Professional Documents
Culture Documents
A PROJECT REPORT
ON
Submitted by
Vikalp Kulshreshtha
62053
TYBMS SEM: V
Making the project was a collaboration process. I have many people to thank for their general
support. First of all I would like to express my deep appreciation and gratitude to Mr. Arun,
Principal of Tilak College, in developing my potential, skills and ability with his valuable and
My thanks to Prof. Chaitali Dutta, Project Guide, for providing valuable advice and co-
I wish to convey my gratitude to Prof. Chaitali Dutta for giving her care, patient, unfailing
support to me and also providing valuable advice and cooperation for this project.
I offer special thanks to my friends for their constant support and help towards making this
project.
I would also like to keep on record my sincere thanks to our staff, for their kind cooperation
I, Vikalp Kulshreshtha, hereby declare that the project report entitled "Research on
Management Studies to Mumbai University. This is my original work and not submitted for
award of any other degree/ diploma/ fellowship or other similar titles or prize to any other
PIACE: - SIGNATURE
India, like many other countries of the world, have adopted a gradual approach to telecom
sector reform through selective privatization and managed competition in different segments
of the telecom market. The Indian telecommunications industry is one of the fastest growing
in the world and India is projected to become the second largest telecom market globally.
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. In
one of the biggest brand transition exercises in recent times, Hutch, country’s fourth-largest
mobile service provider was renamed Vodafone. With the entry of Vodafone, which is the
world's leading international mobile communications company in the Indian Telecom sector
the Indian consumers have benefited in terms of better products and services? This has had a
considerable impact on the users as well as the service providers like Airtel, Reliance, Idea and
Tata Teleservices.
The project work was undertaken to evaluate the marketing strategies of Vodafone in India.
The data for the thesis was collected using both primary and secondary data.
Secondary data regarding growth of Indian Telecom Industry, Vodafone and its strategies in
India and other related facts was collected from the website of TRAI, DOT and Vodafone.
Primary data for the thesis was collected using a structured questionnaire which was filled by
110 mobile users in Navi Mumbai region. The information collected thereon was analysed the
impact of marketing strategies on the churn rate at Vodafone. I have also collected some
It was found that in Navi Mumbai, Airtel leads the subscriber tally vis-à-vis Vodafone.
4. RESEARCH METHODOLOGY 43
7. BIBLIOGRAPHY 73
8. APPENDIX 74
INTRODUCTION TO INDIAN TELECOM SECTOR
INTRODUCTION
The telecom industry is one of the fastest growing industries in India. India has nearly 200
million telephone lines making it the third largest network in the world after China and USA.
With a growth rate of 45%, Indian telecom industry has the highest growth rate in the world.
History of Indian Telecommunications started in 1851 when the first operational land lines
were laid by the government near Calcutta (seat of British power). Telephone services were
introduced in India in 1881. In 1883, telephone services were merged with the postal system.
Indian Radio Telegraph Company (IRT) was formed in 1923. After independence in 1947, all
the foreign telecommunication companies were nationalized to form the Posts, Telephone and
sector was considered as a strategic service and the government considered it best to bring
The first wind of reforms in telecommunications sector began to flow in 1980s when the private
long-distance service that would be its own regulator (separate from the postal system). In
1986, two wholly government-owned companies were created: the Videsh Sanchar Nigam
In 1990s, telecommunications sector benefited from the general opening up of the economy.
In addition, examples of telecom revolution in many other countries, which resulted in better
quality of service and lower tariffs, led Indian policy makers to initiate a change process finally
resulting in opening up of telecom services sector for the private sector. National Telecom
Policy (NTP) 1994 was the first attempt to give a comprehensive roadmap for the Indian
1
telecommunications sector. In 1997, Telecom Regulatory Authority of India (TRAI) was
created. TRAI was formed to act as a regulator to facilitate the growth of the telecom sector.
New National Telecom Policy was adopted in 1999 and cellular services were also launched
Telecommunication sector in India can be divided into two segments: Fixed Service Provider
(FSPs), and Cellular Services. Fixed line services consist of basic services, national or domestic
long distance and international long distance services. The state operators (BSNL and MTNL),
account for almost 90 per cent of revenues from basic services. Private sector services are
presently available in selective urban areas, and collectively account for less than 5 per cent of
subscriptions. However, private services focus on the business/corporate sector, and offer
reliable, high- end services, such as leased lines, ISDN, closed user group and
videoconferencing.
Cellular services can be further divided into two categories: Global System for Mobile
Communications (GSM) and Code Division Multiple Access (CDMA). Airtel, Vodafone-
Hutch, and Idea Cellular dominate the GSM sector, while Reliance and Tata Indicom dominate
the CDMA sector. Opening up of international and domestic long distance telephony services
are the major growth drivers for cellular industry. Cellular operators get substantial revenue
from these services, and compensate them for reduction in tariffs on airtime, which along with
rental was the main source of revenue. The reduction in tariffs for airtime, national long
distance, international long distance, and handset prices has driven demand.
2
Telephone penetration in India (Total working lines)
0.8 million 18.6 million 333.84 million 650 million 970.97 million
The past decade has seen an exponential growth in the Indian Telecom Sector. In the year 2000,
Telecom Regulatory Authority of India (TRAI) Act was amended and in 2001, Telecom
Disputes Settlement and Appellate Tribunal (TDSAT) started its functioning. In 2002, Bharat
Sanchar Nigam Limited (BSNL) entered into GSM cellular operation and made incoming calls
free for the first time and since then there is no looking back. Currently, the call rates in India
are one of the lowest; to the extent where some operators are even offering Per-Second-Billing.
Despite the financial slowdown, the industry continued its high growth rate. In 2009, the Indian
Telecom sector contributed 5.65 to the country’s Gross Domestic Product (GDP) and attracted
a Foreign Direct Investment (FDI) of over $2 billion. India is Third in the world in terms of the
number of Telecom subscribers. In addition to this, India has the second largest wireless
network in the world, next only to China. The government initiatives like announcement
of 3G policy and WiMAX rollout are bold steps in serving mass communications. Sharing of
the basic telecom infrastructure among the major telecom players such as Airtel and Vodafone
The emergence of Rural Market in India provides an extensive market place for mobile
3
galvanize competition and expand network coverage into the hinterlands of the country. Within
a short span of 3 years, the rural tele-density has jumped from 4.5% to 19%. Ex-
Communications Minister A. Raja believes that the continued participation of private sector
will help us achieve the target of 40 percent rural tele-density well before the set timeline of
2014.
In order to make the latest technology available in the market, focus is on commercialization
of telecom innovation and technology. This can contribute towards inclusive growth by making
low cost handsets available that support affordable access in rural areas. The production of
telecom equipments as of March 2009 was INR 518 billion with a CAGR of 29% during the
last five years. At the same time INR 81 billion of telecom equipments were exported with a
Value Added Services (VAS) has an immense potential to grow with services like Mobile
banking and Mobile -commerce. Content development, pricing and innovative strategies are
With growing competitive pressure on all fronts and the inevitable need to keep pace with
emerging technologies globally, telecom operators are re-examining their traditional business
models and are making substantial investments in upcoming technologies. These include 3G
Band Allocation, Worldwide Interoperability for Microwave Access (WiMAX) and Future
Generation Networks.
