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Business & Service Marketing

Service Blueprint of Telecom Industry

Ashish Gautam (09) Rakesh Singh (31) Tage Nobin (45)

Introduction

Telecommunication has been recognized world-over as an important tool for socio- economic development for a nation and plays a phenomenal role in growth and modernization of various sectors of the economy. Over the last few years, Indian telecom market has shown overwhelming growth thanks to domestic demand, policy initiatives undertaken by the government and admirable efforts by the players of the industry and in the process, has managed to emerge as one of the youngest and fastest growing economies in the world today. Factors like regulatory liberalization, structural reforms and competition played a very important part in this rapid transformation.

The fact that India is one of worlds fastest growing telecom markets in the world, has acted as the primary driver for foreign and domestic telecommunication companies investing into the sector. It is also recognized as one of the most lucrative markets globally, resulting in massive investments being made in the sector both by the private and government sector in the last decade.

The telecom industry has witnessed significant growth in subscriber base over the last decade, with increasing network coverage and a competition-induced decline in tariffs acting as catalysts for the growth in subscriber base. The growth story and the potential have also served to attract newer players in the industry, with the result that the intensity of competition has kept increasing.

Liberalization of the sector has not only led to rapid growth but also helped a great deal towards maximization of consumer benefits, evident from a huge fall in tariffs. Telecom sector has witnessed a continuous rising trend in the total number of telephone subscribers. From a meager 22.8 million telephone subscribers (wireless plus wire line) in 1999, it has grown to 926.53 million at the end of December, 2011, reaching tele-density of 76.86 %. The total number of urban subscribers today stand at 611.19 Million (65.59 %) and rural subscribers at 315.33 Million (34.41 %). Wireless telephone connections have contributed to this growth as the number of wireless connections rose from 35.61 million in 2004 to 893.84 Million at the end of December, 2012.

The Blueprint of Telecommunication Industry

The Blueprint of Telecommunication Industry

Service Encounters in Telecommunication Industry

Types of Service Encounters

Phone

Encounters

Remote

Encounters

Face-to-Face

Encounters

It is a critical point of contact by which a customer will judge the quality of an organization. For a telecommunication industry there are various points of contact for a customer with the company. They are:

1. Customer Care: When the customer faces some difficulties in terms of service provided or need some help they call to customer care. The response given by the company has a lot of impact.

2. Retail Outlets: There is lots of retail outlets where customers go to get SIM, recharge etc which becomes a touch point for the customers. There are several organized and unorganized retail outlets in this segment. The type and quality of customer service the retailers provide makes a sort of perception in the mind of customers.

3. Market Research: When an employee goes for a market research he sometimes needs to make the customers what the product is so while the employees do this type of research along with it also creates brand awareness, brand recall also influences the consumer sometimes.

4. Service Calls: During service calls the service provider tries to influence the customers with the attractive service plans, tariffs etc. The experience of delivery and interest in products can sometimes be considered as a moment of truth

Pricing Strategy:

The Indian Telecom story has caught everyone’s attention the world over. The number of subscribers in India has crossed the half a billion mark, next only to China. Along with the subscribers, the number of operators in India has also increased. The entry of new service providers, with MTS being the most recent and the operators’ pursuit for a stronghold in the telecom market has led to tariff based price wars for attracting new customers.

Evolution of Pricing in the Indian Telecom Industry

Indian service providers’ pricing evolved over three phases. The first phase was an introduction phase, from 1995 to 2000. The incoming and outgoing calls were priced around Rs 14/minute, which made the service a luxury, attracting significant snob appeal. Eventually the outgoing call prices dropped to Rs 9/ minute and incoming to Re 1/minute (towards the end of this phase), attracting a greater segment of the population.

Thereafter, in the Growth phase which lasted from 2000-2005, the outgoing call rates dropped to Rs 2/minute while the incoming calls became free of charge. Many new players entered the market during this period, such as Reliance, which set new benchmarks for pricing. Following an aggressive strategy to attract a huge customer base, Reliance forced other operators to change their plans according to its offerings.

Interestingly, what followed is the maturity phase where Tata Docomo used the 1p/second billing to gain entry into the crowded market. Tata Docomo’s strategy is reminiscent of Reliance’s pricing strategy from the growth phase. The other operators reluctantly followed suit and added per-second billing plans to their existing product portfolio. This is one of the reasons for the crowding seen in Airtel’s postpaid plans, among others, as it continues to offer per-minute billing options also.

Price Plans

The biggest driver of growth in telecom industry is the development of pricing plans catering to individual needs and requirements of people at the prices they are willing to pay. A plethora of price plans are available today such as prepaid, postpaid, lifetime validity, Closed User Groups, corporate plans or some combination of these. We will restrict our analysis to the postpaid plans as they exhibit individual usage patterns and preferences, which govern the prepaid and Closed User Group plans.

We consider the price plans of two service providers at the extreme ends of evolution, Airtel & Tata Docomo. We analyze the prepaid plans of these two subscribers in Mumbai Circle for product line structure, difference across products for different usages and then compare them to international players AT&T and Verizon for positioning.

Employee Role in Service Delivery:

Employees play a very important role in service delivery in telecom sector. One of the reasons for selecting a particular service provider is customer service. The service does not involve only solving technical issues but also involves talking properly and delivery of service in minimum waiting time. Also the product till it reaches to customer has to deal with different types and levels of employees in different terms like retailers, dealers, managers, customer care etc.

Marketing Strategy in Telecommunication Industry:

Telecommunication industry companies have the following characteristics:

1. Intangible Nature: Service is invisible. Services being purchased previously

seen or touched, hear and smell not to. The buyers can not touch this nature in order to reduce the uncertainty caused; they must seek to sign or evidence of the quality of service. They will see the place, personnel, equipment, communication materials, symbols and prices, etc., to determine the quality of service. Therefore,

the service provider's mission is "management of evidence", of the intangible tangible. The services are subject to the challenge of marketing is to ask them to increase physical evidence. If we want to make our service fast and efficient corporate look, we should try the following tools to make this tangible positioning strategy.

2. Inseparability: Both production and consumption of services is generally the

same time. Because the customer was present when the service provided and customer interaction is a feature of services marketing, both provider and customer service result are affected.

3. Variability: Service of great variability because the service provided depends

on whom, when and where available. For control of the quality of services can take two steps: first, investment in staff and excellent selection training. The training of service providers, it appears the customer can make the appropriate response to

various situations, thus reducing the variability of services, the second step, through customer suggestions and complaints systems, customer surveys and contrast purchase customer satisfaction tracking to understand the situation. In this way, the poor quality of service and can be detected out to be correct.

4. Perishable Nature: Service does not have to storability. Its production process

itself is the process of consumption, and thus easily lost. Because service companies have the above characteristics, in the service of enterprises, Customer service quality is not the face of stability and a more varied service providers, and service providers not only by the impact, but also by "private" production process.

and therefore the marketing services business requires not only the traditional markets marketing, but also inserted two other marketing, the internal marketing and interactive marketing. Internal marketing and interactive marketing constitute the modern marketing - full marketing i.e. the focus of marketing is full of marketing.