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MARKETING MANAGEMENT-1 [STP ANALYSIS]

MARKETING MANAGEMENT-1 [STP ANALYSIS]

Table of Contents

Executive Summary................................................................................................. ...4


Introduction............................................................................................. ...................6
Overview of the Telecom Industry..............................................................................7
Highlights........................................................................................... .....................7
Competitors........................................................................................................ .....9
Marketing Strategies..................................................................................................9
Service & Handset- Buy One, Get Other Free..........................................................9
Customer Generation - Tapping in to Internal Resources.......................................10
Advertising – Educating Masses and Evoking Passions..........................................10
Market Segmentation...............................................................................................11
Segmentation Strategy of reliance communications................................................13
Market Segmentation Strategy..............................................................................13
Measurable, Accessible, Substantial, Differentiable and Actionable Market.......14
Targeting............................................................................... ...................................17
Targetting Full Market Coverage............................................................................17
Positioning for Competitive Advantage.................................................................17
Positioning Strategy..............................................................................................19
Product Differentiation.......................................................................................19
Service Differentiation....................................................................................... .20
Personnel Differentiation....................................................................................20
Channel Differentiation......................................................................................21
Image Differentiation.........................................................................................21
Conclusion……………………………………………………………………………………………….
22
MARKETING MANAGEMENT-1 [STP ANALYSIS]

EXECUTIVE SUMMARY

Reliance Communication stimulated telecommunication growth in India by


challenging many of the conventional practices in product design, distribution,
sales, advertising and pricing. Reliance Communication fashioned a strategy
which was conceptually simple but sweeping in its impact. While the
competitors focused on the top segment of the market, by charging a
premium, Reliance Communication sought to reduce the cost to the
consumer, thus focusing on a market driven by volume. While others saw
weaknesses of India as a market – widespread poverty and low levels of
telecommunication penetration – and Reliance as an old economy firm focusing on
oil production and business-to-business clients – Reliance Communication realized
that these actually were strengths which it could tap into. Reliance Communication’s
managers saw that telecommunications would be much valued by the poorer
sections of society if it could be used to create opportunities and offered at
affordable prices. The company tapped into its strong political and financial clout to
build up a strong organization that could push it through the legal and regulatory
system. Reliance Communication is planning to consolidate its telecommunication
revolution through three phases:

Firstly, the mobile revolution now reaching 17 million customers will expand to
640,000 villages and to over 5,000 cities and towns. This revolution will create the
potential for every individual to talk, learn, shop, bank, transact, entertain and be
informed, while on the move.

Secondly, an enterprise Netway revolution will bring the possibility to provide


broadband experience to every desktop and device in half a million enterprise
buildings initially and eventually to millions of commercial buildings. This will create
the potential to empower every enterprise by making transactions efficient,
functions seamless and new economic opportunities abundant.

Thirdly, a convergence revolution will provide high-speed networks to millions of


homes. This revolution will offer every home access to a wide range of television
MARKETING MANAGEMENT-1 [STP ANALYSIS]

channels, high-speed telephony, audio conferencing, videoconferencing and video


on demand.

With this we conclude that Reliance communication has an enormous opportunity of


growth with a firm financial backing from its other business units and a political
lobby supporting its strategies. Our group observed that RCOM will lead the Indian
Telecom industry by 2010 because TRAI is supporting the CDMA technology in
future.
MARKETING MANAGEMENT-1 [STP ANALYSIS]

INTRODUCTION

“We will leverage our strengths to execute complex global-scale projects to


facilitate leading-edge information and communication services affordable to all
individual consumers and businesses in India. We will offer unparalleled value to
create customer delight and enhance business productivity. We will also generate
value for our capabilities beyond Indian borders and enable millions of India's
knowledge workers to deliver their services globally.”

The Late Dhirubhai Ambani dreamt of a digital India — an India where the common
man would have access to affordable means of information and communication.
Dhirubhai, who single-handedly built India’s largest private sector company virtually
from scratch, had stated as early as 1999: “Make the tools of information and
communication available to people at an affordable cost. They will overcome the
handicaps of illiteracy and lack of mobility.”

