Introduction

The main area of the study is to study the Advertising in Telecom Industry in India and its
Impact on Customers. The sources of data collection used in the study are both primary and
secondary in nature. We are going to conduct a survey to know the impact of advertisements
of telecom industry on customers which is part of primary data. We will collect the data
from different websites and books mentioned in references which are the part of secondary
data.

In this report I have tried to analyze the present scenario of Indian telecom sector. The Real
aim of the project is to study the effectiveness and response towards advertisements provided
by major players, but many sub objectives are also included under this project so as to make it
comprehensive one.

In this project I have covered the Analysis of Telecom Industry of India. In this analysis I
have shown history and present scenario of the Telecom industry in India. I have
complemented this with the internal study of companies. I have shown history, growth,
market share and advertising strategies adopted by Vodafone, Airtel, Reliance
communication, BSNL and Idea cellular.

The project is based on advertising so I have first explained about advertising, its
importance, managing advertising decisions and types of advertising. I have analyzed the
growth in ad volumes of telecom sector, share of telecom sector advertising, segment wise
growth in telecom sector, share of key players in advertising, new brands advertised in
telecom equipments and service and share of sales promotion in telecom sector.

Primary data has been collected in which focus group study had been conducted to design
the customer survey questionnaire with a sample size of 200 respondents. This survey has

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been conducted in AHMEDABAD. Secondary data was collected through websites,
newspapers, magazines and books.
After the data collection, it has been compiled, classified and tabulated manually and with
help of computer. Then the task of drawing inferences has been accomplished with the help
of percentage and graphic method.

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 Methodology

The research methodology that I undertook for the purpose of this study is enumerated below:

PRIMARY RESEARCH:
This consisted questionnaire and interaction from various people. A focus group study will be
conducted to design the customer survey questionnaire with a sample size of 200 respondents.

SECONDARY RESEARCH:
Sources of secondary data were primarily the Internet , journals , newspaper, annual report,
database available in the library, catalogues and presentations.

Research Design:
The research design is Descriptive studies. Descriptive studies are well structured, they tend to
be rigid and its approach cannot be changed every now and then.

Descriptive studies are undertaken in many circumstances:

1. When the researcher is interested in knowing the characteristics of certain groups such as
age , profession.

2. When the researcher is interested in knowing the proportion of people in given population
who have behaved in a particular manner, making projection of certain things.

The objective of this kind of study is to answer the why, who, what ,when and how of the
subject under consideration.

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I have taken descriptive because my research includes the knowing the behavior of customer
towards advertisement. I have analyzed how people of various age group respond to different
advertising or their perception towards advertisement. Also my survey is related to companies
like Vodafone, Airtel, Reliance communications, BSNL and Idea cellular.

Types of questions:

OPEN ENDED:
They give the respondents complete freedom to decide the form , length and detail of the
answer. Open questions are preferred when the researchers is interested in knowing what is
upper most in the mind of respondents.

DICHOTOMOUS:
This type of questions have only two type of answer, yes or no. true or false etc.

MULTIPLE CHOICE QUESTIONS:

In the case of multiple choice question the respondents is offered two or more choices. The
researcher exhausts all the possible choices and the respondent has to indicate which one is
applicable in this case.

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 History of Telecommunication Industry

The history of telecommunication industry started with the first public demonstration of Morse’s
electric telegraph, Baltimore to Washington in 1844. In 1876 Alexander Graham Bell filed his
patent application and the first telephone patent was issued to him on 7th of March.

In 1913, telegraph was popular way of communication. AT&T commits to dispose its telegraph
stocks and agreed to provide long distance connection to independence telephone system.

In 1956, the final judgment limited the Bell System to Common Carrier Communications and
Government projects but preserving the long-standing relationships between the manufacturing,
researches and operating arms of the Bell System. In this judgment AT&T retained bell
laboratories and Western Electric Company. This final judgment brought to a close the justice
departments seven –year-old antitrust suit against AT&T and Western Electric which sought
separation of the Bell Systems Manufacturing from its operating and research functions. AT&T
was still controlling the telecommunication industry.

In 1982 , AT&T was requested to divestiture its stock ownership in Western Electric;
termination of exclusive relationship between AT&T and Western Electric; divestiture by
Western Electric of its fifty percent interest in Bell Telephone Laboratories, AT&T ‘s
telecommunication research and development facility, is a jointly owned subsidiary in which
AT&T and Western Electric each own 50% of the stock; separation of telephone manufacturing
from provision of telephone service and the compulsory licensing of patents owned by AT&T
on a non-discriminatory basis.

It was telecommunication act of 1996 that true competition was allowed. The act of 1996
opened the market to all competitors. AT&T being the first telecommunication company paved

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the road for the telecommunication industry as well as set the policy and standards for others to
follow.

Global Scenario

World telecom industry is an uprising industry, proceeding towards a goal of achieving two third
of the world's telecom connections. Over the past few years information and communications
technology has changed in a dramatic manner and as a result of that world telecom industry is
going to be a booming industry. Substantial economic growth and mounting population enable
the rapid growth of this industry.

The world telecommunications market is expected to rise at an 11 percent compound annual

growth rate at the end of year 2010. The leading telecom companies like AT&T, Vodafone,
Verizon, SBC Communications, Bell South, Qwest Communications are trying to take the
advantage of this growth. These companies are working on telecommunication fields like
broadband technologies, EDGE(Enhanced Data rates for Global Evolution) technologies, LAN-
WAN inter networking, optical networking, voice over Internet protocol, wireless data service
etc.

Economical aspect of telecommunication industry: World telecom industry is taking a crucial

part of world economy. The total revenue earned from this industry is 3 percent of the gross
world products and is aiming at attaining more revenues. One statistical report reveals that
approximately 16.9% of the world population has access to the Internet.

Present market scenario of world telecom industry: Over the last couple of years, world
telecommunication industry has been consolidating by allowing private organizations the
opportunities to run their businesses with this industry. The Government monopolies are now
being privatized and consequently competition is developing. Among all, the domestic and small
business markets are the hardest.

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Until the 1980s the world telecommunications systems had a simply administrative structure.
The United States telephone service was supplied by a regulated monopoly, American
Telephone and Telegraph (AT&T). Telegraph service was provided mainly by the Western
Union Corporation. In almost all other countries both services were the monopolies of
government agencies known as PTTs (for Post, Telephone, and Telegraph). In the United States
beginning in 1983, AT&T agreed in a court settlement to divest itself of the local operating
companies that provided basic telephonic service. They remained regulated local monopolies,
grouped together into eight regional companies.

AT&T now offers long distance service in competition with half a dozen major and many minor
competitors while retaining ownership of a subsidiary that produces telephonic equipment,
computers and other electronic devices. During the same period Great Britain’s national
telephone company was sold to private investors as was Japan’s NTT telephone monopoly. For
telegraphy and data transmission, Western Union was joined by other major companies, while
many multinational firms formed their own telecommunications services that link offices
scattered throughout the world. New technology also brought continuing changes in the
providers of telecommunication. Private companies such as Comsat in the United States were
organized to provide satellite communication links within the country.

Around the world we are witnessing remarkable changes to the telecoms environment. After
years of debate, structural separation is now taking place in many parts of the world including
Hong Kong, New Zealand, Singapore and some European markets. Structural separation – or at
least full-blown operational separation – is required to advance the entire industry and to create
new business opportunities and innovations which will benefit our society, our economy and
ultimately our industry.
The focus is also shifting away from broadband to what it can actually achieve. Next Generation
Telecommunications better describes this new environment and is essential for the emerging
digital economy. Important services that depend on NGT include telehealth, e-education, e-

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business, digital media, e-government and environmental applications such as smart utility
meters.

In order to meet this burgeoning consumer demand for NGT applications, we are seeing
increasing investment in All-IP Next Generation Networks and fiber networks. A proper
inventory of national infrastructure assets is required if we want to establish an efficient and
economically viable national broadband structure for these services. In the developing markets,
next generations telecoms will take the form of wireless NGNs (i.e., LTE/WiMAX).

These are some of the elements of the broader ICT revolution that is unfolding before our very
eyes. We are right in the midst of the transition from old communications structures (mainly
one-way streets) to new structures that are fully-interactive and video-based.