Considered to be the fastest growing telecommunications industry in the world, India is divided
into a total of 22 telecom circles with multiple carriers operating in each circle. Private
operators control 87.9% of the wireless market share while state-owned operators BSNL and
4
MTNL hold 12.1% of the market share. The number of mobile phone subscribers in India rose
to 975.98 million in May, 2015 with the addition of 2.44 million connections.
(in millions)
5
Graph below shows Service Provider wise Market Share as on June-15.
BSNL 8%
Aircel 8%
Vodafone 19%
Reliance 11%
Idea 17%
The stupendous growth of the telecommunication companies in India over the last fifteen years
can be attributed to the liberal government of India, economic policy. The economic
renaissance affected in the early 1990s brought around a paradigm shift on the overall business
scenario of India. The telecommunication companies in India went through a huge makeover
A more liberal form of economic policy replaced the erstwhile closed market policy. A
completely new form of Indian Telecommunication Policy was drafted to compliment the
change effected in the economic policy of India. The amendment affected the new
telecommunication policy of India made huge changes with respect to investments and entry
of Foreign Direct Investments (FDI) and Foreign Institution Investors (FII) respectively, into
6
the virgin Indian telecommunication market. This resulted entry of private, domestic and
India is really mentioned worthy and this industry witnessed highest growth after the Indian
Information Technology industry. The robust growth of Indian economy after the economic
liberalization in the 1990s induced massive change in the telecom policy and new draft was
framed and implemented by the 'Telecom Regulatory Authority of India' (TRAI) and
7
VODAFONE INDIA LTD.
COMPANY PROFILE
It is the world's largest mobile telecommunications company measured by revenues and the
world's second-largest measured by subscribers (behind China Mobile), with around 341
countries and has partner networks in over 40 additional countries. It owns 45% of Verizon
measured by subscribers. Vodafone had about 178.68 million customers as of December 2014
in India.
The name Vodafone comes from Voice data fone, chosen by the company to "reflect the
Mission:
Vodafone will enhance value for its stakeholders and contribute to society by providing our
Through excellence in our service, we aspire to be the most respected and successful
8
Vision:
Vodafone India Ltd. is an Indian subsidiary of Vodafone group and commenced its operations
in 1994 when its predecessor Hutchison Telecom acquired the cellular license for Mumbai.
The company now has operations across the country with over 118.04 million GSM mobile
customers. Over the years, Vodafone Essar, has been named the ‘Most Respected Telecom
Company’, the ‘Best Mobile Service in the country ‘and the ‘Most Creative and Most Effective
Vodafone acquired an indirect controlling interest in Vodafone Essar, their local operating
company in India, in 2007-08. Vodafone currently has equity interests in 31 countries across
Vodafone Essar is now largest operating company for Vodafone when measured by customer
numbers and its sheer scale and rapid growth makes it unique. It has nearly 10,000 employees
and employs more than 90,000 contractors. The network is rapidly expanding to meet demand
and extend telecommunications to more rural areas, with more than 2,500 new base stations
9
MARKETING STRATEGIES IN INDIA
a) Core Competencies:
Vodafone’s primary aim is to be a world leader in mobile communication and at the same time
provide a unique experience to the customers who use their services. By analysing the overall
structure of the company, it can be understood that reliable innovative services and the
The brand image of Vodafone is very strong in the market and a continuous recycling of their
campaigns from the pug to Zoo zoo’s to the present blackberry boys advertisements has
Their innovative products like “Chota recharge”, handsets priced as low as ₹ 700, the new solar
powered phone VF247, Android mobile phone HTC and the soon to be launched iPhone 4 in
the Indian market or services like Vodafone Tuesdays has made it sure that Vodafone stays
ahead of its competitors and at the same time, their subscriber base goes on increasing.
Vodafone has also been successful in creating synergies by acquiring companies around the
globe. In India, also, Vodafone entered the market by acquiring Hutch and in no time
Vodafone’s intention to tap the price sensitive rural market comes with its low cost offerings
such as low priced Magic Box which has a bundled low priced handset along with prepaid card
and various freebies. Products like Vodafone 150 priced at ₹ 799 and eco-friendly solar
charging handset VF 247 will help Vodafone to penetrate the rural market in a big way. To
penetrate the urban market, Vodafone is coming up with Apple iPhone 4 and Blackberry
10
The FIPB has also cleared the Vodafone’s applications for national and international long
distance (NLD & ILD) and internet service provider (ISP) license which will further take its
c) Competitive Advantage:
and coming up with new plans. Vodafone adjusts according to the changing market which gives
them a competitive advantage. Vodafone has from time to time come with creative advertising
campaign for its various plans which has captured the imagination of millions. Vodafone’s
plans like “Chota Recharge” and number of add on plans like these has made it sure that it
maintains an edge over its competitors. Vodafone pursues a global international corporate-level
strategy and has heavily focused on acquisitions like Hutch acquisition in India. Vodafone has
also pursued a focused cost leadership business-level strategy of exclusive focus on the mobile
telephony industry in India with no distractions that faced their competitors (such as fixed-line
telephony).
11
PORTERS FIVE FORCES MODEL
The buyers in the mobile telephony industry are strong. These powerful buyers can reduce the
cost leaders prices, but not past the level of their closest competitor. This ensures Vodafone
will continue to profit at above average returns compared to its closest competitor.
Suppliers of the mobile telephony industry are strong. Vodafone, by being a cost leader,
operates with margins greater than its competitor’s do, which, in turn, allows them to absorb
price increases from its suppliers easier than its competitors. By being a large, focused player
of the mobile telephony industry, Vodafone could hold suppliers costs down, and it could make
Potential Entrants:
While the threat of new entrants is weak, Vodafone must continue to reduce costs below that
of its competitors. By maintaining high levels of efficiency, Vodafone can help make the
entrance into the Mobile telephony industry unattractive to its potential competitors.
Product Substitutes:
Vodafone faces a low threat of product substitutes. The focused cost leadership strategy that
lower rate by their excellent use of economies of scale, their buying power, and their absorption
of temporary price increases that come from suppliers that don‘t need to be passed on to the
consumer.
12
Industry Rivalry:
Vodafone faces a very high industry rivalry from its competitors because as the different
mobile operators slashes its rate per call or provides any new services then they also have to
Strength:
The main strength of Vodafone within the telecommunications market lies in its brand image
and recognition. Vodafone, having established a global presence and having invested highly in
differentiating advantage that, if exploited properly, can offer a lead in competition. The
presence of Vodafone in numerous countries within Europe as well as in all part of the world
enhances this image. It allows customers to travel and enjoy easily the services of their home
country operator. It has established strategic alliance to provide better service to client.
Weaknesses:
The expansion of Vodafone has been completed at the expense of direct control of its
telecommunications companies (e.g. the acquisition of the third biggest Czech mobile phone
operator, Cesky mobile) rather than organic growth. This increased its subscribers’ base
quickly, offering direct market knowledge and immediate additions of customer bases at the
expense of direct effective control of the subsidiaries. At the same time though, it implicitly
imposed a centralized operational structure for the group, nominating the UK headquarters as
the leading business unit running a much centralized marketing and handset procurement at
group level. This has resulted in the neglect of local markets and local differences, allowing
market share to be gained by smaller local competitors. Due to the highly saturated Western
13
European market this has resulted in an increase in the price elasticity of demand, with
consumers becoming continuously price oriented. This has resulted in high customer churn
Opportunities:
The telecommunications market, even though highly saturated in some regions offers great
potential due to the ageing population and the sophistication of the consumers. It offers great
segments. Different strategies should be pursued – simple phones and simplified pricing plans
to the ageing population and more updated, sophisticated solutions for younger generations.
