IILM COLLEGE OF MANAGEMENT STUDIES

MOS PROJECT REPORT-“CUSTOMER SATISFACTION SURVEY: TELECOM SECTOR”

SUBMITTED TO – PROF. KRITI SWARUP

SUBMITTED BY – MD. KABEJOR RAHMANROLL NO- 57PGDM 10-12(GENERAL)

CUSTOMER SATISFACTION:

According to Philip Kotler, “Satisfaction is a person’s feelings of pressure or

disappointment resulting from product’s perceived performance (outcome) in

relation to his or her expectations. Customer satisfaction is the level of a person’s

felt state resulting from comparing a product’s perceived performance (outcome) in

relation to the person’s expectations”.

This satisfaction level is a function of difference between perceived performance

and expectations. If the product’s performance, exceed expectation the customer

highly satisfied or delighted. If the performance matches the expectations the

customer is satisfied. If the products performance fall shorts of expectations the

customer is dissatisfied.

1 Many companies are aiming for high satisfaction because customers who are just

satisfied still find it easy to switch when a better offer comes along. High satisfaction

or delight creates an emotional affinity with brand.

2 Variety of factors that affect customer satisfaction includes product quality, product

availability and after sales support such as warranties and services. Customer

satisfaction is seen as a proof of delivering a quality product or service. It is believed

that customer satisfaction brings sales growth, and market share. A company can

always increase customer satisfaction by lowering its price or increasing its services

but this may result in lower profits. Thus the purpose of marketing is to generate

customer value profitability.

3 India is on the threshold of a new millennium. India chose for global economy,

exposing her to winds of change in the market place, which has expanded vastly and

become fiercely competitive. In the changed environment, decision makers view the

marketing concept as the key to success. Marketing in practice has to manage

products, pricing, promotion and distribution.

4 A successful product can be developed by exploding these opportunities. While

delivering the value of the consumer we make use of marketing support. This support

is based on the knowledge of consumers and distribution. Marketing support both at

the introduction of products and maturing is considered

5 Marketing, as suggested by the American Marketing Association is "an

organizational function and a set of processes for creating, communicating and

delivering value to customers and for managing customer relationships in ways that

benefit the organization and its stakeholders".

6 The two major factors of marketing are the recruitment of new customers

(acquisition) and the retention and expansion of relationships with existing customers

(base management). Marketing methods are informed by many of the social,

particularly psychology, sociology, and economics. Anthropology is also a small, but

growing, influence. Market research underpins these activities. Through advertising,

it is also related to many of the creative arts.

7 For a marketing plan to be successful, the mix of the four "Ps" i.e. product, price,

place, promotion must reflect the wants and desires of the consumers in the target

market. Trying to convince a market segment to buy something they don't want is

extremely expensive and seldom successful. Marketers depend on marketing

research, both formal and informal, to determine what consumers want and what they

are willing to pay for. Marketers hope that this process will give them a sustainable

competitive advantage. Marketing management is the practical application of this

process. The offer is also an important addition to the 4P's theory.

METHOD TO MEASURE CUSTOMER

SATISFACTION:

Companies use the following methods to measure customer satisfaction.

1 ) Complaints and suggestion system: Companies obtaining complaints through

their customer service centres, and further suggestions were given by customers to

satisfy their desires.

2) Customer satisfaction surveys:

Responsive companies obtain a direct measure of customer satisfaction by periodic

surveys. They send questionnaires to random sample of their customers to find out

how they feel about various aspects of the company’s performance and also solicit

views on their competitor’s performance. It is useful to measure the customer’s

willingness to recommend the company and brand to other persons.

3 )Lost Customer Analysis.:

Companies should contact customers who have stopped buying or who have

switched to another supplier to learn why this happened.

4 )Consumer Behavior Vs Consumption Behavior:

Consumer behavior refers to the manner in which an individual reaches decision

related to the selection, purchases and use of goods and services. Walters and Paul

says that, consumer behavior is the process where by the individuals decides what,

when, how and from whom to purchase goods & services.

