About the case study

Telecommunications services were introduced in the 1990’s Only post paid services were available The two major players in the industry were Bharti and Essar

(Monopoly) The rates were high at about Rs. 16 per minute Indians were used to paying lesser amounts for landline phones

(Rs. 1.20 for 3 minutes) The cellular services market has limited growth because of

many factors such as ...High Tariff ratesOnly found in the MetrosLow standard of living

Because of the high tariff rate’s, mobiles and post paid services were only targeted to the high class society

BACKGROUND INFORMATION

THE PRE-PAID LAUNCH• PRE-PAID SIMS LAUNCHED IN THE LATE 1990’S• IT GAINED POPULARITY FAST • THE MAIN AIM OF THIS LAUNCH WAS SO THAT

COMPANIES CAN TARGET ALL SECTIONS OF SOCIETY AND NOT JUST THE UPPER CLASS• THE TARIFF RATES DECREASED BY 75% BETWEEN

LATE 1990’S AND EARLY 2000’S• BY OCTOBER 2002 THERE WERE 8.5 MILLION CELL

PHONE USERS AND 65 % OF THAT BELONGED TO PRE-PAID USERS• 80% OF NEW ADD ON’S WERE ALSO PRE-PAID

AIRTEL MAGIC WAS BORN

AIRTEL MAGICBharati launched its own prepaid cellular service under magic brand in Jan 1999

Magic targeted the infrequent mobile users

First launched in Delhi and later in other circles in India

Made more accessible with magic made available at Departmental stores, gifts shop, telephone booths, Kirana stores etcSo getting a Magic connection was easy

Because of the pre-paid cards, there has been huge

growth in the cellular market The base increased from 3.5 million in 2001 to 6.4

million in 2002 Telecom circles projected an estimated growth rate of

Rajastan 179% Harayana 151%Kerala 151%

Analysts estimated that the number of subscribers in 2004 would reach 25 million as compared to 4.5 million in 2002

The cellular market

Power of Suppliers

• Low power• Airtel can change

suppliers

Power of customers

• High bargain power because of high competition

• Low switching costs• Low differentiation

among providers

Competitive Rivalry

• Intense competition• Many service

providers with more or less same schemes

• Hutch, BSNL, Spice etc…

Threat of subtitutes

• Fixed line telephone - BSNL

• Internet • CDMA providers

Threat of new entrants

• High because barriers of entry are low

• Low specialist knowledge required

• Increased attractiveness of market

Now that the cellular market was targeted at

all sections of society, it had huge potential for growth and innovation.

The huge growth of this market for pre-paid SIM’s has attracted many new entrants

Therefore AIRTEL thought it would be best to revamp their marketing strategy

Huge Potential

How did Airtel revamp?

It changed to

It changed the logo hoping that the newlogo would look more energetic and friendlierfor the target audience

The new strategy was aimed at attracting even non-interested customers by appealing to their needs and requirements 

Magic was positioned as a friendly, mass-market brand. Magic targeted the youth and stood for simplicity and attitude

that said, 'anything is possible.‘ (Target customers) Bharti then focused on extending its distribution base in all the

circles in which it operated and therefore, ensured the availability of Magic cards in the remotest parts of its operating circles. By late 2002, the states of Kerala and A.P. had 2000 and 4,500 stores respectively.

Continued…

AIRTEL MAGIC introduced some new features such as :

Door step deliveryTie-up with ICICI BankLaunched regional roaming networks in AisaBalance on screenBalance on demand

Flexible pricing – the tariff rates at night were cheaper than the ones during the day.

Continued…

Celebrity Endorsement

sairtel magic.mp4

“Magic is a youth brand, and all these celebrities depict exuberance and confidence to succeed, which are in synergy with the core values of the product.” PH RAO, MD

Saurav Ganguly and movie stars Madhavan and Kareena Kapoor were signed as the endorsers of Airtel Magic

Objective was to cash upon the two biggest passions of Indian masses-Movies & Cricket

Since many new entrants come into the

industry after the launch of the prepaid Airtel Magic tried to promote the brand and retain its customers by conducting many contests for its subscribers through SMS.

Magic was reportedly very popular with customers (especially the youth) who appreciated the (ease of operation, affordability and ready availability) brand offered.

Competition

To gain success from their marketing revamp

they brought magic under their umbrella brand “AIRTEL”.

This created positive images in the mind of the customers, as AIRTEL was one of the first players in the industry and has a customer following.

Airtel Magic also changed its tag lines many times to try and emotionally connect with its target audience.

Success Factor

PEST ANALYSISPolitical factors

• The Indian political scenario and regulations from TRAI are the most significant aspects which would affect airtel

• Mobile number portability implementation would enable subscribers to move to different service providers which have better coverage, retaining there original number

• In India legal obligations are defined regarding 3G auction and bidding, which proves to be in favour of airtel as this auction is not available to new entrants

ECONOMIC• Airtel enjoys a very large consumer base in India and Africa,

expanding more into rural market will provide airtel with more such opportunities to increase revenue and market share

• The telecom sector is one of the major sector which provide direct employment which indirectly helps in economic growth of India.

• This sector accounts for 1% of India's GDP, approximately 30% of the service tax revenue is contributed by telecom sector

SOCIAL FACTORS• Airtel has been very successful in branding it self “A brand for successful people ”• It has constantly come up with advertising campaigns which

emotionally affect the Indian consumers Example-the “express yourself” and “har ek friend zaroori h0ta hai”• Cost factor is also a major concern to customers for example

calling rate, roaming facility, tec.

TECHNOLOGICAL FACTOR

• Airtel is the first telephone company to outsource everything except marketing, sales and financial operation. airtel outsourced their IT processes to IBM, entire network operations to Ericesson and Siemens along with Alcatel Lucent recently and the transmission tower to another company

• Airtel has high-speed optic fibre network. This network presently spans 126,357 kms all over India. It’s international network infrastructure include ownership of the i2i submarine cable system and consortium ownership in five global undersea cable system

• It is also the first to introduce 4g speed in India

OUR RECOMMENDATIONS

• INCREASE IN VISIBILITY AND COVERAGE • NEW TARIFF PLANS • IMPROVED AND INNOVATIVE SERVICE PACKAGES • FOCUS MORE ON COST REDUCTION (AGGRESSIVE

ADVERTISING) • COME UP WITH BETTER MORE INNOVATIVE TVC THAT CAN

RUN FOR A LONG TIME• WIDENING THE NETWORK COVERING AREA

THANK YOU