Airtel Magic - Selling a Pre-paid Cellphone Service

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Themes: Marketing Mix
Period : 2002
Organization : Bharti Cellular Limited, Spice Telecom
Pub Date : 2003
Countries : Switzerland
Industry : Cellular

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Case Code : MKTG040
Case Length : 12 Pages
Price: Rs. 300;

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The Industry Strikes Back Contd...

Bharti's competitors launched various promotional campaigns for their brands - many of them copying those of Bharti's. While Spice awarded free talk-time to winners of a Soccer World cup related promotional event, the subscribers of Idea ChitChat in Andhra Pradesh could win gold coins, watches and talk-time under a special scheme. However, the most severe competition was witnessed in the area of tariff reduction.

In the Karnataka circle, Spice reduced tariff rates on its pre-paid cellular cards, Simple and Uth in mid 2002. According to the new rates, Simple subscribers were required to pay Rs 1.49 (30 seconds) both for incoming and outgoing calls (24 hours a day) and Uth subscribers were required to pay only Rs 0.5 (30 seconds) at night as against Rs 0.75 charged previously.

In September 2002, Spice even offered interesting and even useful information like train timings, astrology, news, movie tickets, cricket updates, stock market news through its brand, Genie. With Hutch Essar entering the Karnataka cellular market as the fourth operator in 2002, both Bharti and Spice were devising strategies to retain their respective positions in the market. The case was the same in Andhra Pradesh (AP), where Hutch entered in August 2002. Hutch⁸ was becoming a formidable competitor for Bharti in many circles. With its aggressive marketing and promotional campaigns and a range of value added services, Hutch had garnered considerable shares in many circles by mid 2002.

Value added services offered by Hutch (through its advanced 16K SIM) included regional roaming, dial-in service, voice messaging (in India and even to US or Canada), voice mail, voice response service, unified messaging service and other online menu services (such as SMS, railway information, train timings, movie tickets, stock market news, TV schedules). In Kolkata, Hutchison's Command recorded over 55.03% growth between January and August 2002, while Orange, Essar and Fascel reported growth rates of 46%, 36.67% and 46.29% respectively for the same period.

In early August 2002, Hutchison announced a new scheme 'Go Hutch for Rs 74' in Andhra Pradesh, wherein pre-paid customers were offered a talk time of worth Rs 175 on purchase of a pre-paid card of Rs 249, which made Hutch pre-paid card cheaper to other pre-paid cellular services in the state. In response to this, Bharti introduced its new Magic Recharge scheme, under which, subscribers could accumulate free talk time for every fourth recharge card bought.

Bharti decided to design different marketing strategies for different circles depending on the strategies, employed by the competitors. While the company was focusing on its pricing strategies, its competitors in various sectors were concentrated on new service offerings and value additions (For instance, in the Chennai circle, the cellular war between RPG Group, Bharti and Hutch was more value and service driven).

Since price reduction moves were almost immediately matched by the players, companies had begun focussing on developing value-added offerings and schemes to expand their market and gain customer loyalty. Analysts remarked that the players were coming up with new schemes or value-additions almost every week to get the better of their competitors.

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8] A brand belonging to the Hutchison group. Hutchison operated through the Orange, Hutchison Max (Mumbai), Celforce (Gujarat) and Hutch/Hutch Essar (Andhra Pradesh, Karnataka, Delhi and Chennai) brands.