Consumer behavior relates to an individual person (Micro behavior) where as

consumption behavior relates to and to the mass or aggregate of individuals (Macro

behavior) consumers behavior as a study focuses on the decision process of the

individual consumer or consuming unit such as the family.

In contrast the consumption behavior as a study is to do with the explanation of the

behavior of the aggregate of consumers or the consuming unit. Consumer is a pivot,

around which the entire system of marketing revolves. The study of buyer behavior

is one of the most important keys to successful mark.

INTRODUCTION TO TELECOM INDUSTRY:

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.

Evolution of the industry-Important Milestones

Year

1851 First operational land lines were laid by the government near Calcutta (seatof 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 Cable CommunicationCompany (IRCC)

1947 Nationalization of all foreign telecommunication companies to form thePosts, Telephone and Telegraph (PTT), a monopoly run by thegovernment's Ministry of Communications

1985 Department of Telecommunications (DOT) established, an exclusiveprovider of domestic and long-distance service that would be its ownregulator (separate from the postal system)

1986 Conversion of DOT into two wholly government-owned companies: theVidesh Sanchar Nigam Limited (VSNL) for international telecommunicationsand Mahanagar Telephone Nigam Limited (MTNL) for service inmetropolitan areas.

1997 Telecom Regulatory Authority of India created.

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

2000 DoT becomes a corporation, BSNL

A large population, low telephony penetration levels, and a rise in consumers' income and spending owing to strong economic growth have helped make India the fastest-growing telecom market in the world. The first and largest operator is the state-owned incumbent BSNL, which is also the 7th largest telecom company in the world in terms of its number of subscribers. BSNL was created by corporatization. while DTS (Department of Telecommunication Services), a government unit responsible for provision of telephony services. Subsequently, after the telecommunication policies were revised to allow private operators, companies such as Bharti Telecom, TATA Indicom, Vodafone, MTNL, Idea, Vodafone and BPL have entered the space. Major operators in India. However, rural India still lacks strong infrastructure.

The total number of telephones in the country crossed the 300 million mark on June 18 2008The overall tele-density has increased to 36.98% in March 2009 .In the wireless segment, 15.87 million subscribers have been added in March 2009. The total wireless subscribers (GSM, CDMA & WLL (F)) base is more than 391.76 million now. The wire line segment subscriber base stood at 38.22 million with a decline of 0.13 million in October 2008.

Market Share of Public and Private Industry

The 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 is soon going to enter the Indian telecom market. The GSM, CDMA, WLL service providers are all upgrading them to provide 3G mobile services. Along with improvement in telecom services, there is also an improvement in manufacturing. In the beginning, there were only the Siemens handsets in India but now a whole series of new handsets, such as Nokia's latest N-series, Sony Ericsson's W-series, Motorola's PDA phones, etc. have come up.

Touch screen and advanced technological handsets are gaining popularity. 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 Global Cellular Mobile IndustryGlobal telecom sector

Earnings visibilityEarnings growth is being driven by improving pricing conditions, stabilizing operating trends, aggressive cost cutting initiatives, a positive regulatory environment, strong wireless growth, and new market opportunities. This has translated into greater visibility of forward earnings as evidenced by recent increased analyst upgrades within the sector.Merger synergiesGiven the substantial amount of excess capital available in the sector and in private equity we expect to see additional merger and acquisition activity, albeit at a slower pace than recently witnessed. Global telecom M&A deals over the past two years have reflected market expansion but have also had a positive effect on the buyers’ balance sheets. Partnering companies have begun realizing their synergies through cost reductions and economies of scale. In the US, the largest three companies now account for over 70% of the sector market cap; this compares to 34% in 1990. Trends in bundled services are