It was with this belief in mind that Reliance Communications (formerly Reliance
Infocomm) started laying 60,000 route kilometers of a pan-India fiber optic
backbone. This backbone was commissioned on 28 December 2002, the auspicious
occasion of Dhirubhai’s 70th birthday, though sadly after his unexpected demise on
6 July 2002.

Reliance Communications has a reliable, high-capacity, integrated (both wireless


and wire line) and convergent (voice, data and video) digital network. It is capable
of delivering a range of services spanning the entire infocomm (information and
communication) value chain, including infrastructure and services — for enterprises
as well as individuals, applications, and consulting.

Today, Reliance Communications is revolutionizing the way India communicates and


networks, truly bringing about a new way of life.
MARKETING MANAGEMENT-1 [STP ANALYSIS]

OVERVIEW OF THE TELECOM INDUSTRY


HIGHLIGHTS

Indian Telecom services industry accounts for 1.5 per cent of GDP. Telecom
services market is growing at 20 per cent per annum. Cellular segment
growing at 70 per cent.
Major Segments of Telecom Services – Basic Fixed Line services, National
Long Distance, International Subscriber Dialing and Cellular Mobile services.
Policy framework for this segment governed by the National Telecom Policy
(NTP). NTP 1994 allowed private participation. NTP 1999 set target of tele-
density of 15 telephone connections per 100 persons by 2010.
Basic services still largely monopolized by state owned players - MTNL and
BSNL, even though private participation allowed in 1994. Total fixed line
connections are estimated at around at 28 million as on 31 October 2000.
They are expected to go up to 75 million by end of March 2006.
National Long Distance (NLD) service was opened up for private participation
during FY2001. The revenue from this service is expected to be INR 151
billion in FY2002 and INR 239 billion by FY2005.
Overseas service is monopolized by VSNL at present. However VSNL which is
already an internet service provider will also participate in NLD and other
broadband services.
Cellular mobile services, started in 1995, are amongst the fastest growing
segment. After a slow start, this sector grew at compound annual growth rate
of more than 70 per cent.
Future issues include implementation of Calling Party Pays principle, passage
of the Convergence bill and greater consolidation through mergers and
acquisitions.
MARKETING MANAGEMENT-1 [STP ANALYSIS]

Figure 1

Figure 1 shows the structure of the Indian Telecom Industry. The Company Reliance
Communications that we are focusing on lies under Private operators providing fixed
line and cellular services.
MARKETING MANAGEMENT-1 [STP ANALYSIS]

Competitors
The major competitors of Reliance Communications are as follows:

 Airtel
 Vodafone
 IDEA:
 BSNL
 Tata Indicom
 Spice
 Virgin
 Aircel
 Alkatel

MARKETING STRATEGIES

Reliance Communication radically redefined marketing models in India and engaged


homes and enterprises directly by having the ability to deliver physical and virtual
products and services as part of one system. Reliance Communication through its
aggressive, unconventional tactics changed the rules of the mobile marketing
game.

Service & Handset- Buy One, Get Other Free

Handsets were to be purchased separately since the operators until then offered
only services, and never dealt with handsets. For a customer this meant dealing
with two suppliers – one for the service and another for the handset. Reliance
Communication, for the first time in India, offered handsets free of charge, along
with the service.

Customer Generation - Tapping in to Internal Resources


MARKETING MANAGEMENT-1 [STP ANALYSIS]

Reliance targeted internally as it looked for the first set of customers. Officials of
Reliance Communication realized that an employee base of more than 50,000 and a
shareholder base of about 3.3 million was the best place to start as far as
customers were concerned.

Advertising – Educating Masses and Evoking Passions

The Reliance mobile brand was branded as IndiaMobile to cash in on patriotic


feelings. Bundling of handsets along with the service – a first time in India – allowed
Reliance Communication to resort to a co-branding exercise with the handset
makers.