One of the drivers behind the industry changes are the declining revenues experienced by the
telcos in their traditional markets. Over the past 10 years or so, fixed-line operators have been
affected by deregulation, a severe industry downturn, declining prices and major inroads by
mobile services. In addition, people are drifting to other forms of communication, such as email,
online chat, and mobile text messaging instead of the traditional phone.

This has also led to an increased need for bandwidth, which in turn has revived the submarine
cable sector. In recent times there have been many cable build-out announcements around the
world, and some major systems are again being constructed. Over 25 systems are expected to be
built over the next two to three years and network upgrades are also on the agenda for some
existing systems.

It is clear that the mobile industry is also undergoing profound changes. The saturated developed
markets are forcing the industry to find new revenue streams and we are now seeing other
organizations such as media companies, content providers, Internet media companies and private
equity companies becoming involved in this market.

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For the time being however, voice will remain the killer application for mobile with some data
services included as support services and niche market services. 4G (ie, WiMAX/LTE) is the
real solution for mobile data and by 2015 it is expected that the majority of mobile revenues will
come from data.

With the Internet economy, digital media and other telecommunications activities becoming
further established, the need for modern and efficient infrastructure is becoming more critical.

Key highlights
• In 2008 the overall telecoms industry was valued at well over $3.5 trillion with steady
growth ahead.
• On a regional level, Western Europe still has the largest share of broadband subscribers
worldwide.
• DSL is the most popular broadband access technology worldwide, equating for around a
66% market share.

Worldwide telecom statistics at a glance – mid-2008

Telecom Statistics of the world
Population 6.7 billion

Fixed lines 1.3 billion

Mobile subscribers 3.5 billion

Mobile text messages sent 2.3 trillion

Internet users 1.2 billion

Fixed broadband subscribers 380 million

(Source: BuddeComm estimates)

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 Indian Overview

Beginning of telecommunication in India

1851: First operational land lines were laid by the government near Calcutta

1881: Telephone services introduced in India

1883: Merger with postal system

1923: Formation of Indian radio Telegraph Company

1932: Merger of ETC and IRT into Indian Radio and Cable Communication Company

1947: Nationalization of all foreign telecommunication companies to form the posts, telephone
and telegraph, a monopoly run by the government’s ministry of communications

1985: Department of telecommunication established, an exclusive provider of domestic and

long-distance services that would be its own regulator

1986: Conversion of dot into two wholly government – owned companies the VSNL for
international telecommunication and MTNL for services in metropolitan areas

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1997: Telecom regulatory authority created

Telecommunication is important not only because of its role in bringing the benefits of
communication to every corner of India but also in serving the new policy objectives of
improving the global competitiveness of the Indian economy and stimulating and attracting
foreign direct investment.

Today the Indian telecommunications network with over 375 Million subscribers is second
largest network in the world after China. India is also the fastest growing telecom market in the
world with an addition of 9- 10 million monthly subscribers. The teledensity of the Country has
increased from 18% in 2006 to 33% in December 2008, showing a stupendous annual growth of
about 50%, one of the highest in any sector of the Indian Economy. The Department of
Telecommunications has been able to provide state of the art world-class infrastructure at
globally competitive tariffs and reduce the digital divide by extending connectivity to the
unconnected areas. India has emerged as a major base for the telecom industry worldwide. Thus
Indian telecom sector has come a long way in achieving its dream of providing affordable and
effective communication facilities to Indian citizens. As a result common man today has access
to this most needed facility. The reform measures coupled with the proactive policies of the
Department of Telecommunications have resulted in an unprecedented growth of the telecom
sector.

The thrust areas presently are:

1. Building a modern and efficient infrastructure ensuring greater competitive environment
2. With equal opportunities and level playing field for all stakeholders.
3. Strengthening research and development for manufacturing, value added services.
4. Efficient and transparent spectrum management
5. To accelerate broadband penetration

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6. Universal service to all uncovered areas including rural areas.
7. Enabling Indian telecom companies to become global players.

Recent things to watch in Indian telecom sector are:

1. 3G and BWA auctions
2. MVNO
3. Mobile Number Portability
4. New Policy for Value Added Services
5. Market dynamics once the recently licensed new telecom operators start rolling out
6. Services.
7. Increased thrust on telecom equipment manufacturing and exports.
8. Reduction in Mobile Termination Charges as the cost per line has substantially reduced
9. Due to technological advancement and increase in traffic.

India's telecom sector has shown massive upsurge in the recent years in all respects of industrial
growth. From the status of state monopoly with very limited growth, it has grown in to the level
of an industry. Telephone, whether fixed landline or mobile, is an essential necessity for the
people of India. This changing phase was possible with the economic development that followed
the process of structuring the economy in the capitalistic pattern. Removal of restrictions on
foreign capital investment and industrial de-licensing resulted in fast growth of this sector. At
present the country's telecom industry has achieved a growth rate of 14 per cent. Till 2000,
though cellular phone companies were present, fixed landlines were popular in most parts of the
country, with government of India setting up the Telecom Regulatory Authority of India, and
measures to allow new players country, the featured products in the segment came in to
prominence. Today the industry offers services such as fixed landlines, WLL, GSM mobiles,
CDMA and IP services to customers. Increasing competition among players allowed the prices
drastically down by making the mobile facility accessible to the urban middle class population,
and to a great extend in the rural areas. Even for small shopkeepers and factory workers a phone
connection is not an unreachable luxury. Major players in the sector are BSNL, MTNL, Bharti

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Teleservices, Hutchison Essar, BPL, Tata, Idea, etc. With the growth of telecom services,
telecom equipment and accessories manufacturing has also grown in a big way.

Indian Telecom sector, like any other industrial sector in the country, has gone through many
phases of growth and diversification. Starting from telegraphic and telephonic systems in the
19th century, the field of telephonic communication has now expanded to make use of advanced
technologies like GSM, CDMA, and WLL to the great 3G Technology in mobile phones. Day
by day, both the Public Players and the Private Players are putting in their resources and efforts
to improve the telecommunication technology so as to give the maximum to their customers.

Telecom Subscriber Base In India

Indian telecommunication Industry is one of the fastest growing telecom market in the world.
The mobile sector has grown from around 10 million subscribers in 2002 to reach 150
million by early 2007 registering an average growth of over 90%. The two major reasons
that have fuelled this growth are low tariffs coupled with falling handset prices.

Surprisingly, CDMA market has increased it market share up to 30% thanks to Reliance
Communication. However, across the globe, CDMA has been losing out numbers to popular
GSM technology, contrary to the scenario in India.

The other reason that has tremendously helped the telecom Industry is the regulatory changes
and reforms that have been pushed for last 10 years by successive Indian governments.
According to Telecom Regulatory Authority of India (TRAI) the rate of market expansion
would increase with further regulatory and structural reforms. Even though the fixed line market
share has been dropping consistently, the overall (fixed and mobile) subscribers have risen to
more than 200 million by first quarter of 2007. The telecom reforms have allowed the foreign
telecommunication companies to enter Indian market which has still got huge potential.

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International telecom companies like Vodafone have made entry into Indian market in a big
way.

Currently the Indian Telecommunication market is valued at around $100 billion (Rupees
400,000 crore). Two telecom players dominate this market - Bharti Airtel with 27% market
share and Reliance Communication with 20% along with other players like BSNL (Bharat
Sanchar Nigam Limited) and AT&T. One segment of the market that has been puzzling is
broadband Internet. Despite the manner in which the country’s Internet market has been
booming, India’s move into high-speed broadband Internet access has been distinctly slow. And,
while there appears to be considerable enthusiasm amongst the population for the Internet itself,
this has not been reflected in broadband subscription numbers. In 2006 India witnessed a good
surge in broadband users with the total subscriber base in the country expanding by almost
200% to just over 2 million by years end. Despite this surge, broadband penetration in
India still remains around only 0.2%; broadband services still account for only 25% of the
total Internet subscriber base, still in itself comparatively low. So, if 70% of total population is
rural, the scope for growth in this Industry is unprecedented.