also paving the way for additional M&A activity. Sector consolidation will further increase the importance of stock selection.GrowthWhile cost-cutting has been a major source of earnings growth, we have seen top-line pressures decreasing which will help revenues become a larger driver of earnings growth again. We see growth within the sector coming from a number of areas including: broadband, 3G (third generation) technology, expansion in emerging markets. Broadband penetration has been accelerating as internet customers are seeking faster downloads for audio and video files. 3G services, which facilitate the simultaneous transfer of both voice and non-voice (i.e. video, downloads, SMS, etc.) data are providing mobile users with a much more robust communication platform and should finally begin to realize their growth potential in 2007. Emerging market companies benefit from low penetration rates and also tend to have lower leverage, higher margins and higher growth than most developed markets telecom companies.Global opportunitiesIt has become less difficult to find attractive telecom investment opportunities globally than it was a year ago. As the fog has lifted from the sector, there are increased opportunities within both the growth and value spaces.

Definition of Cellular/Mobile phone

The Cellular telephone (commonly "mobile phone" or "cell phone" or "hand phone") is a long-range, portable electronic device used for mobile communication. In addition to the standard voice function of a telephone,

The Global Cellular Mobile Industry:The global mobile phone industry is based on many different manufacturers and operators. The industry is based on advanced technology and many of the manufacturers are operating in different industries, where they use their technological skills, distribution

network, market knowledge and brand name. Four large manufacturers of mobile phones are today dominating the global mobile phone industry &networks; Nokia, Sony Ericson, Samsung and Motorola . Airtel, Bsnl , tataindicom ,Vodafone, reliance, others. In addition to these companies there are many manufacturers that operate globally and locally.

Telecom Industry in India The telecom industry is one of the fastest growing industries in India. India has

nearly200 million telephone lines making it the third largest network in the world after China and USA.

With a growth rate of 45%, Indian telecom industry has the highest growth rate in the8world.

Much of the growth in Asia Pacific Wireless Telecommunication Market is spurred by the growth in demand in countries like India and China.

India‘s mobile phone subscriber base is growing at a rate of 82.2%. China is the biggest market in Asia Pacific with a subscriber base of 48% of the

total subscribers in Asia Pacific. Compared to that India’s share in Asia Pacific Mobile Phone market is 6.4%. Considering the fact that India and China have almost comparable populations,

India’ slow mobile penetration offers huge scope for growth.

History of Indian Telecommunications

It was Started in 1851 ,when the first operational land lines were laid by the government near Calcutta (seat of British power). Telephone services were introduced in India in 1881. In 1883 telephone services were emerged with the postal system. Indian Radio Telegraph Company (IRT) was formed in 1923. After independence in 1947, all the foreign telecommunication companies were nationalized to form the Posts, Telephone and Telegraph (PTT), a monopoly run by the government's Ministry . Telecom sector was considered as a strategic service and the government considered it best to bring under state's control. The first wind of reforms in telecommunications sector began to flow in 1980s when the private sector was allowed in telecommunications equipment manufacturing. In 1985, Department ofTelecommunications (DOT) was established. It was an exclusive provider of domestic and long distance service that would be its own regulator (separate from the postal system). In 1986, two wholly government-owned companies were created: the Videsh Sanchar Nigam Limited (VSNL) for international telecommunications and Mahanagar Telephone Nigam Limited (MTNL) for service in metropolitan areas.

In 1990s, telecommunications sector benefited from the general opening up of the economy. Also, examples of telecom revolution in many other countries, which resulted in better quality of service and lower tariffs, led Indian policy makers to initiate a change

process finally resulting in opening up of telecom services sector for the private sector. National Telecom Policy(NTP) 1994 was the first attempt to give a comprehensive roadmap for the Indian telecommunicationssector.