Business Units of Reliance Communication

Wireless Broad Band Global RTIL

GSM Internet Data Center (IDC) Services ILD* Tower


Business
CDMA Internet Bandwidth (ISP) Voice Carrier

PCO

Core Strengths:

Brand: provides high level of branding and visibility

Distribution: Retail presence through 16,50 exclusive stores in


700 towns
MARKETING MANAGEMENT-1 [STP ANALYSIS]

Contact Centers : 6000 seat multilingual, multi location

Continuous Innovation: e.g. innovative lifetime plan, all India Plan

Network architecture and capability

Strongly positioned for accelerating market growth (*ILD – International long

distance calling )

MARKET SEGMENTATION

a. Markets consist of buyers. These buyers may differ in their wants, resources,
locations, buying attitudes, and buying practices. Through market segmentation,
companies divide large, heterogeneous markets into smaller segments that can be
reached more effectively with products and services that match their unique needs.

Segmenting Consumer Markets

b. There is no single way to segment a market. Marketers must try different


segmentation variables, alone and in combination, to find the best way to view the
market structure.

1. Geographic segmentation divides the market into different geographical units,


such as nations, regions, states, counties, cities, or even neighborhoods. A company
may operate in one or a few geographic areas, or it may operate in all areas but pay
attention to geographical differences in wants and needs.

2. Demographic segmentation divides the market into groups based on variables


such as age, gender, family size, family life cycle, income, occupation, education,
religion, race, generation, and nationality. Consumer wants, needs, and usage rates
often vary with demographic variables. Demographic variables are also easier to
measure than other variables.

Psychographic segmentation divides buyers into different groups based on social


class, lifestyle, or personality characteristics. People in the same demographic
group can have very different psychographic makeups, and marketers often
segment by common lifestyles.

7. Behavioral segmentation divides buyers based on their knowledge, attitudes,


uses, or responses to a product.
MARKETING MANAGEMENT-1 [STP ANALYSIS]

i. Occasion segmentation groups buyers according to occasions when they get the
idea to buy, actually make the purchase, or use the purchased item.

ii. Benefit segmentation requires finding the major benefits people look for in the
product class, the kinds of people who look for each benefit, and the major brands
that deliver each benefit.

iii. User status groups buyers according to whether they are nonusers, ex-users,
potential users, first-time users, or regular users of the product.

iv. Markets can also be segmented according to usage rate—light, medium and
heavy product users.

v. Loyalty status looks at the level of loyalty to brands, stores, and companies.
MARKETING MANAGEMENT-1 [STP ANALYSIS]

SEGMENTATION STRATEGY OF RELIANCE


COMMUNICATIONS
In the words of Dhirubhai Ambani himself, “My vision is to provide the latest
telecommunication facilities to every Indian at the price of a post card”.

Market Segmentation Strategy

Reliance has always been known for its “unconventionalism” in dealing with various
activities of the management, from advertisement and promotion to identifying
potential customers to the actual selling of the product. It was also instrumental in
increasing the mobile phone penetration in India to grow from 0.25 percent in early
2001 to about 7.53 percent till date.

Reliance Communication stimulated telecommunication growth in India by


challenging many of the conventional practices in product design, distribution,
sales, advertising and pricing. Reliance Communication fashioned a strategy which
was conceptually simple but sweeping in its impact. While the competitors focused
on the top segment of the market, by charging a premium, Reliance
Communication sought to reduce the cost to the consumer, thus focusing on a
market driven by volume. While others saw weaknesses of India as a market –
widespread poverty and low levels of telecommunication penetration – and Reliance
as an old economy firm focusing on oil production and business-to-business clients –
Reliance Communication realized that these actually were strengths which it could
tap into. Reliance Communication’s managers saw that telecommunications would
be much valued by the poorer sections of society if it could be used to create
opportunities and offered at affordable prices. The company tapped into its strong
MARKETING MANAGEMENT-1 [STP ANALYSIS]

political and financial clout to build up a strong organization that could push it
through the legal and regulatory system.

Measurable, Accessible, Substantial, Differentiable and Actionable Market

Reliance estimated that there are around 320 million [people in] households with an
annual income of Rs 1.5 lakh (US$3,333) [and above]. Of that, half are in rural areas
with similar purchasing power. And this segment is expected to grow to 500 million
by 2008 and to 602 million by 2010. This presented a substantial chunk of potential
buyers for Reliance products. Besides, the segment was also easily accessible, that
is, it could be easily sought and encouraged to buy Reliance mobiles considering
their extremely economical cost.

