pricing strategies mobile phone industry
DESCRIPTION
Pricing Strategy Mobile Phones Industry India.Welingkar Institute of Management Development & Research.TRANSCRIPT
1
Managing Marketing Programs
Pricing Strategies- Mobile Phone Industry
By Parvez Rangwalla
Email-ID pryprvgmailcom
Welingkar Institute of Management Development
amp Research Bangalore
2
Topics Covered
Topic Page No
1 History and growth of mobile phone industry in India 3
2 Current scenario of Mobile phone industry 4
3 Marketing strategies of Major players- Nokia and Samsung 7
4 Pricing Strategies in Mobile Phone Industry 12
5 Current trend in mobile industry 17
6 Future of mobile industry (RURAL) 20
7 References 22
3
1 History and growth of mobile phone industry in India
The real transformation came in the scenario of Indian telecom industry after
announcement of National telecom policy in 1994 The mobile services were
commercially launched in India in August 1995 In the initial 5ndash6 years the average
monthly subscribers additions were around 005 to 01 million only and the total
mobile subscribers base in December 2002 stood at 105 millions However after
the number of proactive initiatives taken by regulator and licensor the monthly
mobile subscriber additions increased to around 2 million per month in the year
2003-04 and 2004-05 In the last few years there has been a huge exponential
growth with addition of about 10 to 15 million subscribers per month to customer
base
In the initial days of mobile phone in India in mid 1990‟s the grey market accounted
for 80 per cent of the mobile phone sales due to a huge price differential between the
legally imported and the grey market phones
Even as the government slashed the duties at the same time various mobile
manufacturers reduced their rates to induce the customers to buy a phone from
authorized phone shop Today the grey market comprises very small share of
market
When mobile phones were introduced in India in the mid-90s US based Motorola
Swedens Ericsson and Finlands Nokia dominated the handset market in India Over
the years the old order has changed today players like Samsung LG Apple Virgin
HTC Huawei Haier are all competing for a place in the market Apart from this there
is also a competition from imported unbranded Chinese mobiles which are avaible
with lot many features of a typically high end say Nokia mobile but at a substantially
lesser price
After the initial dominance of Nokia from 1990‟s till 2002 a change occurred in Indian
market hen CDMA technology was launched in the year 2003 At this point the
Korean brands namely Samsung and LG established themselves after they tied up
with CDMA operator Reliance Infocomm This was a breakthrough in India‟s mobile
phone industry since people were able to get mobile phones with Reliance
connection only for a initial cost of about Rs 500- This opened up a mass market
for mobile manufacturers in India
Gradually all the major players like Nokia Motorola came up with their CDMA
models and have been able to regain their market share
4
In the last few years India has witnessed a revolution in mobile phone market with
about 8 to 10 million subscribers being added to the customer base each month The
major reasons for this boom have been
1 Falling tariff rates of telecom service providers
2 Fall in the prices of mobile handsets
3 Increase in the reach of service providers covering ever nook and corner of
the country
2 Current scenario of Mobile phone industry
Following are the highlights of mobile phone industry in India as on December 2009
1 The penetration of mobile phones stands at about 30
2 81 of mobile users are in urban area
3 India‟s rural teledensity stands at about 126
4 India has about 517 million subscribers by December 2009
5 It is forecasted that sales of mobile handsets in rural India will grow at CAGR
of around 17 from 2009 to 2012
Above figures clearly indicate that although mobile phones might have made
significant inroads into the urban market amp urban market may start moving towards
saturation but still lot of potential is to be explored in the rural segment
Market Share of different Manufacturers as on Dec-2009 is given below
As evident from above figures Nokia is a major player in the Indian mobile industry
today
5
Also to understand the satisfaction level which users of above brands express we
look at a consumer satisfaction survey the results of which are shown below The
survey was done on Indian Urban mobile phone users with Sample size of N=5775
The source of this data is website wwwvitalanalyticsin
Model Users Likely to
recommend
LG 576
Motorola 410
Nokia 686
Samsung 557
Sony-Ericsson 653
The result shows Nokia users are the most satisfied with their product followed by
Sony-Ericsson and LG
The results of above survey are important since mobile phone is a device which is
frequently replaced in few years time so the brand which provides maximum
satisfaction to users will be able to maintain high loyalty and hence maintain its
market share
A segregation of Indian market on the basis of price bands is shown below We can
see that mobile phones are avaible in various price bands from Rs 2000- amp less up
to Rs 50000-
6
Source httpwwwfonearenacommobile_phone_pricelisthtml
A close study of the product offered by various companies reveals following
1 Companies like HTC Apple Vertu have products only for the high end market
of Rs 15000- and more
2 On the other hand there are players like Usha lexus whose product fall in the
lower category with their products being avaible in price range of minimum of
Rs 1900- to maximum Rs 5900- Also Virgin mobile Huawei etc fall in the
same category
3 Players like Onida have mobiles in lower prices (Rs 2000-) to middle price
range (till Rs9900-)
4 Players like Motorola Nokia LG Sony Ericsson have mobile phones avaible
in all different price range and hence are able to target all the different
segments of the market
7
3 Marketing Strategy A holistic view (Nokia Samsung)
Nokia
Nokia as a manufacture of mobile communication devices was succeeded in
administrating marketing strategies in India markets The reason is that Nokia
delivers better products which cater to the needs and preferences of Indian
consumers
Nokia - Made in India ndash A detailed analysis
In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that
it was setting up a manufacturing facility for mobile devices in Chennai the state
capital of Tamil Nadu in southern India Nokia planned to invest US$ 100-150 million
in the facility where the production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia
Corporation said ldquoEstablishing a new factory in India is an important step in the
continuous development of our global manufacturing networkrdquo4 India was ideal for
Nokias new production facility Each mobile handset has more than 400 parts and
the average production capacity of each manufacturing unit of Nokia is around 20
million units
This level of manufacturing involves a total of 8 billion components per annum
requiring strong logistical support Nokias manufacturing facility needed to be
located close to a major international airport or sea port for quick supply of
components India met all these requirements and also enjoyed cheap manpower
costs and proximity to the rapidly growing Asia Pacific markets
Besides Nokia was the market leader in mobile communication devices in India
The company has been carrying out sales amp marketing customer care and research
amp development activities in the country Nokia considers India to be one of its most
important markets The companys Code Division Multiple Access (CDMA)5 facility is
located in Mumbai and provides software and technical support to CDMA consumers
in India and other Asia Pacific countries In 2004 Nokia was chosen as bdquothe most
respected consumer durables company by Businessworld6 The magazine wrote
ldquoThis Finnish companys debut at the top of the heap says two things
One that its strategies - including ones like developing a phone specifically for
India - are respected But more importantly Nokias win is also an endorsement of
the importance of the ubiquitous cell phone as a durable in todays world After all
unlike its competitors most of which offer a slew of durables Nokia is mostly a cell
phone companyrdquo
8
In 2005 Nokia was recognized as the bdquoBrand of the Year by the Confederation
of Indian Industry Indias apex industry association The company was chosen for
this award because of its high brand recall well established distribution channels
and being most preferred by the consumers
Enamoured of Nokias success in the Indian market Harvard University had
invited Nokia India to talk on bdquoHow Nokia cracked open the Indian market
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper
manufacturing company In 1920 Finnish Rubber Works became a part of the
company and later on in 1922 Finnish Cable Works joined them All the three
companies were merged in 1967 to form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and
electronics businesses and by 1987 consumer electronics became Nokias major
business Nokia created the NMT mobile phone standard in 1981 and launched the
first NMT phone Mobira Cityman in 1987 The company delivered the first GSM
network to Radkilinia a Finnish company in 1991 and in 1992 Nokia 1011 - a
precursor for all Nokias current GSM phones - was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world
Another significant move of the company during this period was the divestment of its
non-core operations like IT The company focused on two core businesses - mobile
phones and telecommunications networks Between 1992 and 1996 the company
exited from the rubber and cable businesses as well
Nokia entered the Indian market in 1994 The first ever GSM call in India was
made on a Nokia 2110 mobile phone on its own network in 1995 When Nokia
entered India the telecom policies were not conducive to the growth of the mobile
phone industry
The tariffs levied on importing mobile phones were as high as 27 usage
charges were at Rs16 per minute and at these high rates consumers did not take
to mobile phones Nokia also had to face tough competition from other powerful
global players like Motorola Sony Siemens and Ericsson
Nokia was quick to learn from its mistakes and adopted strategies to regain its
lost market share Globally during the first quarter of 2005 the companys sales
reached 74 billion euros with the company selling 54 million phones during the
period In India Nokia continued its leadership in GSM with a market share of 74 in
March 2005 Nokia also surpassed Samsung in color mobiles in the GSM segment
recording a share of 55 in the same month
9
Nokia reorganized itself at the global level in 2004 At this point a multimedia
division was formed
The divisions Indian operations concentrated on promoting the concept of high-
end telephones in smaller towns while going in for higher volumes in larger cities
The marketing division of the company concentrated on making distributors in small
towns sell high-end products Though the distributors were skeptical to start with by
the end of 2004 the process was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be
driven by voice multimedia and mobile services for organizations The teledensity in
India was estimated to increase to 182 by March 2009 with mobile subscription
rising to 14877 million by that time In many instances the cell phone has become
the only basic telephone link of a householdenterprise in India rather than a landline
phone It was turning out to be more economical and efficient than fixed line
telephones So there was great scope for further expansion with reduction in the
cost of ownership
Samsungs Strategy to Gain Market Share in The Indian Mobile Phone Market
The Samsung management has initiated a market-mapping exercise to get into our
fold distributors who have relevant knowledge of the market credibility a good
distribution network and will therefore contribute in strengthening Samsungs reach in
the market the new distribution strategy would take its penetration level in the
market from the current 55 percent to 85 percent by the end of the year
On the retail front it was taking initiatives to increase the number of retailers
enrolled as Samsung Mobile Privilege Partners (SMPPs) from around 100 in 2007 to
around 400 by the end of the year Single and multi-brand retailers had shown an
interest in becoming SMPP
In the same month the company launched five new mobile phone models and said
that it would launch another 13 by the middle of the year The models that were
launched included multimedia phones phones for corporate customers and a
comparatively lower priced model aimed at a bigger chunk of the market
The company as of early 2008 its mobile phones were priced between Rs 1700
and Rs 28000 but that the company would launch more expensive mobile phones
in the future
The company also announced its new positioning with the new pay-off line Next is
10
What and that it had roped in a leading actor of the Indian film industry Aamir Khan
(Aamir) as its brand ambassador Aamir would also feature in its new ads
Announcing the major celebrity endorsement for the brand HB Lee president and
CEO Samsung (South-West Asia) said The Samsung brand stands for qualities of
innovation change discovery self-expression and excellence in performance And
these very same qualities are epitomized by Aamir Khan whose quality and depth of
work as well as versatility as an actor have made him a much loved and respected
actor in India today We are indeed very proud and privileged to have him as our
brand ambassador
With Aamirs endorsement of Samsung the fight for the mobile phone market had
also become a four-way battle with other leading actors endorsing the rival brands -
Shah Rukh Khan endorsing Nokia Abhishek Bachchan endorsing Motorola and
Hrithik Roshan endorsing Sony Ericsson
According to Samsung the mobile phone market in India would be 100 million units
in 2008-09With all these new initiatives Samsung was confident of achieving its
objective of cornering a 15 percent market share in the country
The company said that it had the necessary infrastructure to ramp up its production
capacity at its manufacturing unit at Noida from the current 6 million units per annum
depending on the demand
Recently to have an impact on international prospective mobile phone users
Samsung has signed up Didier Drogba playing in Chelsea Football Club as its
2008 Mobile Phone category brand ambassador
As part of this partnership Drogba will appear in Samsung Mobile adverting
campaigns for a period of one year and will also make public appearances to
promote Samsung‟s products and corporate activities
ldquoExtending our association with Chelsea FC we are now thrilled to partner with
Drogba as Samsung‟s brand ambassadorrdquo says Chi Won Suh CEO
Samsung Middle East and Africa region ldquoAfrica is a key market for Samsung
Electronics with immense growth potential and we are confident that our
association with an internationally and locally acclaimed football star like Drogba
will bring us closer to the football loving population throughout the African
continentrdquo
Football sponsorship is one of the pillars of Samsung‟s sports marketing strategy It
is derived from the belief that sport especially football unites people of all ages
11
genders and races
Samsung bada to rival Android Linux
Samsung entered into the mobile OS arena with bada The software whose name is
based on the Korean for ocean is designed to be open and will compete directly
against rivals like Android or LiMo It will be based on universal standards and wont
consider even core aspects of the OS off-limits developers can not only use
contacts the dialer and other utilities but extend them with new features of their own
Most details are left vague but bada will have a central app store Carriers will also
have the option of customizing the OS to suit their own tastes
Samsung expects the very first device using bada to show in the first half of 2010
along with the initial app store More phones should be ready by the second half of
that year while the app store will expand to 30 different countries including key
countries in Europe A more formal unveiling is due in the UK for December and will
be followed by first looks for developers both in December and in January
The news backs analyst claims of Samsung moving to its own platform and adopting
modern open platforms including bada If fully representative it also signals the
likely ends of Symbian and Windows Mobile at Samsung as the forecast would have
Symbian gone entirely by 2011 and Microsofts OS at just 20 percent by 2012 where
it makes up 80 percent of Samsung phones today Such a gesture will also render
closed platforms like OS X iPhones and Windows Mobile the relative minority in
numbers though not necessarily market share
Recent happenings were the Samsung Corby which is a full-touch handset that
places users at the centre of the social media revolution with full support for a wide
range of social networks The new mobile compliments the Company‟s existing
touch screen strategy ldquotouch for every lifestylerdquo by broadening the market and
targeting the youth audience
The Corby represents a complete makeover for the youth segment with its eye-
catching design which marks a significant break from the way full touch phones are
usually designed The Samsung Corby is notable for both its body design and
colours it comes with bold colour options
With Ghazini swiping the box office Samsung has enchased on its brand
ambassador Amir Khan by launching Ghazini mobile games on selected models
which is a smart and innovative approach of marketing strategy
12
The future prospects of Samsung mobiles doesn‟t seem gloomy with the above
developments and with time to come there would be a tough competition with its
rivals So Next is what
4 Pricing Strategies
1 Penetration Pricing This pricing strategy is followed by companies with the
intention to maximize their market share They believe that a higher sales volume
will lead to lower unit costs amp higher long-run profit
Example China Mobile Phones in India
This is one of the fastest growing industries in India China mobile phones are cheap
and offer the same features as a expensive mobile from some other well known
manufacturers
Rs
12000
China-JN269
Rs
9900
China-MT3300
Rs
9800
China_Elitek_85
02
Rs
9500
China-GT-MD900
Rs
9400
China-6500S
Rs
8700
China_GT_Q71
8
Rs
6137
China-Elitek-
X6019
Rs
5200
China_Elitek_X6
011
Rs
4900
China_ELITEK_X6
010
Rs
4500
China_Elitek_X6
012
A few samples of Chinese mobiles are shown above Only problem that exist for the
Chinese mobile phones is that consumer generally have a low quality perception
associated with them and hence do not trust their quality However they are well
suited to people who want to enjoy features of a high end mobile without having a
budget for the same
2 Predatory Pricing
This pricing strategy is followed with the intention to wipe out the competition
13
Example In the year 2003 LG and Samsung along with Reliance came up with
Rs 500- mobile scheme where both handsets along with connections were
available for Rs 500- This was something which revolutionized the mobile
phone and telecom industry
3 Perceived value Pricing
In this case the pricing is done based on the customer‟s perception about the
company and its product Perceived value is made up of several elements such
as buyer‟s image of product performance the channel deliverables warranty
quality and even softer attributes such as supplier‟s reputation
Example A good example for this kind of pricing is Apple iPhones They are offered
in price range of Rs 31000- to Rs 42500-
Their price is set based on image of brand apple amp customer affinity towards it
Comparable mobiles phones from other manufacturers like Sony Ericson Nokia are
offered at relatively cheaper price For example comparable N series mobiles from
Nokia are offered at prices below Rs 30000- (Except for Nokia- N9 amp Nokia-8800
Carbon) Also SONYERICSSON ndash Satio is offered for Rs 31000- amp all other Sony
brands are available for prices below it
Apple can set higher prices since it feels that its customers will be ready to pay for it
based on its perceived value
14
Apple-iPhone-3G-S-32GB Price | Rate Rs 42500-
4 Value Pricing This is pricing strategy in which a company wins loyal customers
by charging a fairly low price for a high quality offering
Example Nokia E 63 Mobile
This mobile is priced at Rs 11260- This mobile offers a large number of high end
applications like Web-Browsing Email Data Network GPRS GPS amp Navigation
and lots of other facilities apart from serving the basic mobile functions At the same
time it has a sleek body amp robust structure
A image of this mobile has been shown below
15
5 Product form pricing Different versions of the same product are priced
differently
Examples Nokia-5000 is priced at Rs 4300- Whereas Nokia-7210C-Supernova is
priced at Rs 4800- offers almost the same features The reason for difference in
pricing is due to the sleek structure of Nokia-7210C
16
6 Promotional Pricing
1 Special Event Pricing In this case special prices are offered during special
occasions like festivals to increase the sales Example Last Diwali (September 2009) Samsung offered discounts on
Samsung Omnia mobile phone Their market price at that time was Rs
33990- whereas their discounted price for Diwali was Rs Rs 31990-
2 Low-Interest financing
Company can offer low interest financing to customer This will reduce the
burden of initial cost to the customer
Example In 2009 Nokia piloted a scheme in two Indian states where it sold
handsets on a weekly instalment of 100 rupees ($2) over 25 weeks period
3 Psychological Discounting
This is done to make the customer believe that product is priced cheaply or
some cases just break the price barrier that customer has in his mind like
price at price Rs 999- which is priced just below Rs 1000-
17
Example
MOTOYUVA - W156 prices at Rs 1099-
Samsung Guru- Rs 2999-
5 Current Trend in Mobile Industry
-- With saturation in the urban market growth in Indian mobile market will be driven
by an increased focus on the rural market aggressive promotions and handset
bundle offers
-- As of March 2007 mobile subscribers in rural India accounted just 20 of the
Indian mobile subscriber base However it is forecasted to grow at a CAGR of more
than 47 during 2007 to 2010
-- In order to remain competitive the mobile industry could see several mergers and
acquisitions roll out obligation and substantiate equity holding in more than one
telecom company
-- The major growth in mobile phone subscribers will be seen in C Circle and B
Circle in short-term
-- Enormous opportunities are emerging for the low cost handset manufacturers
along with low tariffs infrastructure development for mobile communication
-- Rural India will account for around 35-38 of the total mobile handset sales by