The Ministry of Communications and Information Technology (MCIT) is has very aggressive
plans to increase the pace of growth, targeting 250 million telephone subscribers by end-2007
and 500 million by 2010. Most of the expansion in subscribers is set to occur in rural India.
India’s rural telephone density has been languishing at around 1.9%. The subscriber addition
rate has been strong in the last 12 months but the regulatory developments will increase
competition and thus curtail the long-term growth rates of individual companies. The savings
through the setting of tower companies will partly go towards the higher capex and opex costs
from more stringent spectrum allocation norms for the incumbents. The Telecommunications
sector has been consistently adding more than 7 million subscribers for the last 6 months, a very
healthy net addition rate infact. All the private operators GSM as well as the CDMA operators
have been very consistent in their performance. The sector provides very strong revenue as well
as earnings visibility over the next 12 months. However the recent regulatory developments are

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seem to be negative for the telecom companies as it will increase the number operators per circle
which will
intensify competition.

Telecom Regulatory Authority of India (TRAI)

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Mission
To ensure that the interest of consumer is protected and at the same time encourage the
development of telecommunications, broadcasting and cable services in a manner and at a pace
which will enable India to play a leading role in the emerging global information society.

Role of TRAI
One of the main objectives of TRAI is to provide a fair and transparent policy environment
which promotes a level playing field and facilities fair competition. TRAI has issued from time
to time a large number of regulations, orders and directives to deal with the issues coming
before. These regulations cover a wide range of subjects including tariff, interconnection and
quality of services etc.

Functions of TRAI
• Need and timing for introduction of new service provider

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• Terms and condition of license to a service provider
• Technological improvement in services by service provider
• Maintain inter-connect agreement register
• Levy fees and other charges as determined by regulations
• Measures for technological development
• Measures to facilitate competition and promote efficiency in the operation to facilitate
growth in industry

SWOT Analysis of Indian Telecom Industry

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A scan of the internal and external environment is an important part of the strategic planning
process. Environmental factors internal to the firm usually can be classified as strengths (S) or
weaknesses (W), and those external to the firm can be classified as opportunities (O) or threats
(T). Such an analysis of the strategic environment is referred to as a SWOT analysis.

The SWOT analysis provides information that is helpful in matching the firm's resources and
capabilities to the competitive environment in which it operates. As such, it is instrumental in
strategy formulation and selection.

Strengths
Here we will analyze the strengths of the telecom industry as a whole. The most important
factors are:
• Technology is advanced and easy to implement: For telecom industry the technology is
really advanced and more and more investment is done on technology to get world class
infrastructure and knowhow to put in this field. Recently the telecom sector is going to
add 3G spectrum as its latest upgradation.
• Management Team has prior experience: The management team controlling Indian
telecom sector in really efficient. Thank goes to the IITs which produce world class
engineers. So Indian telecom sector has abundance of technological knowhow.

Weakness
The weaknesses of the Indian telecom sector are as follows.
• High Cost of Infrastructure: The infrastructure cost of telecom industry is very high.
• Low customer retention power: The customer retention power for telecom industry is
really low and the customer changes their service provider company very soon.

Opportunity

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 • Population: The population of India is really an opportunity of telecom service
providers, as the number of population without telecom service is also very high. The
industry has to target India’s huge population to grow.
• Changing Population psychograph: Population psychograph is also changing.
Previously telecom service was thought as an emergency service, now it has become an
essential part of life in our country.
• Increased Penetration Level: All the organizations of the industry are trying to increase
their penetration level, in other word to increase the tele-density of the country. The
urban Indian population gives a real growth prospect to the industry.
• FDI: The foreign direct investment in telecom has been hiked up from 49% to 74%. This
move is positive for the sector, as it requires investments of Rs 700 – 900 million over
the next 5 years. FDI inflow by 2004 was 9950.94 cores in telecom. Countries like
Europe, Korea, and Japan telecom are likely to enter India, as India is seen as fastest
growing telecom market in world.

Threats
The treats to the industry are the following:
• Government Policies – Government may provide licenses to many foreign operators,
which may already have pose a threat for the existing players in the industry.
• New Technology can change the market dynamics: A lot of new technologies are
coming. Then even have the potential of changing the entire industry dynamics or even
create substitute of the telecom services existing.

Some of the examples are follows:

➢ VOIP (Skype, Messenger etc.)
➢ Online Chat
➢ Email
➢ Satellite phones

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To summarize the SWOT analysis we can draw the following framework for telecom
industry:

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 Porter’s Five Forces of Indian Telecom
Industry

There is continuing interest in the study of the forces that impact on an organisation or an
industry, particularly those that can be harnessed to provide competitive advantage. The ideas
and models which emerged during the period from 1979 to the mid-1980s (Porter, 1998) were
based on the idea that competitive advantage came from the ability to earn a return on
investment that was better than the average for the industry sector (Thereby, 1998).

As Porter's 5 Forces analysis deals with factors outside an industry that influence the nature of
competition within it, the forces inside the industry (microenvironment) that influence the way
in which firms compete, and so the industry’s likely profitability is conducted in Porter’s five
forces model. A business has to understand the dynamics of its industries and markets in order to
compete effectively in the marketplace. Porter (1980) defined the forces which drive
competition, contending that the competitive environment is created by the interaction of five
different forces acting on a business. In addition to rivalry among existing firms and the threat of
new entrants into the market, there are also the forces of supplier power, the power of the
buyers, and the threat of substitute products or services. Porter suggested that the intensity of
competition is determined by the relative strengths of these forces.

The nature of competition in an industry is strongly affected by suggested five forces. The
stronger the power of buyers and suppliers, and the stronger the threats of entry and substitution,
the more intense competition is likely to be within the industry. However, these five factors are
not the only ones that determine how firms in an industry will compete – the structure of the
industry itself may play an important role. Indeed, the whole five-forces framework is based on
an economic theory know as the “Structure-Conduct-Performance” (SCP) model: the structure
of an industry determines organizations’ competitive behaviour (conduct), which in turn

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determines their profitability (performance). In concentrated industries, according to this model,
organizations would be expected to compete less fiercely, and make higher profits, than in
fragmented ones.

Main Aspects of Porter’s Five Forces Analysis

The original competitive forces model, as proposed by Porter, identified five forces which would
impact on an organization’s behavior in a competitive market. These include the following:

• The rivalry between existing sellers in the market

• The power exerted by the customers in the market
• The impact of the suppliers on the sellers
• The potential threat of new sellers entering the market
• The threat of substitute products becoming available in the market

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Understanding the nature of each of these forces gives organizations the necessary insights to
enable them to formulate the appropriate strategies to be successful in their market (Thurlby,
1998). We will examine these concepts as described by Porter’s 5 force model and as applied to
Indian telecom industry simultaneously.

Force 1: The Degree of Rivalry

The intensity of rivalry, which is the most obvious of the five forces in an industry, helps
determine the extent to which the value created by an industry will be dissipated through head-
to-head competition. The most valuable contribution of Porter's “five forces” framework in this
issue may be its suggestion that rivalry, while important, is only one of several forces that
determine industry attractiveness.
• This force is located at the centre of the diagram
• Is most likely to be high in those industries where there is a threat of substitute products;
and existing power of suppliers and buyers in the market

Now let us understand the implication of degree of revelry in Indian telecom sector. The
dimensions of this parameter are determined by:

High Exit Barriers: In any industry, if the exit barrier is high it increases the difficulty of any
organization to leave the industry sector. So it makes any difficult to any willing to leave
company to leave the industry. The telecom industry suffers from high exit barriers, mainly due
to its specialized equipment. Networks and billing systems cannot really be used for much else,
and their swift obsolescence makes liquidation pretty difficult.

High Fixed Cost: The industry also suffers from high fixed cost which makes the entry barrier
also very high for the industry. It comes as no surprise that in the capital-intensive telecom
industry the biggest barrier to entry is access to finance. To cover high fixed costs, serious
contenders typically require a lot of cash. When capital markets are generous, the threat of
competitive entrants escalates. When financing opportunities are less readily available, the pace
of entry slows. Meanwhile, ownership of a telecom license can represent a huge barrier to entry.

