“CONSUMER PERCEPTION AND MARKETING STRATEGIES OF VODAFONE”

A REPORT SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE POST GRADUATION DIPLOMA IN BUSINESS

ADMINITRATION

(PGDBA-MARKETING)

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IMRAN AFTAB REGISTRATION NO.:- 200751667

SYMBIOSIS CENTRE FOR DISTANCE LEARNINGSYMBIOSIS BHAVAN, 1065 B, GOKHALE CROSS

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2007-2011

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1

DECLARATION BY THE LEARNER

This is to declare that I have carried out this project work myself in part fulfilment of the

PGDBA-Marketing program of SCDL.

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CERTIFICATE OF SUPERVISOR (GUIDE)

Certified that the work incorporated in this project report “CONSUMER PERCEPTION

AND MARKETING STRATEGIES OF VODAFONE” submitted by Imran Aftab

is his original work and completed under my supervision. Material obtained from other

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3

EXECUTIVE SUMMARY

Sales promotion consists of a variety of companies. Sponsored promotional activities that

supplement both advertising and personal set up. These activities are impersonal and can

be directed at industrial buyers, intermediaries or consumers. Sales promotion consists of a

diverse collection of incentive tools, mostly short term, designed to stimulate quicker or

greater purchase of particular products or services by consumers of the trade. Sales

promotion tools vary in their specific objectives. Incentive type promotions are used to

attract new buyers, to reward loyal customers and to increase the repurchase rates of the

occasional users. Sales promotion often attracts the branch switchers, because users of

other brands and categories do not always notice or act on a promotion.

In using the sales promotion a company must establish its objectives, select the tools

develop the program, a pretest the program, implement and control it and evaluate the

results.

Vodafone Essar in India is a subsidiary of Vodafone Group Plc and commenced operations

in 1994 when its predecessor Hutchison Telecom acquired the cellular license for Mumbai.

Vodafone Essar now has operations in 16 circles covering 86% of India’s mobile customer

base, with over 34.1 million customers*.

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CONTENT

INTRODUCTION .............................................................................................6

COMPANY PROFILE.....................................................................................17

LITERATURE REVIEW.................................................................................46

RESEARCH METHODOLOGY.....................................................................49

FINDING AND ANALYSIS...........................................................................51

CONCLUSION................................................................................................71

RECOMMENDATION....................................................................................72

BIBLIOGRAPHY............................................................................................73

ANNEXURE – QUESTIONNAIRE................................................................74

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INTRODUCTION

The Indian telecom market has been displaying sustained high growth rates. Riding on

expectations of overall high economic growth and consequent rising income levels, it

offers an unprecedented opportunity for foreign investment. A combination of factors

is driving growth in the telecom market, promising rich returns on investments.

India is the fourth largest telecom market in

Asia after China, Japan and South Korea.

The Indian telecom network is the eighth largest in the world and the second largest

among emerging economies.

The Indian telecom market size of over US $ 8 billion is expected to increase three

fold by 2012. The expansion of the telecom industry in India has been fuelled by a

massive growth in mobile phone users, which has reached a level of 10 million users

in December 2002, an increase of nearly 100 per cent in 2002.

This exponential growth of mobile telephony can be attributed to the introduction of

digital cellular technology and decrease in tariffs due to competitive pressures. For the

first time in India, the growth of cellular subscriber base has exceeded the fixed line

subscriber base. However, cellular penetration is still 1 per cent as compared to world

average of around 16 per cent.

1.1.2 INDIAN TELECOM SECTOR

Indian Telecom sector, like any other industrial sector in the country, has gone through

many phases of growth and diversification. Starting from telegraphic and telephonic

systems in the 19th century, the field of telephonic communication has now expanded

to make use of advanced technologies like GSM, CDMA, and WLL to the great 3G

Technology in mobile phones. Day by day, both the Public Players and the Private

Players are putting in their resources and efforts to improve the telecommunication

technology so as to give the maximum to their customers.

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The Indian telecom sector can be broadly classified into Fixed Line Telephony and

mobile telephony. The major players of the telecom sector are experiencing a fierce

competition in both the segments.

The major players like BSNL, MTNL, VSNL in the fixed line and Airtel,

Vodafone (Hutch), Idea, Tata, Reliance in the mobile segment are coming up with new

tariffs and discount schemes to gain the competitive advantage.

The Public Players and the Private Players share the fixed line and the mobile

segments. Currently the Public Players have more than 60% of the market share.

1.1.3 DEMOGRAPHIC CHARACTERS :--

According to the Vision 2020 document of the Planning Commission of India, the

country will witness continued urbanization. The urban population is expected to rise

from 28 per cent to 40 per cent of total population by 2020.

Future growth is likely to be concentrated in and around 60 to 70 large cities

having a population of one million or more. This profile of concentrated urban

population will facilitate customized telecom offerings from operators.

1.1.4 MARKET -SIZE, PLAYERS AND TRENDS:-

Both fixed line and mobile segments serve the basic needs of local calls, long distance

calls and the

international calls, with the provision of broadband services in the fixed line segment

and GPRS in the mobile arena. Traditional telephones have been replaced by the

codeless and the wireless instruments.

Mobile phone providers have also come up with GPRS- enabled multimedia

messaging, Internet surfing, and mobile- commerce

The much-awaited 3G mobile technology has entered in the Indian telecom

market.

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The GSM, CDMA, WLL service providers are all upgrading them to provide 3G

mobile services.

Radio services have also been incorporated in the mobile handsets, along with

other applications like high storage memory, multimedia applications, multimedia

games, MP3 Players, video generators, Camera's, etc. The value added services

provided by the mobile service operators contribute more than 10% of the total

revenue.

The 2009 budget has brought further relief to the customers with the reduction in

the tariffs, both local and long distance, and with slashing down the roaming rentals.

This is likely to lead to even more people going for cellular services and more and

more use of the value added services.

However, landline telephony is likely to remain popular, too, in the foreseeable

future. MTNL, the largest landline service provider, has recently taken some bold

initiatives to retain its market share and, if possible, expand it.

1.1.5 OPPORTUNITIES:-

India offers an unprecedented opportunity for telecom service operators, infrastructure

vendors, manufacturers and associated services companies. A host of factors are

contributing to enlarged opportunities for growth and investment in telecom:

an expanding Indian economy with increased focus on the services sector

population mix moving favourably towards a younger age profile

urbanization with increasing incomes

Investors can look to capture the gains of the Indian telecom boom and diversify their

operations outside developed economies that are marked by saturated telecom markets

and lower GDP growth rates.

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1.1.6 COMPETITIVE LANDSCAPE:-

Demand is driven by technological innovation and by growth in business activity.

The profitability of individual companies depends on efficient operations and good

marketing.

Large companies have big economies of scale in providing a highly automated

service to large numbers of customers, and have the financial resources required to

build and maintain a large network.

Smaller companies can compete effectively only in small markets or by providing

specialty services

1.1.7 RESEARCH INDUSTRY GROWTH RATING:-

The First Research Industry Growth Rating reflects the expected industry growth

relative to other industries:-

Ref:-planningcommission.gov.in/reports/genrep/.../1_bg2020.doc

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Ref:-planningcommission.gov.in/reports/genrep/.../2_bg2020.doc

1.1.8 Product‘s Stage in PLC:-

As we can see above the mobile industry graph shows that telecom industry is still at

growing phase in the product life cycle. The first operational land lines were laid by the

British Government in Calcutta in the year 1881 that was first time Telecom sector

introduce and 1985 department of Telecommunication was established. In the year 1997

telecom regulatory authorities of India was created then in 1999 mobile services were

launched in India and national new telecom policy is adopted and in the year 2000 DOT

becomes a corporation BSNL. After that telecom industry has been growing like cats and

dogs. The mobile industry can be reforms into three phases.

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Phase I (1998-2003)

Actual growth started from this phase. TRAI was set up in 1997 and the first tariff

order was issued in 1998. The reforms becomes effective from 1998.

Phase II (2003-2005)

This phase marked a sustained increase in tele-density each year which can me

been in the Graph in chapter 1, the growth in tele-density in 2003-2004 was approximately

2%, a percentage which was greater than the total growth of 1.92% in the 50 year.

Phase III (2005-2007)

Every year industry should grow at pace of grater than 4.5% in the tele-density to

achieve the target of 250 million subscriber by December 2007, According to a release by

TRAI by June 2006 the total subscriber base has reached 153.37 million and tele-density

has reached to a level of 13.95%.

1.1.9 Seasonality in sales and sales cyclicity :-

In the Telecom sector seasonality in sales (mobile subscriber) doesn’t play much

role because we have found out since 1998 to 2007 mostly each and every quarter growing

and the growth in succeeding quarter is more than its preceding one.

1.2.1 PEST Analysis:-

Political – As markets are deregulated, both operators and manufacturers are free to act

independently of government intervention. In Countries like India and China where Partial

regulations exist, government intervention does take place.

Economic – With incomes rising, people have more disposable income, which enables

consumers to be more selective with their choice of mobile phone,

looking to other factors rather than fulfilling the most basic of user needs (text messaging

and phone calls) and price being such a key factor.