In 1997, Telecom Regulatory Authority of India (TRAI) was created. TRAI was formed to act as a regulator to facilitate the growth of the telecom sector.. Telecommunication sector in India can be divided into two segments: Fixed Service Provider (FSPs), and Cellular Services. Fixed line services consist of basic services, national or domestic long distance and international long distance services. The state operators (BSNL and MTNL), account for almost 90 per cent of revenues from basic services. Private sector services are presently available in selective urban areas, and collectively account .Global System for Mobile Communications (GSM) and Code Division Multiple Access (CDMA). The GSM sector is dominated by Airtel, Vodfone-Essar, and Idea Cellular, while the CDMA sector is dominated by Reliance and Tata Indicom. Opening up of international and domestic long distance telephony services are the major growth drivers for cellular industry. Cellular he tariffs on airtime, which along with rental was the main source of revenue. The reduction in tariffs for airtime, national long distance, international long distance, and handset prices has driven demand.

Classification of Telecommunication services

1. Basic services2. Cellular services3. Internet Service Provider (ISP)

REVIEW OF LITERATURE :

1. Robins (2008) This paper is about marketing the next generation of mobile

telephones. The study is about third generation of cell phone technology, what is

usually known as “3G” for short. There are various issues about that new

innovative. One is how to price 3G handsets and services at a level which will

enable telephone operating companies to recoup the high prices they have

already paid to governments for operating licenses. Second the technology is not

yet complete, there are no agreed international standards and companies do not

yet know what new services the technology will prove capable of delivering

effectively. All variants of 3G remain dependent on largely unproven

technology. Marketing 3G is going to be about services which are new and in

many cases, yet to be designed. At the same time, it will involve services which

can also be obtained by computer and other means. It follows that the marketing

task will be high risk. First, 3G has no obviously unique selling proposition to

build on except, perhaps, the combination of live video and easy portability.

Second, the potential customers have not yet had adequate opportunity to signal

their service likes and dislikes. Third, the cost and complexity of service

provision leave doubt about the market’s reaction to price.

2. Debnath (2008) This study explain that the prime focus of the service providers

is to create a loyal customer base by benchmarking their performances and

retaining existing customers in order to benefit from their loyalty. With the

commencement of the economic liberalization in 1991, and with a view to

expand and improve telecom infrastructure through the participation of the

private sector, the Government of India permitted foreign companies holding 51

percent equity stake in joint ventures to manufacture telecom equipment in India.

The Indian Government has announced a new policy, which allows private firms

to provide basic telephone services. There had been a monopoly of the state-

owned department of telecommunications. However, several companies are

expected to benefit from the policy change.

3. Bhatt (2008), in his study titled “A Study of Mobile Phone Usage Among the

Post Graduate Students” analyzed that it is important for mobile carriers, service

providers, content developers, equipment manufacturers, as well as for parents

and young people alike that the key characteristics of mobile technology is well

understood so that the risks associated with its potentially damaging or disruptive

aspects can be mitigated. This paper has tried to compare the usage difference by

gender with respect to the difference manufacturing and service provider

companies.

4. Jha (2008), in his study analyzed that it is the youth which is the real growth

driver of the telecom industry in India. Considering this fact, the paper is an

attempt to give a snapshot of how frequently young people use their mobile

phones for several embodied functions of the cell phones. Data was collected

from a sample of 208 mobile phone owners, aged between 20 and 29. The study

sheds light on how gender, monthly voucher amount and years of owning mobile

phones influence the usage pattern of this device. Findings of the study would be

helpful for the telecom service providers and handset manufacturers to formulate

a marketing strategy for different market segments.

5. Kalavani (2006) in their study analyzed that majority of the respondents have

given favorable opinion towards the services but some problems exist that

deserve the attention of the service providers. They need to bridge the gap

between the services promised and services offered. The overall customers’

attitude towards cell phone services is that they are satisfied with the existing

services but still they want more services to be provided.

6. Kumar (2008), in their study titled “Customer Satisfaction and Discontentment

vis-a-vis BSNL Landline Service: A Study” analyzed that at present, services

marketing plays a major role in the national economy. In the service sector,

telecom industry is the most active and attractive. Though the telecom industry is

growing rapidly, India's telecom density is less than the world's average telecom

density as most of India's market is yet to be covered. This attracts private

operators to enter into the Indian telecom industry, which makes the Bharat

Sanchar Nigam Limited (BSNL) more alert to run its business and survive in the

market.