Since its very inception to becoming one of the market leaders in the field of
telecommunications, Reliance has adopted a number of strategies and introduced a
variety of products to cater to the needs of various market segments. On a broader
note, Reliance has segmented the market on the following major criteria:

Geographic Segmentation
On the basis of geography Reliance Communication has always
believed in uniting India as a whole and considering it as a single
entity and consequently divided it’s services under two major
broad categories (in both prepaid and postpaid) schemes ---
National and International. One of the best examples in this
context is that of the ONE India Plan which allows you to call any
phone, anywhere in India for just ONE RUPEE per min.

Besides, it also come up with national and international roaming plans and STD and
world calling cards to cater to the needs of different people spread across different
geographical locations. The Reliance Global Calling Card is available in 5
denominations — Rs.115, Rs.225, Rs. 575, Rs.699, Rs.1,130, Rs.1,900, Rs.2250. You
can make ISD calls from any Reliance phone, be it postpaid (Reliance Mobile / Fixed
Wireless phone) or Reliance Mobile prepaid. The prepaid Reliance STD Calling Card
offers very affordable rates for local and national long distance (NLD) calls. This is a
rechargeable account-based prepaid card that can be used from Reliance phones
MARKETING MANAGEMENT-1 [STP ANALYSIS]

(Reliance fixed, fixed wireless and mobile – postpaid or prepaid) only and cannot be
used from a PCO. With this card, NLD calls can be made even from Reliance phones
without an NLD facility.

Demographic Segmentation
Reliance has also segmented the market based on the demographic attributes of
the customers such as age, gender, income group, occupation, etc. Thus it has
come up with a variety of plans such as the JOY PLANS on postpaid which can help
in significantly cutting call costs and the ON –NET TALKTIME PACK which allows 1000
min. of free usage to all reliance mobiles and wireless phones within circle
absolutely free. This allows it reach a large chunk of population with different needs
and different financial backgrounds and in the process, makes its services
affordable to everyone.

Psychographic Segmentation
Different people have different value systems, varying personality traits, beliefs,
attitudes, separate self image or self concept and an altogether different way to
look at life (lifestyle). As a result their needs and preferences also differ accordingly.
Reliance Communication has kept this aspect in mind while designing it’s wide
range of mobile phones to appeal to different audiences and in a way suit their self
– image (self concept). From lower end simple and sober handsets like the CLASSIC
series to the little stylish multimedia enabled handsets such as LG, Kyocera and
Nokia to the ultra – stylish UT Star PPC and TELESON handsets, Reliance offers
something for everyone.

Behavioral Segmentation

Customers exhibit varying behavioral patterns towards different products. Different


customers have different perceptions about different products and hence weigh the
value derived from each product differently. Reliance was quick to realize this and
MARKETING MANAGEMENT-1 [STP ANALYSIS]

hence tried to segment the market on the basis of the behavioral patterns of its
customers. Here it looked at whether there was increased buying during special
occasions, whether a substantial chunk of population looked for a specific class of
benefits to be derived from its products, what was their user status (current or ex
user of its products), how heavily or lightly was a specific product used (usage
rates), loyalty towards a particular category or product, readiness to adapt to new
technology and the general attitude towards the product.

Subsequently on 20 September, 2003, the 1st day of Navaratri, --- a multimedia


mobile phone service offering ringtones, greeting cards, pictures and video clips of
Navaratri Festival was introduced on R- world and over 10 million downloads were
reported. Other than this Reliance also continues to offer several schemes to
customers based on their usage rates such as small amount prepaid tariff cards for
lower end users to Broadband services for corporate and high – end individual
users. Further it also offers plans of free subscriptions, gifts and extra talktime to
regular (loyal) users of its products.
MARKETING MANAGEMENT-1 [STP ANALYSIS]

TARGETING
Target Marketing involves breaking a market into segments and then concentrating
your marketing efforts on one or a few key segments. Target marketing can be the
key to a small business’s success. The beauty of target marketing is that it makes
the promotion, pricing and distribution of your products and/or services easier and
more cost-effective. Target marketing provides a focus to all of your marketing
activities.