2010
18
The industrys spectacular growth in India is attracting the attention of several
international brands Glenn Smith reports
SECTOR INSIGHT
The growth of Indias mobile sector has not gone unnoticed Last year Virgin Mobile
agreed a deal to enter the market and Japans DoCoMo bought into mobile operator
Tata to stake its claim in the fast-expanding industry
India offers astounding growth statistics In October 2008 according to the Telecom
Regulatory Authority of India (Trai) 104 million Indians signed up for a phone
service pushing the national total to 3639 million a penetration of 315 per cent
Only 10 years earlier India had a mere 880000 phones most of them landlinesfor
one billion people Today fixed-line phones account for only 105 per cent - 382
million subscribers and this absolute number is slowly declining Wireless operators
meanwhile are surging ahead Many first-time phone buyers are opting for mobile
and will drive the total subscriber base to 500 million by 2010according toTrai
The expansion has been fuelled by recent economic prosperity but the accelerant is
an ever-increasing affordability of handsets and services Mobile phone service costs
have plummeted In March 1999 the effective charge was more than 1532 rupees
(US$031) per minute which fell by half in 2000 again in 2001 and repeatedly
dropped until today - at less than a rupee it is believed to be the cheapest rate in the
worldThe sectors expansion is not expected to be hit by the economic slowdown
Market growth is moving away from the cities and going into the villages and rural
areas says Shankari Panchapakesan executive director of mobile services The
Nielsen Company South Asia The macroeconomy wont impact this because rural
people are using phones in ways that make a difference in their life how they work
how they educate their children and how they access information
Fishermen for example use phones to find outlets for their catch Women earn a
living with phone exchanges Carpenters carve their numbers on village walls For
handsets the undisputed leader is Nokia The Finnish telephone giant has been in
India since 1994 and has invested in three RampD labs making facilities and
distribution partnerships
Naresh Priyadarshihead of Synovate Business Consulting says Nokia has 90000
distributors in India giving it a 90 per cent retail footprint There are also 30000plus
stores that sell Nokia exclusively Nokia has concept stores in at least seven major
cities
Together Indias retail outlets sold 132 million handsets worth 700 billion rupees in
2008 according to Synovate Nokias share of value was 59 per cent followed by
19
Sony Ericsson with a distant eight per cent Samsung with seven per cent and
Motorola with six per cent Smartphones account for 24 percent of sales according
to Synovate with mid-priced feature phones taking 28 per cent and the remainder -
48 per cent - being ultra-low-cost phones Handset makers see ultra-low-cost
phones as the road ahead despite the razorthin profit margins Already sales of
cheap handsets are depressing average prices Euromonitor estimates that unit
prices fell 50 per cent between 2004 and 2007 to an average of 2808 rupees
To put handsets within reach of Indias rural poor phone makers have had to rethink
product design The Nokia 1100 included a torch alarm clock and a radio Nokias
entry-level phones are now priced at 1500 rupees Spice Mobile halved that with its
Peoples Phone priced at 599 rupees including lifetime prepaid activation
To bond with rural users Nokia is launching a subscription-based service called Life
tools with information on agriculture and education Such phone services will serve
as the first online experience for rural Indians
Among affluent urban users value-added-services (VAS) for feature phones are
seen as the way forward Synovate reports VAS at 50 million rupees in 2008 and
fore- casts 70 per cent annual growth to push that to 165 million rupees by 2010 It is
this fast-growing rapidly diversifying market that is attractive to overseas firms
though they should not expect much profit in the short term
Some important facts about Rural Coverage-
bull About 70 percent of Indias near 12 billion inhabitants live in rural
communities
bull rural teledensity was a mere 126 percent
bull Rural wire line connections totaled 1068 million at the end of December
down by 246 percent from 1095 million at the end of Septemberr 2009
bull The rural wireless subscriber base hit 9315 million at the end of the year up
238 percent from 9098 million at the end of September
bull Department of Telecom and BSNL have signed an agreement to provide
861000 connections to individual users and government institutions through
rural and remote exchanges by 2014
bull To promote rural rollout by the private operators the Indian government
imposed Universal Service Obligations (USO) on the countrys operators to
build a fund that can finance the rollout of services in areas where there isnt
an obvious or pressing business case to do so
bull The first phase of mobile infrastructure deployment under the USO fund
scheme commissioned six different service providers to deploy 7871 towers
bull However by the end of October 2009 only 1934 towers had been installed
20
bull The second phase complete with a tender for an additional 11049 sites has
yet to be started
bull The phased rollouts associated with the USO scheme require an additional
40875 mobile towers to be erected
bull Add this to the number of towers required for the five new 2G networks
additional coverage and capacity for existing operators and the introduction
of 3G networks and there is a huge demand for new cell sites right across the
country
6 Future of Mobile Industry
Demand Among Poor Farmers Keeps an Industry Growing as Other Sectors of the
Economy Are Jolted Rural customers have been hungry for mobile phones for a
long time so demand will remain unaffected by the global jitters said SP Shukla
chief executive officer of the mobile business at Reliance Communications India Ltd
Indias second-largest cellular company by number of subscribers
Even amid the global economic slowdown one Indian industry continues to boom
selling cellphones to the rural poor
Economists have slashed Indian economic growth forecasts for this year and the
stock market is in the doldrums But cellphone companies are signing millions of new
subscribers a month making India the fastest growing mobile-phone market in the
world There is no sign of a slowdown yet figures to be released later this month are
expected to show that new subscriptions in January reached a record 11 million
The demand for cellphones is coming mainly from rural consumers who typically
earn less than $1000 a year These buyers havent been affected by plunging stock
and real-estate prices or tighter bank lending since they typically dont own land and
dont borrow A large majority of them dont have access to regular landline phone
networks -- there are only about 40 million landline subscribers in India -- so once
cellular coverage comes to their towns or villages they scramble to get their first
phones
In the village of Karanehalli a cluster of simple homes around an intersection of two
dirt roads about 40 miles from Indias high-tech capital of Bangalore Farmer KT
Srinivasa doesnt have a toilet for his home or a tractor for his field But when a red
and white cellular tower sprouted in his village he splurged on a cellphone
While the way his family threshes rice -- crushing it with a massive stone roller --
hasnt changed for generations his phone has changed the way he farms He uses it
to decide when to plant and harvest by calling other farmers to get the best prices
21
for his rice coconuts and jasmine by calling wholesalers and to save hours of time
waiting on the road for deliveries and pickups that rarely come on time
Life is much better with the cellphone he said from his rice paddy in the shadow of
the new tower I bring it with me to the fields and anyone can reach me here
Mr Srinivasa like close to half the 800 people in his village uses Idea Cellular Ltd
as it was the first to bring them service He paid the equivalent of about $60 for his
Nokia phone and spends about $6 each month for service Like most rural users
Mr Srinivasa uses his phone to make voice calls -- he doesnt know how to text
message or to download emails On average rural Indians use their phones around
85 hours a month up 10 over the past year
The story is the same across rural India home to more than 60 of Indias
population of 12 billion China Indonesia and Brazil also continue to show solid
growth in cellphone sales
The continued expansion of the cellphone industry in India stands in sharp contrast
to most other industries here Textile and software exporters are struggling Indias
brand new malls are sparsely populated and the sales of cars trucks tractors and
motorcycles have declined in recent months
But the cellphone industry recorded more than 10 million new subscribers in
December up from eight million a year earlier The industrys overall subscriber base
grew 48 in 2008 to 347 million customers
Rural customers have been hungry for mobile phones for a long time so demand
will remain unaffected
22
7 References
httpenwikipediaorgwikiCommunications_in_India
httpwwwicmrindiaorgcasestudiescatalogueBusiness20StrategyBSTR174htm
wwwvitalanalyticsin
httpwwwfonearenacommobile_phone_pricelisthtml
wwwmobile-prices-indiacom
httpwwwmobile-prices-indiacomNokia_Mobile_Phonesphp
httpwebebscohostcom
httpwwwindia-cellularcomMobile-Priceshtm
httpproquestumicompqdwebindex=8ampdid=1635821441ampSrchMode=1ampsid=3ampF
mt=3ampVInst=PRODampVType=PQDampRQT=309ampVName=PQDampTS=1264756239ampclien
tId=135690
2
Topics Covered
Topic Page No
1 History and growth of mobile phone industry in India 3
2 Current scenario of Mobile phone industry 4
3 Marketing strategies of Major players- Nokia and Samsung 7
4 Pricing Strategies in Mobile Phone Industry 12
5 Current trend in mobile industry 17
6 Future of mobile industry (RURAL) 20
7 References 22
3
1 History and growth of mobile phone industry in India
The real transformation came in the scenario of Indian telecom industry after
announcement of National telecom policy in 1994 The mobile services were
commercially launched in India in August 1995 In the initial 5ndash6 years the average
monthly subscribers additions were around 005 to 01 million only and the total
mobile subscribers base in December 2002 stood at 105 millions However after
the number of proactive initiatives taken by regulator and licensor the monthly
mobile subscriber additions increased to around 2 million per month in the year
2003-04 and 2004-05 In the last few years there has been a huge exponential
growth with addition of about 10 to 15 million subscribers per month to customer
base
In the initial days of mobile phone in India in mid 1990‟s the grey market accounted
for 80 per cent of the mobile phone sales due to a huge price differential between the
legally imported and the grey market phones
Even as the government slashed the duties at the same time various mobile
manufacturers reduced their rates to induce the customers to buy a phone from
authorized phone shop Today the grey market comprises very small share of
market
When mobile phones were introduced in India in the mid-90s US based Motorola
Swedens Ericsson and Finlands Nokia dominated the handset market in India Over
the years the old order has changed today players like Samsung LG Apple Virgin
HTC Huawei Haier are all competing for a place in the market Apart from this there
is also a competition from imported unbranded Chinese mobiles which are avaible
with lot many features of a typically high end say Nokia mobile but at a substantially
lesser price
After the initial dominance of Nokia from 1990‟s till 2002 a change occurred in Indian
market hen CDMA technology was launched in the year 2003 At this point the
Korean brands namely Samsung and LG established themselves after they tied up
with CDMA operator Reliance Infocomm This was a breakthrough in India‟s mobile
phone industry since people were able to get mobile phones with Reliance
connection only for a initial cost of about Rs 500- This opened up a mass market
for mobile manufacturers in India
Gradually all the major players like Nokia Motorola came up with their CDMA
models and have been able to regain their market share
4
In the last few years India has witnessed a revolution in mobile phone market with
about 8 to 10 million subscribers being added to the customer base each month The
major reasons for this boom have been
1 Falling tariff rates of telecom service providers
2 Fall in the prices of mobile handsets
3 Increase in the reach of service providers covering ever nook and corner of
the country
2 Current scenario of Mobile phone industry
Following are the highlights of mobile phone industry in India as on December 2009
1 The penetration of mobile phones stands at about 30
2 81 of mobile users are in urban area
3 India‟s rural teledensity stands at about 126
4 India has about 517 million subscribers by December 2009
5 It is forecasted that sales of mobile handsets in rural India will grow at CAGR
of around 17 from 2009 to 2012
Above figures clearly indicate that although mobile phones might have made
significant inroads into the urban market amp urban market may start moving towards
saturation but still lot of potential is to be explored in the rural segment
Market Share of different Manufacturers as on Dec-2009 is given below
As evident from above figures Nokia is a major player in the Indian mobile industry
today
5
Also to understand the satisfaction level which users of above brands express we
look at a consumer satisfaction survey the results of which are shown below The
survey was done on Indian Urban mobile phone users with Sample size of N=5775
The source of this data is website wwwvitalanalyticsin
Model Users Likely to
recommend
LG 576
Motorola 410
Nokia 686
Samsung 557
Sony-Ericsson 653
The result shows Nokia users are the most satisfied with their product followed by
Sony-Ericsson and LG
The results of above survey are important since mobile phone is a device which is
frequently replaced in few years time so the brand which provides maximum
satisfaction to users will be able to maintain high loyalty and hence maintain its
market share
A segregation of Indian market on the basis of price bands is shown below We can
see that mobile phones are avaible in various price bands from Rs 2000- amp less up
to Rs 50000-
6
Source httpwwwfonearenacommobile_phone_pricelisthtml
A close study of the product offered by various companies reveals following
1 Companies like HTC Apple Vertu have products only for the high end market
of Rs 15000- and more
2 On the other hand there are players like Usha lexus whose product fall in the
lower category with their products being avaible in price range of minimum of
Rs 1900- to maximum Rs 5900- Also Virgin mobile Huawei etc fall in the
same category
3 Players like Onida have mobiles in lower prices (Rs 2000-) to middle price
range (till Rs9900-)
4 Players like Motorola Nokia LG Sony Ericsson have mobile phones avaible
in all different price range and hence are able to target all the different
segments of the market
7
3 Marketing Strategy A holistic view (Nokia Samsung)
Nokia
Nokia as a manufacture of mobile communication devices was succeeded in
administrating marketing strategies in India markets The reason is that Nokia
delivers better products which cater to the needs and preferences of Indian
consumers
Nokia - Made in India ndash A detailed analysis
In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that
it was setting up a manufacturing facility for mobile devices in Chennai the state
capital of Tamil Nadu in southern India Nokia planned to invest US$ 100-150 million
in the facility where the production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia
Corporation said ldquoEstablishing a new factory in India is an important step in the
continuous development of our global manufacturing networkrdquo4 India was ideal for
Nokias new production facility Each mobile handset has more than 400 parts and
the average production capacity of each manufacturing unit of Nokia is around 20
million units
This level of manufacturing involves a total of 8 billion components per annum
requiring strong logistical support Nokias manufacturing facility needed to be
located close to a major international airport or sea port for quick supply of
components India met all these requirements and also enjoyed cheap manpower
costs and proximity to the rapidly growing Asia Pacific markets
Besides Nokia was the market leader in mobile communication devices in India
The company has been carrying out sales amp marketing customer care and research
amp development activities in the country Nokia considers India to be one of its most
important markets The companys Code Division Multiple Access (CDMA)5 facility is
located in Mumbai and provides software and technical support to CDMA consumers
in India and other Asia Pacific countries In 2004 Nokia was chosen as bdquothe most
respected consumer durables company by Businessworld6 The magazine wrote
ldquoThis Finnish companys debut at the top of the heap says two things
One that its strategies - including ones like developing a phone specifically for
India - are respected But more importantly Nokias win is also an endorsement of
the importance of the ubiquitous cell phone as a durable in todays world After all
unlike its competitors most of which offer a slew of durables Nokia is mostly a cell
phone companyrdquo
8
In 2005 Nokia was recognized as the bdquoBrand of the Year by the Confederation
of Indian Industry Indias apex industry association The company was chosen for
this award because of its high brand recall well established distribution channels
and being most preferred by the consumers
Enamoured of Nokias success in the Indian market Harvard University had
invited Nokia India to talk on bdquoHow Nokia cracked open the Indian market
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper
manufacturing company In 1920 Finnish Rubber Works became a part of the
company and later on in 1922 Finnish Cable Works joined them All the three
companies were merged in 1967 to form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and
electronics businesses and by 1987 consumer electronics became Nokias major
business Nokia created the NMT mobile phone standard in 1981 and launched the
first NMT phone Mobira Cityman in 1987 The company delivered the first GSM
network to Radkilinia a Finnish company in 1991 and in 1992 Nokia 1011 - a
precursor for all Nokias current GSM phones - was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world
Another significant move of the company during this period was the divestment of its
non-core operations like IT The company focused on two core businesses - mobile
phones and telecommunications networks Between 1992 and 1996 the company
exited from the rubber and cable businesses as well
Nokia entered the Indian market in 1994 The first ever GSM call in India was
made on a Nokia 2110 mobile phone on its own network in 1995 When Nokia
entered India the telecom policies were not conducive to the growth of the mobile
phone industry
The tariffs levied on importing mobile phones were as high as 27 usage
charges were at Rs16 per minute and at these high rates consumers did not take
to mobile phones Nokia also had to face tough competition from other powerful
global players like Motorola Sony Siemens and Ericsson
Nokia was quick to learn from its mistakes and adopted strategies to regain its
lost market share Globally during the first quarter of 2005 the companys sales
reached 74 billion euros with the company selling 54 million phones during the
period In India Nokia continued its leadership in GSM with a market share of 74 in
March 2005 Nokia also surpassed Samsung in color mobiles in the GSM segment
recording a share of 55 in the same month
9
Nokia reorganized itself at the global level in 2004 At this point a multimedia
division was formed
The divisions Indian operations concentrated on promoting the concept of high-
end telephones in smaller towns while going in for higher volumes in larger cities
The marketing division of the company concentrated on making distributors in small
towns sell high-end products Though the distributors were skeptical to start with by
the end of 2004 the process was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be
driven by voice multimedia and mobile services for organizations The teledensity in
India was estimated to increase to 182 by March 2009 with mobile subscription
rising to 14877 million by that time In many instances the cell phone has become
the only basic telephone link of a householdenterprise in India rather than a landline
phone It was turning out to be more economical and efficient than fixed line
telephones So there was great scope for further expansion with reduction in the
cost of ownership
Samsungs Strategy to Gain Market Share in The Indian Mobile Phone Market
The Samsung management has initiated a market-mapping exercise to get into our
fold distributors who have relevant knowledge of the market credibility a good
distribution network and will therefore contribute in strengthening Samsungs reach in
the market the new distribution strategy would take its penetration level in the
market from the current 55 percent to 85 percent by the end of the year
On the retail front it was taking initiatives to increase the number of retailers
enrolled as Samsung Mobile Privilege Partners (SMPPs) from around 100 in 2007 to
around 400 by the end of the year Single and multi-brand retailers had shown an
interest in becoming SMPP
In the same month the company launched five new mobile phone models and said
that it would launch another 13 by the middle of the year The models that were
launched included multimedia phones phones for corporate customers and a
comparatively lower priced model aimed at a bigger chunk of the market
The company as of early 2008 its mobile phones were priced between Rs 1700
and Rs 28000 but that the company would launch more expensive mobile phones
in the future
The company also announced its new positioning with the new pay-off line Next is
10
What and that it had roped in a leading actor of the Indian film industry Aamir Khan
(Aamir) as its brand ambassador Aamir would also feature in its new ads
Announcing the major celebrity endorsement for the brand HB Lee president and
CEO Samsung (South-West Asia) said The Samsung brand stands for qualities of
innovation change discovery self-expression and excellence in performance And
these very same qualities are epitomized by Aamir Khan whose quality and depth of
work as well as versatility as an actor have made him a much loved and respected
