Telcos Learning Abcd Of Marketing

[@ksh@T 20]

Telcos learning ABCD of marketing

Operators Forced To Move Down Value Chain To Attract Fresh Customers

Rajeshwari Adappa Thakur & Reena Chakraborty MUMBAI 2 OCTOBER

   TELECOM companies, including mobilephone makers and service providers, are targeting the ABCD' market. No, we are not talking about the American Born, Confused Desi's here, but the `Ayah, Bai, Carpenter, Driver’ market. This is not surprising since the penetration in metros like Mumbai and Delhi have touched 30-40% levels. Having lopped off the creamy layer, operators are now forced to move down the value chain to attract new customers.

   The good news for telcos is that the ABCD market is going mobile with a vengeance as entry-level costs have fallen for mobile handsets as well as service providers. Tariffs in the fixed-line segment, too, have been constant at Rs 1.20 per three minutes for years, but access to mobilephones is relatively easier in many areas as sim cards are available even at local paan shops.

   Besides, the ABCD market has been ignored for long as communication was considered a `luxury' and there were doubts about the `affordability' of mobile or landline communication. Also, telcos were not interested in wiring up the ABCD user due to the low average revenues per user. But the success of schemes like `only incoming calls for a rental of Rs 100' and others with low entry barriers prove that the ABCD market is just as eager to communicate as any other, provided the pricing is `right'.

   Although call tariffs are low, rentals in the post-paid segment or fixed monthly charges (described as access or administration charges) on pre-paid products are a deterrent to the ABCD market.

  Increasingly, telcos are lowering the entry barriers by introducing tariff plans for as low as Rs 199 instead of Rs 300 earlier. Besides, they are doing away with fixed charges in low-value products like the Rs 10-60 recharge vouchers, which are akin to sachet packets in the FMCG segment. The pre-paid plans with recharge amount of less than Rs 200 are targeted at first-time users as well as people falling in the weaker economic strata. Operators have been forced to change strategy due to the slowdown in growth in the metros and A-class cities. But Naveen Chopra, corporate VP - group marketing, Hutch, points out, "The customers of low-value pre-paid plans are not restricted to B and C class cities alone. They are also found in metros and A-class cities."

   While the monthly growth in wireless subscriber base is 3% in metros and 4% in A-class cities, it is higher than 6% in B and C class cities. In Aug '05, the monthly growth was 6% and 8% in B-class and C-class cities, respectively. Though the overall wireless penetration in the country is 5.7 per 100 people, it is much lower in circles like UP, Rajasthan, Bihar, Orissa, Assam and the Northeast. The low-priced plans are aimed at garnering customers in these regions.

Why has RIM also laged behind as 199 scheme in prepaid and postpaid not getting good responce...ABCD.....think abt it ADAE

[SexyGurl 0]

I think the 199 scheme has been very successful .. so succesful that hutch and airtel were forced to come out with 200 rupee cards.

I think two problems which reliance faces are:

1. The second hand market for gsm handsets is very large (compared to second hand market for reliance sets) ... ABCD would not mind picking up second handsets (even if they don't get the benefit of using reliance's 150 ruppee card, which is still cheapest).

2. Because of replaceable SIM ... gsm handset market is unified (about 75% of the handsets) ... while reliance plays it alone. So, point no. 1 is unlikely to get corrected (in reliance's favor) anytime soon.

[@ksh@T 20]

the biggest blow of RIM is the SIM thing man....if this thing is replaced by RUIM for all handsets Its a hit man HIT......

and moreover their marketing is a flop...now how many ppl knkow abt 199 scheme on RIm and how many know 200 scheme of airtel you will find the answer itself...kyonki...

ab mobile rakhne ka kharch sirf 200/- rupya mahine......

[ashoksoft 83]

That is true.... akshat, advertising campaigns of RIM seriously ****... they still try to save a penny worth... most of their ads are in the local trains here... and strangely ... hardly anyone bothers about them these days.

Whereas most other telcos have put out banners and are making a banter about things. Even MTNL's trump has brought out a Rs.175/- refill, for 30 days with a talktime value of Rs. 55/- challenging rim's 199 offer.

Marketing strategies established in the start were okay. .... but hey we need to allow globalization. No use sitting around waiting for things to happen on their own. If Reliance continues its ways, and does not allow R-UIM support completely ... believe me guys .. this is india, there are a trillion ways to get things cracking. it wont be long before someone (maybe me myself) sets up service points where u can transfer ur connection from a normal RIM Handset into programmable R-UIMs (the ones from China Unicom are amazing to play with ... that is a hint for guys interested), allowing handset portablity.

Btw... I have unconfirmed reports that haier plans to launch a CDMA+GSM Dual handset for the indian market soon, when and how no idea as of yet.

Reliance sure needs to loosen a few buttons and think straight. When a unified regime comes to play, do u expect Reliance to still lead a pack? With same prices throughout, and exceptionally good handsets in the backing GSM might still gain its way back...

ADAE , do look into the said prospects.... yeah ! u managers from ADAE, who are on the forum (we do know a few), can take up this issue ahead..

Cheers

Ashok

[amitbt22 2]

They r happy in advertising "apne rajya me kijiye free bat R2R" they r not eager to promote 149 plan which is lowest plan rather than bsnl 100 postpaid plan (only for govt employees)

[SexyGurl 0]

I don't think RUIM helps at all.

RUIM will allow inter-CDMA unification of market .... .why would reliance want to work in a common market with Tata (In fact, if reliance were to move towards RUIM-only handsets, it will help Tata more than reliance).

RUIM won't ensure unification of GSM and CDMA handset markets.