Social – The rise of the so-called information society has made telecommunications

increasingly more important to consumers, both in terms of work and leisure. Users are 11

more aware of mobile phone handset choice and advancements due to increased

information availability.

Technological – There have been many global advancements in technology such as

UMTS,WIMAX, WAP, GSM, GPRS, 3G,4G etc.

Important regulations and their impact on the Indian telecom industry

Unified Access Service License Regime (UASL)

Unified licensing marked the end of the license regime in the Indian telecom industry. It

helped in aligning convergent technologies and services. The establishment of the Unified

Access Licensing Regime (2003) eliminated the need for different licenses for different

services. Players are now allowed to offer both mobile and fixed-line services under a

single license after paying an additional entry fee. This does not take into account national

and international long-distance services and Internet access services. The telecom network

in India is the fifth largest network in the world meeting up with global standards.

Presently, the Indian telecom industry is currently slated to an estimated contribution of

nearly 1% to India’s GDP.

The Indian Telecommunications network with 110.01 million connections is the fifth

largest in the world and the second largest among the emerging economies of Asia. Today,

it is the fastest growing market in the world and represents unique opportunities for U.S.

companies in the stagnant global scenario. The total subscriber base, which has grown by

40% in 2005, is expected to reach 250 million in 2007.

According to Broadband Policy 2004, Government of India aims at 9 million broadband

connections and 18 million internet connections by 2007. The wireless subscriber base has

jumped from 33.69 million in 2004 to 62.57 million in FY2004- 2005. In the last 3 years,

two out of every three new telephone subscribers were wireless subscribers. Consequently,

wireless now accounts for 54.6% of the total telephone subscriber base, as compared to

only 40% in 2003. Wireless subscriber growth is expected to bypass 2.5 million new

subscribers per month by 2007. The wireless technologies currently in use are Global

System for Mobile Communications (GSM) and Code Division Multiple Access (CDMA).

There are primarily 9 GSM and 5 CDMA operators providing mobile services in 19

telecom circles and 4 metro cities, covering 2000 towns across the country.

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1.1) Evolution of the Industry - Important Milestones:

Year Description

1851 First operational land lines were laid by the govt. near Calcutta(seat of

British Power)

1881 Telephone Service introduced in India

1883 Merger with the postal system

1923 Formation of Indian Radio Telegraph Company (IRT)

1932 Merger of ETC and IRT into the Indian Radio and Communication

Company(IRCC)

1947 Nationalization of all foreign telecommunication companies to form the

Posts, Telephone and Telegraph(PTT), a monopoly run by the

government’s Ministry of Communication

1985 Department of Telecommunications (DOT) established, an exclusive

provider of domestic and long-distance service that would be its own

regulator (separate from the postal system)

1986 Conversion of DOT into two wholly government-owned companies: the

Videsh Sanchar Nigam Limited (VSNL) for international

telecommunications and Mahanagar Telephone Nigam Limited (MTNL)

for service in metropolitan areas.

1997 Telecom Regulatory Authority of India created

1999 Cellular Services are launched in India. New National Telecom Policy is

adopted.

2000 DoT becomes a corporation, BSNL

(Source: The Indian Telecom Industry by consulting club, IIM Calcutta)

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1.2) Major Players:

There are three types of players in telecom services:

State owned companies (BSNL and MTNL)

Private Indian owned companies (Reliance Infocomm, Tata Teleservices)

Foreign invested companies (Vodafone-Essar, Bharti Tele-Ventures, Escotel, Idea

Cellular, BPL Mobile, Spice Communications)

India's mobile telecom sector is one of the fastest growing sectors. Unlike in the 1990s

when the mobile phone was an elitist product, mobile operators now tap a mass market

with mass marketing techniques. "Unified licensing" rules allow basic and mobile

operators into each other’s territory, and have ushered in perhaps the final phase of

industry consolidation.

It seems that only companies with deep pockets can effectively compete as primary

operators mobile markets. Economies of scale, scope, and end-to-end presence in long-

distance as well as local telecom, are desirable.

There are, besides, new challenges. Operators have to find new growth drivers for the wire

line business. There are problems of getting broadband to take off, of technology choice, of

when to introduce new technologies, and of developing a viable business model in an era

of convergence.

1.3) Growth of mobile technology:

India has the fastest growing mobile markets in the world. The mobile services were

commercially launched in August 1995 in India. In the initial 5-6 years the average

monthly subscribers additions were around 0.05 to 0.1 million only and the total mobile

subscribers base in December 2002 stood at 10.5 millions. However, after the number of

proactive initiatives taken by regulator and licensor, the monthly subscriber additions

increased to around 2 million per month in the year 2003-04 and 2004-05.

Although mobile telephones followed the New Telecom Policy 1994, growth was tardy in

the early years because of the high price of hand sets as well as the high tariff structure of

mobile telephones. The New Telecom Policy in 1999, the industry heralded several pro

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consumer initiatives. Mobile subscriber additions started picking up. The number of

mobile phones added throughout the country in 2003 was 16 million, followed by 22

millions in 2004, 32 million in 2005 and 65 million in 2006. The only countries with more

mobile phones than India with 156.31 million mobile phones are China – 408 million and

USA – 170 million.

India has opted for the use of both the GSM (global system for mobile communications)

and CDMA (code-division multiple access) technologies in the mobile sector.

The mobile tariffs in India have also become lowest in the world. A new mobile

connection can be activated with a monthly commitment of US$ 5 only. In 2005 alone 32

million handsets were sold in India. The data reveals the real potential for growth of the

Indian mobile market.

1.4) Cellular Service Providers:

As on Apr 2007 India has 167 million mobile phone subscribers. Out of this 125 million

are GSM users and 41 million CDMA users. BSNL, Bharti Airtel, Hutch, Idea, Aircel,

Spice and MTNL are the main GSM providers in India. Reliance Communications and

Tata Indicom are the main CDMA providers in India.

Bharti Airtel

Airtel is providing cellular services in Delhi, Mumbai, Kolkata, Chennai, Andhra Pradesh,

Gujarat, Haryana, Himachal Pradesh, Jammu and Kashmir, Karnataka, Kerala, Madhya

Pradesh, Maharashtra, Goa, Orissa, Punjab, Rajasthan, Tamil Nadu, UP and West Bengal.

Airtel is the No.1 cellular service provider in India using GSM technology. Airtel has 23%

market share in India with a total subscriber base of 38 million.

Reliance Communications

Reliance has both CDMA and GSM networks and total subscriber base of 29 million or

17% market share. It has GSM network in Assam, Bihar, Himachal Pradesh, Kolkata,

North East, Madhya Pradesh, Orissa and West Bengal. Reliance has CDMA networks in

other states and cities.

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Bharat Sanchar Nigam Limited (BSNL)

BSNL is a state owned telecom company which has GSM presence in almost every cities

and towns. BSNL has 27 million subscribers with a market share of 16%.

Vodafone

Vodafone is another emerging GSM provider in India with coverage in Kerala, Mumbai,

Delhi, Kolkata, Chennai, Gujarat, Andhra Pradesh, Karnataka and Punjab with a total

subscriber base of 27 million.

Tata Indicom

Tata Indicom is a main CDMA provider in India with 16 million subscribers all over India.

Tata Indicom has presence in almost every state and cities in India.

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COMPANY PROFILE

Introduction:

Vodafone is a mobile network operator headquartered in Berkshire, England, UK. It is the

largest mobile telecommunications network company in the world by turnover and has a

market value of about £75 billion (August 2008). Vodafone currently has operations in 25

countries and partner networks in a further 42 countries.

The name Vodafone comes from Vo ice da ta fone , chosen by the company to "reflect the

provision of voice and data services over mobile phones."

As of 2006 Vodafone had an estimated 260 million customers in 25 markets across 5

continents. On this measure, it is the second largest mobile telecom group in the world

behind China Mobile.

In the United States, Vodafone owns 45% of Verizon Wireless.

2.2) Mission:

Vodafone is primarily a user of technology rather than a developer of it, and this fact is

reflected in the emphasis of our work program on enabling new applications of mobile

communications, using new technology for new services, research for improving

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operational efficiency and quality of our networks, and providing technology vision and

leadership that can contribute directly to business decisions.

2.3) Vision:

Our Vision is to be the world’s mobile communication leader – enriching customers’ lives,

helping individuals, businesses and Communities be more connected in a mobile world.

2.4) History:

In 1982 Racal Electronics plc's subsidiary Racal Strategic Radio Ltd. won one of two UK

cellular telephone network licenses. The network, known as Racal Vodafone was 80%

owned by Racal, with Millicom and the Hambros Technology Trust owning 15% and 5%

respectively. Vodafone was launched on 1 January 1985. Racal Strategic Radio was

renamed Racal Telecommunications Group Limited in 1985. On 29 December 1986 Racal

Electronics bought out the minority shareholders of Vodafone for GB£110 million.