The expanding Boundaries of the market could provide further opportunities by allowing
Vodafone to enter more aggressively into fixed‐line service and to better enjoy the benefits of
its high investment in 3G technology. Moreover the company has undertaken its first steps in
Threats:
competition. Major brands such as O2 and T‐Mobile are exploiting the price sensitivity of
customers and in this way they are building a stronger image and presence in the market.
Indirect competition is also increasing further, through the presence of Skype and other related
(not only voice) Internet‐based services. This combined with the upcoming European
legislative measures is expected to limit further the tariffs for the network providers imposing
further need for price cuts which could harm the bottom line profitability of the company.
14
STP ANALYSIS
SEGMENTATION
Product Segmentation:
Telecommunication
means
Landline Mobiles
GSM CDMA
Consumer Segmentation:
Customers are typically classified as prepaid or contract customers. Prepaid customers pay in
advance and are generally not bound to minimum contractual commitments, while contract
customers usually sign up for a predetermined length of time and are invoiced for their services,
typically on a monthly basis. Increasingly, Vodafone offers SIM only tariffs allowing
customers to benefit from the Vodafone network whilst keeping their existing handset. The
following segmentation variables are used by Vodafone in order to segment the market:
Geographic:
Vodafone segments its market as metros, A-circle, B-circle and C- circle. Here, the
segmentation is done on the basis of regions in which they operate. Also, rural and semi-
15
urban markets are fast emerging as profitable market segment, so Vodafone is trying to
Demographic:
Income: Vodafone further segments its market according to various income levels and have
Age: Vodafone does not primarily segment its market on the basis of age but they have specific
Nature of the Customer: Depending on the fact that whether the customer is institutional or
sole, the services and plans provided by Vodafone varies and thus, it forms an important bases
for segmentation.
Psychographic:
Lifestyle and Personality: Vodafone segments its users on the type of service they use based
Behavioural:
Benefits Sought: Vodafone segments its customers on the basis of the benefits sought by them
such as such as: local call, STD call or ISD call makers; users of value added services,
Usage Rate: Vodafone also classify its users as one with heavy usage rate, medium usage rate
and light usage rate and have different targeting schemes for each of them.
Type of the service: The Type of the service provided by Vodafone to its customers also plays
16
Business Segmentation:
The Group continues to grow usage and penetration across all business segments. VGE
manages the Group’s relationship with Vodafone’s 270 largest multinational corporate
customers. VGE simplifies the provision of fixed, mobile and broadband services for MNCs
who need a single operational and commercial relationship with Vodafone worldwide. It
provides a range of managed services such as central ordering, customer self-serve web portals,
telecommunications expense management tools and device management coupled with a single
The Group continues to expand its portfolio of innovative solutions offered to small office
home office (‘SoHo’), SME and corporate customers. Increasingly these combine fixed and
TARGETING
Vodafone has full market coverage with differentiated offerings. Market is targeted through
many different tariffs, services and propositions for every segment according to specific
customer preferences and needs. These often bundle together as: voice, messaging, data and
increasing value added services. The various examples for this include:
Home calling cards for the family of those professionals who use to work abroad.
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POSITIONING
Vodafone has continued to build brand value by delivering a superior, consistent and
differentiated customer experience. Their tagline “Where ever you go our network follows”
They differentiated themselves from other mobile service providers by delivering the promise
of “helping customers make the most of their time” and their communication strategy has
always focused on “Happy to help” which tends to strike an emotional chord with the
customer.
The Group’s vision is “to be the communications leader in an increasingly connected world”
expanding the Group’s category from mobile only to total communications. To enable the
consistent use of the Vodafone brand in all customer interactions, a set of detailed guidelines
has been developed in areas such as advertising, retail, online and merchandising.
In April 2009 a campaign, focusing on the different value added services (VAS) offered by the
company was launched, introduced new characters called the Zoo zoos who seem to be in
between the world of animation and reality. Several advertisements in which the Zoo zoos
featured were shown on television during the Indian Premier League (IPL) Season 2 and were
instant hit among the customers but the conversion of this excitement into revenue is yet to be
seen.
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ENTERPRISE SERVICES
Voice services
Pre – Paid
Post – Paid
Entertainment
Devotional
Sports
Astrology
Finance
Travel
Mail, Messaging
Dial in Services
Bill Info
Vodafone Live
Business application
19
Vodafone Office
20
MARKET AND COMPETITIVE ANALYSIS
Vodafone Essar is the second largest GSM operator in India after Airtel from the perspective
of market share and subscriber base and is increasingly expanding its share (the detail figures
are given in Appendix). It still is quite far from Airtel due to Airtel’s strong presence in rural
areas and loyal customer base along with larger reach and first mover advantage.
21
BRANDING, ADVERTIZING, PRICING AND DISTRIBUTION
STRATEGY
Vodafone’s products and services are available directly, via Vodafone stores and country
specific Vodafone websites, and indirectly via third party service providers, independent
dealers, distributors and retailers, to both consumer and business customers in the majority of
The Vodafone Group has created a Global Customer Value Management team to support
operating companies with their aim to engage with customers directly through a data driven
approach. Recent examples of this include: rollout of a consistent and innovative store,
successful trial of an innovative handset based self-service solution and creation of a global
monitor and drive customer satisfaction in the Group’s controlled markets at a local and global
22
Logo a new visual identity—from the deep pink logo of Hutchison-Essar to Vodafone’s
Advertisement:
The inaugural TV commercial showed the trademark pug (minus the boy) moving out of a pink
kennel into a red one. An energetic version of Hutch’s signature ‘You and I’ tune played
towards the end, as the super concluded, ‘Change is good. Hutch is now Vodafone’. There were
four more commercials featuring Hutch’s animated boy and girl, introducing the new brand’s
logo to consumers.
Vodafone put in close to ₹ 150 crore into the first phase of the rebranding exercise—with ₹ 60
In the second phase, Vodafone ushered in its global strapline—“Make the most of now”, which
replaced “How are you?” in 2001. By then it was apparent, the boy-and-pug chapter would
soon be over. In 2008, Vodafone used the platform of cricket when it unveiled the ‘Happy to
Help’ series during the first season of the Indian Premier League (IPL).
This season the Zoozoos are all the rage. These characters have virtually hijacked the online
media as well as television—to convey a value added service (VAS) offering in each of the
new commercials.
23
In Indian scenario when other major telecom service providers are using celebrities(Airtel-
Bachchan) as their brand ambassadors, Vodafone is standing out proudly with Zoozoos and
In telecom industry it proudly stands as world no. 2 after China no. 2 GSM service
A new Marketing Framework has been developed and implemented across the business, which
includes a new vision of expanding the Group’s category from mobile only to total
customers make the most of their time”. The brand function has also developed a methodology
to develop competitive local market brand positioning, with local brand positioning projects
In September 2007, Vodafone welcomed India with the “Hutch is now Vodafone” campaign. The
migration from Hutch to Vodafone was one of the fastest and most comprehensive brand transitions in
24
the history of the Group, with 400,000 multi brand outlets, over 350 Vodafone stores, over 1,000 mini
stores, over 35 mobile stores and over 3,000 touchpoints rebranded in two months, with 60% completed
Vodafone regularly conducts Brand Health Tracking since 2002, which is designed to measure
the brand performance against a number of key metrics and generate insights to assist the
management of the Vodafone brand across all Vodafone branded operating companies.