7. Seth et al (2008), in their study titled “Managing the Customer Perceived Service

Quality for Cellular Mobile Telephone: an Empirical Investigation” analyzed

that there is relative importance of service quality attributes and showed that

responsiveness is the most importance dimension followed by reliability,

customer perceived network quality, assurance, convenience, empathy and

tangibles. This would enable the service providers to focus their resources in the

areas of importance. The research resulted in the development of a reliable and

valid instrument for assessing customer perceived service quality for cellular

mobile services.

8. Fernandez (2007) in their study titled “Understanding Dynamics in an Evolving

Industry: Case of Mobile VAS in India” analyzed that Mobile Value Added

Services (VAS) is a rising star in the fast growing wireless business. In the paper,

attempt is made at understanding the strategic dynamics of the evolving

environment within which the Indian players are operating, the challenges and

structure of the same. Our literature and industry review indicates that - while the

value chain of industry is complicated yet one can observe the bipolar nature of

bargaining powers between mobile network operators and content aggregators.

9. Bismut (2006) in his study titled “Competition in European Telecom Markets”

analyzed that in recent years the European telecommunications market has

witnessed major developments, with rapid expansion in access to

telecommunications networks and a surge in the number of available services

and applications. While many factors have contributed to the transformation of

the telecommunications industry, competition has played a key role in driving

telecom players to invest in new technologies, to innovate and to offer new

services.

10. Kalpana and Chinnadurai (2006) in their study titled “Promotional Strategies of

Cellular Services: A Customer Perspective” analyzed that the increasing

competition and changing taste and preferences of the customer’s all over the

world are forcing companies to change their targeting strategies. The study

revealed the customer attitude and their satisfaction towards the cellular services

in Coimbatore city. It was found that advertisement play a dominant role in

influencing the customers but most of the customers are of opinion that

promotional strategies of cellular companies are more sale oriented rather than

customer oriented.

11. Fredric (2008) analyzed the importance of yield management and discrimination

pricing in telecommunication sector. Yield management is the process of

allocating the right type of capacity or inventory unit to the right kind of

customer at the right price so as to maximize revenue or yield. Yield

management and dynamic pricing strategies could be usefully applied to preserve

and increase profitability. Yield management techniques can help telecom

operators and similar companies to optimize the benefits they can derive from a

subtle management of information networks and partnerships. However, such an

approach is more difficult to implement in the telecommunications industry than

in the airlines sector because of the difficulty to control (and sometimes to

refuse) network access to customers

12. Chris (2003) has analyzed ‘Telecom advertising in print media.’ This research

attempted to investigate why Telecom theme are used in advertisement, and the

motives that lead companies and advertisers to use sport celebrities and sport

concept in advertisements. From study it has been revealed that the appearance

of sport celebrities in advertising endorsement occurred more often in Telecom

magazines than in other magazines, because their target group is more

acquainted with athletes. The sport celebrities that dominated each printed media

are related with their target group characteristics.

CONCLUSION: Telcom majors should think to launch the product according to the needs of

customers to satisfy them and make them brand loyal as very soon this blue ocean of Indian telecom scenario will convert into red ocean where the loss of one is the gain of other .They should also think for searching new space or we can say either creating a new blue space to sustain their growth in long run.

Quality of service and the ability to attract and retain customers dictate the success or failure of next-generation communications service providers. In today’s competitive environment, customers are quick to abandon services that do not meet expectations. The ease with which customers can switch from their current service to another, demands that providers deliver the highest possible levels of service quality and performance. To be successful, communications service providers must deliver positive customer experiences with rich, value-added services supported by comprehensive service quality management. To this effect-Mobile services has experienced the negative attributes of not being customer focused and realizes that quality is an attribute that creates customer satisfaction profitably. Therefore quality must be fused with all resources channeled towards their customers