In September 1988 the company was again renamed Racal Telecom and on 26 October

1988 Racal Electronics floated 20% of the company. The flotation valued Racal Telecom

at GB£1.7 billion On 16 September 1991 Racal Telecom was demerged from Racal

Electronics as Vodafone Group.

In July 1996 Vodafone acquired the two thirds of Talkland it did not already own for £30.6

million. On 19 November 1996, in a defensive move, Vodafone purchased Peoples Phone

for £77 million, a 181 store chain whose customers were overwhelmingly using

Vodafone's network. In a similar move the company acquired the 80% of Astec

Communications that it did not own, a service provider with 21 stores.

In 1997 Vodafone introduced its Speech mark logo, as it is a quotation mark in a circle; the

O's in the Vodafone logotype are opening and closing quotation marks, suggesting

conversation.

On 29 June 1999 Vodafone completed its purchase of AirTouch Communications, Inc. and

changed its name to Vodafone Airtouch plc. Trading of the new company commenced on

30 June 1999. To approve the merger, Vodafone sold its 17.2% stake in E-Plus Mobilfunk.

The acquisition gave Vodafone a 35% share of Mannesmann, owner of the largest German

mobile network.

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Vodafone’s original logo used until the introduction of the speech mark logo in 1998.

On 21 September 1999 Vodafone agreed to merge its U.S. wireless assets with those of

Bell Atlantic Corp to form Verizon Wireless. The merger was completed on 4 April 2000.

In November 1999 Vodafone made an unsolicited bid for Mannesmann, which was

rejected. Vodafone's interest in Mannesmann had been increased by the latter's purchase of

Orange, the UK mobile operator. Chris Gent would later say Mannesmann's move into the

UK broke a "gentleman's agreement" not to compete in each other's home territory. The

hostile takeover provoked strong protest in Germany and a "titanic struggle" which saw

Mannesmann resists Vodafone's efforts. However, on 3 February 2000 the Mannesmann

board agreed to an increased offer of £112bn, then the largest corporate merger ever. The

EU approved the merger in April 2000. The conglomerate was subsequently broken up and

all manufacturing related operations sold off.

On 28 July 2000 the Company reverted to its former name, Vodafone Group Plc. In April

2001 the first 3G voice call was made on Vodafone United Kingdom's 3G network. In

2001 the Company took over Eircell, then part of eircom in Ireland, and rebranded it as

Vodafone Ireland. It then went on to acquire Japan's third-largest mobile operator J-Phone,

which had introduced camera phones first in Japan.

On 17 December 2001 Vodafone introduced the concept of "Partner Networks" by signing

TDC Mobil of Denmark. The new concept involved the introduction of Vodafone

international services to the local market, without the need of investment by Vodafone.

The concept would be used to extend the Vodafone brand and services into markets where

it does not have stakes in local operators. Vodafone services would be marketed under the

dual-brand scheme, where the Vodafone brand is added at the end of the local brand. (i.e.,

TDC Mobil-Vodafone etc.)

In February 2002 Finland was added into the mobile community, as Radiolinja is signed as

a Partner Network. Radiolinja later changed its named to Elisa. Later that year the

Company rebranded Japan's J-sky mobile internet service as Vodafone live! and on 3

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December 2002 the Vodafone brand was introduced in the Estonian market with signing of

a Partner Network Agreement with Radiolinja (Eesti). Radiolinja (Eesti) later changed its

name to Elisa.

On 7 January 2003 the Company signed a group-wide Partner agreement with mobilkom

Austria. As a result, Austria, Croatia, and Slovenia were added to the community. In April

2003 Og Vodafone was introduced in the Icelandic market and in May 2003 Vodafone

Italy (Omnitel Pronto-Italia) was rebranded Vodafone Italy. On 21 July 2003 Lithuania

was added to the community, with the signing of a Partner Network agreement with Bitė.

In February 2004 Vodafone signed a Partner Network Agreement with Luxembourg's

LuxGSM and a Partner Network Agreement with Cyta of Cyprus. Cyta agreed to rename

its mobile phone operations to Cytamobile-Vodafone. In April 2004 the Company

purchased Singlepoint airtime provider from John Caudwell (Caudwell Group) and approx

1.5million customers onto its base for £405million, adding sites in Stoke on Trent

(England) to existing sites in Newbury (HQ), Birmingham, Warrington and Banbury. In

November 2004 Vodafone introduced 3G services into Europe.

In June 2005 the Company increased its participation in Romania's Connex to 99% and

also bought the Czech mobile operator Oskar. On 1 July 2005 Oskar of the Czech Republic

was rebranded as Oskar-Vodafone. Later that year on 17 October 2005 Vodafone Portugal

launched a revised logo, using new text designed by Dalton Maag, and a 3D version of the

Speech mark logo, but still retaining a red background and white writing (or vice versa).

Also, various operating companies started to drop the use of the SIM card pattern in the

company logo. (The rebranding of Oskar-Vodafone and Connex-Vodafone also does not

use the SIM card pattern.) A custom typeface by Dalton Maag (based on their font family

InterFace) formed part of the new identity.

On 28 October 2005 Connex in Romania was rebranded as Connex-Vodafone and on 31

October 2005 the Company reached an agreement to sell Vodafone Sweden to Telenor for

approximately €1 billion. After the sale, Vodafone Sweden became a Partner Network. In

December 2005 Vodafone won an auction to buy Turkey's second-largest mobile phone

company, Telsim, for $4.5 billion. In December 2005 Vodafone Spain became the second

member of the group to adopt the revised logo: it was phased in over the following six

months in other countries.

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In 2006 the Company rebranded its Stoke-on-Trent site as Stoke Premier Centre, a centre

of expertise for the company dealing with Customer Care for its higher value customers,

technical support, sales and credit control. All cancellations and upgrades started to be

dealt with by this call centre. On 5 January 2006 Vodafone announced the completion of

the sale of Vodafone Sweden to Telenor. On February 2006 the Company closed its

Birmingham Call Centre. In 1 February 2006 Oskar Vodafone became

Vodafone Czech Republic, adopting the revised logo and on 22 February 2006 the

Company announced that it was extending its footprint to Bulgaria with the signing of

Partner Network Agreement with Mobiltel, which is part of mobilkom Austria group.

On 12 March 2006 former chief, Sir Christopher Gent, who was appointed the honorary

post Chairman for Life in 2003, quits following rumours of boardroom rifts. In April 2006

the Company announced that it has signed an extension to its Partner Network Agreement

with BITE Group, enabling its Latvian subsidiary "BITE Latvija" to become the latest

member of Vodafone's global partner community. Also in April 2006 Vodafone Sweden

changed its name to Telenor Sverige AB and Connex-Vodafone became Vodafone

Romania, also adopting the new logo. On 30 May 2006 Vodafone announced the biggest

loss in British corporate history (£14.9 billion) and plans to cut 400 jobs; it reported one-

off costs of £23.5 billion due to the revaluation of its Mannesmann subsidiary. On 24 July

2006 the respected head of Vodafone Europe, Bill Morrow, quit unexpectedly and on 25

August 2006 the Company announced the sale of its 25% stake in Belgium's Proximus for

€2 billion. After the deal, Proximus was still part of the community as a Partner Network.

On 5 October 2006 Vodafone announced the first single brand partnership with Og

Vodafone which would operate under the name Vodafone Iceland and on 19 December

2006 the Company announced the sale of its 25% stake in Switzerland's Swisscom for

CHF4.25 billion (£1.8 billion). After the deal, Swisscom would still be part of the

community as a Partner Network. Finally in December 2006 the Company completed the

acquisition of Aspective, an enterprise applications systems integrator in the UK, signaling

Vodafone's intent to grow a significant presence and revenues in the ICT marketplace.

Early in January 2007 Telsim in Turkey adopted Vodafone dual branding as Telsim

Vodafone and on 1 April 2007 Telsim Vodafone Turkey dropped its original brand and

became Vodafone Turkey. On 1 May 2007 Vodafone added Jersey and Guernsey to the

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community, as Airtel was signed as Partner Network in both crown dependencies. In June

2007 the Vodafone live! Mobile Internet portal in the UK was relaunched. Front page was

now charged for and previously "bundled" data allowance was removed from existing

contract terms. All users were given access to the "full" web rather than a Walled Garden

and Vodafone became the first mobile network to focus an entire media campaign on its

newly launched mobile Internet portal in the UK. On 1 August 2007 Vodafone Portugal

launched Vodafone Messenger, a service with Windows Live Messenger and Yahoo!

Messenger.

On 17 April 2008 Vodafone extended its footprint to Serbia as VIP mobile was added to

the community as a Partner Network and on 20 May 2008 the Company added VIP

Operator as a Partner Network thereby extending the global footprint to Macedonia. In

May 2008 Kall of the Faroe Islands rebranded as Vodafone Faroe Islands.

On 30 October 2008, the company announced a strategic, non-equity partnership with

MTS group of Russia. The agreement adds Russia, Armenia, Turkmenistan, Ukraine, and

Uzbekistan to the group footprint.