Sponsorships:
Vodafone majorly sponsors the following teams and events, apart from various regional and
timely sponsorship:
Distribution:
Vodafone directly owns and manages over 1,150 stores. These stores sell services to new
customers, renew or upgrade services for existing customers, and in many cases also provide
customer support.
A standard store format, which was tested in 2006, was rolled out in 11 markets during the
2008 financial year. All stores in India were rebranded as Vodafone and over 40 stores were
25
The Group also has 6,500 Vodafone branded stores, which sell Vodafone products and services
The internet is a key channel to promote and sell Vodafone’s products and services and to
provide customers with an easy, user friendly and accessible way to manage their Vodafone
Additionally, in most operating companies, sales forces are in place to sell directly to business
Indirect distribution:
The extent of indirect distribution varies between markets but may include using third party
The Group hosts MVNOs in a number of markets. These are operators who buy access to
existing networks and resell that access to customers under a different brand name and
proposition. Where appropriate, Vodafone seeks to enter mutually profitable relationships with
Presence in India:
8,163 base stations directly managed by Vodafone Essar in the remaining seven circles
26
MACRO AND MICRO ENVIRONMENTAL FACTORS
Market potential
Infrastructure
Competition
Income levels
Ethical considerations
The following discussion of principal risk factors and uncertainties identifies the most
significant risks that may adversely affect the Group’s business, operations, liquidity, financial
Adverse macro-economic conditions in the markets in which the Group operates could
27
in which the Group operates, may lead to a reduction in the level of demand from the Group’s
customers for existing and new products and services. In difficult economic conditions,
consumers may seek to reduce discretionary spending by reducing their use of the Group’s
offered by the Group’s competitors. Similarly, under these conditions the enterprise customers
may delay purchasing decisions, delay full implementation of service offerings or reduce their
use of the Group’s services. In addition, number of the Group’s consumer and enterprise
customers that are unable to pay for existing or additional services might increase, having
The continued volatility of worldwide financial markets may make it more difficult for
the Group to raise capital externally, which could have a negative impact on the Group’s
access to finance.
The Group’s key sources of liquidity in the foreseeable future are likely to be cash generated
from operations and borrowings through long term and short term issuances in the capital
markets as well as committed bank facilities. Due to the recent volatility experienced in capital
and credit markets around the world, new issuances of debt securities may experience
decreased demand. Adverse changes in credit markets or Vodafone’s credit ratings could
increase the cost of borrowing and banks may be unwilling to renew credit facilities on existing
terms.
Regulatory decisions and changes in the regulatory environment could adversely affect
As the Group has ventures in a large number of geographic areas, it must comply with an
extensive range of requirements that regulate and supervise the licensing, construction and
operation of its telecommunications networks and services. In particular, there are agencies
28
which regulate and supervise the allocation of frequency spectrum and which monitor and
enforce regulation and competition laws which apply to the mobile telecommunications
the Group or to third parties, could adversely affect the Group’s future operations in these
geographic areas. Additionally, decisions by regulators and new legislation, such as those
relating to international roaming charges and call termination rates, could affect the pricing for,
or adversely affect the revenue from, the services the Group offers.
The Group faces intensifying competition and its ability to compete effectively will depend on,
among other things, network quality, capacity and coverage, the pricing of services and
equipment, the quality of customer service, development of new and enhanced products and
services, the reach and quality of sales and distribution channels and capital resources.
Competition could lead to a reduction in the rate at which the Group adds new customers, a
The focus of competition in many of the Group’s markets continues to shift from customer
acquisition to customer retention as the market for mobile telecommunications has become
increasingly penetrated. In addition, the Group could face increased competition should there
be an award of additional licenses in jurisdictions in which a member of the Group already has
a license.
The Group uses technologies from a number of vendors and makes significant capital
software and other network components may also be delayed. The failure of vendor
29
technology to achieve commercial acceptance could result in additional capital expenditures
As part of its strategy, the Group will continue to offer new services to its existing customers
and seek to increase non-voice service revenue as a percentage of total service revenue.
However, the Group may not be able to introduce these new services commercially, or may
experience significant delays due to problems such as the availability of new mobile handsets,
higher than anticipated prices of new handsets or availability of new content services. In
addition, there is no assurance that revenue from such services will increase ARPU or maintain
profit margins.
The Group has entered into several cost reduction initiatives principally relating to network
implement a single, integrated operating model using one ERP system. However, there is no
assurance that the full extent of the anticipated benefits will be realised in the timeline
envisaged.
Changes in assumptions underlying the carrying value of certain Group assets could
result in impairment.
Vodafone completes a review of the carrying value of its assets annually, or more frequently
where the circumstances require, to assess whether those carrying values can be supported by
the net present value of future cash flows derived from such assets. This includes an assessment
of discount rates and long term growth rates, future technological developments and timing
30
and quantum of future capital expenditure, as well as several factors which may affect revenue
and profitability identified within other risk factors in this section such as intensifying
competition, pricing pressures, regulatory changes and the timing for introducing new products
or services.
As the Group increasingly enters into emerging markets, the value of the Group’s investments
may be adversely affected by political, economic and legal developments which are beyond
Expected benefits from investment in networks, licences and new technology may not be
realised.
The Group has made substantial investments in the acquisition of licences and in its mobile
networks, including the roll out of 3G networks. There can be no assurance that the introduction
of new services will proceed according to anticipated schedules or that the level of demand for
new services will justify the cost of setting up and providing new services.
The Group’s business would be adversely affected by the non-supply of equipment and
Companies within the Group, source network infrastructure and other equipments as well as
network-related and other significant support services, from third party suppliers. The
withdrawal or removal from the market of one or more of these major third party suppliers
could adversely affect the Group’s operations and could result in additional capital or
31
FUTURE STRATEGIES
Based on global trends and Indian experience, the rate of growth of cellular mobile
services would continue to be higher for a number of years. Its two important
implications are further lowering of average cost per line and cellular mobile.
The capital requirement for investments in the next five years are expected to be
lower than the present cost due to continuing decline in equipment cost as well as lower
Railways, Power Grid Corporation, etc. and huge capacity addition by other players.
A small portion of the subscriber base provides a large share of call revenue. High
revenue subscriber category would form the core of competition among operators
which may lead to a fall in the tariffs applicable to this type i.e. long distance calls.
Margin of surplus will decline over time due to competition. However, the break-even
Data services are expected to grow much faster than voice telephony. This underlines
the need in due course to focus on broad-band linkages to enable the provision of these
Due to large uncovered areas in rural and remote regions of the country which are
also expected to be low paying is going to bring the next revolution in the telecom
sector.
The trend towards convergence of services may lead to major changes in the structure of
industry and markets. The new mantra for the Telecom sector is: “ROTI, KAPDA,
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PRODUCT LIFE CYCLE
The current perception of Vodafone in India is that of a brand that provides high quality
customer service at reasonable prices. Even though Vodafone has not hired a known face to
endorse itself, it has still managed to establish a very high “emotional connect” with its
customers through its brilliantly conceived marketing strategies. Excellent examples of this
would be the recent “Zoozoo” campaign and the well-received “Vodafone Pug” campaign. In
the case of the “Pug” campaign, Vodafone managed to project itself as a service provider which
would always be “following” the customer through the tagline “Wherever you go, our network
follows.” And in the case of the “Zoozoo” campaign, Vodafone further strengthened their
Vodafone currently faces stiff competition since new players have also entered the fray
recently. Players like Loop, Hash10, MTS etc. are set to roll out their services due to which
Vodafone may find it difficult to maintain its current share of customer base in India.