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 • 6-7 players in each region
• 3 out of 4 BIG-Four present in each region

Very less time to gain advantage by an innovation: Every company in this industrial sector in
investing a huge amount in research and development and marketing strategy. That is why we
see any offer launched by any company is counter attacked by other companies very soon. This
makes the industry rivalry most prominent.

Price wars: The price war is really very fierce in this industry. Price war in telecom industry has
commoditized the market that branding has taken a backseat.

Force 2: The Threat of New Entrants

Both potential and existing competitors influence average industry profitability. The threat of
new entrants is usually based on the market entry barriers. They can take diverse forms and are
used to prevent an influx of firms into an industry whenever profits, adjusted for the cost of
capital, rise above zero. In contrast, entry barriers exist whenever it is difficult or not
economically feasible for an outsider to replicate the incumbents’ position. The most common
forms of entry barriers, except intrinsic physical or legal obstacles, are as follows:
• Economies of scale: In telecom industry the economies of scale exists from the supplier
side. That is why companies try to increase their subscriber base at drastic rate.
• Distribution channels: Distribution channels are also providing a major determining
factor. These channels are not loyal to any company and competitors can easily access
them and make out work for them.
• Customer Switching Costs: Customer switching cost is very low, as cost of new
connection is really low. And new connection offers more benefits to the customers.

Force 3: The Threat of Substitutes

The threat that substitute products pose to an industry's profitability depends on the relative
price-to-performance ratios of the different types of products or services to which customers can
turn to satisfy the same basic need. The threat of substitution is also affected by switching costs

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– that is, the costs in areas such as retraining, retooling and redesigning that are incurred when a
customer switches to a different type of product or service. It also involves:
• Product-for-product substitution (email for mail, fax); is based on the substitution of
need;
• Generic substitution (Video suppliers compete with travel companies);
• Substitution that relates to something that people can do without (cigarettes, alcohol).
Now let us discuss this concept for telecom industry. The potential major substitutes for telecom
industry are as follows:
➢ VOIP (Skype, Messenger etc.)
➢ Online Chat
➢ Email
➢ Satellite phones
All of these technologies have a huge potential, though none of the above a major threat in
current scenario. So the telecom industry has to keep a close look on these substitutes.

Force 4: Buyer Power

Buyer power is one of forces that influence the appropriation of the value created by an industry.
The most important determinants of buyer power are the size and the concentration of
customers. Other factors are the extent to which the buyers are informed and the concentration
or differentiation of the competitors. Kippenberger (1998) states that it is often useful to
distinguish potential buyer power from the buyer's willingness or incentive to use that power,
willingness that derives mainly from the “risk of failure” associated with a product's use.
• This force is relatively high where there a few, large players in the market, as it is the
case with retailers a grocery stores;
• Present where there is a large number of undifferentiated, small suppliers, such as small
farming businesses supplying large grocery companies;
• Low cost of switching between suppliers, such as from one fleet supplier of trucks to
another.

In the context of Indian telecom industry we can say that the following points influence

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the buyer power:
➢ Lack of differentiation among the service provider
➢ Cut throat competition
➢ Customer is price sensitive
➢ Low switching costs
➢ Number portability to have negative impact

Force 5: Supplier Power

Supplier power is a mirror image of the buyer power. As a result, the analysis of supplier power
typically focuses first on the relative size and concentration of suppliers relative to industry
participants and second on the degree of differentiation in the inputs supplied. The ability to
charge customers different prices in line with differences in the value created for each of those
buyers usually indicates that the market is characterized by high supplier power and at the same
time by low buyer power.

In the drawback of Indian telecom industry the following should be kept in mind:
• Large number of suppliers: The industry basically has a large number of suppliers,
which helps them to choose from a lot of options. So they try to select the best option to
deliver the value to the customers and to have a competitive advantage from their
competitor.
• Shared tower infrastructure: Technology has helped them to share the tower
infrastructure. This basically helps them to reduce the initial investment a lot.
• Limited pool of skilled managers and engineers especially those well versed in the latest.
• Medium cost of switching since changing their hardware would lead to additional cost in
modifying the architecture.
• Overall influence on the industry – medium.

~ 26 ~
 Major Players in Indian Telecom Industry

TOP FIVE COMPANIES:

The Top five companies, on the basis of ‘Market Share’ as on 31st January, 2009 are:

~ 27 ~
1. Bharti Airtel Ltd.
2. Reliance Communications Ltd.
3. Vodafone Essar Ltd.
4. BSNL
5. Idea Cellular + Spice

BHARTI AIRTEL LTD.

Telecom giant Bharti Airtel is the flagship company of Bharti Enterprises. The Bharti Group has
a diverse business portfolio and has created global brands in the telecommunication sector.
Airtel comes from Bharti Airtel Limited, India’s largest integrated and the first private telecom
services provider with a footprint in all the 23 telecom circles. Bharti Airtel since its inception
has been at the forefront of technology and has steered the course of the telecom sector in the
country with its world class products and services. The businesses at Bharti Airtel have been
structured into three individual strategic business units (SBU’s) - Mobile Services, Airtel
Telemedia Services & Enterprise Services. The mobile business provides mobile & fixed
wireless services using GSM technology across 23 telecom circles while the Airtel Telemedia
Services business offers broadband & telephone services in 95 cities and has recently launched
India's best Direct-to-Home (DTH) service, Airtel digital TV. The Enterprise services provide
end-to-end telecom solutions to corporate customers and national & international long distance
services to carriers. All these services are provided under the Airtel brand.

~ 28 ~
The company served an aggregate of 88,270,194 customers as of December 31, 2008; of whom
85,650,733 subscribed to GSM services and 2,619,461 use the Telemedia Services either for
voice and/or broadband access delivered through DSL. Bharti Airtel is the largest wireless
service provider in the country, based on the number of subscribers as of December 31, 2008.
They also offer an integrated suite of telecom solutions to their enterprise customers, in addition
to providing long distance connectivity both nationally and internationally. They have recently
forayed into media by launching their DTH and IPTV Services. All these services are rendered
under a unified brand "Airtel".

The company also deploys, owns and manages passive infrastructure pertaining to telecom
operations under its subsidiary Bharti Infratel Limited. Bharti Infratel owns 42% of Indus
Towers Limited. Bharti Infratel and Indus Towers are the two top providers of passive
infrastructure services in India.

Company shares are listed on The Stock Exchange, Mumbai (BSE) and The National Stock
Exchange of India Limited (NSE).

RELIANCE COMMUNICATIONS LTD.

Reliance Communications is the flagship company of the Anil Dhirubhai Ambani Group
(ADAG) of companies. Listed on the National Stock Exchange and the Bombay Stock
Exchange, it is India’s leading integrated telecommunication company with over 71 million
customers.

~ 29 ~
Their business encompasses a complete range of telecom services covering mobile and fixed
line telephony. It includes broadband, national and international long distance services and data
services along with an exhaustive range of value-added services and applications. Our constant
endeavour is to achieve customer delight by enhancing the productivity of the enterprises and
individuals we serve.

Reliance Mobile (formerly Reliance India Mobile), launched on 28 December 2002, coinciding
with the joyous occasion of the late Dhirubhai Ambani’s 70th birthday, was among the initial
initiatives of Reliance Communications. It marked the auspicious beginning of Dhirubhai’s
dream of ushering in a digital revolution in India. Today, the company can proudly claim that
they were instrumental in harnessing the true power of information and communication, by
bestowing it in the hands of the common man at affordable rates.

They endeavour to further extend their efforts beyond the traditional value chain by developing
and deploying complete telecom solutions for the entire spectrum of society. It was established
in the year 2004 as Reliance Infrastructure Developers Private Limited, Reliance
Communications started laying 60,000 route kilometers of a pan-India fiber optic backbone with
high capacity, integrated (wireless and wireline), convergent (voice, data and video) digital
network and to offer services spanning the entire infocomm value chain. 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.

VODAFONE ESSAR LTD.