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VODAFONE ESSAR

2.5.1) Introduction:

Vodafone Essar, previously Hutchison Essar is a cellular operator in India that covers 21

telecom circles in India. Despite the official name being Vodafone Essar, its products are

simply branded Vodafone. It offers both prepaid and postpaid GSM cellular phone

coverage throughout India and is especially strong in the major metros.

Vodafone Essar provides 2G services based on 900 MHz and 1800 MHz digital GSM

technology, offering voice and data services in 22 of the country's 23 licence areas.

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2.5.2) Ownership:

Vodafone Essar is owned by Vodafone 52%, Essar Group 33%, and other Indian nationals,

15%.

On February 11, 2007, Vodafone agreed to acquire the controlling interest of 67% held by

Li Ka Shing Holdings in Hutch-Essar for US$11.1 billion, pipping Reliance

Communications, Hinduja Group, and Essar Group, which is the owner of the remaining

33%. The whole company was valued at USD 18.8 billion. The transaction closed on May

8, 2007.

2.6) Previous brands:

In December 2006, Hutch Essar re-launched the "Hutch" brand nationwide, consolidating

its services under a single identity. The Company entered into agreement with NTT

DoCoMo to launch i-mode mobile Internet service in India during 2007.

The company used to be named Hutchison Essar, reflecting the name of its previous

owner, Hutchison. However, the brand was marketed as Hutch. After getting the necessary

government approvals with regards to the acquisition of a majority by the Vodafone

Group, the company was rebranded as Vodafone Essar. The marketing brand was officially

changed to Vodafone on 20 September 2007.

On September 20, 2007 Hutch becomes Vodafone in one of the biggest brand transition

exercises in recent times.

Vodafone Essar is spending somewhere in the region of Rs 250 crores on this high-profile

transition being unveiled today. Along with the transition, cheap cell phones have been

launched in the Indian market under the Vodafone brand. There are plans to launch co-

branded handsets sourced from global vendors as well.

A popular daily quoted a Vodafone Essar director as saying that "the objective is to

leverage Vodafone Group's global scale in bringing millions of low-cost handsets from

across-the-world into India."

24

While there is no revealing the prices of the low-cost Vodafone handsets, the industry is

abuzz that prices might start at Rs 666, undercutting Reliance Communications' much-

hyped 'Rang Barse' with cheap handsets beginning at Rs 777.

Meanwhile, Vodafone Essar sources said there would be no discounts or subsidized

handset offers -- rather handset-bundled schemes for customers.

Incidentally, China's ZTE, which is looking to set-up a manufacturing unit in the country,

is expected to provide several Vodafone handsets in India. Earlier this year, Vodafone

penned a global low-cost handset procurement deal with ZTE

Hierarchy:

The PR dept in Mumbai has been started only a month back and it only has 1 employee i.e

the PR Head

Factors considered while formulating PR strategies:

One of the factors in formulating the PR strategies is that whenever a mention of the

telecom industry is made, positive articles of Vodafone has to be made. Their main aim is

to promote the brand Vodafone and its services. They also keep in mind that the right

medium of communication is used to reach the target public, there target being each and

25

Central Unit for

India

CEOCentral Unit for

India

CEO

Outside Agency

Genesis

PR Head

Mumbai

every person right from a milkman to high-profile people. They also keep in mind that

they maintain good relations with the media so that media can help them out when they are

in need of them.

Budget:

There is a pre-determined budget. This budget is devised by the central unit of India and is

then passed down to various circles, Mumbai being one of them. PR head needs to

formulate all the strategies along with the outside agency i.e Genesis which sits in the

corporate office only. The major expense of the PR department is the fees that they pay to

the outside agency.

PR strategies used by Vodafone as a whole:

Advertisements: Vodafone believes in advertising through media like television and press

as people retain those things that they view visually. Heavy mounts of money is spent on

visual advertisements.

Corporate Advertising: Vodafone also undertakes corporate advertising. The PR

department informs the spokesperson Mr. Navin Chopra which details he can reveal and

which he shouldn’t reveal. He has to be very polite while handling the media. They give

everything in writing to the media. The PR department also informs Mr. Navin about how

to dodge certain questions with trick and humours so as to maintain the confidentiality of

certain important issues like the future plans of the company.

Hoardings: Vodafone uses hoardings also in order to promote their company and the new

services or tariffs plans that they are coming up with. This strategy helps in making their

target audience aware of their upcoming plans.

Press Releases: Vodafone in USA has a separate press office that issues all the Press

Release. They press officer makes the entire press release and then it’s confirmed by the

spokesperson of Vodafone USA and is then released. There they believe Press Releases

help in order to maintain very good relations with the media and it also helps them to be in

the eye of the audience. It had also held and India Analyst and Investor Day in London to

talk about its operations in India. It has issued a press release on it on 10th December, 2007.

26

Press Conference: Vodafone uses press conferences as a very powerful tool in handling

the media and seeking consumer attention. They hold press conferences at the launch of

new services or products of any kind. They also hold press conferences when they are

getting into a business deal for some company. They also hold press conferences for

announcing half-yearly results or financial reports of the company.

Media Interviews: Vodafone undertakes media interviews with proper planning. It is

sometimes initiated by media while most of the time it is by Vodafone. It is handled very

carefully specially during crisis or when a new service is launched and is this used as a

very good platform for promotion, building image and even control crisis.

Social Activities: Vodafone undertakes social activities on a huge scale. The Vodafone

Group Foundation is committed to providing assistance in the area of disaster response. Its

main aim is to develop partnerships which enhance long term disaster response and

preparedness activity, working with organizations such as the United Nations Foundation,

Oxfam and MapAction. It also seeks wherever possible to make a direct contribution in

response to critical humanitarian crises.

The Safaricom Foundation and The Vodafone Group Foundation, together donate KShs

15,000,000 towards humanitarian relief in Kenya.

Oxfam: VGF is a founding sponsor of the Oxfam 365 programme, an initiative aimed at

funding a global rapid response team of aid workers and maintaining the UK’s biggest

warehouse with a stockpile of emergency supplies.

UN Foundations: The UN Foundation-Vodafone Group Foundation alliance strives to be

the leading public-private partnership using strategic technology programmes to strengthen

the UN’s humanitarian efforts worldwide.

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MapAction: VGF is supporting MapAction’s humanitarian aid effort in delivering

situation maps updated hour-by-hour in the field, that enable aid agencies to do their job of

delivering assistance.

Global Focus: World of Difference: World of Difference (WoD) is an innovative charitable

volunteering initiative currently being delivered across the international network of

Vodafone Foundations.

WoD is based around the concept that individuals and community organisations should

identify what they feel passionate about and then be provided with the resources to make

changes happen.

WoD creates the opportunity for individuals to work for one year for a charitable partner

organisation, with salary and related support provided. The winners are chosen on merit

through a public competition. To date, 52 individual winners have participated or are

currently participating.

Based on a model which was initially developed by the Vodafone New Zealand

Foundation in 2002, WoD programmes have also been successfully launched by the

Vodafone Australia Foundation, the Vodafone Netherlands Foundation and the Vodafone

Ireland Foundation.

There are some slight variations in programme implementation from country to country,

but the basic format of the WoD model – support for an individual to work for one year in

28

a cutting-edge charitable organisation to achieve pre-agreed outcomes – is the same in each

foundation.

Sponsorships: Vodafone sponsors many events. Some of them are:

Vodafone McLaren Mercedes: Vodafone had a contract with the Mercedes. Vodafone

McLaren Mercedes has extended Lewis Hamilton’s contract with the team for a further

five years. The new agreement, which starts for 2008, will run up to and including the

2012 season.

UEFA Champions League: Vodafone is in its second season as Official Partner and

Official Mobile network of the UEFA Champions League, the world's largest annual

football competition.

Vodafone is delighted to be at the forefront of Europe’s premier club competition. After

the successes of last season's UEFA Champions League sponsorship and the agreements

announced in April to sponsor the UEFA Cup Final and UEFA Super Cup, Vodafone is

looking forward to strengthening its position as a brand passionate about the beautiful

game.

It has also come up with Vodafone Stadium of Fans wherein fans can make teams and play

for themselves.

England Cricket Team: Vodafone can’t get enough of the England Cricket Team – 11

years on and their support is still going strong as the principal partner of the Team. And it’s

not just about a logo on a shirt. This partnership gives employees and lucky customers

unbelievable access to get up close and personal with the Team.

 As you can imagine, the life of a cricketer means the team are on the road 10 out of 12

months of the year so a BlackBerry is a must have. The Team use their handsets to email

29

friends & family, surf the net, listen to music and send texts which keep them up to speed

no matter where they are in the world.

Internal PR: Vodafone operates a range of all-employee share plans to encourage

widespread employee share ownership throughout the company. Vodafone won a Global

Equity Organization award for best share plan communications in 2006 for the second year

running.

They also operate a number of pension plans which vary according to the conditions and

practices in the countries concerned. These are provided through defined benefit and

defined contribution arrangements. Defined benefit schemes provide benefits based on the

employees’ length of pensionable service and their final pensionable salary or other

criteria. Defined contribution schemes offer employees individual funds that are converted

into benefits at the time of retirement. They also involve them in the decisions of the

company. They conduct training programs also for the benefit of the employees and for

better experience. They also promote leadership on a large scale. This is done in order to

maintain very good relations with the employees of the organization.

