be substantiated by referring to Haque et al.
(2010), who in their research have concluded that service quality directly affects the
customers' perceptions in selecting mobile telecom operators. Further, it has been frequently
pointed out that once customer has been acquired and connected to the network of a
particular operator, their long term relations with the operator are of greater importance for
the success of the company, considering that this industry has a lot of competition. (Grepott
et. al, 2001). This is mainly due to the fact that cellular service providers do not differentiate
from each other.
Therefore in such a competitive scenario, the marketers do understand that in order to
have the market sustenance, one has to enhance the quality of the services provided.
4. RESEARCH METHODOLOGY
The research paper presented here is an exploratory paper the data for which is
collected from various secondary resources like research papers, journals, magazines, articles
from other databases. In addition to this, various other data sources from DOT, FICCI, Indian
economic overview, TRAI are used.
5. DATA ANALYSIS
5.1 Role of Handset Manufacturers
Depending on their position and interest in a given market mobile manufacturers play a
variety of roles across the mobile VAS value-chain. The roles hand set manufacturers play
would depend on their ability to provide functionalities that are inherently integrated into the
mobile handset. For instance, Nokia Life is an application that is integrated into certain types
of Nokia handsets. Thus handset manufacturers play crucial role in driving the distribution and
24
5. International Journal of Marketing and Human Resource Management (IJMHRM),
ISSN 0976 – 6421 (Print), ISSN 0976 – 643X (Online), Volume 4, Issue 1, January - April (2013)
uptake of mobile applications. Handset manufacturers can embed applications and native
content into a handset. Through partnerships with mobile network operators, handsets are sold
in markets according to different subsidy and pricing models. Impact on market positioning
and sales would depend on supply-side partnerships with handset manufacturers. On other
hand, applications can help drive product differentiation from a demand-side. Value is derived
in three principal ways.
a. Application uptake and usage can help in capturing end-user revenue.
b. Data analytics can be leveraged for informed marketing and advertising.
c. Increased sales and brand visibility in the market can help realize indirect value.
5.2 Role of Mobile Network Operators
Mobile network operators impact the value chain by creating, collecting and delivering
relevant content to mobile phone users in more than one area. Mobile network operators can
tailor and deliver content that is easy to use as it is integrated with the device. They also control
how their products are marketed to different consumer groups, a key point in the chain. Mobile
network operators can drive uptake of its services and differentiate from peer competitors by
integrating a particular product, like a toolbar on a phone that displays weather or exchange
rates. Usage is increased when mobile network operators develop mobile VAS to increase the
ways in which users can interact with their phones. Brand differentiation is brought by
reinforcing services. This is done either through mobile VAS products that are focused on
universal products that are available to the overall subscriber base or by concentrating on
specific subscriber segments. The products can be developed by mobile phone operators either
by partnering with other segments of the value chain or developing own products. Improved
customer segment acquisition and reduction in churn can be achieved by differentiation in the
market or from direct service revenue (e.g. ringtones) and marketing.
5.3 Business Challenges
As each market is unique sizing and assessment of specific business challenges in each
market is based on the potential impact achieved if a mobile VAS solution were to be
implemented to address the business challenge. Based on unique features of each individual
market, sizing and ranking has been categorized as follows:
a. Reliability: Basically means accessibility of entrepreneurs in each market to relevant
resources. An example would be the reliability of the market data made available to an
entrepreneur based on the frequency the data is updated.
b. Quality: Availability of quality of resources to an entrepreneur in each market. An
example of this would be if market data were available to an entrepreneur, the quality
and detail would need to be of a specific standard to facilitate in making an informed
business decision.
c. Availability: Level of resources available to an entrepreneur in each market. An
example of availability would be the amount of market data available to an entrepreneur
in a specific market data in order to make an informed decision on the pricing of their
product/service.
25
6. International Journal of Marketing and Human Resource Management (IJMHRM),
ISSN 0976 – 6421 (Print), ISSN 0976 – 643X (Online), Volume 4, Issue 1, January - April (2013)
d. Affordability: Cost involved in accessing/acquiring specific resources from each market. An
example would be the cost associated with acquiring market data in order for an entrepreneur to
make an informed business decision.
e. Social Stigma: Constraint associated with socio-cultural stigmas. An example of this would be
the social stigma attached to a woman entrepreneur negotiating prices with a male counterpart.
f. Latency: Accessing relevant resources in each market within a given time and with ease by the
entrepreneurs. An example of this would be the abundant availability of market data but a high
level of difficulty associated with accessing this data.
5.4 The role played by VAS
Technology Impact on consumer offers and experience in India
In the global marketplace advancing technologies are providing companies with new customers every
day by developing more affordable gadgets. With advancements in the technology, the customer’s
expectations also keep varying. Service providers have to therefore continuously strive for excellence
in the services. Information processing systems make sharing information faster, easier, and
increasingly more widespread. According to research firm Gartner ‘mobile applications with money
transfer via short message service’ lead the list of top 10 most used mobile applications, followed by
‘mobile search’ to drive sales and marketing opportunities on the phone, ‘mobile browsing’, ‘mobile
advertising’ and ‘mobile music’.