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Expansion, further focusing on its current segments, implementation of a revised business
model and intensive marketing would be the key features Vodafone should be concentrating
Vodafone is currently in the process of adding further verticals to its market portfolio in order
to increase its presence and expand its customer base. 3G services are currently in the pipeline.
Also Vodafone can venture into providing broadband and WiMAX services which have a very
high potential for revenue generation. M2M or Machine to Machine platform is also present
on Vodafone’s strategy for market diversification. The platform, which is an enterprise solution
designed by Vodafone for providing automation and wireless controlling is still under the
process of patenting.
• Expand distribution:
The current distribution model of Vodafone has been very successful in penetration of the
urban segment. It has a presence in all the 23 Indian telecom circles and has set up 78,000 base
stations spread across India. And Vodafone is still deploying 2,600 base stations each month.
Even in Mumbai, Vodafone has a total of 25,000 distribution outlets, out of which 35 are
Vodafone Stores. Even though the presence is considerable, Vodafone needs to focus on a more
intensive distributional model in order to keep up with competitors like Airtel etc.
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IMPACT OF MOBILE NUMBER PORTABILITY
35
INTERVIEW
Vodafone India is barely old. Can you see the direction in which it is heading?
Vodafone has experienced a fairly good run in the past few years. It has emerged as one of the
premium players in the telecom. Within a short period being second in the industry is a
tremendous achievement. It is one of the few players which has a pan-India presence and it
caters to not only the Premium segment but also to the rural segments as well. Plus, Vodafone
is at the forefront of ushering in new technology e.g. 3G and Wi-max is about to roll out within
For entry into any sector, say rural or urban, there should be focus on network coverage and
distribution. In addition to that, the affordability and penetration also comes into picture.
Considerable effort is being put in from our side to increase our network coverage, customer
satisfaction. We have one of the best and largest customer support service which is twice the
The telecom sector already is experiencing cut-throat competition. With new competitors
It is very difficult already for the existing players as profit margins are reducing with increase
in number of players. The profits have reduced due to the slashing of call rates. However, the
profits realized are due to increasing usage rates. New competitors are a very good launch and
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What are your future strategies?
Our strategies are more towards customer service, value added services etc. rather than
changing tariffs frequently. For instance, Vodafone India has 35 owned stores in Mumbai to
provide help and customer services. This believe has made Vodafone the leading player in
Mumbai. Our next competitor does not have half the number of service centres that we have.
How are your strategies in India different from those of other countries?
Strategies are very different not only from country to country but also from region to region.
Our strategy for Europe which is a mature market is different from that for India and Africa
which are developing markets. While Europe market is important in terms of revenues, Indian
Can you say something about the effect of Zoo-Zoo campaign on the customers?
It has almost created a wave and impact has been very encouraging. Existing customers loved
the campaign and many responded to the campaign through phone and internet. The Zoo-Zoos’
effect has caught the public’s imagination so much that there were Zoo-Zoo Ganapati and
Rakhis selling. We also captured the attention of the public through our pug dog
the rates of all the service providers are almost same, you need to do something so that the
customer chooses your service over your competitors’ while opting for a mobile connection.
We maintain a very good relation with customers through our customer satisfaction surveys,
customer delight studies. The sample drawn is random sampling and not done only for
Vodafone customers.
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Can you throw some light on the distribution network of Vodafone India?
Vodafone India has a very good distribution network. We have 25000 operators functioning
now. We also undertake special programs to drive better distribution in every circle. Since we
have better distribution network in the country we are the benchmark of the Indian telecom
sector.
What are the other external factors that you feel had affected the telecom sector in the
recent past?
Every national event affects the industry as a whole. The drought in India affected the
disposable income in rural India. Naturally the spending on these services will decrease. The
sector is not immune to terrorist attacks or even Swine flu scare as it affects the movement of
tourists and in turn adverse effects our revenues from roaming charges.
Why did you choose to enter India through Hutchinson Essar rather than entering
directly?
It is a strategical move by Vodafone. It is a way of faster routing. For instance, for DOCOMO
it took them 2 years after getting license to start their operations. It involved building of
newer infrastructure whereas we chose to cut costs by operating through Hutchinson Essar.
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CUSTOMER RELATIONSHIP MANAGEMENT
From now, onwards millions of people all through the world could access mobile phones for
the first time with the release of Vodafone’s first ultra-cheap own-branded phones. It is said by
the company that these phones are cheap enough for poor people to have. Plus the Vodafone
125 and 225, released recently, are aimed at expanding the availability of affordable mobile
Chinese manufacturer ZTE Corporation has produced the mobile phones for Vodafone - the
first handsets resulting from an agreement between the two companies announced in
December. They will come into view first on Vodafone networks in Egypt, Romania and South
Africa. The Vodafone 125 and 225 are reported to be consisting with a similar set of basic
features, although the 125 has a monochrome display whereas the 225’s display is colour.
Vodafone is also planning to open access to mobile services for more people in countries where
mobile networks are the most viable and cost-effective communications service available. The
phones are said to be coming with the price tag of around 1200-2500.
Happy To Help:
This is an online 24*7 helpline service for the customers of Vodafone. This provides help to
the customer queries related to the products & services like VAS, talk time, recharge & etc.
This is one of the best way of maintaining a healthy customer relationship adopted by
VODAFONE. They have their own customer care centers all over India wherein the customers
39
directly come to the center’s regarding the problems they face related to the products &
services.
40
41
Coverage
Feel at home with the widest coverage in the country. Present all over India, we have you
Karnataka Haryana
Kerala UP(E)
Punjab UP(W)
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RESEARCH METHODOLOGY
It is well known fact that the most important step in marketing research process is to define the
problem. Choose for investigation because a problem well defined is half solved. That was the
reason that at most care was taken while defining various parameters of the problem. After
giving through brain storming session, objectives were selected and the set on the base of these
objectives. A questionnaire was designed major emphasis of which was gathering new ideas
or insight to determine and bind out solution to the problems. This research consists of
following element:
Data Source
Research included gathering both primary and secondary data. Primary data is the first hand
data, which are selected a fresh and thus happen to be original in character. Primary Data
was crucial to know the customers satisfaction of various Vodafone Sim card
users. Secondary data are those which has been collected by someone else
and which already have been passed through statistical process. Secondary data has been
Research Approach
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Hence, these objectives were translated into three key focus areas –
Reducing costs.
The project was carried out in two parts. The first part involved Churn Analysis. The second
part included studying customer engagement and life cycle analysis. The methodology for
Gathering knowledge from the available data and reports (MIS team)
External information through public sources like TRAI and the Internet
Customer surveys and client visits – to get opinions from the customer directly
Sampling Unit
It gives the target population that will be sampled. This research was carried in
After the data has been collected, it was tabulated and findings of the project were presented
My project was based on the “Marketing Strategies of Vodafone India” and data was taken
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1. Research work was carried out in one area of CITY of NAVI
MUMBAI only the finding may not be applicable to the other parts of the country
4. The views of the people are biased therefore it does not reflect true picture.
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FINDINGS AND ANALYSIS
Internet and cell phone subscribers to switch providers. In a general context, churn is a
synonym for agitation or turnover. This project that is a part of my BMS course that I am
pursing at Tilak College of Science And Commerce in Vashi, Navi Mumbai, involves studying
the Churn of Enterprise customers and customer satisfaction. The project was aimed at
identifying effective measures to reduce the churn rate and improve overall customer
satisfaction.