actor in India today We are indeed very proud and privileged to have him as our
brand ambassador
With Aamirs endorsement of Samsung the fight for the mobile phone market had
also become a four-way battle with other leading actors endorsing the rival brands -
Shah Rukh Khan endorsing Nokia Abhishek Bachchan endorsing Motorola and
Hrithik Roshan endorsing Sony Ericsson
According to Samsung the mobile phone market in India would be 100 million units
in 2008-09With all these new initiatives Samsung was confident of achieving its
objective of cornering a 15 percent market share in the country
The company said that it had the necessary infrastructure to ramp up its production
capacity at its manufacturing unit at Noida from the current 6 million units per annum
depending on the demand
Recently to have an impact on international prospective mobile phone users
Samsung has signed up Didier Drogba playing in Chelsea Football Club as its
2008 Mobile Phone category brand ambassador
As part of this partnership Drogba will appear in Samsung Mobile adverting
campaigns for a period of one year and will also make public appearances to
promote Samsung‟s products and corporate activities
ldquoExtending our association with Chelsea FC we are now thrilled to partner with
Drogba as Samsung‟s brand ambassadorrdquo says Chi Won Suh CEO
Samsung Middle East and Africa region ldquoAfrica is a key market for Samsung
Electronics with immense growth potential and we are confident that our
association with an internationally and locally acclaimed football star like Drogba
will bring us closer to the football loving population throughout the African
continentrdquo
Football sponsorship is one of the pillars of Samsung‟s sports marketing strategy It
is derived from the belief that sport especially football unites people of all ages
11
genders and races
Samsung bada to rival Android Linux
Samsung entered into the mobile OS arena with bada The software whose name is
based on the Korean for ocean is designed to be open and will compete directly
against rivals like Android or LiMo It will be based on universal standards and wont
consider even core aspects of the OS off-limits developers can not only use
contacts the dialer and other utilities but extend them with new features of their own
Most details are left vague but bada will have a central app store Carriers will also
have the option of customizing the OS to suit their own tastes
Samsung expects the very first device using bada to show in the first half of 2010
along with the initial app store More phones should be ready by the second half of
that year while the app store will expand to 30 different countries including key
countries in Europe A more formal unveiling is due in the UK for December and will
be followed by first looks for developers both in December and in January
The news backs analyst claims of Samsung moving to its own platform and adopting
modern open platforms including bada If fully representative it also signals the
likely ends of Symbian and Windows Mobile at Samsung as the forecast would have
Symbian gone entirely by 2011 and Microsofts OS at just 20 percent by 2012 where
it makes up 80 percent of Samsung phones today Such a gesture will also render
closed platforms like OS X iPhones and Windows Mobile the relative minority in
numbers though not necessarily market share
Recent happenings were the Samsung Corby which is a full-touch handset that
places users at the centre of the social media revolution with full support for a wide
range of social networks The new mobile compliments the Company‟s existing
touch screen strategy ldquotouch for every lifestylerdquo by broadening the market and
targeting the youth audience
The Corby represents a complete makeover for the youth segment with its eye-
catching design which marks a significant break from the way full touch phones are
usually designed The Samsung Corby is notable for both its body design and
colours it comes with bold colour options
With Ghazini swiping the box office Samsung has enchased on its brand
ambassador Amir Khan by launching Ghazini mobile games on selected models
which is a smart and innovative approach of marketing strategy
12
The future prospects of Samsung mobiles doesn‟t seem gloomy with the above
developments and with time to come there would be a tough competition with its
rivals So Next is what
4 Pricing Strategies
1 Penetration Pricing This pricing strategy is followed by companies with the
intention to maximize their market share They believe that a higher sales volume
will lead to lower unit costs amp higher long-run profit
Example China Mobile Phones in India
This is one of the fastest growing industries in India China mobile phones are cheap
and offer the same features as a expensive mobile from some other well known
manufacturers
Rs
12000
China-JN269
Rs
9900
China-MT3300
Rs
9800
China_Elitek_85
02
Rs
9500
China-GT-MD900
Rs
9400
China-6500S
Rs
8700
China_GT_Q71
8
Rs
6137
China-Elitek-
X6019
Rs
5200
China_Elitek_X6
011
Rs
4900
China_ELITEK_X6
010
Rs
4500
China_Elitek_X6
012
A few samples of Chinese mobiles are shown above Only problem that exist for the
Chinese mobile phones is that consumer generally have a low quality perception
associated with them and hence do not trust their quality However they are well
suited to people who want to enjoy features of a high end mobile without having a
budget for the same
2 Predatory Pricing
This pricing strategy is followed with the intention to wipe out the competition
13
Example In the year 2003 LG and Samsung along with Reliance came up with
Rs 500- mobile scheme where both handsets along with connections were
available for Rs 500- This was something which revolutionized the mobile
phone and telecom industry
3 Perceived value Pricing
In this case the pricing is done based on the customer‟s perception about the
company and its product Perceived value is made up of several elements such
as buyer‟s image of product performance the channel deliverables warranty
quality and even softer attributes such as supplier‟s reputation
Example A good example for this kind of pricing is Apple iPhones They are offered
in price range of Rs 31000- to Rs 42500-
Their price is set based on image of brand apple amp customer affinity towards it
Comparable mobiles phones from other manufacturers like Sony Ericson Nokia are
offered at relatively cheaper price For example comparable N series mobiles from
Nokia are offered at prices below Rs 30000- (Except for Nokia- N9 amp Nokia-8800
Carbon) Also SONYERICSSON ndash Satio is offered for Rs 31000- amp all other Sony
brands are available for prices below it
Apple can set higher prices since it feels that its customers will be ready to pay for it
based on its perceived value
14
Apple-iPhone-3G-S-32GB Price | Rate Rs 42500-
4 Value Pricing This is pricing strategy in which a company wins loyal customers
by charging a fairly low price for a high quality offering
Example Nokia E 63 Mobile
This mobile is priced at Rs 11260- This mobile offers a large number of high end
applications like Web-Browsing Email Data Network GPRS GPS amp Navigation
and lots of other facilities apart from serving the basic mobile functions At the same
time it has a sleek body amp robust structure
A image of this mobile has been shown below
15
5 Product form pricing Different versions of the same product are priced
differently
Examples Nokia-5000 is priced at Rs 4300- Whereas Nokia-7210C-Supernova is
priced at Rs 4800- offers almost the same features The reason for difference in
pricing is due to the sleek structure of Nokia-7210C
16
6 Promotional Pricing
1 Special Event Pricing In this case special prices are offered during special
occasions like festivals to increase the sales Example Last Diwali (September 2009) Samsung offered discounts on
Samsung Omnia mobile phone Their market price at that time was Rs
33990- whereas their discounted price for Diwali was Rs Rs 31990-
2 Low-Interest financing
Company can offer low interest financing to customer This will reduce the
burden of initial cost to the customer
Example In 2009 Nokia piloted a scheme in two Indian states where it sold
handsets on a weekly instalment of 100 rupees ($2) over 25 weeks period
3 Psychological Discounting
This is done to make the customer believe that product is priced cheaply or
some cases just break the price barrier that customer has in his mind like
price at price Rs 999- which is priced just below Rs 1000-
17
Example
MOTOYUVA - W156 prices at Rs 1099-
Samsung Guru- Rs 2999-
5 Current Trend in Mobile Industry
-- With saturation in the urban market growth in Indian mobile market will be driven
by an increased focus on the rural market aggressive promotions and handset
bundle offers
-- As of March 2007 mobile subscribers in rural India accounted just 20 of the
Indian mobile subscriber base However it is forecasted to grow at a CAGR of more
than 47 during 2007 to 2010
-- In order to remain competitive the mobile industry could see several mergers and
acquisitions roll out obligation and substantiate equity holding in more than one
telecom company
-- The major growth in mobile phone subscribers will be seen in C Circle and B
Circle in short-term
-- Enormous opportunities are emerging for the low cost handset manufacturers
along with low tariffs infrastructure development for mobile communication
-- Rural India will account for around 35-38 of the total mobile handset sales by
2010
18
The industrys spectacular growth in India is attracting the attention of several
international brands Glenn Smith reports
SECTOR INSIGHT
The growth of Indias mobile sector has not gone unnoticed Last year Virgin Mobile
agreed a deal to enter the market and Japans DoCoMo bought into mobile operator
Tata to stake its claim in the fast-expanding industry
India offers astounding growth statistics In October 2008 according to the Telecom
Regulatory Authority of India (Trai) 104 million Indians signed up for a phone
service pushing the national total to 3639 million a penetration of 315 per cent
Only 10 years earlier India had a mere 880000 phones most of them landlinesfor
one billion people Today fixed-line phones account for only 105 per cent - 382
million subscribers and this absolute number is slowly declining Wireless operators
meanwhile are surging ahead Many first-time phone buyers are opting for mobile
and will drive the total subscriber base to 500 million by 2010according toTrai
The expansion has been fuelled by recent economic prosperity but the accelerant is
an ever-increasing affordability of handsets and services Mobile phone service costs
have plummeted In March 1999 the effective charge was more than 1532 rupees
(US$031) per minute which fell by half in 2000 again in 2001 and repeatedly
dropped until today - at less than a rupee it is believed to be the cheapest rate in the
worldThe sectors expansion is not expected to be hit by the economic slowdown
Market growth is moving away from the cities and going into the villages and rural
areas says Shankari Panchapakesan executive director of mobile services The
Nielsen Company South Asia The macroeconomy wont impact this because rural
people are using phones in ways that make a difference in their life how they work
how they educate their children and how they access information
Fishermen for example use phones to find outlets for their catch Women earn a
living with phone exchanges Carpenters carve their numbers on village walls For
handsets the undisputed leader is Nokia The Finnish telephone giant has been in
India since 1994 and has invested in three RampD labs making facilities and
distribution partnerships
Naresh Priyadarshihead of Synovate Business Consulting says Nokia has 90000
distributors in India giving it a 90 per cent retail footprint There are also 30000plus
stores that sell Nokia exclusively Nokia has concept stores in at least seven major
cities
Together Indias retail outlets sold 132 million handsets worth 700 billion rupees in
2008 according to Synovate Nokias share of value was 59 per cent followed by
19
Sony Ericsson with a distant eight per cent Samsung with seven per cent and
Motorola with six per cent Smartphones account for 24 percent of sales according
to Synovate with mid-priced feature phones taking 28 per cent and the remainder -
48 per cent - being ultra-low-cost phones Handset makers see ultra-low-cost
phones as the road ahead despite the razorthin profit margins Already sales of
cheap handsets are depressing average prices Euromonitor estimates that unit
prices fell 50 per cent between 2004 and 2007 to an average of 2808 rupees
To put handsets within reach of Indias rural poor phone makers have had to rethink
product design The Nokia 1100 included a torch alarm clock and a radio Nokias
entry-level phones are now priced at 1500 rupees Spice Mobile halved that with its
Peoples Phone priced at 599 rupees including lifetime prepaid activation
To bond with rural users Nokia is launching a subscription-based service called Life
tools with information on agriculture and education Such phone services will serve
as the first online experience for rural Indians
Among affluent urban users value-added-services (VAS) for feature phones are
seen as the way forward Synovate reports VAS at 50 million rupees in 2008 and
fore- casts 70 per cent annual growth to push that to 165 million rupees by 2010 It is
this fast-growing rapidly diversifying market that is attractive to overseas firms
though they should not expect much profit in the short term
Some important facts about Rural Coverage-
bull About 70 percent of Indias near 12 billion inhabitants live in rural
communities
bull rural teledensity was a mere 126 percent
bull Rural wire line connections totaled 1068 million at the end of December
down by 246 percent from 1095 million at the end of Septemberr 2009
bull The rural wireless subscriber base hit 9315 million at the end of the year up
238 percent from 9098 million at the end of September
bull Department of Telecom and BSNL have signed an agreement to provide
861000 connections to individual users and government institutions through
rural and remote exchanges by 2014
bull To promote rural rollout by the private operators the Indian government
imposed Universal Service Obligations (USO) on the countrys operators to
build a fund that can finance the rollout of services in areas where there isnt
an obvious or pressing business case to do so
bull The first phase of mobile infrastructure deployment under the USO fund
scheme commissioned six different service providers to deploy 7871 towers
bull However by the end of October 2009 only 1934 towers had been installed
20
bull The second phase complete with a tender for an additional 11049 sites has
yet to be started
bull The phased rollouts associated with the USO scheme require an additional
40875 mobile towers to be erected
bull Add this to the number of towers required for the five new 2G networks
additional coverage and capacity for existing operators and the introduction
of 3G networks and there is a huge demand for new cell sites right across the
country
6 Future of Mobile Industry
Demand Among Poor Farmers Keeps an Industry Growing as Other Sectors of the
Economy Are Jolted Rural customers have been hungry for mobile phones for a
long time so demand will remain unaffected by the global jitters said SP Shukla
chief executive officer of the mobile business at Reliance Communications India Ltd
Indias second-largest cellular company by number of subscribers
Even amid the global economic slowdown one Indian industry continues to boom
selling cellphones to the rural poor
Economists have slashed Indian economic growth forecasts for this year and the
stock market is in the doldrums But cellphone companies are signing millions of new
subscribers a month making India the fastest growing mobile-phone market in the
world There is no sign of a slowdown yet figures to be released later this month are
expected to show that new subscriptions in January reached a record 11 million
The demand for cellphones is coming mainly from rural consumers who typically
earn less than $1000 a year These buyers havent been affected by plunging stock
and real-estate prices or tighter bank lending since they typically dont own land and
dont borrow A large majority of them dont have access to regular landline phone
networks -- there are only about 40 million landline subscribers in India -- so once
cellular coverage comes to their towns or villages they scramble to get their first
phones
In the village of Karanehalli a cluster of simple homes around an intersection of two
dirt roads about 40 miles from Indias high-tech capital of Bangalore Farmer KT
Srinivasa doesnt have a toilet for his home or a tractor for his field But when a red
and white cellular tower sprouted in his village he splurged on a cellphone
While the way his family threshes rice -- crushing it with a massive stone roller --
hasnt changed for generations his phone has changed the way he farms He uses it
to decide when to plant and harvest by calling other farmers to get the best prices
21
for his rice coconuts and jasmine by calling wholesalers and to save hours of time
waiting on the road for deliveries and pickups that rarely come on time
Life is much better with the cellphone he said from his rice paddy in the shadow of
the new tower I bring it with me to the fields and anyone can reach me here
Mr Srinivasa like close to half the 800 people in his village uses Idea Cellular Ltd
as it was the first to bring them service He paid the equivalent of about $60 for his
Nokia phone and spends about $6 each month for service Like most rural users
Mr Srinivasa uses his phone to make voice calls -- he doesnt know how to text
message or to download emails On average rural Indians use their phones around
85 hours a month up 10 over the past year
The story is the same across rural India home to more than 60 of Indias
population of 12 billion China Indonesia and Brazil also continue to show solid
growth in cellphone sales
The continued expansion of the cellphone industry in India stands in sharp contrast
to most other industries here Textile and software exporters are struggling Indias
brand new malls are sparsely populated and the sales of cars trucks tractors and
motorcycles have declined in recent months
But the cellphone industry recorded more than 10 million new subscribers in
December up from eight million a year earlier The industrys overall subscriber base
grew 48 in 2008 to 347 million customers
Rural customers have been hungry for mobile phones for a long time so demand
will remain unaffected
22
7 References
httpenwikipediaorgwikiCommunications_in_India
httpwwwicmrindiaorgcasestudiescatalogueBusiness20StrategyBSTR174htm
wwwvitalanalyticsin
httpwwwfonearenacommobile_phone_pricelisthtml
wwwmobile-prices-indiacom
httpwwwmobile-prices-indiacomNokia_Mobile_Phonesphp
httpwebebscohostcom
httpwwwindia-cellularcomMobile-Priceshtm
httpproquestumicompqdwebindex=8ampdid=1635821441ampSrchMode=1ampsid=3ampF
mt=3ampVInst=PRODampVType=PQDampRQT=309ampVName=PQDampTS=1264756239ampclien
tId=135690
3
1 History and growth of mobile phone industry in India
The real transformation came in the scenario of Indian telecom industry after
announcement of National telecom policy in 1994 The mobile services were
commercially launched in India in August 1995 In the initial 5ndash6 years the average
monthly subscribers additions were around 005 to 01 million only and the total
mobile subscribers base in December 2002 stood at 105 millions However after
the number of proactive initiatives taken by regulator and licensor the monthly
mobile subscriber additions increased to around 2 million per month in the year
2003-04 and 2004-05 In the last few years there has been a huge exponential
growth with addition of about 10 to 15 million subscribers per month to customer
base
In the initial days of mobile phone in India in mid 1990‟s the grey market accounted
for 80 per cent of the mobile phone sales due to a huge price differential between the
legally imported and the grey market phones
Even as the government slashed the duties at the same time various mobile
manufacturers reduced their rates to induce the customers to buy a phone from
authorized phone shop Today the grey market comprises very small share of
market
When mobile phones were introduced in India in the mid-90s US based Motorola
Swedens Ericsson and Finlands Nokia dominated the handset market in India Over
the years the old order has changed today players like Samsung LG Apple Virgin
HTC Huawei Haier are all competing for a place in the market Apart from this there
is also a competition from imported unbranded Chinese mobiles which are avaible
with lot many features of a typically high end say Nokia mobile but at a substantially
lesser price
After the initial dominance of Nokia from 1990‟s till 2002 a change occurred in Indian
market hen CDMA technology was launched in the year 2003 At this point the
Korean brands namely Samsung and LG established themselves after they tied up
with CDMA operator Reliance Infocomm This was a breakthrough in India‟s mobile
phone industry since people were able to get mobile phones with Reliance
connection only for a initial cost of about Rs 500- This opened up a mass market
for mobile manufacturers in India
Gradually all the major players like Nokia Motorola came up with their CDMA
models and have been able to regain their market share
4
In the last few years India has witnessed a revolution in mobile phone market with
about 8 to 10 million subscribers being added to the customer base each month The
major reasons for this boom have been
1 Falling tariff rates of telecom service providers
2 Fall in the prices of mobile handsets
3 Increase in the reach of service providers covering ever nook and corner of
the country
2 Current scenario of Mobile phone industry
Following are the highlights of mobile phone industry in India as on December 2009
1 The penetration of mobile phones stands at about 30
2 81 of mobile users are in urban area
3 India‟s rural teledensity stands at about 126
4 India has about 517 million subscribers by December 2009
5 It is forecasted that sales of mobile handsets in rural India will grow at CAGR
of around 17 from 2009 to 2012
Above figures clearly indicate that although mobile phones might have made
significant inroads into the urban market amp urban market may start moving towards
saturation but still lot of potential is to be explored in the rural segment
Market Share of different Manufacturers as on Dec-2009 is given below
As evident from above figures Nokia is a major player in the Indian mobile industry
today
5
Also to understand the satisfaction level which users of above brands express we
look at a consumer satisfaction survey the results of which are shown below The
survey was done on Indian Urban mobile phone users with Sample size of N=5775