Most kids in rural India do not have access to formal education and often end up working on
the farms during the day. So to help reach out to these children, an inspiring project, Millee, is under
consideration, which uses mobile gaming technology to enhance access to literacy among children of
school-going age in the developing world. “Another very interesting project is farmers using a phone
to water their farmland in Gujarat.”
In December 2009, Infosys announced the launch of Flypp, an application platform that has
delighted digital consumers with a host of ready-to-use experiential applications across a universe of
devices. Mapmyindia, in partnership with Sygic, has launched mobile apps that give the user street
level directions, and lets them search across points-of-interests (PoI) on their mobiles without the need
for a data plan. That’s not all… mobile trading will soon be a reality, and India’s markets regulator
SEBI is currently working on the final guidelines.
Already, Nokia has partnered with ITC e-Choupal to offer personalized agri-services on the
Nokia Life Tools to e-Choupal network. And, information giant Thomson Reuters’ latest offering for
farmers, Reuters MarketLite, is already “all the rage” among the village folks who use information on
seeds, weather and other farm inputs regularly.
Recently, IMImobile, the global service creation partner for operators, media providers and
enterprises launched DaVinci Social, a white-labeled service that enables people to easily manage
their mobile digital social life. It is apparently the first Bollywood streaming application ready on
Nokia s60 5th edition devices and streams Bollywood songs, movie tailors, director’s cuts etc.
6. CONCLUSION
A recent study by consultancy Informate Mobile Intelligence revealed that mobile users spend
15-20 minutes on messaging activities daily, while 40-45 minutes are spent on entertainment where
users listen to a minimum of 2-3 songs and click 15-18 photos in a month. The study also revealed
that card and puzzle categories are the most favored among gamers in India. With its mobile
subscriber base growing rapidly, advertisers in India are also adopting innovative ways of reaching
out to the consumer on their mobiles. While basic promotional SMS alerts are used by everyone- from
small businesses to national-level politicians, advertisers are focusing on more complex mediums
such as embedding promotions within mobile games.
26
7. International Journal of Marketing and Human Resource Management (IJMHRM),
ISSN 0976 – 6421 (Print), ISSN 0976 – 643X (Online), Volume 4, Issue 1, January - April (2013)
With intense competition driving down tariffs, mobile operators in India are
increasingly focusing on VAS to generate revenues. VAS, which covers the entire gamut of
services from downloads of movies and music, to SMS and MMS, ringtones, caller tunes and
games, has been on a solid footing globally, but given the low base and the familiarity with
information technology, it is witnessing exponential growth in India. Although most Indian
consumers are not very comfortable with non-voice usage of their mobile phones, that trend
is gradually reversing, helped by the entertainment sector, with music and film companies,
game makers and television channels aggressively entering the mobile content market.
Around 60 percent of all VAS revenue currently comes from music downloads and ringtones,
and driven by a huge youth market, demand for gaming, mobile imagery and streaming audio
and video is rising.
Indian telecom firms currently draw only a small portion of their revenues from VAS,
but this will likely grow in future. The ARPU from non-voice services, including data card
access and SMS, is expected to rise from 9 percent now to about 25 percent. Data services
should see a surge in adoption and usage. High-speed applications will open up a lot of
possibilities of innovative VAS enabling diverse infotainment service opportunities in this
film and cricket-focused country.
BIBLIOGRAPHY
1. (Online) www.DoT.gov, in 21st September 2012
2. (Online) ficci.com, 22 September 2012
3. (Online) ieo.org.in, 25th October 2012
4. (Online) www.indiabudget.ac.in, 25th December 2012
5. (Online) www.media.com/en/news-insights, 27th February 2013
6. (Online)www.gsma.com/mobilefordevelopment/.../Mobile-Value-Added-
Services-digital-report.pdf, 27th February 2013
7. TRAI report
8. African Journal of Business Management Vol. 4(16), pp. 3457-3462,18
November, 2010
9. Booz&Co
10. IJBIT, Volume 3, Issue 2, April-September 2010
11. International Journal of Research in Finance & Marketing
12. V.A. Parasuraman, A. Zeithaml, L. Berry. A Conceptual Model of Service
Quality and Its Implications for the Future Research. Journal of Marketing. 1985
13. V. A. Zeithaml, L.L. Berry and A. Parasuraman, “The Behavioral Consequences of
Service Quality”, Journal of Marketing, 1996.
14. Dr. Vinit Dani and Mrs. Vanishree Pabalkar, “Impact of FDI: Banana Republic or
Miracle Growth” International Journal of Management (IJM), Volume 4, Issue 1,
2013, pp. 157 - 162, ISSN Print: 0976-6502, ISSN Online: 0976-6510, Published by
IAEME.
15. Nitin Panwar and Mahim Sagar, “Can Value Added Services be a Point of Purchase
Differentiator?” International Journal of Management (IJM), Volume 1, Issue 1, 2010,
pp. 88 - 103, ISSN Print: 0976-6502, ISSN Online: 0976-6510, Published by IAEME.
27