This project was carried out in two phases. The first phase involved understanding churn rate
in the Enterprise segment and studying alternative to reduce churn. The second phase included
Through this report, I shall elaborate the details of my project and my approach that I adopted
1. Churn Analysis and Recommendation - Understand the reasons behind churn and
customer goes through when considering, purchasing, using, and maintaining loyalty
to a product or service. The task was to understand how Vodafone handles each aspect
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SURVEY RESULTS
satisfied dissatisfied
1 Network 48 26 14 8 4
2 Customer Care 18 38 22 14 8
3 Compared with
other simcard 10 48 34 8 0
4 Call cost 8 62 14 4 12
5 Mobile Internet 24 58 10 6 2
6 3G plan 6 16 22 42 14
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CHURN ANALYSIS
2. Predicting – studying the predictive churn model, understanding the key factors
considered for the predictive churn model and measuring the effectiveness of the model.
Churn should also be studied as Actual Churn and Partial Churn. Actual Churn is related to the
disconnections. Partial churn can be denoted by delayed payments, complaints increase and
lower usage of VAS services or voice or data usage. The Predictive Churn Model uses these
factors as indicators to identify their threat base. Out calling is done to these numbers to identify
Predictive churn modeling (Predictive churn modeling is the process by which a model is
created or chosen to try to best predict the probability of an outcome of a churn.) although
effective in reducing churn, suffers due to certain practical issues. Most of the subscribers who
are identified as the threat base (Base of customers who are likely to churn based on a model-
based prediction.) are not contactable. Either they choose not to speak or they cannot be
reached. Moreover, by the time these subscribers are identified in the threat base, they have
already churned.
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February saw an increase in COCP churn due to a large number of disconnections from ICICI.
Whereas March saw a larger number of IOIP disconnections mainly owing to involuntary churn
The above table shows the churn in terms of numbers and in terms of revenue. It is essential to
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CHURN REASONS
Churn reasons can be studied in two categories – Voluntary and Involuntary churn. The table
1. Unpaid bills are the major reason for involuntary churn. March saw a 16% increase
over Feb. One explanation to this is that Feb has only 28 days. In comparison to Jan,
the churn numbers almost remains the same. In general, the UNB disconnections in
2010 are on the rise. The subscriber base is also on the increase every month at an
2. UNB and TWO together (unpaid bills) attribute to more than 90% of the disconnection
cases.
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3. There are cases wherein the customer has not received the bill or wherein he has a bill
dispute. Hence, he has not made the payment. This was observed by analyzing the
4. The top 3 reasons for IV disconnections are the same across all AON categories of
subscribers.
5. It is interesting to note that there are no UNB disconnections for those customers who
are on Direct Debit. Hence, this can be looked as one way to reduce UNB disconnection.
6. Most of these unbilled cases are primarily from BPO and call centers. Most of the
subscribers choose to not pay the last bill before they leave the organization. As
understood from the collections department, attempts to trace them are also in vain,
7. It was also noted that most of the subscribers in the UNB disconnections are in the age
group of 25 – 30 years (about 40%). Moreover, they are mainly from companies like
interesting to note that this segment is also the biggest revenue churners.
Recommendations
2. E-Bill should be encouraged– It was observed that many companies and individuals
were open to E-Bills. However, they were not taking the initiative themselves for
subscribing to E-Bill. Hence, I feel that if there were an active campaign to promote E-
Bill in all companies, there would be many lesser complaints over bill delivery delays
3. E-Bills could also be sent proactively to all those subscribers whose email address we
have in the system along with their hard copy of their bills.
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4. Early payment - This campaign was once carried out and it saw a surge of 4% in on-
5. Alternate Contact Numbers and Reference Checks- should be obtained and verified too
in order to improve contactability. Presently, reference numbers are ID proofs are being
obtained. However, reference checks should be done in especially companies like call
centers where the subscribers are not traceable after they leave.
6. Alternate contact numbers should not be company board line numbers. Ideally, they
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Observations: Voluntary Churn
1. Almost all enterprise voluntary churn is tagged under COO Change of ownership. This
practice makes it difficult to identify the real reason for Churn. E.g., Taj and TCS have
churn because of competition from TATA and Essar group has churn since they do not
give away their numbers when employees leave the organization. Hence, they are kept
in safe custody.
2. From the retention team, it is understood that most of the COCP disconnection reasons
are not gathered. Partly because the authorized signatory in the organization sends out
an email for disconnection without stating the reason. Moreover, some companies do
not want to be disturbed by retention team. Hence, for such companies retention attempt
is not made.
3. Only a very few of these COCP numbers could be contacted for retention efforts.
Mostly the reasons for disconnection given were – moving out of town or personal
reasons. This additional information is not captured when tagging under COO.
4. The retention count for COCP is very low. Only about 1 or 2 cases out of 10 are
retained.
5. Also, noted in many corporates where tariff is low (like Godrej); there are many
connections are taken for others in the same corporate tariff, but then there connections
are churned since the individual does not want to take responsibility against
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Recommendations
1. Disconnection codes for Enterprise need to be revised and clearly indicate the actual
reasons.
2. To make the retention effort more effective, enterprise should have a separate retention
call center. Presently, only email requests for disconnection are handled separately.
Moreover, for the IOIP customers, they are treated on par with the regular postpaid
subscribers.
4. For COCP disconnection requests from the authorized signatories (Generally, the
SPOC (Single Point of Contact) in an organization for dealing with mobile connections.
This could be an individual in the admin department or the HR department.), the reason
should be obtained and the churn should be tagged with the real reason. This can be
taking the request along with the reason through the e-mail.
5. Research indicates that the 4 most important factors that cause churn are - Service,
Tariff, Network and Brand Image. Service and tariff are the two things that we can
Revenue Churn
The actual number of disconnections in a month can be a good indicator of Churn. However,
it does not fully represent the actual loss to Vodafone. Hence, there is a need to study churn in
terms of Revenue loss too. Revenue churn is obtained by taking the sum of all the ARPU of all
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The table below shows the revenue churn for the month of March for the top companies.
Though the data is sorted in the descending order of the number of churns, the revenue churn
Observations
1. A month on month analysis of revenue churn would reveal that there are some
2. Number of churn doesn’t indicate the revenue loss to Vodafone. E.g., Tata Power may
show more number of churn than say Barclays (Ref Table above). However, in terms
of revenue, the loss from Barclays exceeds Tata Power by virtue of the larger ARPU
from Barclays.
3. Churn can also be tackled by treating important customers or high value users
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Suggestions
advantage. Hence it is essential that our database cater to the additional information that
is required today.
competition does in terms of not only tariffs and schemes they offer to corporates,
b) Customer demographics -
i. Get to know certain lifestyle information about customers so that you could
ii. This can be obtained whenever the customer interacts with a call center, or
when he signs up for a service. Make him fill out a small questionnaire that
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iii. This information could be on their Interests, Profile, and Job etc.
iv. The importance of user profiling based on mobility has also been elaborated
http://enterprise.vodafone.com/insight_news/whitepapers/
VAS one has subscribed for. VAS has huge potential. Hence, it shall be covered
separately.