The source of this data is website wwwvitalanalyticsin
Model Users Likely to
recommend
LG 576
Motorola 410
Nokia 686
Samsung 557
Sony-Ericsson 653
The result shows Nokia users are the most satisfied with their product followed by
Sony-Ericsson and LG
The results of above survey are important since mobile phone is a device which is
frequently replaced in few years time so the brand which provides maximum
satisfaction to users will be able to maintain high loyalty and hence maintain its
market share
A segregation of Indian market on the basis of price bands is shown below We can
see that mobile phones are avaible in various price bands from Rs 2000- amp less up
to Rs 50000-
6
Source httpwwwfonearenacommobile_phone_pricelisthtml
A close study of the product offered by various companies reveals following
1 Companies like HTC Apple Vertu have products only for the high end market
of Rs 15000- and more
2 On the other hand there are players like Usha lexus whose product fall in the
lower category with their products being avaible in price range of minimum of
Rs 1900- to maximum Rs 5900- Also Virgin mobile Huawei etc fall in the
same category
3 Players like Onida have mobiles in lower prices (Rs 2000-) to middle price
range (till Rs9900-)
4 Players like Motorola Nokia LG Sony Ericsson have mobile phones avaible
in all different price range and hence are able to target all the different
segments of the market
7
3 Marketing Strategy A holistic view (Nokia Samsung)
Nokia
Nokia as a manufacture of mobile communication devices was succeeded in
administrating marketing strategies in India markets The reason is that Nokia
delivers better products which cater to the needs and preferences of Indian
consumers
Nokia - Made in India ndash A detailed analysis
In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that
it was setting up a manufacturing facility for mobile devices in Chennai the state
capital of Tamil Nadu in southern India Nokia planned to invest US$ 100-150 million
in the facility where the production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia
Corporation said ldquoEstablishing a new factory in India is an important step in the
continuous development of our global manufacturing networkrdquo4 India was ideal for
Nokias new production facility Each mobile handset has more than 400 parts and
the average production capacity of each manufacturing unit of Nokia is around 20
million units
This level of manufacturing involves a total of 8 billion components per annum
requiring strong logistical support Nokias manufacturing facility needed to be
located close to a major international airport or sea port for quick supply of
components India met all these requirements and also enjoyed cheap manpower
costs and proximity to the rapidly growing Asia Pacific markets
Besides Nokia was the market leader in mobile communication devices in India
The company has been carrying out sales amp marketing customer care and research
amp development activities in the country Nokia considers India to be one of its most
important markets The companys Code Division Multiple Access (CDMA)5 facility is
located in Mumbai and provides software and technical support to CDMA consumers
in India and other Asia Pacific countries In 2004 Nokia was chosen as bdquothe most
respected consumer durables company by Businessworld6 The magazine wrote
ldquoThis Finnish companys debut at the top of the heap says two things
One that its strategies - including ones like developing a phone specifically for
India - are respected But more importantly Nokias win is also an endorsement of
the importance of the ubiquitous cell phone as a durable in todays world After all
unlike its competitors most of which offer a slew of durables Nokia is mostly a cell
phone companyrdquo
8
In 2005 Nokia was recognized as the bdquoBrand of the Year by the Confederation
of Indian Industry Indias apex industry association The company was chosen for
this award because of its high brand recall well established distribution channels
and being most preferred by the consumers
Enamoured of Nokias success in the Indian market Harvard University had
invited Nokia India to talk on bdquoHow Nokia cracked open the Indian market
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper
manufacturing company In 1920 Finnish Rubber Works became a part of the
company and later on in 1922 Finnish Cable Works joined them All the three
companies were merged in 1967 to form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and
electronics businesses and by 1987 consumer electronics became Nokias major
business Nokia created the NMT mobile phone standard in 1981 and launched the
first NMT phone Mobira Cityman in 1987 The company delivered the first GSM
network to Radkilinia a Finnish company in 1991 and in 1992 Nokia 1011 - a
precursor for all Nokias current GSM phones - was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world
Another significant move of the company during this period was the divestment of its
non-core operations like IT The company focused on two core businesses - mobile
phones and telecommunications networks Between 1992 and 1996 the company
exited from the rubber and cable businesses as well
Nokia entered the Indian market in 1994 The first ever GSM call in India was
made on a Nokia 2110 mobile phone on its own network in 1995 When Nokia
entered India the telecom policies were not conducive to the growth of the mobile
phone industry
The tariffs levied on importing mobile phones were as high as 27 usage
charges were at Rs16 per minute and at these high rates consumers did not take
to mobile phones Nokia also had to face tough competition from other powerful
global players like Motorola Sony Siemens and Ericsson
Nokia was quick to learn from its mistakes and adopted strategies to regain its
lost market share Globally during the first quarter of 2005 the companys sales
reached 74 billion euros with the company selling 54 million phones during the
period In India Nokia continued its leadership in GSM with a market share of 74 in
March 2005 Nokia also surpassed Samsung in color mobiles in the GSM segment
recording a share of 55 in the same month
9
Nokia reorganized itself at the global level in 2004 At this point a multimedia
division was formed
The divisions Indian operations concentrated on promoting the concept of high-
end telephones in smaller towns while going in for higher volumes in larger cities
The marketing division of the company concentrated on making distributors in small
towns sell high-end products Though the distributors were skeptical to start with by
the end of 2004 the process was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be
driven by voice multimedia and mobile services for organizations The teledensity in
India was estimated to increase to 182 by March 2009 with mobile subscription
rising to 14877 million by that time In many instances the cell phone has become
the only basic telephone link of a householdenterprise in India rather than a landline
phone It was turning out to be more economical and efficient than fixed line
telephones So there was great scope for further expansion with reduction in the
cost of ownership
Samsungs Strategy to Gain Market Share in The Indian Mobile Phone Market
The Samsung management has initiated a market-mapping exercise to get into our
fold distributors who have relevant knowledge of the market credibility a good
distribution network and will therefore contribute in strengthening Samsungs reach in
the market the new distribution strategy would take its penetration level in the
market from the current 55 percent to 85 percent by the end of the year
On the retail front it was taking initiatives to increase the number of retailers
enrolled as Samsung Mobile Privilege Partners (SMPPs) from around 100 in 2007 to
around 400 by the end of the year Single and multi-brand retailers had shown an
interest in becoming SMPP
In the same month the company launched five new mobile phone models and said
that it would launch another 13 by the middle of the year The models that were
launched included multimedia phones phones for corporate customers and a
comparatively lower priced model aimed at a bigger chunk of the market
The company as of early 2008 its mobile phones were priced between Rs 1700
and Rs 28000 but that the company would launch more expensive mobile phones
in the future
The company also announced its new positioning with the new pay-off line Next is
10
What and that it had roped in a leading actor of the Indian film industry Aamir Khan
(Aamir) as its brand ambassador Aamir would also feature in its new ads
Announcing the major celebrity endorsement for the brand HB Lee president and
CEO Samsung (South-West Asia) said The Samsung brand stands for qualities of
innovation change discovery self-expression and excellence in performance And
these very same qualities are epitomized by Aamir Khan whose quality and depth of
work as well as versatility as an actor have made him a much loved and respected
actor in India today We are indeed very proud and privileged to have him as our
brand ambassador
With Aamirs endorsement of Samsung the fight for the mobile phone market had
also become a four-way battle with other leading actors endorsing the rival brands -
Shah Rukh Khan endorsing Nokia Abhishek Bachchan endorsing Motorola and
Hrithik Roshan endorsing Sony Ericsson
According to Samsung the mobile phone market in India would be 100 million units
in 2008-09With all these new initiatives Samsung was confident of achieving its
objective of cornering a 15 percent market share in the country
The company said that it had the necessary infrastructure to ramp up its production
capacity at its manufacturing unit at Noida from the current 6 million units per annum
depending on the demand
Recently to have an impact on international prospective mobile phone users
Samsung has signed up Didier Drogba playing in Chelsea Football Club as its
2008 Mobile Phone category brand ambassador
As part of this partnership Drogba will appear in Samsung Mobile adverting
campaigns for a period of one year and will also make public appearances to
promote Samsung‟s products and corporate activities
ldquoExtending our association with Chelsea FC we are now thrilled to partner with
Drogba as Samsung‟s brand ambassadorrdquo says Chi Won Suh CEO
Samsung Middle East and Africa region ldquoAfrica is a key market for Samsung
Electronics with immense growth potential and we are confident that our
association with an internationally and locally acclaimed football star like Drogba
will bring us closer to the football loving population throughout the African
continentrdquo
Football sponsorship is one of the pillars of Samsung‟s sports marketing strategy It
is derived from the belief that sport especially football unites people of all ages
11
genders and races
Samsung bada to rival Android Linux
Samsung entered into the mobile OS arena with bada The software whose name is
based on the Korean for ocean is designed to be open and will compete directly
against rivals like Android or LiMo It will be based on universal standards and wont
consider even core aspects of the OS off-limits developers can not only use
contacts the dialer and other utilities but extend them with new features of their own
Most details are left vague but bada will have a central app store Carriers will also
have the option of customizing the OS to suit their own tastes
Samsung expects the very first device using bada to show in the first half of 2010
along with the initial app store More phones should be ready by the second half of
that year while the app store will expand to 30 different countries including key
countries in Europe A more formal unveiling is due in the UK for December and will
be followed by first looks for developers both in December and in January
The news backs analyst claims of Samsung moving to its own platform and adopting
modern open platforms including bada If fully representative it also signals the
likely ends of Symbian and Windows Mobile at Samsung as the forecast would have
Symbian gone entirely by 2011 and Microsofts OS at just 20 percent by 2012 where
it makes up 80 percent of Samsung phones today Such a gesture will also render
closed platforms like OS X iPhones and Windows Mobile the relative minority in
numbers though not necessarily market share
Recent happenings were the Samsung Corby which is a full-touch handset that
places users at the centre of the social media revolution with full support for a wide
range of social networks The new mobile compliments the Company‟s existing
touch screen strategy ldquotouch for every lifestylerdquo by broadening the market and
targeting the youth audience
The Corby represents a complete makeover for the youth segment with its eye-
catching design which marks a significant break from the way full touch phones are
usually designed The Samsung Corby is notable for both its body design and
colours it comes with bold colour options
With Ghazini swiping the box office Samsung has enchased on its brand
ambassador Amir Khan by launching Ghazini mobile games on selected models
which is a smart and innovative approach of marketing strategy
12
The future prospects of Samsung mobiles doesn‟t seem gloomy with the above
developments and with time to come there would be a tough competition with its
rivals So Next is what
4 Pricing Strategies
1 Penetration Pricing This pricing strategy is followed by companies with the
intention to maximize their market share They believe that a higher sales volume
will lead to lower unit costs amp higher long-run profit
Example China Mobile Phones in India
This is one of the fastest growing industries in India China mobile phones are cheap
and offer the same features as a expensive mobile from some other well known
manufacturers
Rs
12000
China-JN269
Rs
9900
China-MT3300
Rs
9800
China_Elitek_85
02
Rs
9500
China-GT-MD900
Rs
9400
China-6500S
Rs
8700
China_GT_Q71
8
Rs
6137
China-Elitek-
X6019
Rs
5200
China_Elitek_X6
011
Rs
4900
China_ELITEK_X6
010
Rs
4500
China_Elitek_X6
012
A few samples of Chinese mobiles are shown above Only problem that exist for the
Chinese mobile phones is that consumer generally have a low quality perception
associated with them and hence do not trust their quality However they are well
suited to people who want to enjoy features of a high end mobile without having a
budget for the same
2 Predatory Pricing
This pricing strategy is followed with the intention to wipe out the competition
13
Example In the year 2003 LG and Samsung along with Reliance came up with
Rs 500- mobile scheme where both handsets along with connections were
available for Rs 500- This was something which revolutionized the mobile
phone and telecom industry
3 Perceived value Pricing
In this case the pricing is done based on the customer‟s perception about the
company and its product Perceived value is made up of several elements such
as buyer‟s image of product performance the channel deliverables warranty
quality and even softer attributes such as supplier‟s reputation
Example A good example for this kind of pricing is Apple iPhones They are offered
in price range of Rs 31000- to Rs 42500-
Their price is set based on image of brand apple amp customer affinity towards it
Comparable mobiles phones from other manufacturers like Sony Ericson Nokia are
offered at relatively cheaper price For example comparable N series mobiles from
Nokia are offered at prices below Rs 30000- (Except for Nokia- N9 amp Nokia-8800
Carbon) Also SONYERICSSON ndash Satio is offered for Rs 31000- amp all other Sony
brands are available for prices below it
Apple can set higher prices since it feels that its customers will be ready to pay for it
based on its perceived value
14
Apple-iPhone-3G-S-32GB Price | Rate Rs 42500-
4 Value Pricing This is pricing strategy in which a company wins loyal customers
by charging a fairly low price for a high quality offering
Example Nokia E 63 Mobile
This mobile is priced at Rs 11260- This mobile offers a large number of high end
applications like Web-Browsing Email Data Network GPRS GPS amp Navigation
and lots of other facilities apart from serving the basic mobile functions At the same
time it has a sleek body amp robust structure
A image of this mobile has been shown below
15
5 Product form pricing Different versions of the same product are priced
differently
Examples Nokia-5000 is priced at Rs 4300- Whereas Nokia-7210C-Supernova is
priced at Rs 4800- offers almost the same features The reason for difference in
pricing is due to the sleek structure of Nokia-7210C
16
6 Promotional Pricing
1 Special Event Pricing In this case special prices are offered during special
occasions like festivals to increase the sales Example Last Diwali (September 2009) Samsung offered discounts on
Samsung Omnia mobile phone Their market price at that time was Rs
33990- whereas their discounted price for Diwali was Rs Rs 31990-
2 Low-Interest financing
Company can offer low interest financing to customer This will reduce the
burden of initial cost to the customer
Example In 2009 Nokia piloted a scheme in two Indian states where it sold
handsets on a weekly instalment of 100 rupees ($2) over 25 weeks period
3 Psychological Discounting
This is done to make the customer believe that product is priced cheaply or
some cases just break the price barrier that customer has in his mind like
price at price Rs 999- which is priced just below Rs 1000-
17
Example
MOTOYUVA - W156 prices at Rs 1099-
Samsung Guru- Rs 2999-
5 Current Trend in Mobile Industry
-- With saturation in the urban market growth in Indian mobile market will be driven
by an increased focus on the rural market aggressive promotions and handset
bundle offers
-- As of March 2007 mobile subscribers in rural India accounted just 20 of the
Indian mobile subscriber base However it is forecasted to grow at a CAGR of more
than 47 during 2007 to 2010
-- In order to remain competitive the mobile industry could see several mergers and
acquisitions roll out obligation and substantiate equity holding in more than one
telecom company
-- The major growth in mobile phone subscribers will be seen in C Circle and B
Circle in short-term
-- Enormous opportunities are emerging for the low cost handset manufacturers
along with low tariffs infrastructure development for mobile communication
-- Rural India will account for around 35-38 of the total mobile handset sales by
2010
18
The industrys spectacular growth in India is attracting the attention of several
international brands Glenn Smith reports
SECTOR INSIGHT
The growth of Indias mobile sector has not gone unnoticed Last year Virgin Mobile
agreed a deal to enter the market and Japans DoCoMo bought into mobile operator
Tata to stake its claim in the fast-expanding industry
India offers astounding growth statistics In October 2008 according to the Telecom
Regulatory Authority of India (Trai) 104 million Indians signed up for a phone
service pushing the national total to 3639 million a penetration of 315 per cent
Only 10 years earlier India had a mere 880000 phones most of them landlinesfor
one billion people Today fixed-line phones account for only 105 per cent - 382
million subscribers and this absolute number is slowly declining Wireless operators
meanwhile are surging ahead Many first-time phone buyers are opting for mobile
and will drive the total subscriber base to 500 million by 2010according toTrai
The expansion has been fuelled by recent economic prosperity but the accelerant is
an ever-increasing affordability of handsets and services Mobile phone service costs
have plummeted In March 1999 the effective charge was more than 1532 rupees
(US$031) per minute which fell by half in 2000 again in 2001 and repeatedly
dropped until today - at less than a rupee it is believed to be the cheapest rate in the
worldThe sectors expansion is not expected to be hit by the economic slowdown
Market growth is moving away from the cities and going into the villages and rural
areas says Shankari Panchapakesan executive director of mobile services The
Nielsen Company South Asia The macroeconomy wont impact this because rural
people are using phones in ways that make a difference in their life how they work
how they educate their children and how they access information
Fishermen for example use phones to find outlets for their catch Women earn a
living with phone exchanges Carpenters carve their numbers on village walls For
handsets the undisputed leader is Nokia The Finnish telephone giant has been in
India since 1994 and has invested in three RampD labs making facilities and
distribution partnerships
Naresh Priyadarshihead of Synovate Business Consulting says Nokia has 90000
distributors in India giving it a 90 per cent retail footprint There are also 30000plus
stores that sell Nokia exclusively Nokia has concept stores in at least seven major
cities
Together Indias retail outlets sold 132 million handsets worth 700 billion rupees in
2008 according to Synovate Nokias share of value was 59 per cent followed by
19
Sony Ericsson with a distant eight per cent Samsung with seven per cent and
Motorola with six per cent Smartphones account for 24 percent of sales according
to Synovate with mid-priced feature phones taking 28 per cent and the remainder -
48 per cent - being ultra-low-cost phones Handset makers see ultra-low-cost
phones as the road ahead despite the razorthin profit margins Already sales of
cheap handsets are depressing average prices Euromonitor estimates that unit
prices fell 50 per cent between 2004 and 2007 to an average of 2808 rupees
To put handsets within reach of Indias rural poor phone makers have had to rethink
product design The Nokia 1100 included a torch alarm clock and a radio Nokias
entry-level phones are now priced at 1500 rupees Spice Mobile halved that with its
Peoples Phone priced at 599 rupees including lifetime prepaid activation
To bond with rural users Nokia is launching a subscription-based service called Life
tools with information on agriculture and education Such phone services will serve
as the first online experience for rural Indians
Among affluent urban users value-added-services (VAS) for feature phones are
seen as the way forward Synovate reports VAS at 50 million rupees in 2008 and
fore- casts 70 per cent annual growth to push that to 165 million rupees by 2010 It is
this fast-growing rapidly diversifying market that is attractive to overseas firms
though they should not expect much profit in the short term
Some important facts about Rural Coverage-
bull About 70 percent of Indias near 12 billion inhabitants live in rural
communities
bull rural teledensity was a mere 126 percent
bull Rural wire line connections totaled 1068 million at the end of December
down by 246 percent from 1095 million at the end of Septemberr 2009
bull The rural wireless subscriber base hit 9315 million at the end of the year up