PR strategies of Vodafone India:

Press Releases: Vodafone India doesn’t have a separate press office to issue all the Press

Releases. The PR Head himself makes the entire press release and then it’s confirmed by

the spokesperson of Vodafone India i.e Navin Chopra and is then released. There they

believe Press Releases help in order to maintain very good relations with the media and it

also helps them to be in the eye of the audience.

Press Conferences: Vodafone uses press conferences as a very powerful tool in handling

the media and seeking consumer attention. They hold press conferences at the launch of

new services or products of any kind. They also use press conferences as a tool in order to

control crisis.

30

Media Interviews: Vodafone undertakes media interviews with proper planning. It is

sometimes initiated by media while most of the time it is by Vodafone. It is handled very

carefully specially during crisis or when a new service is launched and is this used as a

very good platform for promotion, building image and even control crisis.

Hoardings and Advertisements: Vodafone uses advertisements as a powerful tool. The

hoardings are placed in every corner of a city. It helps in seeking immediate attention of

the consumers.

Vodafone also uses advertisements. It has it corporate news in the CAT 1 papers like

Economic Times, Times of India, Hindustan Times and many others. It also ahs its news in

CAT 2 papers including all the regional language papers. It also advertises on television

and radio.

They also have running ads on Star India about the news updates or new services or new

tariff plans. Vodafone has entered into a Rebranding Campaign with Star India in order to

promote the Essar Brand.

Newsletter: Vodafone India issues house journals for its employees named Baatchit. They

believe this helps in maintaining good relations with them. It is issued by the HR Head.

Agency: The last PR strategy that they use is that they have hired an agency that goes to

the Vodafone store with genuine problems. Then they report to the top management of the

company stating how the executives at the store responded to their queries and how did

they behave with them. This helps the company in making the decisions regarding those

executives at the stores. This strategy has helped them a lot in making Vodafone stores a

better place so that their customers get even better service.

Successful Strategies:

Vodafone has had many successful strategies. One of them is the success of Vodafone in

India. Vodafone for the Indian masses was a completely new brand name. Therefore,

Vodafone had to see that the positive image of Vodafone is built up in the minds of the

people.

In order to promote the brand Vodafone in India, a Central PR team was set up in India.

They handled all the promotion activities. They held many press conferences and issued

31

press releases. They also arranged for media interviews. They released many positive

articles about the Vodafone company in all the CAT 1 papers.

Vodafone as been successful in retaining the position of Hutchison Essar and infact make

this telecom company much more successful. Today Vodafone has 33 lakh customers. Its

adding 2 lac customers every month.

Crisis:

It had faced a huge crisis during bomb blasts and floods. There was no network at all. The

cell sides were damaged in water. They had the Motorola machine. It couldn’t take the

heavy load of calls. That is why it became slow. There were no generators so the whole

system stopped functioning because the supply of electricity was cut off.

This was a very delicate situation. The company and the PR dept dint lose their cool. They

were calm and were cautious and quick in taking steps. At that time they immediately

flashed news on all the news channels that people shouldn’t take more time to talk as it

was blocking the call lines. The PR dept also informed all its employees not to use their

mobile phones so that that much load is reduced. They also held an immediate press

conference in order to explain what was going on and why was there no network.

As a result of this crisis, they immediately took steps to evaluate what went wrong. They

immediately planted generators everywhere. They started using fibre optic cables. They

immediately changed their Motorola machine and replaced with one of a more superior

quality. After this incident they also started with a Disaster Management Cell in the

company.

PROMOTIONAL STRATEGY

Vodafone to “Touch Tomorrow” with a new brand vision

The Hutch Mobile promoted Vodafone cellular service will go in for repositioning of its

brand image. The new brand ethos is portrayed in two distinct fashions - the tag line

"Touch Tomorrow", which underscores the leading theme for the new brand vision,

32

followed by "The Good Life", which underscores a more caring, more customer centric

organization. Aimed at re-engineering its image as just simply a cellular service provider to

an all out information communications services provider, Touch Tomorrow is meant to

embrace the new generation of mobile communication services and the changing scope of

customer needs and aspirations that come along with it

The new communication is about a new dimension in the cellular category that goes

beyond the Internet, SMS, roaming, IVRS, etc but which engulfs the whole gamut of

wireless digital broadband services that will constitute tomorrows cellular services. The

new campaign is in two phases - the first of which will communicate overall brand

philosophy and the second products and services. According to Mr. Jagdish Kini, Chief

Operating Officer, Hutch Mobile Limited, Karnataka "We are adopting a new brand-

platform - Touch Tomorrow - not only to reflect our corporate ethos but also business

strategy".

The new identity will have the logo in Red, Black and White colours along with lower case

typography to convey warmth. Vodafone will incorporate the latest branding in all of its

communication and will soon be going in for an enhanced promotional drive to establish

the brand's presence.

Life time Plan

PRE-PAID card users need not worry anymore about recharging their coupons every

month. Company has launched a plan that allows users to take a pre-paid connection with

lifetime validity for a one time payment of Rs. 999. Subscribers availing themselves of this

scheme will also get full talk time for the recharge coupon they purchase and also have the

option to buy Taiwanese manufactured Bird mobile handsets for as low as Rs. 1,399.

The move is aimed at stopping the churn in the pre-paid subscriber base. Once a subscriber

takes this plan, he will always be an Vodafone subscriber whether the mobile is being used

or not.

MARKET SITUATION

At the time of launch

The first mover in the market was Vodafone which launched its services in Delhi in Aug

1995 (Informal launch). Essar Cellphone followed by launching its services informally in 33

Oct 95. At this point of time, the market was at a nascent stage, awareness level was low

and both operators independently tried to spread awareness and educate the people

Once the networks were commercially launched, it became a number game with a

multitude of schemes being offered to woo customers Initially the cellphone was perceived

as a status symbol and utility took a back seat The target segment in Delhi were corporate

and the high income group. The average capacity installed was for 1.5 lakh subscribers.

This coupled with the steep license fee paid to DOT put pressure on the operators to break-

even by rapidly expanding their markets. In the first two years, this led to a number of

schemes being offered and prices crashing.

COMPETITIVE SITUATION

Vodafone launched its services before Essar and skimmed the market picking up the bulk

of the high usage premium clients. This is a very competitive industry with the two

companies differentiating either on value-added services or price. Vodafone is perceived

as the high quality provider and has a premium image. Essar, on the other hand, is

perceived as the lower end service provider. Vodafone positions itself as the market leader

on the basis of the number of subscribers. Essar is trying to counter this by emphasising on

the reach of its network and the quality of its service. However, Essar is somewhat not

been very successful largely due to the inconsistency in advertising

To promote themselves, both the players have been dependent on tactical advertising

However, they have restrained from using comparative advertising Hoardings have been a

very popular medium for carrying the advertisements Vodafone has also been advertising

on television using the Hutch Telecom name.

SALES DEPARTMENT AND STRATEGY

A. Major Accounts (Direct Channel)

Handles corporate (named and famed) accounts

Forecasting of sales

Mapping the accounts

34

Providing after sales support to the subscribers.

Maintaining call reports for records.

Providing Feedback to the marketing department regarding the requirement of the

market.

B. IDC (indirect Channel)

Handling distribution

Maintaining records and level check of the channel partner

Liaisoning between the channel partner and the company.

Target achievement

Training the executives of the channel

C. Distribution Support

1. Logistics

Monitor handset and SIM card requirements of channel partners and co-

ordinate with stores

Settle areas of concerns such as incentive claims of channel partners

2. Rental

Provide cellular services (SIM cards) on rent.

Provide cellular phones on rent

Useful for people visiting Delhi for a short interval.

3 Telesales

Call customers and generate sales lead.

Follow up with the customers, if they need any assistance

Pass on the sales lead to the channel department.

35

4 Audit

Consultant to the Vodafone showrooms.

Monitor the operations at the Vodafone distribution outlets Organize training.

5. Retail

Locate shops to open retail counters.

Monitor the retail counters.

MARKET SEGMENTATION

Segmentation is beneficial because of better predictability of the target consumer group,

minimization of risk exposure, better ability to fine-tune a product / service to the

requirement of target buyer and the resultant ease in designing a proper designing

marketing mix strategy In this case segmentation is on the bade of income.

In evaluating different market segments the company looks at two factors The overall

attractiveness of the segments and the company's objectives & resources The present

market for Cellular phones, pagers and conventional phones is as follows

Premium Middle Economy

Upper Lower Upper Lower Upper Lower

Cellular Phones X X X - - -

Pager X X X X - -

Conventional Phones X X X X X -

X Market Segment Targeted

36

TARGET MARKET SEGMENT

Vodafone has targeted the premium and upper middle class. The rationale behind it is that

only those segments should be targeted who value time and have the paying capacity. It Is

also planning to target the business tourists during their stay in the capital

About 60% of the clientele are top executives of corporate houses. About 15% are foreign

organisations and the rest are professionals and small businessmen. During the

introduction stage there was intense pressure to get consumers across to hook up with their

brand, because getting them to switch brand loyalty later would be hard

So far Vodafone marketers have been concentrating totally on the business executive class

but now that the basic viable volumes has beer) built up and prices have declined to a

certain extent they are planning to venture further a field.