~ 30 ~
Vodafone Essar in India is a subsidiary of Vodafone Group Plc and commenced operations in
1994 when its predecessor Hutchison Telecom acquired the cellular license for Mumbai.
Vodafone Essar now has operations in 22 circles with over 65.92 million customers**. The
company is a joint venture of Essar Communication Holdings Ltd and the UK-based Vodafone
Group. Vodafone has partnered with the Essar Group as their principal joint venture partner for
the Indian market. They are in the business of cellular telephony. Over the years, Vodafone
Essar, under the Hutch brand, has been named the ‘Most Respected Telecom Company’, the
‘Best Mobile Service in the country’ and the ‘Most Creative and Most Effective Advertiser of
the Year’.

Vodafone is the world’s leading international mobile communications company. It currently has
equity interests in 27 countries across 5 continents and 40 partner networks with over 289
million proportionate customers worldwide. Vodafone has partnered with the Essar Group as its
principal joint venture partner for the Indian market.

Essar Global Limited (EGL) is a diversified business group spanning the manufacturing and
services sectors of Steel, Energy, Power, Communications, Shipping & Logistics, and Projects.
The group has operations and investments in India, Canada, USA, Africa, the Middle East, the
Caribbean and South East Asia and employs 30,000 people worldwide.

Vodafone Essar Ltd provides services like 2G, which are based on 1800 Mhz and 900Mhz GSM
digital technology. They offers voice and data services. In addition, they offers postpaid
connections activation, prepaid SIM cards and recharge coupons sale, service
activation/deactivation, postpaid tariff plan change, customer query resolution, prepaid/postpaid
SIM card replacement and upgradation, mobile number change, and information on and
subscription of value added services through stores.

BHARAT SANCHAR NIGAM LTD.

~ 31 ~
Bharat Sanchar Nigam Ltd. formed in October, 2000, is World's 7th largest Telecommunications
Company providing comprehensive range of telecom services in India: Wireline, CDMA
mobile, GSM Mobile, Internet, Broadband, Carrier service, MPLS-VPN, VSAT, VoIP services,
IN Services etc. Within a span of five years it has become one of the largest public sector unit in
India.

It has about 47.3 million line basic telephone capacity, 4 million WLL capacity, 20.1 Million
GSM Capacity, more than 37382 fixed exchanges, 18000 BTS, 287 Satellite Stations, 480196
Rkm of OFC Cable, 63730 Rkm of Microwave Network connecting 602 Districts, 7330
cities/towns and 5.5 Lakhs villages.

BSNL is the only service provider, making focused efforts and planned initiatives to bridge the
Rural-Urban Digital Divide ICT sector. In fact there is no telecom operator in the country to beat
its reach with its wide network giving services in every nook & corner of country and operates
across India except Delhi & Mumbai.

BSNL is numero uno operator of India in all services in its license area. The company offers
vide ranging & most transparent tariff schemes designed to suite every customer.

BSNL cellular service, CellOne, has more than 17.8 million cellular customers, garnering 24
percent of all mobile users as its subscribers. That means that almost every fourth mobile user in
the country has a BSNL connection. In basic services, BSNL is miles ahead of its rivals, with
35.1 million Basic Phone subscribers i.e. 85 per cent share of the subscriber base and 92
percent share in revenue terms.

~ 32 ~
BSNL has more than 2.5 million WLL subscribers and 2.5 million Internet Customers who
access Internet through various modes viz. Dial-up, Leased Line, DIAS, Account Less Internet
(CLI). BSNL has been adjudged as the NUMBER ONE ISP in the country. BSNL has set up a
world class multi-gigabit, multi-protocol convergent IP infrastructure that provides convergent
services like voice, data and video through the same Backbone and Broadband Access Network.
At present there are 0.6 million DataOne broadband customers.

IDEA CELLULAR LTD.

IDEA Cellular is a publicly listed company, having listed on the Bombay Stock Exchange (BSE
and the National Stock Exchange (NSE) in March 2007. Idea Cellular Ltd. is India's leading
GSM mobile services operator. It has licenses to operate in 11 circles. The company has a
customer base of over 17 million. It is the first cellular company to launch music messaging with
Cellular Jockey, Background Tones, Group Talk, a voice portal with Say IDEA and a complete
suite of mobile email Services.

~ 33 ~
A brand known for many firsts, Idea was the first to launch GPRS and EDGE in the country.
Idea has received international recognition for its path-breaking innovations when it won the
GSM Association Award for "Best Billing and Customer Care Solution" for 2 consecutive years.

IDEA Cellular is part of the Aditya Birla Group, India's first truly multinational corporation. The
group operates in 25 countries, and is anchored by over 1,25,000 employees belonging to 25
nationalities.

The combined holding of the Aditya Birla Group companies in Idea stands at 98.3 per cent. Mr.
Kumar Mangalam Birla has been named the Chairman of the company.

The Indian telecommunications market for mobile services is divided into 22 "Service Areas"
classified into "Metro", Category "A", Category "B" and Category "C" service areas by the
Government of India. These classifications are based principally on a Service Area's revenue
generating potential.

Customer Service and Innovation are the drivers of this Cellular Brand. A brand known for their
many firsts, IDEA is the only operator to launch General Packet Radio Service (GPRS) and
EDGE in the country. IDEA has seen phenomenal growth since its inception, the company's
footprint idea is to first achieve critical mass, then drill deep instead of
spreading thin, however, does not increasing geographic footprint only, it also drills deep and
successfully attempts to provide excellent network coverage in all its circles of operations.

~ 34 ~
 Advertising – A Powerful Tool

Most of us feel that advertising is, after all, for the marketer, a powerful persuasive tool for
creating a demand for his product. Consumers apparently feel that they have nothing to gain
from these advertisements. Most of us do not have cent percent faith in the correctness of the
advertising message. We have some sort of predetermined impression that advertisements are
exaggerations, highlighting the benefits of the product which are not too important while
concealing the drawbacks which are more important. In short, we do not take any advertisement
message seriously and have stereotyped reaction to almost all the advertisements. The basic

~ 35 ~
purpose of advertisement to communicate effectively with the target market itself is not
achieved.

Some economists have argued that advertising creates product differentiation, as a result of
which demand becomes increasingly inelastic; that, in fact it does nothing but to replace price
competition, by advertising. It is possible that the gain in eliminating price competition by
covering a market segment for the advertised product may be much more than the expenditure
incurred on advertising. Large firms have the power of huge money; they spend it on
advertising, particularly when they introduce a product with a varying differentiation, which
enables them to capture a substantial market. Not only in such pre-empting of a market possible;
but such advertising has the power to create a barrier for new firms or a product to enter the
market in competition. The result is that big companies continue to enjoy a large market share in
a monopolistic competitive situation, getting high prices and high profits which, again, enable
them to spend huge sums on advertising. And so a vicious circle develops.

The power of advertising is so great that some authors have argued that it deprives consumers of
their discretion in the market place and makes it possible for suppliers to manage demand. John
Kenneth Galbraith, in his monumental work, The New Industrial Estate, has observed:

“The control or management of demand is, in fact, a vast and rapidly growing industry itself. It
embraces a huge network of communications, a great array of merchandising and selling
organizations, nearly the entire advertising industry, numerous ancillary research, training and
other related services, and much more. In everyday parlance, this great machine and the demand
and varied talents that it employs, are said to be engaged in selling goods. In less ambiguous
language, it means that it is engaged in the management of those who buy goods.”

In this criticism of advertising, economists assume that market response is directly proportional
to the amount spent on advertising. The bigger the advertising budget, the greater is the market
manipulative power available with the marketer. Another assumption is that advertising is too
expensive, not really within the capacity of other medium and small-size firms. The third
assumption that once a company or firm takes the lead, others are forbidden and cannot take
away or snatch the market from it.

~ 36 ~
No doubt market response has a relationship with the dose of advertising; even so, advertising
alone is not the only cause of the response. There are other equally important criteria which
affect the buying decision. These are product quality, its availability and sales promotion. On a
larger basis, therefore, advertising may be blamed for decreasing competition; but certainly not
on a permanent basis. The assumption that advertising is too expensive cannot withstand a
critical analysis. Due to technological advancement and the development of various media,
advertising is commonly used by manufacturers and marketers.