238 percent from 9098 million at the end of September
bull Department of Telecom and BSNL have signed an agreement to provide
861000 connections to individual users and government institutions through
rural and remote exchanges by 2014
bull To promote rural rollout by the private operators the Indian government
imposed Universal Service Obligations (USO) on the countrys operators to
build a fund that can finance the rollout of services in areas where there isnt
an obvious or pressing business case to do so
bull The first phase of mobile infrastructure deployment under the USO fund
scheme commissioned six different service providers to deploy 7871 towers
bull However by the end of October 2009 only 1934 towers had been installed
20
bull The second phase complete with a tender for an additional 11049 sites has
yet to be started
bull The phased rollouts associated with the USO scheme require an additional
40875 mobile towers to be erected
bull Add this to the number of towers required for the five new 2G networks
additional coverage and capacity for existing operators and the introduction
of 3G networks and there is a huge demand for new cell sites right across the
country
6 Future of Mobile Industry
Demand Among Poor Farmers Keeps an Industry Growing as Other Sectors of the
Economy Are Jolted Rural customers have been hungry for mobile phones for a
long time so demand will remain unaffected by the global jitters said SP Shukla
chief executive officer of the mobile business at Reliance Communications India Ltd
Indias second-largest cellular company by number of subscribers
Even amid the global economic slowdown one Indian industry continues to boom
selling cellphones to the rural poor
Economists have slashed Indian economic growth forecasts for this year and the
stock market is in the doldrums But cellphone companies are signing millions of new
subscribers a month making India the fastest growing mobile-phone market in the
world There is no sign of a slowdown yet figures to be released later this month are
expected to show that new subscriptions in January reached a record 11 million
The demand for cellphones is coming mainly from rural consumers who typically
earn less than $1000 a year These buyers havent been affected by plunging stock
and real-estate prices or tighter bank lending since they typically dont own land and
dont borrow A large majority of them dont have access to regular landline phone
networks -- there are only about 40 million landline subscribers in India -- so once
cellular coverage comes to their towns or villages they scramble to get their first
phones
In the village of Karanehalli a cluster of simple homes around an intersection of two
dirt roads about 40 miles from Indias high-tech capital of Bangalore Farmer KT
Srinivasa doesnt have a toilet for his home or a tractor for his field But when a red
and white cellular tower sprouted in his village he splurged on a cellphone
While the way his family threshes rice -- crushing it with a massive stone roller --
hasnt changed for generations his phone has changed the way he farms He uses it
to decide when to plant and harvest by calling other farmers to get the best prices
21
for his rice coconuts and jasmine by calling wholesalers and to save hours of time
waiting on the road for deliveries and pickups that rarely come on time
Life is much better with the cellphone he said from his rice paddy in the shadow of
the new tower I bring it with me to the fields and anyone can reach me here
Mr Srinivasa like close to half the 800 people in his village uses Idea Cellular Ltd
as it was the first to bring them service He paid the equivalent of about $60 for his
Nokia phone and spends about $6 each month for service Like most rural users
Mr Srinivasa uses his phone to make voice calls -- he doesnt know how to text
message or to download emails On average rural Indians use their phones around
85 hours a month up 10 over the past year
The story is the same across rural India home to more than 60 of Indias
population of 12 billion China Indonesia and Brazil also continue to show solid
growth in cellphone sales
The continued expansion of the cellphone industry in India stands in sharp contrast
to most other industries here Textile and software exporters are struggling Indias
brand new malls are sparsely populated and the sales of cars trucks tractors and
motorcycles have declined in recent months
But the cellphone industry recorded more than 10 million new subscribers in
December up from eight million a year earlier The industrys overall subscriber base
grew 48 in 2008 to 347 million customers
Rural customers have been hungry for mobile phones for a long time so demand
will remain unaffected
22
7 References
httpenwikipediaorgwikiCommunications_in_India
httpwwwicmrindiaorgcasestudiescatalogueBusiness20StrategyBSTR174htm
wwwvitalanalyticsin
httpwwwfonearenacommobile_phone_pricelisthtml
wwwmobile-prices-indiacom
httpwwwmobile-prices-indiacomNokia_Mobile_Phonesphp
httpwebebscohostcom
httpwwwindia-cellularcomMobile-Priceshtm
httpproquestumicompqdwebindex=8ampdid=1635821441ampSrchMode=1ampsid=3ampF
mt=3ampVInst=PRODampVType=PQDampRQT=309ampVName=PQDampTS=1264756239ampclien
tId=135690
4
In the last few years India has witnessed a revolution in mobile phone market with
about 8 to 10 million subscribers being added to the customer base each month The
major reasons for this boom have been
1 Falling tariff rates of telecom service providers
2 Fall in the prices of mobile handsets
3 Increase in the reach of service providers covering ever nook and corner of
the country
2 Current scenario of Mobile phone industry
Following are the highlights of mobile phone industry in India as on December 2009
1 The penetration of mobile phones stands at about 30
2 81 of mobile users are in urban area
3 India‟s rural teledensity stands at about 126
4 India has about 517 million subscribers by December 2009
5 It is forecasted that sales of mobile handsets in rural India will grow at CAGR
of around 17 from 2009 to 2012
Above figures clearly indicate that although mobile phones might have made
significant inroads into the urban market amp urban market may start moving towards
saturation but still lot of potential is to be explored in the rural segment
Market Share of different Manufacturers as on Dec-2009 is given below
As evident from above figures Nokia is a major player in the Indian mobile industry
today
5
Also to understand the satisfaction level which users of above brands express we
look at a consumer satisfaction survey the results of which are shown below The
survey was done on Indian Urban mobile phone users with Sample size of N=5775
The source of this data is website wwwvitalanalyticsin
Model Users Likely to
recommend
LG 576
Motorola 410
Nokia 686
Samsung 557
Sony-Ericsson 653
The result shows Nokia users are the most satisfied with their product followed by
Sony-Ericsson and LG
The results of above survey are important since mobile phone is a device which is
frequently replaced in few years time so the brand which provides maximum
satisfaction to users will be able to maintain high loyalty and hence maintain its
market share
A segregation of Indian market on the basis of price bands is shown below We can
see that mobile phones are avaible in various price bands from Rs 2000- amp less up
to Rs 50000-
6
Source httpwwwfonearenacommobile_phone_pricelisthtml
A close study of the product offered by various companies reveals following
1 Companies like HTC Apple Vertu have products only for the high end market
of Rs 15000- and more
2 On the other hand there are players like Usha lexus whose product fall in the
lower category with their products being avaible in price range of minimum of
Rs 1900- to maximum Rs 5900- Also Virgin mobile Huawei etc fall in the
same category
3 Players like Onida have mobiles in lower prices (Rs 2000-) to middle price
range (till Rs9900-)
4 Players like Motorola Nokia LG Sony Ericsson have mobile phones avaible
in all different price range and hence are able to target all the different
segments of the market
7
3 Marketing Strategy A holistic view (Nokia Samsung)
Nokia
Nokia as a manufacture of mobile communication devices was succeeded in
administrating marketing strategies in India markets The reason is that Nokia
delivers better products which cater to the needs and preferences of Indian
consumers
Nokia - Made in India ndash A detailed analysis
In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that
it was setting up a manufacturing facility for mobile devices in Chennai the state
capital of Tamil Nadu in southern India Nokia planned to invest US$ 100-150 million
in the facility where the production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia
Corporation said ldquoEstablishing a new factory in India is an important step in the
continuous development of our global manufacturing networkrdquo4 India was ideal for
Nokias new production facility Each mobile handset has more than 400 parts and
the average production capacity of each manufacturing unit of Nokia is around 20
million units
This level of manufacturing involves a total of 8 billion components per annum
requiring strong logistical support Nokias manufacturing facility needed to be
located close to a major international airport or sea port for quick supply of
components India met all these requirements and also enjoyed cheap manpower
costs and proximity to the rapidly growing Asia Pacific markets
Besides Nokia was the market leader in mobile communication devices in India
The company has been carrying out sales amp marketing customer care and research
amp development activities in the country Nokia considers India to be one of its most
important markets The companys Code Division Multiple Access (CDMA)5 facility is
located in Mumbai and provides software and technical support to CDMA consumers
in India and other Asia Pacific countries In 2004 Nokia was chosen as bdquothe most
respected consumer durables company by Businessworld6 The magazine wrote
ldquoThis Finnish companys debut at the top of the heap says two things
One that its strategies - including ones like developing a phone specifically for
India - are respected But more importantly Nokias win is also an endorsement of
the importance of the ubiquitous cell phone as a durable in todays world After all
unlike its competitors most of which offer a slew of durables Nokia is mostly a cell
phone companyrdquo
8
In 2005 Nokia was recognized as the bdquoBrand of the Year by the Confederation
of Indian Industry Indias apex industry association The company was chosen for
this award because of its high brand recall well established distribution channels
and being most preferred by the consumers
Enamoured of Nokias success in the Indian market Harvard University had
invited Nokia India to talk on bdquoHow Nokia cracked open the Indian market
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper
manufacturing company In 1920 Finnish Rubber Works became a part of the
company and later on in 1922 Finnish Cable Works joined them All the three
companies were merged in 1967 to form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and
electronics businesses and by 1987 consumer electronics became Nokias major
business Nokia created the NMT mobile phone standard in 1981 and launched the
first NMT phone Mobira Cityman in 1987 The company delivered the first GSM
network to Radkilinia a Finnish company in 1991 and in 1992 Nokia 1011 - a
precursor for all Nokias current GSM phones - was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world
Another significant move of the company during this period was the divestment of its
non-core operations like IT The company focused on two core businesses - mobile
phones and telecommunications networks Between 1992 and 1996 the company
exited from the rubber and cable businesses as well
Nokia entered the Indian market in 1994 The first ever GSM call in India was
made on a Nokia 2110 mobile phone on its own network in 1995 When Nokia
entered India the telecom policies were not conducive to the growth of the mobile
phone industry
The tariffs levied on importing mobile phones were as high as 27 usage
charges were at Rs16 per minute and at these high rates consumers did not take
to mobile phones Nokia also had to face tough competition from other powerful
global players like Motorola Sony Siemens and Ericsson
Nokia was quick to learn from its mistakes and adopted strategies to regain its
lost market share Globally during the first quarter of 2005 the companys sales
reached 74 billion euros with the company selling 54 million phones during the
period In India Nokia continued its leadership in GSM with a market share of 74 in
March 2005 Nokia also surpassed Samsung in color mobiles in the GSM segment
recording a share of 55 in the same month
9
Nokia reorganized itself at the global level in 2004 At this point a multimedia
division was formed
The divisions Indian operations concentrated on promoting the concept of high-
end telephones in smaller towns while going in for higher volumes in larger cities
The marketing division of the company concentrated on making distributors in small
towns sell high-end products Though the distributors were skeptical to start with by
the end of 2004 the process was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be
driven by voice multimedia and mobile services for organizations The teledensity in
India was estimated to increase to 182 by March 2009 with mobile subscription
rising to 14877 million by that time In many instances the cell phone has become
the only basic telephone link of a householdenterprise in India rather than a landline
phone It was turning out to be more economical and efficient than fixed line
telephones So there was great scope for further expansion with reduction in the
cost of ownership
Samsungs Strategy to Gain Market Share in The Indian Mobile Phone Market
The Samsung management has initiated a market-mapping exercise to get into our
fold distributors who have relevant knowledge of the market credibility a good
distribution network and will therefore contribute in strengthening Samsungs reach in
the market the new distribution strategy would take its penetration level in the
market from the current 55 percent to 85 percent by the end of the year
On the retail front it was taking initiatives to increase the number of retailers
enrolled as Samsung Mobile Privilege Partners (SMPPs) from around 100 in 2007 to
around 400 by the end of the year Single and multi-brand retailers had shown an
interest in becoming SMPP
In the same month the company launched five new mobile phone models and said
that it would launch another 13 by the middle of the year The models that were
launched included multimedia phones phones for corporate customers and a
comparatively lower priced model aimed at a bigger chunk of the market
The company as of early 2008 its mobile phones were priced between Rs 1700
and Rs 28000 but that the company would launch more expensive mobile phones
in the future
The company also announced its new positioning with the new pay-off line Next is
10
What and that it had roped in a leading actor of the Indian film industry Aamir Khan
(Aamir) as its brand ambassador Aamir would also feature in its new ads
Announcing the major celebrity endorsement for the brand HB Lee president and
CEO Samsung (South-West Asia) said The Samsung brand stands for qualities of
innovation change discovery self-expression and excellence in performance And
these very same qualities are epitomized by Aamir Khan whose quality and depth of
work as well as versatility as an actor have made him a much loved and respected
actor in India today We are indeed very proud and privileged to have him as our
brand ambassador
With Aamirs endorsement of Samsung the fight for the mobile phone market had
also become a four-way battle with other leading actors endorsing the rival brands -
Shah Rukh Khan endorsing Nokia Abhishek Bachchan endorsing Motorola and
Hrithik Roshan endorsing Sony Ericsson
According to Samsung the mobile phone market in India would be 100 million units
in 2008-09With all these new initiatives Samsung was confident of achieving its
objective of cornering a 15 percent market share in the country
The company said that it had the necessary infrastructure to ramp up its production
capacity at its manufacturing unit at Noida from the current 6 million units per annum
depending on the demand
Recently to have an impact on international prospective mobile phone users
Samsung has signed up Didier Drogba playing in Chelsea Football Club as its
2008 Mobile Phone category brand ambassador
As part of this partnership Drogba will appear in Samsung Mobile adverting
campaigns for a period of one year and will also make public appearances to
promote Samsung‟s products and corporate activities
ldquoExtending our association with Chelsea FC we are now thrilled to partner with
Drogba as Samsung‟s brand ambassadorrdquo says Chi Won Suh CEO
Samsung Middle East and Africa region ldquoAfrica is a key market for Samsung
Electronics with immense growth potential and we are confident that our
association with an internationally and locally acclaimed football star like Drogba
will bring us closer to the football loving population throughout the African
continentrdquo
Football sponsorship is one of the pillars of Samsung‟s sports marketing strategy It
is derived from the belief that sport especially football unites people of all ages
11
genders and races
Samsung bada to rival Android Linux
Samsung entered into the mobile OS arena with bada The software whose name is
based on the Korean for ocean is designed to be open and will compete directly
against rivals like Android or LiMo It will be based on universal standards and wont
consider even core aspects of the OS off-limits developers can not only use
contacts the dialer and other utilities but extend them with new features of their own
Most details are left vague but bada will have a central app store Carriers will also
have the option of customizing the OS to suit their own tastes
Samsung expects the very first device using bada to show in the first half of 2010
along with the initial app store More phones should be ready by the second half of
that year while the app store will expand to 30 different countries including key
countries in Europe A more formal unveiling is due in the UK for December and will
be followed by first looks for developers both in December and in January
The news backs analyst claims of Samsung moving to its own platform and adopting
modern open platforms including bada If fully representative it also signals the
likely ends of Symbian and Windows Mobile at Samsung as the forecast would have
Symbian gone entirely by 2011 and Microsofts OS at just 20 percent by 2012 where
it makes up 80 percent of Samsung phones today Such a gesture will also render
closed platforms like OS X iPhones and Windows Mobile the relative minority in
numbers though not necessarily market share
Recent happenings were the Samsung Corby which is a full-touch handset that
places users at the centre of the social media revolution with full support for a wide
range of social networks The new mobile compliments the Company‟s existing
touch screen strategy ldquotouch for every lifestylerdquo by broadening the market and
targeting the youth audience
The Corby represents a complete makeover for the youth segment with its eye-
catching design which marks a significant break from the way full touch phones are
usually designed The Samsung Corby is notable for both its body design and
colours it comes with bold colour options
With Ghazini swiping the box office Samsung has enchased on its brand
ambassador Amir Khan by launching Ghazini mobile games on selected models
which is a smart and innovative approach of marketing strategy
12
The future prospects of Samsung mobiles doesn‟t seem gloomy with the above
developments and with time to come there would be a tough competition with its
rivals So Next is what
4 Pricing Strategies
1 Penetration Pricing This pricing strategy is followed by companies with the
intention to maximize their market share They believe that a higher sales volume
will lead to lower unit costs amp higher long-run profit
Example China Mobile Phones in India
This is one of the fastest growing industries in India China mobile phones are cheap
and offer the same features as a expensive mobile from some other well known
manufacturers
Rs
12000
China-JN269
Rs
9900
China-MT3300
Rs
9800
China_Elitek_85
02
Rs
9500
China-GT-MD900
Rs
9400
China-6500S
Rs
8700
China_GT_Q71
8
Rs
6137
China-Elitek-
X6019
Rs
5200
China_Elitek_X6
011
Rs
4900
China_ELITEK_X6
010
Rs
4500
China_Elitek_X6
012
A few samples of Chinese mobiles are shown above Only problem that exist for the
Chinese mobile phones is that consumer generally have a low quality perception
associated with them and hence do not trust their quality However they are well
suited to people who want to enjoy features of a high end mobile without having a
budget for the same
2 Predatory Pricing
This pricing strategy is followed with the intention to wipe out the competition
13
Example In the year 2003 LG and Samsung along with Reliance came up with
Rs 500- mobile scheme where both handsets along with connections were
available for Rs 500- This was something which revolutionized the mobile
phone and telecom industry
3 Perceived value Pricing
In this case the pricing is done based on the customer‟s perception about the
company and its product Perceived value is made up of several elements such
as buyer‟s image of product performance the channel deliverables warranty
quality and even softer attributes such as supplier‟s reputation
Example A good example for this kind of pricing is Apple iPhones They are offered
in price range of Rs 31000- to Rs 42500-
Their price is set based on image of brand apple amp customer affinity towards it
Comparable mobiles phones from other manufacturers like Sony Ericson Nokia are
offered at relatively cheaper price For example comparable N series mobiles from
Nokia are offered at prices below Rs 30000- (Except for Nokia- N9 amp Nokia-8800
Carbon) Also SONYERICSSON ndash Satio is offered for Rs 31000- amp all other Sony
brands are available for prices below it
Apple can set higher prices since it feels that its customers will be ready to pay for it
based on its perceived value
14
Apple-iPhone-3G-S-32GB Price | Rate Rs 42500-
4 Value Pricing This is pricing strategy in which a company wins loyal customers
by charging a fairly low price for a high quality offering
Example Nokia E 63 Mobile
This mobile is priced at Rs 11260- This mobile offers a large number of high end
applications like Web-Browsing Email Data Network GPRS GPS amp Navigation
and lots of other facilities apart from serving the basic mobile functions At the same