POSITIONING

The product is sought to be positioned as a business efficiency tool. a lifestyle revolution

and a status symbol The emphasis is to remove misconception that the cellphone is an

expensive means of communication and drive home the point that the cellphone is actually

a day-to-day utility

PRODUCT POLICY AND PLANNING

The product or service is the heart of the marketing mix. Without a product or a service

customers' needs cannot be satisfied.

The basic product promise by Vodafone is mobility. Vodafone's main marketing strategy

is to be a first mover all the time. It has recognised the significance of making the first

move-- because in the field of Communication & Information Technology changes occur

at a tremendous pace.

Effective product segmentation has to be carried on continuously because basic services

can be and will be copied and in time become expected component of the product.

Vodafone seeks to carry out this segmentation through provision of new information

services and making new facilities available. The product policy and planning depends on

the stage of the product life cycle. At present the cellular phone market has reached the

37

maturity stage. Since, the premium segment is nearing saturation the company targeting

the upper middle and middle-middle class. In order to do so Vodafone is trying to

optimise the price performance package by offering suitable "product bundling".

This involves the selection of the suitable hardware (handset) and its software (its

services.) with reasonable price in order to deliver maximum price performance to its

customers. In addition, it offers free Airtime services and other concessions to make the

prices and thus the product more attractive. It has also opened a 24 hours customer

service.

Only price doesn't serve as an effective differentiator, value added services become the

effective differentiator.

The "Value Added Services" provided from Vodafone are:-

1). Voice Mail service

This system is similar to the answering machine - if the user is not able to answer a call for

some reason the caller can leave messages in the voice mail box which can be later

retrieved by the user

ii) Short Message Service

The short message service is like a two-way pager. It gives an option of sending and

receiving text messages directly from one mobile phone to another without the intervention

of an operator.

iii) Mobile Fax 1 Data Service

This service helps the subscriber to send and receive Faxes, access E-mail, download

computer files from other systems and remotely log on to another computer and surf the

Internet.

iv) Cash Card

38

The cash card is a pre-paid and pre-activated card which allows the buyers to buy air time

in advance. All it requires is the payment of an initial amount. This is a useful service for

people who travel to Delhi often and those who want to control the expenses on their calls.

v) Caller ID

Displays calling person's number.

vi) Outgoing call restriction

To prevent or limit outgoing calls, for example, in peak hours. Also possible to exclude

one or several countries, or any geographical region, to permit only local calls, or to limit

the outgoing calls to a listed number.

viii) Call forward

Incoming calls can be forwarded to another fixed or mobile phone.

Besides these some other services provided by Vodafone are - Call conferencing, Call

Broadcast et cetera.

It is in the operators -Interest that they not only get many subscribers but also get them to

use the mobile facility frequently. In the early stages getting increases to subscribe may be

easier than getting them to talk since they will find it costlier to use the mobile phone as

compared to a conventional phone [if is believed that initially cellphones would be used

buy]

viii) Roaming Facility

Roaming facility is available while the subscriber is travelling. The billing is done in the

home network (Delhi). Roaming facility is available manually* as well as semi-

automatically. Once a subscriber is In any other city or country, where a GSM network is

available, simply insert the SIM card of the local operator Into your handset and start

talking.

* Manual Roaming means a separate SIM card is provided for each city

** Semi automatic roaming means one card has the facility for different cities.

39

VODAFONE'S MARKETING ORIENTATION.

Since this is a high-involvement expensive product, the service provider has to fully take

care of the customers.

a) They take personal responsibility to "get" the answer for any problem faced by the

customer

b) They anticipate customers' problems and take pro-active steps to prevent them

c) They give answers to the questions & requests, quickly & efficiently.

d) They have a positive tone & manner while interacting with customers.

e) They end the interaction on a positive or a humorous note-making the last 30

seconds count.

Vodafone realises that attracting people 'Is easy but converting them into loyal customers

is hard, hence emphasis is on maintaining a 'Smiling and a Friendly Atmosphere' to please

and retain the customer.

PRICE AND PRICING POLICY

VODAFONE has realised that the Indian market is price sensitive. Therefore it care of the

has come up with various innovative tariff schemes to take needs of different category of

customers- Generally, the cellular services are more expensive than the land line based

telephone services. This is due to the reason that the operating companies are required to

pay a fee to the government for using airtime.

MARKETING StrategyAdopted by Vodafone

Hutch has spent a considerable amount on advertising its mobile phone service, Vodafone.

Besides print advertising, the company had put up large no of hoardings and kiosks in and

around Delhi.

The objective behind designing a promotion campaign for the ‘Vodafone’ services is to

promote the brand awareness and to build brand preferences.

It is trying to set up a thematic campaign to build a stronger brand equity for Vodafone.

Since the cellular phone category itself is too restricted, also the fact that a Cellular phone 40

is a high involvement product, price doesn't qualify as an effective differentiator. The

image of the service provider counts a great deal. Given the Cell phone category, it is the

network efficiency and the quality of service that becomes important. What now the buyer

is looking at is to get the optimum price-performance package. This also serves as an

effective differentiator

Brand awareness is spread through the' campaigns and brand preference through brand

stature. Vodafone's campaign in the capital began with a series of 'teaser' hoardings across

the city,' bearing just the company's name and without explaining what Vodafone was. In

the next phase the campaign associated Vodafone with Cellular only thereafter was the

Hutch Cellular connection brought up. Vans with Vodafone logos roamed the city, handing

out brochures about the company and its services to all consumers. About 50,000 direct

callers were sent out. When the name was well entrenched in the Delhiites’s mind, the

Vodafone campaign began to focus on the utility of Cellphone. In the first four months

alone Airtei's advertisement spend exceeded Rs. 4 crores.

As of today the awareness level Is 60% unaided. This implies that if potential or

knowledgeable consumers are asked to name a Cellular phone service provider that is on

the top of his/her mind 60% of them would name Vodafone. As for aided it -is 100% (by

giving clues and hints etc.).

Brand strength of a product or the health of a brand is measured by the percentage score of

the brand on the above aided and the unaided tests. The figures show that Vodafone is a

healthy and a thriving brand.

Every company has a goal, which might comprise a sales target and a game plan with due

regard to Its competitor. Vodafone 's campaign strategy is designed keeping in mind its

marketing strategy. The tone, tenor and the stance of the visual ads are designed to convey

the image of a market leader in terms of its market share. It tries to portray the image of

being a "first mover every time" and that of a "market leader".

The status of the product in terms of its life cycle has just reached the maturity stage in

India. It is still on the rising part of the product life cycle curve in the maturity stage.

41

The diagram on the left hand side shows the percentage of the users classified into heavy,

medium and low categories. The right hand side shows the revenue share earned from the

three types of users.

Vodafone, keeping in mind the importance of the customer retention, values its heavy

users the most and constantly indulges in service innovation. But, since heavy users

comprise only 15 - 20% of the population the other segment cannot be neglected.

The population which has just realised the importance of cellular phones has to be roped

in. It is for this reason that the service provider offers a plethora of incentives and

discounts. Concerts like the "Freedom concert" are being organised by Vodafone in order

to promote sales. The media channel is chosen with economy in mind. The target segment

is not very concrete but, there is an attempt to focus on those who can afford. The print

advertisements and hoarding are placed in those strategic areas which most likely to catch

the attention of those who need a cellular phone. The product promise (which might cost

different 1 higher) is an important variable in determining the target audience.

Besides this, other promotional strategies that Vodafone has adopted are .

(i) People who have booked Vodafone services have been treated to exclusive

premiers of blockbuster movies. Vodafone has tied up with Lufthansa to offer customer

bonus miles on the German airlines frequent flier's programs.

(ii) There have been educational campaigns, image campaigns, pre launch

advertisements, launch advertisements, congratulatory advertisements, promotional

advertise-ments, attacking advertisements and tactical advertisements

SWOT Analysis is a strategic planning method used to evaluate the Strengths,

Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It

involves specifying the objective of the business venture or project and identifying the

internal and external factors that are favorable and unfavorable to achieving that objective.

The technique is credited to Albert Humphrey, who led a research project at Stanford

University in the 1960s and 1970s using data from Fortune 500 companies.

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Internal

Strengths Weaknesses

Leadership Position

Global Brand Strength

High Geographical reach

Centralized Control – Low

Flexibility

High Consumer churn rates

External

Opportunities Threats

Expanding marketing boundaries

Growth through 3G

Strategic Alliances

Increased Competition

Market saturation in Europe

Emergencies of Low cost

Brands

43

SWOT ANALYSIS OF VODAFONE

4.1) Strengths:

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 marketing a differentiated image by promoting a Vodafone life style,

currently enjoys a 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. In the few countries that Vodafone is not

physically present (e.g. Norway) it has well established strategic alliances which allow for

a better service of mobile clients.