2. Churn should be studied separately for Black Berry, Data Cards, Voice and VAS.
3. Increasing Data Usage / VAS – Bharti Airtel has launched their online application store
called App Central with over 1200 application for download (most of them being free)
across 25 categories for business, games, books, social networking and other needs.
The VAS industry in India generated revenue of US$ 1.2 billion in 2007–08 and is
payments
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Suggestions Description Purpose
59
Airtel helped the company gain Rs.200 and
from 61 % to 82 %.
Address We could ask the user to confirm the To reduce first bill
Verification address in the system through sms. The and further bill
Welcome and There should be a first bill and welcome Primarily for
online access Ids User IDs and Passwords (like most banks customer to start
and passwords do). It is then up to the customer to use the using the online
services.
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Having a separate Enterprise customers need to be treated Call center
Programs airways for converting their mobile usage especially in the wake
soon.
Solutions Provider
Focus on other We could study where other enterprise To provide not only
enterprise solutions could fit into the scheme of our voice, but data and a
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CUSTOMER LIFECYCLE
In customer relationship management (CRM), customer life cycle is a term used to describe
the progression of steps a customer goes through when considering, purchasing, using, and
maintaining loyalty to a product or service. In layman's terms, this means getting a potential
customer's attention, teaching them what you have to offer, turning them into a paying
customer, and then keeping them as a loyal customer whose satisfaction with the product or
service urges other customers to join the cycle. CLC focuses upon the creation of and delivery
of lifetime value to the customer i.e. looks at the products or services that customers NEED
throughout their lives. It is marketing orientated rather than product orientated. That is, the
concept is much broader. A product concept would look at a customer buying a voice
connection. A marketing concept would look at it as a customer purchasing a communication
or a mobility solution. Hence, it could be anything from a regular voice connection, a
blackberry, or a data card etc.
When you calculate the present value of the future cash flows attributed to the customer
relationship, you arrive at the Lifetime Value of a Customer. Simply put, it represents exactly
how much each customer is worth in monetary terms, and therefore exactly how much a
marketing department should be willing to spend to acquire each customer.
Awareness – Awareness drives engagement. The more customers are aware of your
brand and offerings, the more likely they will begin to engage with you (if they find
that the brand is interesting and engagement worthy).
Consideration – This includes all the buying decisions that the customer would like to
consider before choosing a product.
– How and from where does the customer get information for the products
that he needs?
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Retention – Ensuring that the customer does not churn and continue to use more
products and services.
Marketers tend to focus on the latter two stages: purchase and retention, because this is their
end-goal. However, we have to keep in mind that if we really want to ‘engage’ people, not just
to ‘persuade’ them to buy something, we have to include the first three stages as well.
Awareness
There are many ways of going about it. The simplest way to go about is by using surveys to
measure the effectiveness of all the promotional activities. The DAGMAR (Defining
Advertising Goals for Measured Advertising Results) model suggests the same. It required you
to know your present state (say through surveys) and then measure your result after the
promotion. Goals should be realistic and measurable, like increasing awareness levels from
10% to 35%.
1. Vodafone as a brand is very prominent for all mobile subscribers. But where Vodafone
lacks is the awareness of Vodafone‘s Enterprise Solutions. This was observed during
several interactions with individual clients and authorized signatories.
2. Presently, there are no promotions done on the different solutions that we offer. Apart
from promoting voice connections, there are very few promotions in the market for
blackberry and data cards and almost nil for the rest.
3. Product innovations are poor and hence we do not have the first mover advantage in
the market either. Our competitors also offer most of our products that we offer and
hence, the differentiations in the products are less.
4. Magazine and Print ads should be the preferred choice as they have many advantages
over television ads. In addition, print ads are more effective in the segment that
Enterprise solutions operate – the corporate customer.
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Consideration
According to the survey conducted at Harvard University, the four most important factors that
are taken into consideration before buying a new mobile are -
1. Tariff
2. Network
3. Service
4. Brand Image
This is also consistent with the feedback obtained at various touch points where customers
walk in to get more information on new connections. Other factors include benefits, peer
review, availability etc. Consideration factors are different for different types of customers like
Prospects, first time buyers, repeat buyers, core customers etc. Some of the ways to improve
these factors would be
1. Tariff: To have more than one tariff plan at corporates (where the customer base is
sufficiently large) so that there could more choice available for different set of people.
2. Network: Improving network coverage in other areas also. Many customers have
coverage related problems in other outer areas or when they go on roaming. Hence,
they wish to choose some other provider. This is one of the reasons observed for churn.
Inquiry
Once the customer knows that there is a product offering with a particular brand, he would like
to learn more on the offering. This is where he would get in touch with the organization through
various Touch Points (Encounters where customers and business engage to exchange
information, provide service, or handle transactions.). It is this experience here at these touch
points that push the customer to buying the product/service.
Some of the things that can be done to measure and improve customer inquiry at these touch
points –
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1. Obtain customer feedback at every touch point. Presently, it is done only at a few touch
points.
2. Event Driven surveys – Get the customer to fill a short questionnaire or get his feedback to
obtain a little more information about him after an event. Some of the scenarios where this
could be done would be
a) After online bill payment, a few questions could be asked along with the thanks you
message.
b) A new set of questions (2 or 3) behind the hard bill so that when they are submitted
along with the check, this information could be obtained.
3. CDI (Customer Delight Index) - CDI is used to measure customer satisfaction. The
marketing team at Vodafone presently uses this for the regular consumer. The same process
can be adopted to be used for Enterprise as well.
4. Effectiveness of touch points should also be measured to know which ones do and do not
contribute to improving customer satisfaction. I have developed an Engagement Matrix that
will help us identify most of the touch point and quantitatively measure their importance
and effectiveness. All the steps have also been document in the spreadsheet. A snapshot of
the matrix is shown below.
Between purchase and retention, a lot of effort is put especially in servicing the customer for
all his needs. Once the sale is done for a particular product, relationship managers are attached
to each corporate account to service the needs of the customers.
Nevertheless, there are still many complaints, requests and enquiries flowing in every month.
March saw a 22% increase in the total number of complaints. This was primarily dominated
by service and billing complaints. Service complaints were higher than billing complaints
particularly in the COCP segment. Service complaints were dominated by DND requests.
Whereas, the IOIP customers had many bill disputes.
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Sample Study
To study the criticality of these complaints, a sample of 100 numbers who churned in March
were chosen randomly. These were mapped to the complaints they had logged in that month
and the previous month and their AON category.
Using this information, the reasons for disconnections could be traced to the complaints they
had in the past for different AON category of users. The following table summarizes the top 4
complaints.
1. Billing complaints are considerably higher than the rest of the complaints. This has led
to dissatisfaction and hence the churn.
3. Bill disputes tend to increase over the lifetime of the customer. Most of these disputes
were related to tariff disputes, CUG installation errors and data usage.
This just goes to show that billing complaints are more critical than others are.
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Customer Engagement
Engagement is one of the most powerful emerging business principles of this century, but
historically it has been elusive, unmeasured and undisciplined. Customer engagement is the
emotional connection or attachment that a customer develops during the repeated and ongoing
interactions. Engagement accumulates through satisfaction, loyalty, influence, and excitement
about your brand. Organizations who engage consumers to the point where they are moved to
behavioral change do so by creating opportunities for emotional connections through ongoing,
consistently positive experiences.