time it has a sleek body amp robust structure
A image of this mobile has been shown below
15
5 Product form pricing Different versions of the same product are priced
differently
Examples Nokia-5000 is priced at Rs 4300- Whereas Nokia-7210C-Supernova is
priced at Rs 4800- offers almost the same features The reason for difference in
pricing is due to the sleek structure of Nokia-7210C
16
6 Promotional Pricing
1 Special Event Pricing In this case special prices are offered during special
occasions like festivals to increase the sales Example Last Diwali (September 2009) Samsung offered discounts on
Samsung Omnia mobile phone Their market price at that time was Rs
33990- whereas their discounted price for Diwali was Rs Rs 31990-
2 Low-Interest financing
Company can offer low interest financing to customer This will reduce the
burden of initial cost to the customer
Example In 2009 Nokia piloted a scheme in two Indian states where it sold
handsets on a weekly instalment of 100 rupees ($2) over 25 weeks period
3 Psychological Discounting
This is done to make the customer believe that product is priced cheaply or
some cases just break the price barrier that customer has in his mind like
price at price Rs 999- which is priced just below Rs 1000-
17
Example
MOTOYUVA - W156 prices at Rs 1099-
Samsung Guru- Rs 2999-
5 Current Trend in Mobile Industry
-- With saturation in the urban market growth in Indian mobile market will be driven
by an increased focus on the rural market aggressive promotions and handset
bundle offers
-- As of March 2007 mobile subscribers in rural India accounted just 20 of the
Indian mobile subscriber base However it is forecasted to grow at a CAGR of more
than 47 during 2007 to 2010
-- In order to remain competitive the mobile industry could see several mergers and
acquisitions roll out obligation and substantiate equity holding in more than one
telecom company
-- The major growth in mobile phone subscribers will be seen in C Circle and B
Circle in short-term
-- Enormous opportunities are emerging for the low cost handset manufacturers
along with low tariffs infrastructure development for mobile communication
-- Rural India will account for around 35-38 of the total mobile handset sales by
2010
18
The industrys spectacular growth in India is attracting the attention of several
international brands Glenn Smith reports
SECTOR INSIGHT
The growth of Indias mobile sector has not gone unnoticed Last year Virgin Mobile
agreed a deal to enter the market and Japans DoCoMo bought into mobile operator
Tata to stake its claim in the fast-expanding industry
India offers astounding growth statistics In October 2008 according to the Telecom
Regulatory Authority of India (Trai) 104 million Indians signed up for a phone
service pushing the national total to 3639 million a penetration of 315 per cent
Only 10 years earlier India had a mere 880000 phones most of them landlinesfor
one billion people Today fixed-line phones account for only 105 per cent - 382
million subscribers and this absolute number is slowly declining Wireless operators
meanwhile are surging ahead Many first-time phone buyers are opting for mobile
and will drive the total subscriber base to 500 million by 2010according toTrai
The expansion has been fuelled by recent economic prosperity but the accelerant is
an ever-increasing affordability of handsets and services Mobile phone service costs
have plummeted In March 1999 the effective charge was more than 1532 rupees
(US$031) per minute which fell by half in 2000 again in 2001 and repeatedly
dropped until today - at less than a rupee it is believed to be the cheapest rate in the
worldThe sectors expansion is not expected to be hit by the economic slowdown
Market growth is moving away from the cities and going into the villages and rural
areas says Shankari Panchapakesan executive director of mobile services The
Nielsen Company South Asia The macroeconomy wont impact this because rural
people are using phones in ways that make a difference in their life how they work
how they educate their children and how they access information
Fishermen for example use phones to find outlets for their catch Women earn a
living with phone exchanges Carpenters carve their numbers on village walls For
handsets the undisputed leader is Nokia The Finnish telephone giant has been in
India since 1994 and has invested in three RampD labs making facilities and
distribution partnerships
Naresh Priyadarshihead of Synovate Business Consulting says Nokia has 90000
distributors in India giving it a 90 per cent retail footprint There are also 30000plus
stores that sell Nokia exclusively Nokia has concept stores in at least seven major
cities
Together Indias retail outlets sold 132 million handsets worth 700 billion rupees in
2008 according to Synovate Nokias share of value was 59 per cent followed by
19
Sony Ericsson with a distant eight per cent Samsung with seven per cent and
Motorola with six per cent Smartphones account for 24 percent of sales according
to Synovate with mid-priced feature phones taking 28 per cent and the remainder -
48 per cent - being ultra-low-cost phones Handset makers see ultra-low-cost
phones as the road ahead despite the razorthin profit margins Already sales of
cheap handsets are depressing average prices Euromonitor estimates that unit
prices fell 50 per cent between 2004 and 2007 to an average of 2808 rupees
To put handsets within reach of Indias rural poor phone makers have had to rethink
product design The Nokia 1100 included a torch alarm clock and a radio Nokias
entry-level phones are now priced at 1500 rupees Spice Mobile halved that with its
Peoples Phone priced at 599 rupees including lifetime prepaid activation
To bond with rural users Nokia is launching a subscription-based service called Life
tools with information on agriculture and education Such phone services will serve
as the first online experience for rural Indians
Among affluent urban users value-added-services (VAS) for feature phones are
seen as the way forward Synovate reports VAS at 50 million rupees in 2008 and
fore- casts 70 per cent annual growth to push that to 165 million rupees by 2010 It is
this fast-growing rapidly diversifying market that is attractive to overseas firms
though they should not expect much profit in the short term
Some important facts about Rural Coverage-
bull About 70 percent of Indias near 12 billion inhabitants live in rural
communities
bull rural teledensity was a mere 126 percent
bull Rural wire line connections totaled 1068 million at the end of December
down by 246 percent from 1095 million at the end of Septemberr 2009
bull The rural wireless subscriber base hit 9315 million at the end of the year up
238 percent from 9098 million at the end of September
bull Department of Telecom and BSNL have signed an agreement to provide
861000 connections to individual users and government institutions through
rural and remote exchanges by 2014
bull To promote rural rollout by the private operators the Indian government
imposed Universal Service Obligations (USO) on the countrys operators to
build a fund that can finance the rollout of services in areas where there isnt
an obvious or pressing business case to do so
bull The first phase of mobile infrastructure deployment under the USO fund
scheme commissioned six different service providers to deploy 7871 towers
bull However by the end of October 2009 only 1934 towers had been installed
20
bull The second phase complete with a tender for an additional 11049 sites has
yet to be started
bull The phased rollouts associated with the USO scheme require an additional
40875 mobile towers to be erected
bull Add this to the number of towers required for the five new 2G networks
additional coverage and capacity for existing operators and the introduction
of 3G networks and there is a huge demand for new cell sites right across the
country
6 Future of Mobile Industry
Demand Among Poor Farmers Keeps an Industry Growing as Other Sectors of the
Economy Are Jolted Rural customers have been hungry for mobile phones for a
long time so demand will remain unaffected by the global jitters said SP Shukla
chief executive officer of the mobile business at Reliance Communications India Ltd
Indias second-largest cellular company by number of subscribers
Even amid the global economic slowdown one Indian industry continues to boom
selling cellphones to the rural poor
Economists have slashed Indian economic growth forecasts for this year and the
stock market is in the doldrums But cellphone companies are signing millions of new
subscribers a month making India the fastest growing mobile-phone market in the
world There is no sign of a slowdown yet figures to be released later this month are
expected to show that new subscriptions in January reached a record 11 million
The demand for cellphones is coming mainly from rural consumers who typically
earn less than $1000 a year These buyers havent been affected by plunging stock
and real-estate prices or tighter bank lending since they typically dont own land and
dont borrow A large majority of them dont have access to regular landline phone
networks -- there are only about 40 million landline subscribers in India -- so once
cellular coverage comes to their towns or villages they scramble to get their first
phones
In the village of Karanehalli a cluster of simple homes around an intersection of two
dirt roads about 40 miles from Indias high-tech capital of Bangalore Farmer KT
Srinivasa doesnt have a toilet for his home or a tractor for his field But when a red
and white cellular tower sprouted in his village he splurged on a cellphone
While the way his family threshes rice -- crushing it with a massive stone roller --
hasnt changed for generations his phone has changed the way he farms He uses it
to decide when to plant and harvest by calling other farmers to get the best prices
21
for his rice coconuts and jasmine by calling wholesalers and to save hours of time
waiting on the road for deliveries and pickups that rarely come on time
Life is much better with the cellphone he said from his rice paddy in the shadow of
the new tower I bring it with me to the fields and anyone can reach me here
Mr Srinivasa like close to half the 800 people in his village uses Idea Cellular Ltd
as it was the first to bring them service He paid the equivalent of about $60 for his
Nokia phone and spends about $6 each month for service Like most rural users
Mr Srinivasa uses his phone to make voice calls -- he doesnt know how to text
message or to download emails On average rural Indians use their phones around
85 hours a month up 10 over the past year
The story is the same across rural India home to more than 60 of Indias
population of 12 billion China Indonesia and Brazil also continue to show solid
growth in cellphone sales
The continued expansion of the cellphone industry in India stands in sharp contrast
to most other industries here Textile and software exporters are struggling Indias
brand new malls are sparsely populated and the sales of cars trucks tractors and
motorcycles have declined in recent months
But the cellphone industry recorded more than 10 million new subscribers in
December up from eight million a year earlier The industrys overall subscriber base
grew 48 in 2008 to 347 million customers
Rural customers have been hungry for mobile phones for a long time so demand
will remain unaffected
22
7 References
httpenwikipediaorgwikiCommunications_in_India
httpwwwicmrindiaorgcasestudiescatalogueBusiness20StrategyBSTR174htm
wwwvitalanalyticsin
httpwwwfonearenacommobile_phone_pricelisthtml
wwwmobile-prices-indiacom
httpwwwmobile-prices-indiacomNokia_Mobile_Phonesphp
httpwebebscohostcom
httpwwwindia-cellularcomMobile-Priceshtm
httpproquestumicompqdwebindex=8ampdid=1635821441ampSrchMode=1ampsid=3ampF
mt=3ampVInst=PRODampVType=PQDampRQT=309ampVName=PQDampTS=1264756239ampclien
tId=135690
5
Also to understand the satisfaction level which users of above brands express we
look at a consumer satisfaction survey the results of which are shown below The
survey was done on Indian Urban mobile phone users with Sample size of N=5775
The source of this data is website wwwvitalanalyticsin
Model Users Likely to
recommend
LG 576
Motorola 410
Nokia 686
Samsung 557
Sony-Ericsson 653
The result shows Nokia users are the most satisfied with their product followed by
Sony-Ericsson and LG
The results of above survey are important since mobile phone is a device which is
frequently replaced in few years time so the brand which provides maximum
satisfaction to users will be able to maintain high loyalty and hence maintain its
market share
A segregation of Indian market on the basis of price bands is shown below We can
see that mobile phones are avaible in various price bands from Rs 2000- amp less up
to Rs 50000-
6
Source httpwwwfonearenacommobile_phone_pricelisthtml
A close study of the product offered by various companies reveals following
1 Companies like HTC Apple Vertu have products only for the high end market
of Rs 15000- and more
2 On the other hand there are players like Usha lexus whose product fall in the
lower category with their products being avaible in price range of minimum of
Rs 1900- to maximum Rs 5900- Also Virgin mobile Huawei etc fall in the
same category
3 Players like Onida have mobiles in lower prices (Rs 2000-) to middle price
range (till Rs9900-)
4 Players like Motorola Nokia LG Sony Ericsson have mobile phones avaible
in all different price range and hence are able to target all the different
segments of the market
7
3 Marketing Strategy A holistic view (Nokia Samsung)
Nokia
Nokia as a manufacture of mobile communication devices was succeeded in
administrating marketing strategies in India markets The reason is that Nokia
delivers better products which cater to the needs and preferences of Indian
consumers
Nokia - Made in India ndash A detailed analysis
In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that
it was setting up a manufacturing facility for mobile devices in Chennai the state
capital of Tamil Nadu in southern India Nokia planned to invest US$ 100-150 million
in the facility where the production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia
Corporation said ldquoEstablishing a new factory in India is an important step in the
continuous development of our global manufacturing networkrdquo4 India was ideal for
Nokias new production facility Each mobile handset has more than 400 parts and
the average production capacity of each manufacturing unit of Nokia is around 20
million units
This level of manufacturing involves a total of 8 billion components per annum
requiring strong logistical support Nokias manufacturing facility needed to be
located close to a major international airport or sea port for quick supply of
components India met all these requirements and also enjoyed cheap manpower
costs and proximity to the rapidly growing Asia Pacific markets
Besides Nokia was the market leader in mobile communication devices in India
The company has been carrying out sales amp marketing customer care and research
amp development activities in the country Nokia considers India to be one of its most
important markets The companys Code Division Multiple Access (CDMA)5 facility is
located in Mumbai and provides software and technical support to CDMA consumers
in India and other Asia Pacific countries In 2004 Nokia was chosen as bdquothe most
respected consumer durables company by Businessworld6 The magazine wrote
ldquoThis Finnish companys debut at the top of the heap says two things
One that its strategies - including ones like developing a phone specifically for
India - are respected But more importantly Nokias win is also an endorsement of
the importance of the ubiquitous cell phone as a durable in todays world After all
unlike its competitors most of which offer a slew of durables Nokia is mostly a cell
phone companyrdquo
8
In 2005 Nokia was recognized as the bdquoBrand of the Year by the Confederation
of Indian Industry Indias apex industry association The company was chosen for
this award because of its high brand recall well established distribution channels
and being most preferred by the consumers
Enamoured of Nokias success in the Indian market Harvard University had
invited Nokia India to talk on bdquoHow Nokia cracked open the Indian market
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper
manufacturing company In 1920 Finnish Rubber Works became a part of the
company and later on in 1922 Finnish Cable Works joined them All the three
companies were merged in 1967 to form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and
electronics businesses and by 1987 consumer electronics became Nokias major
business Nokia created the NMT mobile phone standard in 1981 and launched the
first NMT phone Mobira Cityman in 1987 The company delivered the first GSM
network to Radkilinia a Finnish company in 1991 and in 1992 Nokia 1011 - a
precursor for all Nokias current GSM phones - was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world
Another significant move of the company during this period was the divestment of its
non-core operations like IT The company focused on two core businesses - mobile
phones and telecommunications networks Between 1992 and 1996 the company
exited from the rubber and cable businesses as well
Nokia entered the Indian market in 1994 The first ever GSM call in India was
made on a Nokia 2110 mobile phone on its own network in 1995 When Nokia
entered India the telecom policies were not conducive to the growth of the mobile
phone industry
The tariffs levied on importing mobile phones were as high as 27 usage
charges were at Rs16 per minute and at these high rates consumers did not take
to mobile phones Nokia also had to face tough competition from other powerful
global players like Motorola Sony Siemens and Ericsson
Nokia was quick to learn from its mistakes and adopted strategies to regain its
lost market share Globally during the first quarter of 2005 the companys sales
reached 74 billion euros with the company selling 54 million phones during the
period In India Nokia continued its leadership in GSM with a market share of 74 in
March 2005 Nokia also surpassed Samsung in color mobiles in the GSM segment
recording a share of 55 in the same month
9
Nokia reorganized itself at the global level in 2004 At this point a multimedia
division was formed
The divisions Indian operations concentrated on promoting the concept of high-
end telephones in smaller towns while going in for higher volumes in larger cities
The marketing division of the company concentrated on making distributors in small
towns sell high-end products Though the distributors were skeptical to start with by
the end of 2004 the process was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be
driven by voice multimedia and mobile services for organizations The teledensity in
India was estimated to increase to 182 by March 2009 with mobile subscription
rising to 14877 million by that time In many instances the cell phone has become
the only basic telephone link of a householdenterprise in India rather than a landline
phone It was turning out to be more economical and efficient than fixed line
telephones So there was great scope for further expansion with reduction in the
cost of ownership
Samsungs Strategy to Gain Market Share in The Indian Mobile Phone Market
The Samsung management has initiated a market-mapping exercise to get into our
fold distributors who have relevant knowledge of the market credibility a good
distribution network and will therefore contribute in strengthening Samsungs reach in
the market the new distribution strategy would take its penetration level in the
market from the current 55 percent to 85 percent by the end of the year
On the retail front it was taking initiatives to increase the number of retailers
enrolled as Samsung Mobile Privilege Partners (SMPPs) from around 100 in 2007 to
around 400 by the end of the year Single and multi-brand retailers had shown an
interest in becoming SMPP
In the same month the company launched five new mobile phone models and said
that it would launch another 13 by the middle of the year The models that were
launched included multimedia phones phones for corporate customers and a
comparatively lower priced model aimed at a bigger chunk of the market
The company as of early 2008 its mobile phones were priced between Rs 1700
and Rs 28000 but that the company would launch more expensive mobile phones
in the future
The company also announced its new positioning with the new pay-off line Next is
10
What and that it had roped in a leading actor of the Indian film industry Aamir Khan
(Aamir) as its brand ambassador Aamir would also feature in its new ads
Announcing the major celebrity endorsement for the brand HB Lee president and
CEO Samsung (South-West Asia) said The Samsung brand stands for qualities of
innovation change discovery self-expression and excellence in performance And
these very same qualities are epitomized by Aamir Khan whose quality and depth of
work as well as versatility as an actor have made him a much loved and respected
actor in India today We are indeed very proud and privileged to have him as our
brand ambassador
With Aamirs endorsement of Samsung the fight for the mobile phone market had
also become a four-way battle with other leading actors endorsing the rival brands -
Shah Rukh Khan endorsing Nokia Abhishek Bachchan endorsing Motorola and
Hrithik Roshan endorsing Sony Ericsson
According to Samsung the mobile phone market in India would be 100 million units
in 2008-09With all these new initiatives Samsung was confident of achieving its
objective of cornering a 15 percent market share in the country
The company said that it had the necessary infrastructure to ramp up its production
capacity at its manufacturing unit at Noida from the current 6 million units per annum
depending on the demand
Recently to have an impact on international prospective mobile phone users
Samsung has signed up Didier Drogba playing in Chelsea Football Club as its
2008 Mobile Phone category brand ambassador
As part of this partnership Drogba will appear in Samsung Mobile adverting
campaigns for a period of one year and will also make public appearances to
promote Samsung‟s products and corporate activities
ldquoExtending our association with Chelsea FC we are now thrilled to partner with
Drogba as Samsung‟s brand ambassadorrdquo says Chi Won Suh CEO
Samsung Middle East and Africa region ldquoAfrica is a key market for Samsung
Electronics with immense growth potential and we are confident that our
association with an internationally and locally acclaimed football star like Drogba
will bring us closer to the football loving population throughout the African
continentrdquo
Football sponsorship is one of the pillars of Samsung‟s sports marketing strategy It
