Promotional Strategies of Cellular Service Providers in India

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Case Details:

Case Code : MKTG106
Case Length : 11 Pages
Period : 2000-05
Pub Date : 2005
Teaching Note : Available
Organization : -
Industry : Cellular Industry
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Introduction Contd...

Reliance was another player that cashed on its innovative promotional strategies which included celebrity endorsements and attractive talk time schemes. Idea, relied heavily on its creative media advertising sans celebrities.

Background Note

The Department of Telecommunications (DoT) was set up by the Government of India (GoI) in the 1980s. Its function was to manage all telecommunication services within the country. In 1986, the GoI sought to modernize the telecommunications facilities in the country, and established Mahanagar Telephone Nigam Limited (MTNL) to look after services in Bombay and New Delhi, and Videsh Sanchar Nigam Limited (VSNL) to handle overseas services. The rest of the nation's services were to be run by the DoT. In 1994, India ranked sixth in the world in terms of number of installed fixed lines.

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The GoI introduced the National Telecom Policy (NTP) in 1994 with a view to improving India's position in global telecommunications. The introduction of the NTP led to a metamorphosis of the industry as it allowed the private sector to invest in telecommunications.

In the course of liberalization, licenses were granted for providing cellular mobile service in the metro cities of Delhi, Mumbai, Kolkata, and Chennai. To avoid overlaps, the NTP stated that not more than two cellular providers could operate in a given telecom circle.

In 1997, the Telecom Regulatory Authority of India (TRAI) was established to regulate all telecommunication services. The NTP of 1999 further relaxed the norms for cellular providers.

Service providers were now free to provide all types of mobile services including voice and non-voice messages and data services in their service area of operation.

Bharti, a part of Bharti Enterprises⁶, was the first to launch its cellular service on July 7, 1995. Bharti's cellular services were launched under the brand name 'AirTel'and were categorized as pre-paid⁷ services and post-paid⁸ services. The postpaid service was launched under the brand name “AirTel” whereas its prepaid services were launched under the brand name “Magic”...

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6] Established in 1976, Bharti Enterprises was India's leading Telecom and Healthcare conglomerate. It had profits of $320 million and revenues of $ 1,790.776 million for the financial year 2004.

7] Pre-paid services are the mobile service where the user needs to purchase a “prepaid” card that offers talk-time and other services depending on the talk- time value of the card.

8] Post-paid services refer to mobile services that are billed on a monthly basis. The user needs to pay the bills at the end of the month's usage of the service.