4.2) Weaknesses:

The expansion of Vodafone has been completed at the expense of direct control of its

operations. The company grew through a process of acquisitions of national

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 centralised 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 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 rates reaching the level of 32.8% in the UK compared to

O2’s 24%.

4.3) 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 opportunities through a careful market segmentation and exploitation of particular

44

profitable 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 establishing strategic alliances to develop

customized solutions for end‐users: Vodafone recently announced two new partnerships,

one with supermarket group ASDA to launch an ASDA branded mobile service in the UK,

and another with electrical retailer DSG International to provide mobile solutions to small

businesses. This could further be enhanced to avoid being a late‐entrant in this new method

of distribution which offers access to a wide potential customer base.

4.4) Threats:

The European part of Vodafone’s market is characterized by existing high levels of

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.

45

LITRATURE REVIEW

Customer satisfaction, a business term, is a measure of how products and services supplied

by a company meet or surpass customer expectation. It is seen as a key performance

indicator within business and is part of the four perspectives of a Balanced Scorecard.

In a competitive marketplace where businesses compete for customers, customer

satisfaction is seen as a key differentiator and increasingly has become a key element of

business strategy.

There is a substantial body of empirical literature that establishes the benefits of customer

satisfaction for firms.

3.2) Measuring customer satisfaction

Organizations are increasingly interested in retaining existing customers while targeting

non-customers; measuring customer satisfaction provides an indication of how successful

the organization is at providing products and/or services to the marketplace.

Customer satisfaction is an ambiguous and abstract concept and the actual manifestation of

the state of satisfaction will vary from person to person and product/service to

product/service. The state of satisfaction depends on a number of both psychological and

physical variables which correlate with satisfaction behaviors such as return and

recommend rate. The level of satisfaction can also vary depending on other options the

customer may have and other products against which the customer can compare the

organization's products.

Because satisfaction is basically a psychological state, care should be taken in the effort of

quantitative measurement, although a large quantity of research in this area has recently

been developed. Work done by Berry, Brodeur between 1990 and 1998 defined ten

'Quality Values' which influence satisfaction behavior, further expanded by Berry in 2002

and known as the ten domains of satisfaction. These ten domains of satisfaction include:

Quality, Value, Timeliness, Efficiency, Ease of Access, Environment, Inter-departmental

Teamwork, Front line Service Behaviors, Commitment to the Customer and Innovation.

These factors are emphasized for continuous improvement and organizational change

measurement and are most often utilized to develop the architecture for satisfaction

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measurement as an integrated model. Work done by Parasuraman, Zeithaml and Berry

between 1985 and 1988 provides the basis for the measurement of customer satisfaction

with a service by using the gap between the customer's expectation of performance and

their perceived experience of performance. This provides the measurer with a satisfaction

"gap" which is objective and quantitative in nature. Work done by Cronin and Taylor

propose the "confirmation/disconfirmation" theory of combining the "gap" described by

Parasuraman, Zeithaml and Berry as two different measures (perception and expectation of

performance) into a single measurement of performance according to expectation.

According to Garbrand, customer satisfaction equals perception of performance divided by

expectation of performance.

The usual measures of customer satisfaction involve a survey with a set of statements using

a Likert Technique or scale. The customer is asked to evaluate each statement and in term

of their perception and expectation of performance of the organization being measured.

3.3) Vodafone had highest customer satisfaction index in 2007

Lisbon, 25 August 2008 - Vodafone obtained the highest customer satisfaction index in the

telecommunications sector in 2007, according to annual results published by Anacom.

Vodafone achieved a satisfaction index of 74.4 (on a scale of 0 to 100), the highest score of

all the companies in the Portuguese telecommunications market and considerably above

the sector average of 67.6.

In the report published by Anacom, Vodafone is ranked in first place in all the indicators

included in the survey: Satisfaction with the operator, Image that customers have of the

operator, Customer Expectations, Perceived Quality of the operator's network and services,

Perceived Value for Money, Complaints received and their handling, and Loyalty of

customers to their operator.

In the Perceived Quality indicator, Vodafone obtained a score of 8.3 points for overall

quality, way ahead of the scores of the other two operators (both obtained 7.7 points).

Vodafone comes top in all the indicators for perceived quality of network and services:

technical quality of the network (8.2 points); customer service and advice capability (7.6

points); quality (8.2 points), diversity (8.0 points) and reliability (7.9 points) of products

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and services offered; clarity and transparency of information supplied (7.8 points); network

coverage (7.9 points) and clarity and transparency of price plans (7.9 points).

Similarly, in the indicators measuring the Image of mobile operators, Vodafone comes top

in the five categories analyzed (on a scale of 1 to 10): 'It is a reliable company in terms of

what it says and what it does' (8.1 points); 'It is stable and well established in the market'

(8.8 points); 'It contributes positively to society' (7.5 points); 'It cares about its customers'

(7.6 points); and 'It is innovative and forward looking' (8.5 points).

The methodology used in the ECSI Portugal 2007 survey (ECSI – European Customer

Satisfaction Index) is similar to that used by the European Commission to survey customer

satisfaction in 25 Member States, enabling comparisons to be made between the results

obtained in each country.

The ECSI Portugal 2007 Communications survey was carried out by the Higher Institute of

Statistics and Information Management at Lisbon's New University in partnership with the

Portuguese Quality Institute and the Portuguese Quality Association, with sponsorship

from Anacom.

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RESEARCH METHODOLGOY

Objective of Study:

Following are the main objective to study about the customer satisfaction on Vodafone.

To study telecommunication industry.

To study the company profile of Vodafone.

To study customer satisfaction of Vodafone.

To study various Marketing activities provided by Vodafone.

To study the various services provided by Vodafone.

To know the expectation of Vodafone Customers.

SCOPE OF THE STUDY

There are many benefits related to take this study. Some of the benefits of taking this study

are as follows:

By analyzing this information, the company would be able to better design schemes

& services & target right prospects’ needs & wants.

More people will get aware about Vodafone that will increase profit level of

Vodafone.

This study helps to identify the behavior of consumer when there are no offers &

schemes from Vodafone.

Problem Identification:

The first and the most important step of marketing research is properly defining the

problem. In order to identify the research problem two categories of problem should be

carefully noticed.

Here the researcher’s problems are:-

A number of customers are not satisfied with services, new schemes and offers.

A number of customers are not satisfied with the network coverage.

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A number of customers are not satisfied with the current call rates of Vodafone.

A number of customers are not satisfied with the Free SMS schemes.

A number of customers are not satisfied with the service of customer care of

Vodafone.

RESEARCH DESIGN:

Research design indicates the methods and procedure of conducting research study.

Research design can be done in following three types:- 1 Exploratory Research:-

Exploratory research focuses on the discovery of new ideas and is generally based on

secondary data.

2 Descriptive Research:-

Descriptive research is undertaken when the researcher want to know the

characteristics of certain groups.

3 Causal or Experimental Researches:-

An experimental research is undertaken to identify causes and effect relationship

between two variables.

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DATA ANALYSIS AND INTERPRETATION

Do you have a mobile phone?

Purpose:

The main purpose of this question is to know how many respondents use mobile phone.

Interpretation:

93% of the respondents are have a mobile phone while 7% of the respondents do not have

a mobile phone.

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Suggestions Yes No

No. of respondents 93 7

Q2) Are you aware about telecommunications services?

Purpose:

The main purpose behind this question is to know about the awareness of

respondents regarding different telecommunications services and also to know about which

telecommunication(operator’s) service they use.

Interpretation:

95% of the respondents are aware about telecommunications services while 5% are not

aware.

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Suggestions Yes No

No. of respondents 95 5

Which operator’s service do you use?

Interpretation:

Major respondents using mobile are enjoying Vodafone services. 16% of the respondents

use Airtel, 6% respondents use Idea while 12%, 4% and 2% respondents use Reliance,

BSNL and Tata Indicom respectively.

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Operator’s service name No. of respondents

Vodafone 87

Airtel 29

Idea 17

Reliance 21

BSNL 5

Tata Indicom 3

Q3) Are you aware about Vodafone?

Purpose:

The purpose behind this question is to know about the awareness of Vodafone among all the

respondents.

Suggestions Yes No

No. of respondents 87 0

Interpretation:

Here 100% of respondents are aware about Vodafone Services.

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Q4) From which source you came to know about Vodafone?

Purpose:

The purpose behind this question is to know from which source the respondents came to

know about Vodafone.

Interpretation:

36% of the respondents are aware about Vodafone through Advertisements, 29% are

aware because of Hoardings while 20% and 15% of the respondents are aware because of

Newspapers and Mouth Publicity respectively.

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Sources No. of respondents

Advertisements 63

Hoardings 52

Newspapers 35

Mouth Publicity 26

Q5) Since how long you are using Vodafone Services?

Purpose:

The purpose behind this question is to know about the usage time of Vodafone customers

i.e. since how long they are using Vodafone services.