It is evident, therefore, that though the criticism of advertising may be occasionally justified in
the short period, it cannot be sustained on a regular basis. No doubt, advertising helps in
building up the reputation of a particular brand; but it is not advertising alone, it is product
performance that also matters. Yes, advertising does enhance the value of the product to its
consumers to a good extent, if it is properly done. It influences the perception of consumers
about the product and creates a desire to buy it. But this would happen only if consumers believe
in the benefits promised in the advertisement of the product and its usage confirms their belief.
This is the way advertising helps in value addition to a product or service.

Role of Advertising in Modern Business World

Advertising is primarily a means by which sellers communicate to prospective buyers the worth
of their goods and services. Advertising is a basic tool of marketing for stimulating demand and
for influencing the level and character of the demand. It has economic, social and psychological
functions.

ECONOMIC FUNCTION: All that advertisement has to do is to sell a product or service. The
advertisement accomplishes by communicating properly and effectively, by communicating to

~ 37 ~
the right people, by communicating the right message, put across through brilliant and
persuasive language, making use of appeals to different human motives. Advertisements
sometimes do the sales job in a subtle and indirect manner. They incline us favorably to the
products, they affect our attitudes. So advertising performs the economic function by being an
art of persuasion. It also is helped by a science of layout, visualization, print reproduction,
special effects on films etc. Advertising establishes a direct rapport with the buyer, with no
middlemen in the way.

SOCIAL FUNCTION: Advertising has affected not the core cultural values but the subsidiary
cultural values. For example, to get married is core cultural value. Advertising cannot effectively
change it by telling people that you do not marry. Yes, to marry late and not an early age is a
subsidiary cultural value. Advertisement can definitely affect it.

Advertisement is a mirror of the society in which it operates. It reflects the cultural values of the
society. Some argue that advertising debases our cultural standards. There are many factors
which affect culture and get affected by them – schools, colleges, families, museums, churches
etc. Successful advertising is consistent with the cultural values of a given society. Yes, it can
transfer some cultural values of one society to another society at a given point of time. Its cross-
cultural impact will depend upon the universalization of appeal.

PSYCHOLOGICAL FUNCTIONS: Advertising is closely linked to consumer behaviour. So

it affects personality of the consumer, his concept of self, his attitudes, beliefs and opinions, his
life cycle and life style etc. Advertising appeals to our physiological and psychological motives.
Its appeals may be rational or emotional.

Managing Advertising Decisions

Delivering an effective marketing message through advertising requires many different

decisions as the marketer develops their advertising campaign. For small campaigns, that
involve little creative effort, one or a few people may handle the bulk of the work. In fact, the
Internet has made do-it-yourself advertising an easy to manage process and has especially
empowered small businesses to manage their advertising decisions. As we will see, not only can

~ 38 ~
small firms handle the creation and placement of advertisements that appear on the Internet, new
services have even made it possible for a single person to create advertisements that run on local
television. For instance, a company called SpotRunner allows users to select from a list of high-
quality television ads that can be customized and then placed within local cable television
programming.
For larger campaigns the skills needed to make sound advertising decisions can be quite varied
and may not be easily handled by a single person. While larger companies manage some
advertising activities within the company, they are more likely to rely on the assistance of
advertising professionals, such as those found at advertising agencies, to help bring their
advertising campaign to market.

Types of Advertising

Print Advertising – Newspapers, Magazines, Brochures, Fliers

The print media have always been a popular advertising medium. Advertising products via
newspapers or magazines is a common practice. In addition to this, the print media also offers
options like promotional brochures and fliers for advertising purposes. Often the newspapers and
the magazines sell the advertising space according to the area occupied by the advertisement, the
position of the advertisement (front page/middle page), as well as the readership of the
publications. For instance an advertisement in a relatively new and less popular newspaper
would cost far less than placing an advertisement in a popular newspaper with a high readership.
The price of print ads also depend on the supplement in which they appear, for example an
advertisement in the glossy supplement costs way higher than that in the newspaper supplement
which uses a mediocre quality paper.

Outdoor Advertising – Billboards, Kiosks, Tradeshows and Events

Outdoor advertising is also a very popular form of advertising, which makes use of several tools
and techniques to attract the customers outdoors. The most common examples of outdoor

~ 39 ~
advertising are billboards, kiosks, and also several events and tradeshows organized by the
company. The billboard advertising is very popular however has to be really terse and catchy in
order to grab the attention of the passersby. The kiosks not only provide an easy outlet for the
company products but also make for an effective advertising tool to promote the company’s
products. Organizing several events or sponsoring them makes for an excellent advertising
opportunity. The company can organize trade fairs, or even exhibitions for advertising their
products. If not this, the company can organize several events that are closely associated with
their field. For instance a company that manufactures sports utilities can sponsor a sports
tournament to advertise its products.

Broadcast advertising – Television, Radio and the Internet

Broadcast advertising is a very popular advertising medium that constitutes of several branches
like television, radio or the Internet. Television advertisements have been very popular ever
since they have been introduced. The cost of television advertising often depends on the duration
of the advertisement, the time of broadcast (prime time/peak time), and of course the popularity
of the television channel on which the advertisement is going to be broadcasted. The radio might
have lost its charm owing to the new age media however the radio remains to be the choice of
small-scale advertisers. The radio jingles have been very popular advertising media and have a
large impact on the audience, which is evident in the fact that many people still remember and
enjoy the popular radio jingles.

Covert Advertising – Advertising in Movies

Covert advertising is a unique kind of advertising in which a product or a particular brand is
incorporated in some entertainment and media channels like movies, television shows or even
sports. There is no commercial in the entertainment but the brand or the product is subtly (or
sometimes evidently) showcased in the entertainment show. Some of the famous examples for
this sort of advertising have to be the appearance of brand Nokia which is displayed on Tom
Cruise’s phone in the movie Minority Report, or the use of Cadillac cars in the movie Matrix
Reloaded.

~ 40 ~
Surrogate Advertising – Advertising Indirectly
Surrogate advertising is prominently seen in cases where advertising a particular product is
banned by law. Advertisement for products like cigarettes or alcohol which are injurious to
heath are prohibited by law in several countries and hence these companies have to come up
with several other products that might have the same brand name and indirectly remind people
of the cigarettes or beer bottles of the same brand. Common examples include Fosters and
Kingfisher beer brands, which are often seen to promote their brand with the help of surrogate
advertising.

Public Service Advertising – Advertising for Social Causes

Public service advertising is a technique that makes use of advertising as an effective
communication medium to convey socially relevant messaged about important matters and
social welfare causes like AIDS, energy conservation, political integrity, deforestation, illiteracy,
poverty and so on. David Oglivy who is considered to be one of the pioneers of advertising and
marketing concepts had reportedly encouraged the use of advertising field for a social cause.
Oglivy once said, "Advertising justifies its existence when used in the public interest - it is much
too powerful a tool to use solely for commercial purposes.". Today public service advertising
has been increasingly used in a non-commercial fashion in several countries across the world in
order to promote various social causes. In USA, the radio and television stations are granted on
the basis of a fixed amount of Public service advertisements aired by the channel.

Celebrity Advertising
Although the audience is getting smarter and smarter and the modern day consumer getting
immune to the exaggerated claims made in a majority of advertisements, there exist a section of
advertisers that still bank upon celebrities and their popularity for advertising their products.
Using celebrities for advertising involves signing up celebrities for advertising campaigns,
which consist of all sorts of advertising including, television ads or even print advertisements.

Advertising Trends in Indian Telecom

~ 41 ~
The way telecom firms advertise, gives an approximate idea about the telecom trends. I would
try to uncover some of them, which come to my mind. At the initial launch of the mobile
services, they were advertised as lifestyle products. The message that sought to be conveyed was
that if you have a mobile phone, you have arrived in life. A few well-healed people could afford
the high call rates at that time. It was in no way for the masses. I am sure that the mobile
companies made a large profit out of it. Perhaps for the first time, Indians were exposed to
concepts alien to them: Customer Care Support. It saw a booming of the ancillary services and
fresh graduates, stunted in mental development though, came out in droves for the well-paid
jobs.