is derived from the belief that sport especially football unites people of all ages
11
genders and races
Samsung bada to rival Android Linux
Samsung entered into the mobile OS arena with bada The software whose name is
based on the Korean for ocean is designed to be open and will compete directly
against rivals like Android or LiMo It will be based on universal standards and wont
consider even core aspects of the OS off-limits developers can not only use
contacts the dialer and other utilities but extend them with new features of their own
Most details are left vague but bada will have a central app store Carriers will also
have the option of customizing the OS to suit their own tastes
Samsung expects the very first device using bada to show in the first half of 2010
along with the initial app store More phones should be ready by the second half of
that year while the app store will expand to 30 different countries including key
countries in Europe A more formal unveiling is due in the UK for December and will
be followed by first looks for developers both in December and in January
The news backs analyst claims of Samsung moving to its own platform and adopting
modern open platforms including bada If fully representative it also signals the
likely ends of Symbian and Windows Mobile at Samsung as the forecast would have
Symbian gone entirely by 2011 and Microsofts OS at just 20 percent by 2012 where
it makes up 80 percent of Samsung phones today Such a gesture will also render
closed platforms like OS X iPhones and Windows Mobile the relative minority in
numbers though not necessarily market share
Recent happenings were the Samsung Corby which is a full-touch handset that
places users at the centre of the social media revolution with full support for a wide
range of social networks The new mobile compliments the Company‟s existing
touch screen strategy ldquotouch for every lifestylerdquo by broadening the market and
targeting the youth audience
The Corby represents a complete makeover for the youth segment with its eye-
catching design which marks a significant break from the way full touch phones are
usually designed The Samsung Corby is notable for both its body design and
colours it comes with bold colour options
With Ghazini swiping the box office Samsung has enchased on its brand
ambassador Amir Khan by launching Ghazini mobile games on selected models
which is a smart and innovative approach of marketing strategy
12
The future prospects of Samsung mobiles doesn‟t seem gloomy with the above
developments and with time to come there would be a tough competition with its
rivals So Next is what
4 Pricing Strategies
1 Penetration Pricing This pricing strategy is followed by companies with the
intention to maximize their market share They believe that a higher sales volume
will lead to lower unit costs amp higher long-run profit
Example China Mobile Phones in India
This is one of the fastest growing industries in India China mobile phones are cheap
and offer the same features as a expensive mobile from some other well known
manufacturers
Rs
12000
China-JN269
Rs
9900
China-MT3300
Rs
9800
China_Elitek_85
02
Rs
9500
China-GT-MD900
Rs
9400
China-6500S
Rs
8700
China_GT_Q71
8
Rs
6137
China-Elitek-
X6019
Rs
5200
China_Elitek_X6
011
Rs
4900
China_ELITEK_X6
010
Rs
4500
China_Elitek_X6
012
A few samples of Chinese mobiles are shown above Only problem that exist for the
Chinese mobile phones is that consumer generally have a low quality perception
associated with them and hence do not trust their quality However they are well
suited to people who want to enjoy features of a high end mobile without having a
budget for the same
2 Predatory Pricing
This pricing strategy is followed with the intention to wipe out the competition
13
Example In the year 2003 LG and Samsung along with Reliance came up with
Rs 500- mobile scheme where both handsets along with connections were
available for Rs 500- This was something which revolutionized the mobile
phone and telecom industry
3 Perceived value Pricing
In this case the pricing is done based on the customer‟s perception about the
company and its product Perceived value is made up of several elements such
as buyer‟s image of product performance the channel deliverables warranty
quality and even softer attributes such as supplier‟s reputation
Example A good example for this kind of pricing is Apple iPhones They are offered
in price range of Rs 31000- to Rs 42500-
Their price is set based on image of brand apple amp customer affinity towards it
Comparable mobiles phones from other manufacturers like Sony Ericson Nokia are
offered at relatively cheaper price For example comparable N series mobiles from
Nokia are offered at prices below Rs 30000- (Except for Nokia- N9 amp Nokia-8800
Carbon) Also SONYERICSSON ndash Satio is offered for Rs 31000- amp all other Sony
brands are available for prices below it
Apple can set higher prices since it feels that its customers will be ready to pay for it
based on its perceived value
14
Apple-iPhone-3G-S-32GB Price | Rate Rs 42500-
4 Value Pricing This is pricing strategy in which a company wins loyal customers
by charging a fairly low price for a high quality offering
Example Nokia E 63 Mobile
This mobile is priced at Rs 11260- This mobile offers a large number of high end
applications like Web-Browsing Email Data Network GPRS GPS amp Navigation
and lots of other facilities apart from serving the basic mobile functions At the same
time it has a sleek body amp robust structure
A image of this mobile has been shown below
15
5 Product form pricing Different versions of the same product are priced
differently
Examples Nokia-5000 is priced at Rs 4300- Whereas Nokia-7210C-Supernova is
priced at Rs 4800- offers almost the same features The reason for difference in
pricing is due to the sleek structure of Nokia-7210C
16
6 Promotional Pricing
1 Special Event Pricing In this case special prices are offered during special
occasions like festivals to increase the sales Example Last Diwali (September 2009) Samsung offered discounts on
Samsung Omnia mobile phone Their market price at that time was Rs
33990- whereas their discounted price for Diwali was Rs Rs 31990-
2 Low-Interest financing
Company can offer low interest financing to customer This will reduce the
burden of initial cost to the customer
Example In 2009 Nokia piloted a scheme in two Indian states where it sold
handsets on a weekly instalment of 100 rupees ($2) over 25 weeks period
3 Psychological Discounting
This is done to make the customer believe that product is priced cheaply or
some cases just break the price barrier that customer has in his mind like
price at price Rs 999- which is priced just below Rs 1000-
17
Example
MOTOYUVA - W156 prices at Rs 1099-
Samsung Guru- Rs 2999-
5 Current Trend in Mobile Industry
-- With saturation in the urban market growth in Indian mobile market will be driven
by an increased focus on the rural market aggressive promotions and handset
bundle offers
-- As of March 2007 mobile subscribers in rural India accounted just 20 of the
Indian mobile subscriber base However it is forecasted to grow at a CAGR of more
than 47 during 2007 to 2010
-- In order to remain competitive the mobile industry could see several mergers and
acquisitions roll out obligation and substantiate equity holding in more than one
telecom company
-- The major growth in mobile phone subscribers will be seen in C Circle and B
Circle in short-term
-- Enormous opportunities are emerging for the low cost handset manufacturers
along with low tariffs infrastructure development for mobile communication
-- Rural India will account for around 35-38 of the total mobile handset sales by
2010
18
The industrys spectacular growth in India is attracting the attention of several
international brands Glenn Smith reports
SECTOR INSIGHT
The growth of Indias mobile sector has not gone unnoticed Last year Virgin Mobile
agreed a deal to enter the market and Japans DoCoMo bought into mobile operator
Tata to stake its claim in the fast-expanding industry
India offers astounding growth statistics In October 2008 according to the Telecom
Regulatory Authority of India (Trai) 104 million Indians signed up for a phone
service pushing the national total to 3639 million a penetration of 315 per cent
Only 10 years earlier India had a mere 880000 phones most of them landlinesfor
one billion people Today fixed-line phones account for only 105 per cent - 382
million subscribers and this absolute number is slowly declining Wireless operators
meanwhile are surging ahead Many first-time phone buyers are opting for mobile
and will drive the total subscriber base to 500 million by 2010according toTrai
The expansion has been fuelled by recent economic prosperity but the accelerant is
an ever-increasing affordability of handsets and services Mobile phone service costs
have plummeted In March 1999 the effective charge was more than 1532 rupees
(US$031) per minute which fell by half in 2000 again in 2001 and repeatedly
dropped until today - at less than a rupee it is believed to be the cheapest rate in the
worldThe sectors expansion is not expected to be hit by the economic slowdown
Market growth is moving away from the cities and going into the villages and rural
areas says Shankari Panchapakesan executive director of mobile services The
Nielsen Company South Asia The macroeconomy wont impact this because rural
people are using phones in ways that make a difference in their life how they work
how they educate their children and how they access information
Fishermen for example use phones to find outlets for their catch Women earn a
living with phone exchanges Carpenters carve their numbers on village walls For
handsets the undisputed leader is Nokia The Finnish telephone giant has been in
India since 1994 and has invested in three RampD labs making facilities and
distribution partnerships
Naresh Priyadarshihead of Synovate Business Consulting says Nokia has 90000
distributors in India giving it a 90 per cent retail footprint There are also 30000plus
stores that sell Nokia exclusively Nokia has concept stores in at least seven major
cities
Together Indias retail outlets sold 132 million handsets worth 700 billion rupees in
2008 according to Synovate Nokias share of value was 59 per cent followed by
19
Sony Ericsson with a distant eight per cent Samsung with seven per cent and
Motorola with six per cent Smartphones account for 24 percent of sales according
to Synovate with mid-priced feature phones taking 28 per cent and the remainder -
48 per cent - being ultra-low-cost phones Handset makers see ultra-low-cost
phones as the road ahead despite the razorthin profit margins Already sales of
cheap handsets are depressing average prices Euromonitor estimates that unit
prices fell 50 per cent between 2004 and 2007 to an average of 2808 rupees
To put handsets within reach of Indias rural poor phone makers have had to rethink
product design The Nokia 1100 included a torch alarm clock and a radio Nokias
entry-level phones are now priced at 1500 rupees Spice Mobile halved that with its
Peoples Phone priced at 599 rupees including lifetime prepaid activation
To bond with rural users Nokia is launching a subscription-based service called Life
tools with information on agriculture and education Such phone services will serve
as the first online experience for rural Indians
Among affluent urban users value-added-services (VAS) for feature phones are
seen as the way forward Synovate reports VAS at 50 million rupees in 2008 and
fore- casts 70 per cent annual growth to push that to 165 million rupees by 2010 It is
this fast-growing rapidly diversifying market that is attractive to overseas firms
though they should not expect much profit in the short term
Some important facts about Rural Coverage-
bull About 70 percent of Indias near 12 billion inhabitants live in rural
communities
bull rural teledensity was a mere 126 percent
bull Rural wire line connections totaled 1068 million at the end of December
down by 246 percent from 1095 million at the end of Septemberr 2009
bull The rural wireless subscriber base hit 9315 million at the end of the year up
238 percent from 9098 million at the end of September
bull Department of Telecom and BSNL have signed an agreement to provide
861000 connections to individual users and government institutions through
rural and remote exchanges by 2014
bull To promote rural rollout by the private operators the Indian government
imposed Universal Service Obligations (USO) on the countrys operators to
build a fund that can finance the rollout of services in areas where there isnt
an obvious or pressing business case to do so
bull The first phase of mobile infrastructure deployment under the USO fund
scheme commissioned six different service providers to deploy 7871 towers
bull However by the end of October 2009 only 1934 towers had been installed
20
bull The second phase complete with a tender for an additional 11049 sites has
yet to be started
bull The phased rollouts associated with the USO scheme require an additional
40875 mobile towers to be erected
bull Add this to the number of towers required for the five new 2G networks
additional coverage and capacity for existing operators and the introduction
of 3G networks and there is a huge demand for new cell sites right across the
country
6 Future of Mobile Industry
Demand Among Poor Farmers Keeps an Industry Growing as Other Sectors of the
Economy Are Jolted Rural customers have been hungry for mobile phones for a
long time so demand will remain unaffected by the global jitters said SP Shukla
chief executive officer of the mobile business at Reliance Communications India Ltd
Indias second-largest cellular company by number of subscribers
Even amid the global economic slowdown one Indian industry continues to boom
selling cellphones to the rural poor
Economists have slashed Indian economic growth forecasts for this year and the
stock market is in the doldrums But cellphone companies are signing millions of new
subscribers a month making India the fastest growing mobile-phone market in the
world There is no sign of a slowdown yet figures to be released later this month are
expected to show that new subscriptions in January reached a record 11 million
The demand for cellphones is coming mainly from rural consumers who typically
earn less than $1000 a year These buyers havent been affected by plunging stock
and real-estate prices or tighter bank lending since they typically dont own land and
dont borrow A large majority of them dont have access to regular landline phone
networks -- there are only about 40 million landline subscribers in India -- so once
cellular coverage comes to their towns or villages they scramble to get their first
phones
In the village of Karanehalli a cluster of simple homes around an intersection of two
dirt roads about 40 miles from Indias high-tech capital of Bangalore Farmer KT
Srinivasa doesnt have a toilet for his home or a tractor for his field But when a red
and white cellular tower sprouted in his village he splurged on a cellphone
While the way his family threshes rice -- crushing it with a massive stone roller --
hasnt changed for generations his phone has changed the way he farms He uses it
to decide when to plant and harvest by calling other farmers to get the best prices
21
for his rice coconuts and jasmine by calling wholesalers and to save hours of time
waiting on the road for deliveries and pickups that rarely come on time
Life is much better with the cellphone he said from his rice paddy in the shadow of
the new tower I bring it with me to the fields and anyone can reach me here
Mr Srinivasa like close to half the 800 people in his village uses Idea Cellular Ltd
as it was the first to bring them service He paid the equivalent of about $60 for his
Nokia phone and spends about $6 each month for service Like most rural users
Mr Srinivasa uses his phone to make voice calls -- he doesnt know how to text
message or to download emails On average rural Indians use their phones around
85 hours a month up 10 over the past year
The story is the same across rural India home to more than 60 of Indias
population of 12 billion China Indonesia and Brazil also continue to show solid
growth in cellphone sales
The continued expansion of the cellphone industry in India stands in sharp contrast
to most other industries here Textile and software exporters are struggling Indias
brand new malls are sparsely populated and the sales of cars trucks tractors and
motorcycles have declined in recent months
But the cellphone industry recorded more than 10 million new subscribers in
December up from eight million a year earlier The industrys overall subscriber base
grew 48 in 2008 to 347 million customers
Rural customers have been hungry for mobile phones for a long time so demand
will remain unaffected
22
7 References
httpenwikipediaorgwikiCommunications_in_India
httpwwwicmrindiaorgcasestudiescatalogueBusiness20StrategyBSTR174htm
wwwvitalanalyticsin
httpwwwfonearenacommobile_phone_pricelisthtml
wwwmobile-prices-indiacom
httpwwwmobile-prices-indiacomNokia_Mobile_Phonesphp
httpwebebscohostcom
httpwwwindia-cellularcomMobile-Priceshtm
httpproquestumicompqdwebindex=8ampdid=1635821441ampSrchMode=1ampsid=3ampF
mt=3ampVInst=PRODampVType=PQDampRQT=309ampVName=PQDampTS=1264756239ampclien
tId=135690
6
Source httpwwwfonearenacommobile_phone_pricelisthtml
A close study of the product offered by various companies reveals following
1 Companies like HTC Apple Vertu have products only for the high end market
of Rs 15000- and more
2 On the other hand there are players like Usha lexus whose product fall in the
lower category with their products being avaible in price range of minimum of
Rs 1900- to maximum Rs 5900- Also Virgin mobile Huawei etc fall in the
same category
3 Players like Onida have mobiles in lower prices (Rs 2000-) to middle price
range (till Rs9900-)
4 Players like Motorola Nokia LG Sony Ericsson have mobile phones avaible
in all different price range and hence are able to target all the different
segments of the market
7
3 Marketing Strategy A holistic view (Nokia Samsung)
Nokia
Nokia as a manufacture of mobile communication devices was succeeded in
administrating marketing strategies in India markets The reason is that Nokia
delivers better products which cater to the needs and preferences of Indian
consumers
Nokia - Made in India ndash A detailed analysis
In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that
it was setting up a manufacturing facility for mobile devices in Chennai the state
capital of Tamil Nadu in southern India Nokia planned to invest US$ 100-150 million
in the facility where the production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia
Corporation said ldquoEstablishing a new factory in India is an important step in the
continuous development of our global manufacturing networkrdquo4 India was ideal for
Nokias new production facility Each mobile handset has more than 400 parts and
the average production capacity of each manufacturing unit of Nokia is around 20
million units
This level of manufacturing involves a total of 8 billion components per annum
requiring strong logistical support Nokias manufacturing facility needed to be
located close to a major international airport or sea port for quick supply of
components India met all these requirements and also enjoyed cheap manpower
costs and proximity to the rapidly growing Asia Pacific markets
Besides Nokia was the market leader in mobile communication devices in India
The company has been carrying out sales amp marketing customer care and research
amp development activities in the country Nokia considers India to be one of its most
important markets The companys Code Division Multiple Access (CDMA)5 facility is
located in Mumbai and provides software and technical support to CDMA consumers
in India and other Asia Pacific countries In 2004 Nokia was chosen as bdquothe most
respected consumer durables company by Businessworld6 The magazine wrote
ldquoThis Finnish companys debut at the top of the heap says two things
One that its strategies - including ones like developing a phone specifically for
India - are respected But more importantly Nokias win is also an endorsement of
the importance of the ubiquitous cell phone as a durable in todays world After all
unlike its competitors most of which offer a slew of durables Nokia is mostly a cell
phone companyrdquo
8
In 2005 Nokia was recognized as the bdquoBrand of the Year by the Confederation
of Indian Industry Indias apex industry association The company was chosen for
this award because of its high brand recall well established distribution channels
and being most preferred by the consumers
Enamoured of Nokias success in the Indian market Harvard University had
invited Nokia India to talk on bdquoHow Nokia cracked open the Indian market
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper
manufacturing company In 1920 Finnish Rubber Works became a part of the
company and later on in 1922 Finnish Cable Works joined them All the three
companies were merged in 1967 to form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and
electronics businesses and by 1987 consumer electronics became Nokias major
business Nokia created the NMT mobile phone standard in 1981 and launched the
first NMT phone Mobira Cityman in 1987 The company delivered the first GSM
network to Radkilinia a Finnish company in 1991 and in 1992 Nokia 1011 - a
precursor for all Nokias current GSM phones - was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world
Another significant move of the company during this period was the divestment of its
non-core operations like IT The company focused on two core businesses - mobile
phones and telecommunications networks Between 1992 and 1996 the company
exited from the rubber and cable businesses as well
Nokia entered the Indian market in 1994 The first ever GSM call in India was
made on a Nokia 2110 mobile phone on its own network in 1995 When Nokia
entered India the telecom policies were not conducive to the growth of the mobile
phone industry
The tariffs levied on importing mobile phones were as high as 27 usage
charges were at Rs16 per minute and at these high rates consumers did not take
to mobile phones Nokia also had to face tough competition from other powerful
global players like Motorola Sony Siemens and Ericsson
Nokia was quick to learn from its mistakes and adopted strategies to regain its
lost market share Globally during the first quarter of 2005 the companys sales
reached 74 billion euros with the company selling 54 million phones during the
period In India Nokia continued its leadership in GSM with a market share of 74 in
March 2005 Nokia also surpassed Samsung in color mobiles in the GSM segment
recording a share of 55 in the same month
9
Nokia reorganized itself at the global level in 2004 At this point a multimedia