Interpretation:

Major Respondents using Vodafone are old customers. 39% of the respondents use

Vodafone services from past more than 1 year while the lowest is 14% respondents using

Vodafone services less than 1 month.

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Time period No. of respondents

Less than 1 month 12

2-6 months 19

6-12 months 22

More than 1 year 34

Q6) Which of the following services do you use of Vodafone?

Purpose:

The purpose behind this question is to know which services do the Vodafone customer

use, Pre-Paid or Post-Paid.

Interpretation:

84% of the respondents use pre-paid services while only 16% of the respondents use

post-paid services.

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Services No. of respondents

Pre-Paid 73

Post-paid 14

Q7) Which services are more helpful to you while using Vodafone Services?

Purpose:

The purpose behind this question is to know which services are more helpful to the

respondent while using Vodafone.

Interpretation:

Here major Respondents are youngsters so they mainly use SMS services of Vodafone.

37% of the respondents use Vodafone for SMS services while only 14% of the respondents

use Vodafone for Value Added Services.

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Services No. of respondents

Call Rates 27

SMS Rates 48

Network 36

Value Added Services 19

Q8) Do you call at customer care?

Purpose:

The purpose of this question is to know how

many times and how often the respondents call at customer care of Vodafone.

Interpretation:

87% of the respondent calls at customer care while 13% respondents do not call at

customer care.

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Suggestions Yes No

No. of respondents 76 11

If yes, how often you call at customer care?

Interpretation

Major respondents here call customer care occasionally. 31% respondents respondents call

customer care once a month while 16% and 7% of respondents call once a week and daily

respectively.

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Time Period No. of respondents

Daily 5

Once a week 12

Once a month 24

Occasionally 35

Q9) For what reason you call at customer care?

Purpose:

The main purpose of this question is to know the reason of the respondents regarding

calling at customer care.

Interpretation:

34% of respondents call at customer care for complaining purpose while 30%, 19% and

17% of respondents call customer care for other queries, information regarding new

schemes and value added services respectively.

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Reasons No. of respondents

Value Added Services 21

Information regarding new schemes 23

Complaining 42

Other queries 36

Q10) Rate the following on the basis of your satisfaction.

Services Excellent Very Good Fairly Good Average Poor

Network 31 29 17 7 3

SMS Rates 6 19 35 24 3

New schemes and

offers

3 14 27 33 10

Customer Care 6 32 29 15 5

Recharge Outlets 12 28 31 14 2

Call Rates 2 20 43 19 3

Value Added

Services

9 24 29 19 6

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Network:

Purpose:

Service Excellent Very Good Fairly Good Average Poor

Network 31 29 17 7 3

The purpose of this analysis is to know the perspective of the customers of Vodafone

regarding network service.

Interpretation:

Here major respondents are satisfy with the network coverage. 36% of the

respondents are rate the Vodafone’s network excellent, 33% rate it very good, 20% rate it

farely good while 8% and 3% rate it average and poor.

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SMS Rates:

Purpose:

The purpose of this analysis is to know the perspective of the customers of vodafone

regarding Rates of SMS.

Service Excellent Very Good Fairly Good Average Poor

SMS Rates 6 19 35 24 3

Interpretation:

Here major respondents are not much satisfied with the SMS rates of Vodafone as

major respondents are youngsters. 7% of respondents rate it excellent, 22% rate it very

good, 40% rate it fairly good, 28% rate it average, 3% rate it poor.

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New Schemes and Offers:

Purpose:

The main purpose of this analysis is to the respondent’s perspective related to the new

schemes and offers provided by Vodafone.

Service Excellent Very Good Fairly Good Average Poor

New schemes

and offers

3 14 27 33 10

Interpretation:

Here major respondents are not much satisfied with new schemes and offers of

Vodafone. 38% respondents rate new schemes and offers as average, 31% respondents rate

it as fairly good, 16% rate it as very good while 12% and 3% rate it as poor and excellent

respectively.

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Customer Care:

Purpose:

The main purpose of this analysis is to know about the satisfaction of customer care

service provided by Vodafone to their customers.

Service Excellent Very Good Fairly Good Average Poor

Customer Care 6 32 29 15 5

Interpretation:

Customer care service of Vodafone is better compared to some of the other

services. 37% respondents rate it as very good, 33% rate it as fairly good, 17% rate it as

average, and 6% and 7% rate it as poor and excellent respectively.

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Recharge Outlets:

Purpose:

The purpose behind this analysis is to know about the satisfaction of the Vodafone

customers regarding recharge outlets.

Service Excellent Very Good Fairly Good Average Poor

Recharge Outlets 12 28 31 14 2

Interpretation:

Recharge outlets of Vodafone are majorly rated on fairly good and very good basis.

36% of the respondents rate it as fairly good, 32% rate it as very good, 16% rate it as

average, 14% rate it excellent and 2% respondents rate it as poor.

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Call Rates:

Purpose:

The purpose behind this analysis is to know about the perception of vodafone customers

regarding different call rates.

Service Excellent Very Good Fairly Good Average Poor

Call Rates 2 20 43 19 3

Interpretation:

Major percentage of respondents are not happy with the call rates of Vodafone.

49% of respondents rate call rates of vodafone as fairly good, 23% rate it as very good,

22% rate it as average while 4% and 2% respondent rate it as poor and excellent

respectively.

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Value Added Services:

Purpose:

The purpose behind this analysis is to know about the perception of vodafone customers

regarding Value Added Services.

Service Excellent Very Good Fairly Good Average Poor

Value Added

Services

9 24 29 19 6

Interpretation:

Value added services of Vodafone are quite feasible as compared to some of the

other services. 33% respondents rate it as fairly good, 28% rate it as very good, 22% rate it

as average while 10% and 7% rate it as excellent and poor respectively.

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Q12) Why you are not using Vodafone Services?

Purpose:

The purpose of this question is to know why other respondents do not use Vodafone

services.

Interpretation:

6 don’t use Vodafone services because of high prices. 3 respondents don’t use Vodafone

services because of poor services while 2 respondents each don’t use vodafone services

because of lack of awareness and poor network.

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Reasons No. of respondents

Lack of awareness 2

High Prices 6

Poor Services 3

Poor Network 2

CONCLUSION

Follwing are the conclusion that the researcher found after the survey.

From the above analysis the researcher concludes that major respondents are

dissatisfied with some of the major services like call rates, SMS rates and new

schemes & offers.

Major respondents from all respondents use services of Vodafone.

Major customers of Vodafone are old customers so many of the respondents are

satisfied with the services of Vodafone and thus they would like to recommend

Vodafone to others.

Major respondents using Vodafone use pre-paid services compared to post-paid

services.

Major respondents are youngsters so they need more SMS facilities and low call

rates, but Vodafone dissatisfies these age group (18-25) as their call rates and SMS

rates are much high.

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RECOMMENDATION

Following are some of the suggestions given by the researcher so that Vodafone can serve

people and its customers in an improved way:

Vodafone should decrease call rates for local users.

Vodafone should provide more offers to Post-Paid customers so that the number of

Post-Paid customers increase.

Vodafone should bring introduce some new SMS schemes for the youngsters.

Vodafone should introduce more schemes and offers.

Vodafone should provide more schemes and offers to its old customers.

Vodafone should decrease call rates of STD and ISD.

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BIBLIOGRAPHY

Books:

Marketing Management – Philip Kotler, Kevin Lane Keller.

Websites:

http://www.vodafone.com/start/media_relations/news/local_press_releases/

portugal/portugal_press_release/vodafone_had_highest.html

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

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APPENDIX

Q1) Do you have a mobile phone?

o Yes

o No

Q2) Are you aware about telecommunications service?

o Yes

o No

If yes, then which operator’s Service do you use?

o Vodafone (Multi-choice)

o Airtel

o Idea

o Reliance

o BSNL

o Tata Indicom ( If not Vodafone then go to Q12 )

Q3) Are you aware about Vodafone?

o Yes

o No (If No, then go to Q11 )

Q4) From which source you came to know about Vodafone?

o Advertisement (Multi-choice)

o Hoardings

o Newspapers

o Mouth Publicity

Q5) Since how long you are using Vodafone services?

o Less than 1 month

o 2-6 months

o 6-12 months

o More than 1 year

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Q6) Which of the following services do you use of Vodafone?

o Pre-paid

o Post-paid

Q7) Which services are more helpful to you while using Vodafone services?

o Call rates (Multi-choice)

o SMS service

o Network

o Value Added Services

Q8) Dou you call at customer care?

o Yes

o No

If yes, how often you call at customer care?

o Daily

o Once a week

o Once a month

o Occasionally

Q9) For what reason you call at customer care?

o Value added services (Multi-choice)

o Information regarding new schemes

o Other queries

o Complaining

Q10) Rate the following services on the basis of your satisfaction.

Services Excellent Very Good Fairly good Average Poor

Network

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SMS rates

New schemes and offers

Customer Care

Recharge outlets

Call Rates

Value Added Services

Q11) What makes you unaware about Vodafone?

o Less Advertisements

o Less Publicity

o Others

(If others then mention ________________________)

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