Airtel then sought the services of Sachin Tendulkar. He was the brand ambassador and saw his
earnings sharply increasing. I saw his picture everywhere exhorting me buy the mobile prepaid
card. After the initial publicity passed away, A.R. Rahman gave his now famous tune. All the
other companies have variously tried other gimmicks to sell their connections.

However, the landscape changed after Reliance came in the mobile services. Mukesh Ambani
was seen telling people about his father’s dream. The initial launch was lackluster. With the
launch of the prepaid services, the punch line was “mujhme hai who baat” or “I have that thing!”
I wonder how many people actually signed up after those ads. I believe that it was solely
because of the Monsoon Hungama that Reliance was able to ramp up its numbers. Then came
the ad line “Kar lo duniya muthi mein”. (Have the world in your fist). I remember that this
became the butt of dirty jokes on the GSM networks! So much for imagination of creative heads
of the ad agency.

The icing on the cake goes to Hutch. They designed the simple ad with the kid and cute Chinese
Pug. It was a hit of all sorts. It conveyed the effectiveness of the message succinctly. I believe
that it drove Hutch connections across the places where it offered its services. However, it was
considered too elitist for the masses. The advertisement should be able to convey the message
effectively; one with which people could identify with. In this regard, BSNL could claim
something. BSNL advertisements depicted typically government mentality for awarding the
contract to lowest in the tender process. The quality clearly shows. Is there anyway people could
identify themselves with that advertisements? What of those places where BSNL is the sole
service provider?

~ 42 ~
As the title goes, advertising trends are reflective of the current scenario in telecom. Airtel has
been advertising its group card labeled as Friends. In fact, until now, the market was treated as
homogenous. Over the period, classification has been sought to target the specific customers
with specific needs. Airtel took the lead in announcing Senior citizen cards targeted at those
above 60. The Friends card is for those who wish to restrict themselves to their group with low
calling rates and some free messages.

Reliance has realized early on about targeting the businesses. Its offer of flat rate for making
STD calls to anyone across its network is unparalleled. This way it can ensure that there would
be higher converts towards it services. R-Connect is its portal that differentiated Reliance early
on from other operators. It knows that future revenues are going to come from value added
services. This way it has foreseen the development in the industry.

Following this, Airtel introduced its Airtel Live! I guess so have the other operators across
board. The voice calls would not yield much as much as revenue as would the value added
services. Hence, for the same reason they have introduced value added cards, which would help
to download ring tones and other fancy stuff.

This is the reason I have always insisted that Telecom operators should get bullish on data
services. 3G mobile services look good as technology demonstrators. Until the time, the prices
for the 3G enabled handsets fall down to manageable levels, it would not take off. I believe that
it takes up a large chunk of the scarce spectrum, which does not make any sense to introduce.
WAP and GPRS were heavily promoted but have been more or less non-starters. The real
differentiator would be the quality of services, cheap offering if these companies have to venture
in the rural areas and the reach of the network.

In this regard, the division of India in circles is not in the right spirit. It should be taken as a
homogenous land mass. The day is not far when it would be local call to call anywhere across
the nation. Reliance has made this possible to some extent.

Advertising by Telecom Industry on TV

Key Findings:

~ 43 ~
➢ 2007
• Telecom sector advertising on TV grew by 61 per cent during 2007 compared to 2006.

• Telecommunication Services segment had more than 60 per cent share of overall
Telecom sector advertising on TV.

• Telecommunication Services has seen a rise of 108 per cent in TV advertising, whereas
Telecommunication Equipments saw a rise of 17 per cent during 2007 over 2006.

• Bharti Airtel Ltd was the number one advertiser under Telecommunication Services and
Nokia Corporation led Telecommunication Equipments advertising on TV during 2007.

➢ 2008
• TV advertising of Telecom sector saw a rise of 99 per cent during January - August 2008
compared to January - August 2007.

• 'Telecommunication Services' garnered a high share of Telecom sector advertising on

TV during January - August 2008.

• TV advertising of 'Telecommunication Equipments' saw a growth of 45 per cent and that

of 'Telecommunication Services' grew by 127 per cent during January - August 2008.

• 'Nokia Corporation' leads in advertising of 'Telecommunication Equipments' and '

Vodafone Essar Ltd' was number one advertisers for 'Telecommunication Services' on
TV during January - August 2008.

• 'R Madhavan' had the maximum ad volumes of Celebrity Endorsement of Telecom

sector on TV during January - August 2008.

➢ 2009
• Telecom sector has seen a decline of 16 per cent in its TV ad volumes during Jan - Mar
'09 compared to Jan - Mar '08.

• High share of 'telecommunication services' advertising on TV during Jan-Mar '09.

~ 44 ~
• 'Sony Ericsson (India)' was the top advertisers under 'telecommunication equipments'
and 'Bharti Airtel Ltd' leads in 'telecommunication services' advertising on TV during Q1
'09.

• 'Sony Ericsson W595' and 'Sony Ericsson F305' were top two new brands advertised
under 'telecommunication equipments' on TV during Q1 '09.

• Virgin vGlide Phones (slider) topped the chart of new 'telecommunication services'
advertised on TV during Q1 '09.

The segregation of the telecom sector

Growth in Ad Volumes of Telecom Sector

~ 45 ~
➢ 2009

• 16 per cent drop in telecom sector advertising on TV during first quarter of 2009
compared to same period in 2008

Share of segments of Telecom sector

➢ 2009
~ 46 ~
• With 87 per cent share 'telecommunication services' leads in advertising of 'telecom
sector' on TV, followed by 'telecommunication equipments' and 'corporate brand image'
with 11 per cent and two per cent share respectively during Q1 '09.

Growth in ad volumes of segments of Telecom

sector

~ 47 ~
 ➢ 2009

• 'Telecommunication services' have seen a decline of 7 per cent in its TV ad volumes

during Jan - Mar '09 compared to Jan - Mar '08.

• TV advertising of 'telecommunication equipments' recorded a drop of 56 per cent during

Q1 '09 compared to Q1 '08.

Top five advertisers under the Telecom segments

~ 48 ~
 ➢ 2009

• 'Bharti Airtel Ltd', 'Vodafone Essar Ltd' and 'Bharat Sanchar Nigam Ltd' the top three
key players of 'telecommunication services' together accounted for 65 per cent share on
TV during Q1 '09.

• During Q1 '09, top three advertiser together contributed for 83 per cent of overall
'telecommunication equipment' TV advertising share viz. 'Sony Ericsson (India)', 'Nokia
Corporation' and 'LG Electronics India Ltd'.

New Brands advertised in Telecom Equipments and

Services

~ 49 ~
➢ 2009

• Top three 'telecom services' advertised on TV were 'Virgin vGlide Phones (slider)',
'Vodafone Blackberry Storm' and 'Apple Music Caller Tunes' during Q1 '09.

• Three brands of 'BSNL' and two of 'Etisalat' made to the top 10 list of new brands of
'telecom services'.

• 'Sony Ericsson W595 ', 'Sony Ericsson F305' and 'Samsung Guru 1410' were the top
three new 'telecommunication equipments' advertised on TV during Q1 '09.

• Top 10 list of new brands of 'telecommunication equipments' advertised on TV,

comprised of three brands of 'Sony Ericsson' and two were of 'HTC Corporation' during
Q1 '09

~ 50 ~
Top advertisers with Celebrity endorsement ad
volumes

➢ 2009

• Top three celebrities endorsing telecom products on TV during the first quarter of 2009
were 'Deepika Padukone', 'Saif Ali Khan' and 'Kareena Kapoor'

~ 51 ~
 Data Analysis and Interpretations
The main area of the study is the Advertising in Telecom Industry in India and its Impact on
Customers. For this purpose I conducted a survey of 200 people in AHMEDABAD city.

Research Design:
The research design is Descriptive studies. Descriptive studies are well structured, they tend to
be rigid and its approach cannot be changed every now and then.

Descriptive studies are undertaken in many circumstances:

1. When the researcher is interested in knowing the characteristics of certain groups such as
age , profession.
2. When the researcher is interested in knowing the proportion of people in given population
who have behaved in a particular manner, making projection of certain things.

The objective of this kind of study is to answer the why, who, what ,when and how of the
subject under consideration.