Customer satisfaction is a nice to have, but does not result in a secure customer. Satisfied
customers may be pleased with a recent experience, but often do not have an emotional
connection with the company. This lack of an emotional connection often results in customers
with high levels of customer satisfaction switching to competitors for reasons such as a minor
cost difference or a slightly more convenient location.
On the other hand, Customer Engagement is necessary have, and the best and most successful
companies in the world use it. Four characteristics of Customer Engagement are
Retention: Engaged customers will spend more with you over their lifetime than with
your competition.
Effort: Engaged customers will actually go out of their way to do business with you -
even spend more to benefit from your products, service and brand.
Advocacy: Engaged customers spread the good word, making it easier and cheaper for
you to attract new customers.
Passion: Engaged customers are passionate about the brand – so passionate that they
may even spend time actively promoting the brand to others or defending the brand if
others speak negatively about it.
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Benefits of Engagement
1. Referrals
7. Reduced Risk
The first three are the key indicators of customer engagement. Simply put, it would be adequate
to look at the number of referrals, or the number of times the customer has given a feedback or
his frequency of re-purchase to measure engagement.
Customer Lifetime Value is usually defined as the total net income a company can expect from
a customer. The exact mathematical definition and its calculation method depend on many
factors, such as whether customers are “subscribers” (as in most telecommunications products)
or “visitors” (as in direct marketing or e-business).
The Business Intelligence unit of the CRM division at Amdocs tailors analytical solutions to
business problems, which are a high priority of Amdocs’ customers in the communication
industry: churn and retention analysis, fraud, campaign management, credit and collection risk
management and more. LTV plays a major role in several of these applications, in particular
Churn analysis and retention campaign management. In the context of churn analysis, the LTV
of a customer or a segment is important complementary information to their churn probability,
as it gives a sense of how much is really being lost due to churn and how much effort should
be concentrated on this segment. In the context of retention campaigns, the main business issue
is the relation between the resources invested in retention and the corresponding change in LTV
of the target segments.
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In general, there are three factors we have to determine in order to calculate LTV –
1. The customer’s value over time: In practice, the customer’s future value has to be
estimated from current data, using business knowledge and analytical tools.
2. A length of service (LOS) model: describing the customer’s churn probability over
time.
3. A discounting factor: that describes how much each $1 gained in some future time t is
worth for us right now. This function is usually given based on business knowledge.
Each component can be calculated or estimated separately or their modeling can be combined.
At present, this sort of study cannot be carried out at Vodafone since the data available is
limited. However, I have tried to describe the approach that can be adopted to quantify the
CLV. It is also understood that Vodafone is migrating to a new version of CRM that is provided
by Amdocs. (Hence, the reference to Amdocs CRM above).
1. Engaged – Engaged customers report strong agreement with statements about product
satisfaction, purchase intentions, intent to recommend products/services, and high
regard for a company’s products/services.
3. Swing – These customers have the potential to be swayed to the Love or Hate Group
depending on future experiences with the company. The Swing Group answered survey
questions in ways that indicated passive satisfaction without active engagement. The
Swing Group is where the action happens, where there is a great opportunity to win
loyal customers for life.
Using surveys, we could identify the percentage of customers in each category. This sort of
classification will help us in designing the engagement initiatives. Customer engagement can
be measured by using surveys. By asking customers the right questions, we can arrive at the
following information
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2. Referrals – “In the last 12 months, did you have a delightful experience worth telling
someone about?” If the answer was yes, “how many people did you tell?“
4. Frequency of feedback - depends on the how many customers gave their feedback and
how many of them have been giving feedback regularly.
Share of the wallet indicates brand loyalty, referrals helps in word of mouth marketing and
frequency of feedback helps brining in continuous improvements. Studies have shown that,
Engaged customers have a larger share of the wallet, often influence more referrals, give
regular feedback and are more likely to remain with the brand than disengaged customers are.
The above diagram shows how to use surveys as an effective tool at different stages of customer
lifecycle.
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CONCLUSION & RECOMMENDATIONS
Conclusion
Intense competition in the industry has resulted in a drastic reduction in tariff for services such as SMS,
roaming and long distance. Number portability would give the consumers more choice in addition to
increase in competition. According to experts, this would result in a further reduction in tariff.
Here is an idea for smaller operators like Tata, Idea and Aircel to churn high-ARPU customers
Most the high-ARPU customers are with the biggies like Airtel, Vodafone etc., because these
operators were early in the game and anyone who could afford a mobile phone three years ago
Recent introduction of dual SIM phones in the market triggered this idea.
2. Customers at Navi Mumbai are willing to switch Service provider if they are offered with a
3. Mobile Number Portability System has change the scenario of the telecom Industry. Earlier
the only way a service provider was able to hold their customer was by the mobile number.
Now with MNPS into action customer have freedom to switch with same number so customer
4. In this battle between customers and service providers, service provider will have to
Assuming that the value and service being offered by the new operator is indeed better than the
old one, it at least gives a chance to the new operator and a convenient option to user who is
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Recommendations
2. Event driven surveys – as explained earlier in the report, this either online like after a
bill payment through the internet or it could be offline, like after an interaction with
personnel at a Vodafone store.
3. Verification problems and Billing disputes are problems that are more serious – Treat
them with more severity.
6. Watching your competitor’s moves – Like tariff plans, promotional activities, process,
product innovations etc.
7. Payment option at service desks – Service desks at corporates should include payment
option too. At present, only check payment is possible. Having multiple payment
options like payment through credit/debit card facilities would greatly help in
payments.
8. Social networking is the next level of engagement – This is an emerging area today.
Social CRM through social networking sites like Twitter, Facebook etc. have become
very popular in the last few years. Companies like Nike claim to have converted 40%
of their community members into the company’s shoes. Through social networking,
customers can be made aware of the latest news and product updates.
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BIBLIOGRAPHY
References:
Websites:
www.vodafone.in
www.vodafone.com
www.campaignindia.in/Brand/vodafone
http://www.blastradius.com/work/vodafone/
http://en.wikipedia.org/wiki/Telecommunications_statistics_in_India
http://www.vodafone.co.uk/about-us/selling-vodafone/
http://en.wikipedia.org/wiki/Customer_satisfaction
http://en.wikipedia.org/wiki/Hutch_(Indian_cellular_company)
http://en.wikipedia.org/wiki/Vodafone
http://bora.nhh.no/bitstream/2330/1919/1/Saplitsa%202008.pdf
www.anacom.pt/render.jsp?contentId=606658
www.iimcal.ac.in/community/consclub/reports/telecom.pdf
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APPENDICES
Questionnaire [Customer]
Dear sir/Madam,
I request to spare sometime to consider the following questionnaire. The intention of this
project is purely academic; all information provided by you will be kept strictly confidential.
Be as truthful as you can.
Thank you for your co-operation.
Q.4 Are you satisfied with Vodafone compared to other Sim Cards?
Highly Satisfied
Satisfied
Average
Dissatisfied
Highly Dissatisfied
74
Q.5 Are you satisfied with the Call Cost/Call Rates of Vodafone?
Highly Satisfied
Satisfied
Average
Dissatisfied
Highly Dissatisfied
75