TARGETING FULL MARKET COVERAGE


Today Reliance Communications has established itself as one of the top telecom
service providers in India offering a wide range of services such as CDMA and GSM
services in both prepaid and postpaid flavours, Broadband services through R –
Connect, Reliance Hello schemes, Reliance PCO, interactive TV, Data Center, etc.
Because of the enormous gamut of services offered across various product
categories, (be it selling mobile phones or new connections or broadband services)
and market segments (both high end commercial usage to lower end individual
use), the Strategic Business (SBU) Units caters to almost all product categories
across all market segments. Thus the company targets the full Telecom Industry
market rather than any specific segment leaving no segment untargeted. Hence we
can safely conclude that the market segment targeted by the SBU is that of FULL
MARKET COVERAGE.

Positioning for Competitive Advantage


a. A product’s position is the way the product is defined by the consumers on
important attributes; it is the place the product occupies in consumers’ minds
relative to competing products. It involves implanting the brand’s unique benefits
and differentiation in customers’ minds.

b. To simplify the buying process, consumers organize products, services, and


companies into categories and “position” them in their minds. A product’s position
MARKETING MANAGEMENT-1 [STP ANALYSIS]

is a complex set of perceptions, impressions, and feelings that consumers have for
the product compared with competing products.

c. Consumers will position products with or without the help of marketers. So


marketers must plan positions that will give their products the greatest advantage
in selected target markets, and then must design marketing mixes to create these
planned positions.
MARKETING MANAGEMENT-1 [STP ANALYSIS]

POSITIONING STRATEGY

As already mentioned before, Reliance Communications (previously Reliance


Communication) has believed in introducing innovative techniques and practices in
all its marketing strategies --- be it segmenting, targeting or positioning itself in the
market. Starting from the 1st of its kind --- the Dhirubhai Ambani offer to the present
day offer of connecting the entire India through ONE INDIA PLAN, Reliance has
always believed in making its services affordable to the people while not
compromising on the services offered and at the same time getting
substantial profit margins to sustain its growth. This principle forms the primary
basis of Reliance Communications product’s positioning strategy.

Among the major positioning strategies adopted by Reliance are:

Product Differentiation

Reliance offers its customers a wide range of products such as


both high end and low end mobile phones at prices which are
much less costlier than its competitors. A few of these mobile
phones have already been shown in the previous pages. These
handsets differ both in their looks as well as their style quotient
when compared to other brands and are available with a variety of schemes and
features which are substantially different from other products of the same range
offered in the market. Thus both form and design differentiation can be easily
made out. Other than this, Reliance Communication used was product
differentiation by mixing data applications with voice. Through RWorld – an inbuilt
Java enabled data feature of all Reliance phones - the company guaranteed
download speeds of up to 144 kbps from an applications suite which has over 120
applications ranging from interactive Guides such as TV programme guides and City
Guides, Live News and TV news clips from channels like NDTV, CNBC, Aaj Tak and
India TV to contests, video songs, Ring Tones, Cricket Information, Women's World
and KidzWorld.

It introduced numerous applications like news, streaming audio and video of movies
and music clips, city & TV guides, exam results, astrology and stock prices.
MARKETING MANAGEMENT-1 [STP ANALYSIS]

Service Differentiation

Reliance has also differentially positioned its products in the market through an
entire range of services offered by it which includes the ability to procure its
products easily (ordering ease), easy delivery mechanisms, installation procedures,
appropriate guarantee/ warranty associated with its products, financing schemes,
appointment of customer training personnel, and adequate after sales services. To
achieve this, Reliance Communication started retail outlets in prime commercial and
residential areas ranging between 800 and 2000 sq ft, in major Indian cities, district
headquarters and towns that would number over 500, and set up WebWorlds. At the
WebWorlds the customer could interface directly with the company officials, see,
touch and try the products and then buy. At the phone stores, the customers could
buy the phones directly across the counter. The company envisaged that ultimately
there would be at least one WebWorld in all the towns where Reliance
Communication has a presence. To ensure that the product was available at the
customer's doorstep, Reliance stocked its handsets in about 15,000 outlets across
the country, while 70,000 outlets sold the recharge coupons. It also appointed 600
exclusive distributors who sold only the pre-paid offering. Retailers like FabMall,
PlanetM, HP, Music World and Timex started to bundle their products along with
Reliance India

Mobile. Phones were distributed at discount prices with many products the
consumer bought. Additionally the company conducted nationwide product
demonstrations and announced that the Pioneer Scheme would be a limited period
offer, which further enhanced the interest of the consumers.

