AIRTEL MAGIC – SELLING A PRE-PAID CELLPHONE SERVICE

BACKGROUND NOTE Contd..

However, Bharti was not content with sitting back and savoring the short-term success of Magic. The company realized that the Indian cellular telephony market was undergoing a radical transformation. With the entry of a fourth players in various telecom circles in 2002 (until then only three players were operating in all circles), the future was expected to be rather uncertain. The subscriber base was over 6.4 million by March 2002 as compared to 3.5 million in March 2001. Telecom circles in the states of Rajasthan, Haryana and Kerala posted an estimated growth rate (in subscribers) of 179%, 151% and 151% respectively in 2002.

This growth could be primarily attributed to the introduction of pre-paid cards, which accounted for over 55% of an operator's revenue. In early 2002, analysts forecasted that the number of subscribers using pre-paid cellular services in India was estimated to reach over 25 million by the year 2004 (from 4.5 million in 2002). The immense potential the market offered lured almost all major players to shift their focus to the pre-paid segment to design new marketing strategies to expand their user base in this segment. With the intensifying competition in the market, Bharti also felt the need to revamp its own marketing strategies and retain its position as the market leader.

ALL SET TO CREATE MAGIC

In early 2002, Magic decided to revamp its marketing strategies. There were plans to launch the service in newer areas and bring about changes in pricing, positioning and advertising. The company also planned to make new value additions by providing better services. As a first step in this direction, Magic was brought under Bharti's umbrella brand, Airtel, and was renamed Airtel Magic. Company sources said that the move was aimed at banking on the strengths of Airtel as a brand. While the earlier brand strategy aimed at customers interested in using mobile services, the new strategy was aimed at attracting even non-interested customers by appealing to their needs and requirements (offering them a value they did not perceive earlier).

In line with this strategy, Magic was positioned as a friendly, mass-market brand. Sources at Bharti revealed that in its repositioning exercise under the Airtel brand, Magic targeted youth and stood for simplicity and attitude that said, ‘anything is possible.'Explaining the rationale behind the brand repositioning on the Airtel level, Hemant said, “As we grew to a 15-circle telecom network, we wanted to become generic to mobility in the country.” As a part of its revamping exercise, Bharti also changed the logo. The new Magic logo reflected the new brand values of youthfulness, energy, simplicity and friendliness (See Exhibit III for Old and New Logos of Magic).

Bharti then focused on extending its distribution base in all the circles in which it operated and therefore, ensured the availability of Magic cards in the remotest parts of its operating circles. By late 2002, the states of Kerala and A.P. had 2000 and 4,500 stores respectively. In Chennai (Tamil Nadu) and Kolkata (West Bengal) there were over 2,500 and 3,000 outlets respectively.

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