Themes: Marketing Mix
Period : 2002
Organization : Bharti Cellular Limited, Spice Telecom
Pub Date : 2003
Countries : Switzerland
Industry : Cellular
The Industry Strikes Back Contd...
Some such schemes launched in mid 2002 included Tamil SMS and Audiotimes (a service which enabled subscribers to send song clippings to other cell phone users) by RPG. Bharti shot back with an offer wherein new Magic subscribers were given an audiocassette containing popular Tamil movie songs.
Various value-added services were also offered in late 2002 in Chennai such as Panchangam (SMS-based), which informed customers about good (and bad) timings during the day. Bharti also tied up with a leading Internet portal, indiatimes.com to offer news headlines and stock market news through SMS. |
While the players in the cellular market in India were focussing heavily on the pre-paid card segment due to its high potential, some analysts expressed doubts about the profitability of this segment in the long run.
They said that low profit margins from the pre-paid segment (on account of low tariff and high advertising, promotional and customer service costs) could lead to losses in the long run. As the fierce competition would make price-cuts and heavy investments in advertising and promotions inevitable, this seemed quite possible.
However, it was believed such problems might be overcome by building up a vast customer base and making up for margins by increasing sales volumes (A company's cost per subscriber decreased with the increase in the subscriber base, thereby, resulting in increased margins.)
However, the biggest challenge came in the form of CellOne, a cellular service launched by the state-owned telecom major, Bharat Sanchar Nigam Ltd. (BSNL) in October 2002. Not only were the rental charges of CellOne much lower than those of any other player, BSNL had plans to (further) reduce tariff.