Personnel Differentiation

Reliance ensured that the staff at Webworlds was competent and courteous enough
towards customers besides being well – trained, responsive and reliableand
possessing good communication skills. In essence it ensured that the customer
went satisfied after each visit and this gave it sufficient competitive advantage over
its competitors.
MARKETING MANAGEMENT-1 [STP ANALYSIS]

Channel Differentiation
In the case of marketing channels, instead of resorting to the tried and tested
means, Reliance Communication created a completely new model. As a tribute to
Dhirubhai Ambani, Reliance Communication fostered a new breed of entrepreneurs,
as channel partners. The Dhirubhai Ambani Entrepreneur Programme began with an
aim of enrolling 200,000 individuals who are committed to acquiring new customers
and creating a new experience for them, based on flawless service and feelings of
satisfaction. About 50,000 individuals were recruited in a matter of weeks who were
guided and supported by 900 Reliance executives across the country. In 673 towns
and cities, Reliance trained these entrepreneurs in basic skill sets, so that they are
able to deliver value to customers at their doorsteps. Reliance Communication
envisaged spending over Rs.1000 million (US$22.2 million) per year in training and
competency building programmes for these entrepreneurs. Through this
programme, in addition to contributing to society by encouraging other enterprises,
and creating economic opportunities for millions of young Indians, Reliance
leveraged goodwill and networks.

Image Differentiation
The Reliance mobile brand was positioned as IndiaMobile to cash in on patriotic
feelings. The Reliance Communication brand name embossed on every handset
gave it a unique cachet, while the costs of many of the advertisements were
discounted since they were also borne by the handset makers. A mega advertising
campaign was launched across the media to mark the launch. The blitzkrieg
coincided with the world cup cricket tournament, ensuring a huge audience. The
main theme of the first campaign built on the vision of Reliance Communication in
bringing the power of telecommunication to every person. This campaign helped to
educate people on the importance of telecommunication services. The next set of
campaigns talked about the innovative product features which differentiated
Reliance Communication from its competitors. The advertisements announced that
Reliance IndiaMobile was 'Kabhi mobile, kabhi computer' (Sometimes Mobile,
Sometimes Computer). In the subsequent campaigns Reliance started riding on
movies and cricket as themes.
MARKETING MANAGEMENT-1 [STP ANALYSIS]

CONCLUSION

Market segmentation, target marketing and Positioning are the key factors for any
service or product to be successful. A mélange of consumer segmentation variables,
including geographic, demographic, psychographic and behavioral characteristics is
a prerequisite for any product/service to reach out to its customers, as it is the use
of multiple segmentation bases. The importance and reasons for segmentation,
targeting and positioning can be very well portrayed through several examples of
Fortune 500 companies. Segmentation outlines the company’s opportunities, but
target marketing is where the marketing manager makes his or her money. Turning
the segmentation opportunities into real markets is the real focus. Methods of
evaluating the market segments are the various levels of targeting: undifferentiated
or mass marketing; differentiated marketing; concentrated marketing; and
micromarketing. Choosing the target marketing strategy is described as dependent
on many variables, such as company resources, how variable the product is, and
the stage of the product life cycle. But while a company is targeting important
segments, it must take care not to cause any controversy or concern. For instance,
companies that have targeted their premium cereals primarily to children have
been called to task for their practices, as have cigarette companies that seem to
have targeted the youth market in their chosen advertising vehicles. Finally, a
company has to figure out the best way to position itself for competitive advantage.
Positioning involves implanting the brand’s unique benefits, and differentiation in
customers’ minds.

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