Reliance should (as it already is) ... work towards Overall Cost of Service -- eg. I count my cost of service, in this way:

I bought LG 5130 for 5000 bucks and buy 199 vouchers:

Assuming I write off my 5130 in 12 months:

Per month = 5000/12 + 199 = Rs. 615 approx.

I count my costs like this:

Cost of plain vanilla voice & sms = 199 + (200 for handset) = Rs. 400

Cost of R-world = Rs. 215

I bought LG 5130 in the first place because of R-world videos and speaker phone. (other wise I would have bought a 2400 rupee phone) ... and my Overall Cost of service would have been only Rs. 400

The Rs. 215 is just for seeing R-world.

------------------------------------------------

So, for someone wanting just ABCD-type services .. they would buy a Rs. 2000 handset + 149 per month.

Overall Cost of Serivce = 2000/12 + 149 = Rs. 310 approx.

So, really reliance is offering the Overall Service at Rs. 310 per month to ABCD customers.

What do Airtel and Hutch offer:

Say a ghisa-pita GSM set is available at Rs. 1000/-

Rs. 200 per month as voucher cost.

Total cost = Rs. 1000/12 + 200 = Rs. 280/-

--------------------------------------------

SOOOOO....

Reliance offers:

BRAND NEW SET at a monthly CoS (i.e. Cost of Service) = Rs. 310

Airtel / Hutch offer:

SECOND HAND SET + Rs. 50 talktime at a monthly Cos = Rs. 280

--------------------------------------------------------------------------

Now, the question is, does the ABCD customer see value in a BRAND NEW SET .. and willing to pay Rs. 30 per month extra and about 25 minutes of local calls per month less ?

The situation has changed since Airtel and Hutch launched the Rs. 200 cards ... becoz earlier they were having Rs. 330 cards at the minimum.

So, CoS to ABCD customers was 80+330= 410 MUCH ABOVE RELIANCE !

So, as soon as Airtel / Hutch launched 200 cards, Reliance launched 149 cards ... to reduce the CoS difference between it and them (currently it stands at 280 vs 310).

Another issue is a BRAND NEW SET (of Rs. 2000) is expected to last longer than a SECOND HAND SET (of Rs. 1000) ... so that is qualitative factor which ABCD will need to incorporate in their estimate of CoS.

Edited October 4, 2005 by bhutes

[Utsav 0]

Apply for a CRO post in RIL, they'll not lose you. Put the ****ing service and poor network aside, your calculation is really great.

Just to add, LG 5130 is available for Rs.3800/- nowadays.

[@ksh@T 20]

bhai log this is a very serious and rigorous problem now.....if the promotional offers dont start attaracting pppl...now then ...ADAe is LOSt...no promotions nothing..no new handsets and the new handsets which are good are toooo much costly...why wd 1 shell out 14000 for 6265 when he can get a 6600 in 10000.......aint it

[KumaarShah 143]

bhai log this is a very serious and rigorous problem now.....if the promotional offers dont start attaracting pppl...now then ...ADAe is LOSt...no promotions nothing..no new handsets and the new handsets which are good are toooo much costly...why wd 1 shell out 14000 for 6265 when he can get a 6600 in 10000.......aint it

43053[/snapback]

You are right. ADAE is sleeping now - no new handsets, no new schemes - only withdrawals of schemes - no reduction in tariffs to offnet.

I sent a email to them asking why I should not switch over to GSM as they are more competitive in tariffs and the voice quality has also improved susbtantially now and also they have very pleasing and attractive handsets. They made two senior executives call me up who pleaded me to continue with them and not disconnect from RIM. All tariff revisions will take place by month end, I was promised.

You are absolutely right abt the 6255 vs 6600 pricing. It just does not make any sense to go in for any new RIM handset as they are either not having required features or they are overpriced as compared to other GSM phones. RIM is currently focusing only on on net calls and all off net calls are expensive. Locally GSM is available at 0.50 pm to all mobiles whereas r2r is free and r2gsm is at 1pm or 0.8pm or 1.20pm depending on the plan you have opted for. Hutch, Chennai also offers night tariffs of 0.10 pm to any mobile across Chennai and TN. It is far cheaper to talk from GSM than from RIM. These tariffs are available in prepaid, mind you where every month, you have new schemes which offer you full talktime.

It is high time ADAE pulls up their socks and get down to business and come back with a bang in the market. It appears that ADA has totally forgotten his father's dream of a call not costing more than a postcard. Hope he recollects his memory very soon. Most of the DAPO customers will definitely switch over to GSM post the 3 year period which ends in March 2006.

Thanx

[Saurav 22]

what was the executives response?

can u provide some details of ur conversation.

[RajanPERT 0]

Hi everybody!

In this good discussion I want to add something. As someone say’s here, What about dream of the Ambani’s father.

When a company launched something, the company always decides the target. But what u thinks, when a company gets more then their target (two or three times more). As this happened in the case of Reliance Infocom, I think, Ambani, never assumed that the company will work at this speed.

When something touches its height. Then the time of correction or complete makeover come. As we saw in the steps of the Anil Ambani, Try to change everything in Reliance Infocom. New brand image, New policy guidelines etc.

This is the phase of Reliance Infocom’s makeover. It will take time. After all, Anil Ambani doesn’t work like Mukesh Ambani. They are new for this type business, and they also changed the staff of Reliance Infocom. So the every one is new for reliance. So they try to make their footprint strong in the market and then try to do something new. As u saw in news, reliance is trying to reach new location or as you saw the in your billing system or you saw the change in 220 or 440 voucher.

It will take time and Hope, after sometime, we will have a new Reliance Infocom.

Waiting for other comments….

Thanks and Take Care!