I have taken descriptive because my research includes the knowing the behavior of customer
towards advertisement. I have analyzed how people of various age group respond to different
advertising or their perception towards advertisement. Also my survey is related to companies
like Vodafone, Airtel, Reliance communications, BSNL and Idea cellular.

Types of questions:

OPEN ENDED:
They give the respondents complete freedom to decide the form , length and detail of the
answer. Open questions are preferred when the researchers is interested in knowing what is
upper most in the mind of respondents.

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DICHOTOMOUS:
This type of questions have only two type of answer, yes or no. true or false etc.

MULTIPLE CHOICE QUESTIONS:

In the case of multiple choice question the respondents is offered two or more choices. The
researcher exhausts all the possible choices and the respondent has to indicate which one is
applicable in this case.

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Gender: (a) Male (b) Female

GENDER VALUE PERCENTAGE

MALE 118 59%

FEMALE 82 41%

Out of 200 respondents, 118 were male and 82 were female.

Age: (a) 15-25 (b) 26-35 (c) 36-45 (d) Above 45

AGE VALUE PERCENTAGE

15-25 64 32%

26-35 60 30%

36-45 56 28%

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 Above 45 20 10%

Out of 200 respondents, 64 were between the age of 15-25, 60 were between the age of 26-35,
56 were between the age of 36-45 and 20 were above 45.

Education: (a) Matriculate (b) Intermediate (C) Graduation (d) Postgraduate

EDUCATION VALUE PERCENTAGE

MATRICULATE 28 14%

INTERMEDIATE 40 20%

GRADUATE 72 36%

POSTGRADUATE 60 30%

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Out of 200 respondents 28 were matriculate, 40 were intermediate, 72 were graduate and 60
were postgraduate.

Who is your current service provider?

(a) Airtel (b) Vodafone (c) Reliance (d) BSNL (e) Idea (f) other

CURRENT SERVICE VALUE PERCENTAGE

PROVIDER

AIRTEL 50 25%

VODAFONE 34 17%

RELIANCE 36 18%

BSNL 26 13%

IDEA 22 11%

OTHER 32 16%

Out of 200 respondents 50 were using Airtel, 34 were using Vodafone, 36 were using Reliance,
26 were using BSNL, 22 were using Idea and 32 were using others.

For how long you are using this mobile connection?

(a) Less than 6 months. (b) 6 to 12 months. (c) Above 12 months.

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 TIME PERIOD VALUE PERCENTAGE

LESS THAN 6 MONTHS 22 11%

6 TO 12 MONTHS 56 28%

ABOVE 12 MONTHS 120 61%

Out of 200 respondents 22 were using the current connection for less than 6 months, 56 were
using it from 6-12 months and 120 were using it from more than 1 year.

What were the reasons for choosing this mobile connection?

(a) Recommended by friends or relatives. (b) Recommended by retailers.
(c) Brand image (d) Advertisement

BUYING FORCE VALUE PERCENTAGE

FRIENDS / RELATIVES 76 38%

RETAILERS 24 12%

BRAND IMAGE 16 8%

ADVERTISEMENT 84 42%

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Out of 200 respondents 76 were influenced by friends and relatives, 24 were influenced by
retailers, 16 were influenced by brand image and 84 were influenced by advertisements.

While purchasing a connection advertising plays any role? (a) Yes (b) No

ADVERTISING IN VALUE PERCENTAGE

PURCHASE

YES 168 84%

NO 32 16%

Out of 200 respondents 168 agreed that advertisements play a role in making purchase decision
and 32 did not agree on that.

From where do you watch advertisements the most?

(a) Television (b) Radio (c) Newspaper (d) Magazines (e) Other

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 SOURCE OF VALUE PERCENTAGE
ADVERTISEMENT

TELEVISION 110 55%

RADIO 6 3%

NEWSPAPER 50 25%

MAGAZINE 14 7%

OTHER 20 10%

Out of 200 respondents 110 replied Television, 6 replied Radio, 50 replied Newspapers, 14
replied Magazines and 20 replied Others.

Which telecommunication company has good advertising?

(a) Airtel (b) Vodafone (c) Reliance (d) BSNL (e) Idea (f) other

GOOD ADVERTISING VALUE PERCENTAGE

AIRTEL 50 25%

VODAFONE 64 32%

RELIANCE 30 15%

BSNL 16 8%

IDEA 40 20%

OTHER 0 0%

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Out of 200 respondents 50 liked the advertisements of Airtel, 64 liked advertisements of
Vodafone, 30 liked the advertisements of Reliance, 16 liked the advertisements of BSNL and 40
liked the advertisements of IDEA.
Do you think that advertisement made by company informs you about their products?
(a) Yes (b) No (c) Undecided

INFORMATION IN ADS VALUE PERCENTAGE

YES 140 70%

NO 48 24%

UNDECIDED 12 6%

Out of 200 respondents 140 were in favor of that advertisements provides information about the
products, 48 were not in favor of that and 12 were not able to decide.

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Based on advertisements made by company, would you like to go for more connections for
you or your family in future?
(a) Yes. (b) No. (c) Undecided.

ADS FOR REFERENCE VALUE PERCENTAGE

YES 148 74%

NO 44 22%

UNDECIDED 8 4%

Out of 200 respondents 148 agreed that they would buy connection on the basis of advertisement
made by companies, 44 did not agree and 8 were not able to decide.

Findings
➢ A very healthy majority believes that advertisements play a role while making purchase
decision for new connection. So the companies should handle the advertising properly
and should try to deliver the information properly.

➢ In telecom industry the most important factor which affects the purchase decision of the
customers is advertisement. Suggestions of friends and relatives also plays major role in
this. So the companies should take care of the existing customers so that they can be
recommended to others.

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 ➢ Majority of the people likes to watch advertisements on television. And after television
people rated newspapers. So the companies should focus more on television ads and
newspaper ads.

➢ Majority of the people like Vodafone advertisements more than others. After that Airtel
and Idea comes. So the other companies should try to make advertisements which can
connect to the customers.

➢ Majority of the people believe that advertisements provide information about the
products. So the companies should try to deliver all the information about the plans and
offers through advertisements.

➢ Majority of the people wants to buy the connections for family and friends on the basis
of advertisements. So advertisements should be given more focus and importance by the
telecom companies.

Annexure

QUESTIONNAIRE

1. Name _________________________________________

2. Gender: (a) Male (b) Female

3. Age: (a) 15-25 (b) 26-35 (c) 36-45 (d) Above 45

4. Education: (a) Matriculate (b) Intermediate (C) Graduation (d) Postgraduate

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5. Who is your current service provider?
(a) Airtel (b) Vodafone (c) Reliance (d) BSNL (e) Idea (f) other

6. For how long you are using this mobile connection?

(a) Less than 6 months. (b) 6 to 12 months. (c) Above 12 months.

7. What were the reasons for choosing this mobile connection?

(a) Recommended by friends or relatives.
(b) Recommended by retailers.
(c) Brand image
(d) Advertisement

8. While purchasing a connection advertising plays any role? (a) Yes (b) No

9. From where do you watch advertisements the most?

(a) Television (b) Radio (c) Newspaper (d) Magazines (e) Other

10. Which telecommunication company has good advertising?

(a) Airtel (b) Vodafone (c) Reliance (d) BSNL (e) Idea (f) other

11. Do you think that advertisement made by company informs you about their products?
(a) Yes (b) No (c) Undecided

12. Based on advertisements made by company , would you like to go for more connections
for you or your family in future?
(a) Yes. (b) No. (c) Undecided.

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 References

Faculty Guide: Dr. SUSHANT NAGPAL

Websites:

➢ www.vodafone.in
➢ www.airtel.in
➢ www.rcom.co.in

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 ➢ www.bsnl.co.in
➢ www.ideacellular.com
➢ www.google.com

Newspapers:

➢ Dainik Bhaskar
➢ Rajasthan Patrika
➢ The Times Of India

Books:

➢ Foundations of advertising by S.A. Chunawala & K.C. Sethia

➢ Advertising management by Rajeev Batra & John Myers
➢ Advertising and promotion by George & Michal Belch
➢ Advertising, Marketing and Sales promotion by Devendra Thakur

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