division was formed
The divisions Indian operations concentrated on promoting the concept of high-
end telephones in smaller towns while going in for higher volumes in larger cities
The marketing division of the company concentrated on making distributors in small
towns sell high-end products Though the distributors were skeptical to start with by
the end of 2004 the process was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be
driven by voice multimedia and mobile services for organizations The teledensity in
India was estimated to increase to 182 by March 2009 with mobile subscription
rising to 14877 million by that time In many instances the cell phone has become
the only basic telephone link of a householdenterprise in India rather than a landline
phone It was turning out to be more economical and efficient than fixed line
telephones So there was great scope for further expansion with reduction in the
cost of ownership
Samsungs Strategy to Gain Market Share in The Indian Mobile Phone Market
The Samsung management has initiated a market-mapping exercise to get into our
fold distributors who have relevant knowledge of the market credibility a good
distribution network and will therefore contribute in strengthening Samsungs reach in
the market the new distribution strategy would take its penetration level in the
market from the current 55 percent to 85 percent by the end of the year
On the retail front it was taking initiatives to increase the number of retailers
enrolled as Samsung Mobile Privilege Partners (SMPPs) from around 100 in 2007 to
around 400 by the end of the year Single and multi-brand retailers had shown an
interest in becoming SMPP
In the same month the company launched five new mobile phone models and said
that it would launch another 13 by the middle of the year The models that were
launched included multimedia phones phones for corporate customers and a
comparatively lower priced model aimed at a bigger chunk of the market
The company as of early 2008 its mobile phones were priced between Rs 1700
and Rs 28000 but that the company would launch more expensive mobile phones
in the future
The company also announced its new positioning with the new pay-off line Next is
10
What and that it had roped in a leading actor of the Indian film industry Aamir Khan
(Aamir) as its brand ambassador Aamir would also feature in its new ads
Announcing the major celebrity endorsement for the brand HB Lee president and
CEO Samsung (South-West Asia) said The Samsung brand stands for qualities of
innovation change discovery self-expression and excellence in performance And
these very same qualities are epitomized by Aamir Khan whose quality and depth of
work as well as versatility as an actor have made him a much loved and respected
actor in India today We are indeed very proud and privileged to have him as our
brand ambassador
With Aamirs endorsement of Samsung the fight for the mobile phone market had
also become a four-way battle with other leading actors endorsing the rival brands -
Shah Rukh Khan endorsing Nokia Abhishek Bachchan endorsing Motorola and
Hrithik Roshan endorsing Sony Ericsson
According to Samsung the mobile phone market in India would be 100 million units
in 2008-09With all these new initiatives Samsung was confident of achieving its
objective of cornering a 15 percent market share in the country
The company said that it had the necessary infrastructure to ramp up its production
capacity at its manufacturing unit at Noida from the current 6 million units per annum
depending on the demand
Recently to have an impact on international prospective mobile phone users
Samsung has signed up Didier Drogba playing in Chelsea Football Club as its
2008 Mobile Phone category brand ambassador
As part of this partnership Drogba will appear in Samsung Mobile adverting
campaigns for a period of one year and will also make public appearances to
promote Samsung‟s products and corporate activities
ldquoExtending our association with Chelsea FC we are now thrilled to partner with
Drogba as Samsung‟s brand ambassadorrdquo says Chi Won Suh CEO
Samsung Middle East and Africa region ldquoAfrica is a key market for Samsung
Electronics with immense growth potential and we are confident that our
association with an internationally and locally acclaimed football star like Drogba
will bring us closer to the football loving population throughout the African
continentrdquo
Football sponsorship is one of the pillars of Samsung‟s sports marketing strategy It
is derived from the belief that sport especially football unites people of all ages
11
genders and races
Samsung bada to rival Android Linux
Samsung entered into the mobile OS arena with bada The software whose name is
based on the Korean for ocean is designed to be open and will compete directly
against rivals like Android or LiMo It will be based on universal standards and wont
consider even core aspects of the OS off-limits developers can not only use
contacts the dialer and other utilities but extend them with new features of their own
Most details are left vague but bada will have a central app store Carriers will also
have the option of customizing the OS to suit their own tastes
Samsung expects the very first device using bada to show in the first half of 2010
along with the initial app store More phones should be ready by the second half of
that year while the app store will expand to 30 different countries including key
countries in Europe A more formal unveiling is due in the UK for December and will
be followed by first looks for developers both in December and in January
The news backs analyst claims of Samsung moving to its own platform and adopting
modern open platforms including bada If fully representative it also signals the
likely ends of Symbian and Windows Mobile at Samsung as the forecast would have
Symbian gone entirely by 2011 and Microsofts OS at just 20 percent by 2012 where
it makes up 80 percent of Samsung phones today Such a gesture will also render
closed platforms like OS X iPhones and Windows Mobile the relative minority in
numbers though not necessarily market share
Recent happenings were the Samsung Corby which is a full-touch handset that
places users at the centre of the social media revolution with full support for a wide
range of social networks The new mobile compliments the Company‟s existing
touch screen strategy ldquotouch for every lifestylerdquo by broadening the market and
targeting the youth audience
The Corby represents a complete makeover for the youth segment with its eye-
catching design which marks a significant break from the way full touch phones are
usually designed The Samsung Corby is notable for both its body design and
colours it comes with bold colour options
With Ghazini swiping the box office Samsung has enchased on its brand
ambassador Amir Khan by launching Ghazini mobile games on selected models
which is a smart and innovative approach of marketing strategy
12
The future prospects of Samsung mobiles doesn‟t seem gloomy with the above
developments and with time to come there would be a tough competition with its
rivals So Next is what
4 Pricing Strategies
1 Penetration Pricing This pricing strategy is followed by companies with the
intention to maximize their market share They believe that a higher sales volume
will lead to lower unit costs amp higher long-run profit
Example China Mobile Phones in India
This is one of the fastest growing industries in India China mobile phones are cheap
and offer the same features as a expensive mobile from some other well known
manufacturers
Rs
12000
China-JN269
Rs
9900
China-MT3300
Rs
9800
China_Elitek_85
02
Rs
9500
China-GT-MD900
Rs
9400
China-6500S
Rs
8700
China_GT_Q71
8
Rs
6137
China-Elitek-
X6019
Rs
5200
China_Elitek_X6
011
Rs
4900
China_ELITEK_X6
010
Rs
4500
China_Elitek_X6
012
A few samples of Chinese mobiles are shown above Only problem that exist for the
Chinese mobile phones is that consumer generally have a low quality perception
associated with them and hence do not trust their quality However they are well
suited to people who want to enjoy features of a high end mobile without having a
budget for the same
2 Predatory Pricing
This pricing strategy is followed with the intention to wipe out the competition
13
Example In the year 2003 LG and Samsung along with Reliance came up with
Rs 500- mobile scheme where both handsets along with connections were
available for Rs 500- This was something which revolutionized the mobile
phone and telecom industry
3 Perceived value Pricing
In this case the pricing is done based on the customer‟s perception about the
company and its product Perceived value is made up of several elements such
as buyer‟s image of product performance the channel deliverables warranty
quality and even softer attributes such as supplier‟s reputation
Example A good example for this kind of pricing is Apple iPhones They are offered
in price range of Rs 31000- to Rs 42500-
Their price is set based on image of brand apple amp customer affinity towards it
Comparable mobiles phones from other manufacturers like Sony Ericson Nokia are
offered at relatively cheaper price For example comparable N series mobiles from
Nokia are offered at prices below Rs 30000- (Except for Nokia- N9 amp Nokia-8800
Carbon) Also SONYERICSSON ndash Satio is offered for Rs 31000- amp all other Sony
brands are available for prices below it
Apple can set higher prices since it feels that its customers will be ready to pay for it
based on its perceived value
14
Apple-iPhone-3G-S-32GB Price | Rate Rs 42500-
4 Value Pricing This is pricing strategy in which a company wins loyal customers
by charging a fairly low price for a high quality offering
Example Nokia E 63 Mobile
This mobile is priced at Rs 11260- This mobile offers a large number of high end
applications like Web-Browsing Email Data Network GPRS GPS amp Navigation
and lots of other facilities apart from serving the basic mobile functions At the same
time it has a sleek body amp robust structure
A image of this mobile has been shown below
15
5 Product form pricing Different versions of the same product are priced
differently
Examples Nokia-5000 is priced at Rs 4300- Whereas Nokia-7210C-Supernova is
priced at Rs 4800- offers almost the same features The reason for difference in
pricing is due to the sleek structure of Nokia-7210C
16
6 Promotional Pricing
1 Special Event Pricing In this case special prices are offered during special
occasions like festivals to increase the sales Example Last Diwali (September 2009) Samsung offered discounts on
Samsung Omnia mobile phone Their market price at that time was Rs
33990- whereas their discounted price for Diwali was Rs Rs 31990-
2 Low-Interest financing
Company can offer low interest financing to customer This will reduce the
burden of initial cost to the customer
Example In 2009 Nokia piloted a scheme in two Indian states where it sold
handsets on a weekly instalment of 100 rupees ($2) over 25 weeks period
3 Psychological Discounting
This is done to make the customer believe that product is priced cheaply or
some cases just break the price barrier that customer has in his mind like
price at price Rs 999- which is priced just below Rs 1000-
17
Example
MOTOYUVA - W156 prices at Rs 1099-
Samsung Guru- Rs 2999-
5 Current Trend in Mobile Industry
-- With saturation in the urban market growth in Indian mobile market will be driven
by an increased focus on the rural market aggressive promotions and handset
bundle offers
-- As of March 2007 mobile subscribers in rural India accounted just 20 of the
Indian mobile subscriber base However it is forecasted to grow at a CAGR of more
than 47 during 2007 to 2010
-- In order to remain competitive the mobile industry could see several mergers and
acquisitions roll out obligation and substantiate equity holding in more than one
telecom company
-- The major growth in mobile phone subscribers will be seen in C Circle and B
Circle in short-term
-- Enormous opportunities are emerging for the low cost handset manufacturers
along with low tariffs infrastructure development for mobile communication
-- Rural India will account for around 35-38 of the total mobile handset sales by
2010
18
The industrys spectacular growth in India is attracting the attention of several
international brands Glenn Smith reports
SECTOR INSIGHT
The growth of Indias mobile sector has not gone unnoticed Last year Virgin Mobile
agreed a deal to enter the market and Japans DoCoMo bought into mobile operator
Tata to stake its claim in the fast-expanding industry
India offers astounding growth statistics In October 2008 according to the Telecom
Regulatory Authority of India (Trai) 104 million Indians signed up for a phone
service pushing the national total to 3639 million a penetration of 315 per cent
Only 10 years earlier India had a mere 880000 phones most of them landlinesfor
one billion people Today fixed-line phones account for only 105 per cent - 382
million subscribers and this absolute number is slowly declining Wireless operators
meanwhile are surging ahead Many first-time phone buyers are opting for mobile
and will drive the total subscriber base to 500 million by 2010according toTrai
The expansion has been fuelled by recent economic prosperity but the accelerant is
an ever-increasing affordability of handsets and services Mobile phone service costs
have plummeted In March 1999 the effective charge was more than 1532 rupees
(US$031) per minute which fell by half in 2000 again in 2001 and repeatedly
dropped until today - at less than a rupee it is believed to be the cheapest rate in the
worldThe sectors expansion is not expected to be hit by the economic slowdown
Market growth is moving away from the cities and going into the villages and rural
areas says Shankari Panchapakesan executive director of mobile services The
Nielsen Company South Asia The macroeconomy wont impact this because rural
people are using phones in ways that make a difference in their life how they work
how they educate their children and how they access information
Fishermen for example use phones to find outlets for their catch Women earn a
living with phone exchanges Carpenters carve their numbers on village walls For
handsets the undisputed leader is Nokia The Finnish telephone giant has been in
India since 1994 and has invested in three RampD labs making facilities and
distribution partnerships
Naresh Priyadarshihead of Synovate Business Consulting says Nokia has 90000
distributors in India giving it a 90 per cent retail footprint There are also 30000plus
stores that sell Nokia exclusively Nokia has concept stores in at least seven major
cities
Together Indias retail outlets sold 132 million handsets worth 700 billion rupees in
2008 according to Synovate Nokias share of value was 59 per cent followed by
19
Sony Ericsson with a distant eight per cent Samsung with seven per cent and
Motorola with six per cent Smartphones account for 24 percent of sales according
to Synovate with mid-priced feature phones taking 28 per cent and the remainder -
48 per cent - being ultra-low-cost phones Handset makers see ultra-low-cost
phones as the road ahead despite the razorthin profit margins Already sales of
cheap handsets are depressing average prices Euromonitor estimates that unit
prices fell 50 per cent between 2004 and 2007 to an average of 2808 rupees
To put handsets within reach of Indias rural poor phone makers have had to rethink
product design The Nokia 1100 included a torch alarm clock and a radio Nokias
entry-level phones are now priced at 1500 rupees Spice Mobile halved that with its
Peoples Phone priced at 599 rupees including lifetime prepaid activation
To bond with rural users Nokia is launching a subscription-based service called Life
tools with information on agriculture and education Such phone services will serve
as the first online experience for rural Indians
Among affluent urban users value-added-services (VAS) for feature phones are
seen as the way forward Synovate reports VAS at 50 million rupees in 2008 and
fore- casts 70 per cent annual growth to push that to 165 million rupees by 2010 It is
this fast-growing rapidly diversifying market that is attractive to overseas firms
though they should not expect much profit in the short term
Some important facts about Rural Coverage-
bull About 70 percent of Indias near 12 billion inhabitants live in rural
communities
bull rural teledensity was a mere 126 percent
bull Rural wire line connections totaled 1068 million at the end of December
down by 246 percent from 1095 million at the end of Septemberr 2009
bull The rural wireless subscriber base hit 9315 million at the end of the year up
238 percent from 9098 million at the end of September
bull Department of Telecom and BSNL have signed an agreement to provide
861000 connections to individual users and government institutions through
rural and remote exchanges by 2014
bull To promote rural rollout by the private operators the Indian government
imposed Universal Service Obligations (USO) on the countrys operators to
build a fund that can finance the rollout of services in areas where there isnt
an obvious or pressing business case to do so
bull The first phase of mobile infrastructure deployment under the USO fund
scheme commissioned six different service providers to deploy 7871 towers
bull However by the end of October 2009 only 1934 towers had been installed
20
bull The second phase complete with a tender for an additional 11049 sites has
yet to be started
bull The phased rollouts associated with the USO scheme require an additional
40875 mobile towers to be erected
bull Add this to the number of towers required for the five new 2G networks
additional coverage and capacity for existing operators and the introduction
of 3G networks and there is a huge demand for new cell sites right across the
country
6 Future of Mobile Industry
Demand Among Poor Farmers Keeps an Industry Growing as Other Sectors of the
Economy Are Jolted Rural customers have been hungry for mobile phones for a
long time so demand will remain unaffected by the global jitters said SP Shukla
chief executive officer of the mobile business at Reliance Communications India Ltd
Indias second-largest cellular company by number of subscribers
Even amid the global economic slowdown one Indian industry continues to boom
selling cellphones to the rural poor
Economists have slashed Indian economic growth forecasts for this year and the
stock market is in the doldrums But cellphone companies are signing millions of new
subscribers a month making India the fastest growing mobile-phone market in the
world There is no sign of a slowdown yet figures to be released later this month are
expected to show that new subscriptions in January reached a record 11 million
The demand for cellphones is coming mainly from rural consumers who typically
earn less than $1000 a year These buyers havent been affected by plunging stock
and real-estate prices or tighter bank lending since they typically dont own land and
dont borrow A large majority of them dont have access to regular landline phone
networks -- there are only about 40 million landline subscribers in India -- so once
cellular coverage comes to their towns or villages they scramble to get their first
phones
In the village of Karanehalli a cluster of simple homes around an intersection of two
dirt roads about 40 miles from Indias high-tech capital of Bangalore Farmer KT
Srinivasa doesnt have a toilet for his home or a tractor for his field But when a red
and white cellular tower sprouted in his village he splurged on a cellphone
While the way his family threshes rice -- crushing it with a massive stone roller --
hasnt changed for generations his phone has changed the way he farms He uses it
to decide when to plant and harvest by calling other farmers to get the best prices
21
for his rice coconuts and jasmine by calling wholesalers and to save hours of time
waiting on the road for deliveries and pickups that rarely come on time
Life is much better with the cellphone he said from his rice paddy in the shadow of
the new tower I bring it with me to the fields and anyone can reach me here
Mr Srinivasa like close to half the 800 people in his village uses Idea Cellular Ltd
as it was the first to bring them service He paid the equivalent of about $60 for his
Nokia phone and spends about $6 each month for service Like most rural users
Mr Srinivasa uses his phone to make voice calls -- he doesnt know how to text
message or to download emails On average rural Indians use their phones around
85 hours a month up 10 over the past year
The story is the same across rural India home to more than 60 of Indias
population of 12 billion China Indonesia and Brazil also continue to show solid
growth in cellphone sales
The continued expansion of the cellphone industry in India stands in sharp contrast
to most other industries here Textile and software exporters are struggling Indias
brand new malls are sparsely populated and the sales of cars trucks tractors and
motorcycles have declined in recent months
But the cellphone industry recorded more than 10 million new subscribers in
December up from eight million a year earlier The industrys overall subscriber base
grew 48 in 2008 to 347 million customers
Rural customers have been hungry for mobile phones for a long time so demand
will remain unaffected
22
7 References
httpenwikipediaorgwikiCommunications_in_India
httpwwwicmrindiaorgcasestudiescatalogueBusiness20StrategyBSTR174htm
wwwvitalanalyticsin
httpwwwfonearenacommobile_phone_pricelisthtml
wwwmobile-prices-indiacom
httpwwwmobile-prices-indiacomNokia_Mobile_Phonesphp
httpwebebscohostcom
httpwwwindia-cellularcomMobile-Priceshtm
httpproquestumicompqdwebindex=8ampdid=1635821441ampSrchMode=1ampsid=3ampF
mt=3ampVInst=PRODampVType=PQDampRQT=309ampVName=PQDampTS=1264756239ampclien
tId=135690
7
3 Marketing Strategy A holistic view (Nokia Samsung)
Nokia
Nokia as a manufacture of mobile communication devices was succeeded in
administrating marketing strategies in India markets The reason is that Nokia
delivers better products which cater to the needs and preferences of Indian
consumers
Nokia - Made in India ndash A detailed analysis
In April 2005 Nokia India a subsidiary of Finland-based Nokia announced that
it was setting up a manufacturing facility for mobile devices in Chennai the state
capital of Tamil Nadu in southern India Nokia planned to invest US$ 100-150 million
in the facility where the production was expected to begin in the first half of 2006
Pekka Ala-Pietilauml President and Head of Customer amp Market Operations Nokia
Corporation said ldquoEstablishing a new factory in India is an important step in the
continuous development of our global manufacturing networkrdquo4 India was ideal for
Nokias new production facility Each mobile handset has more than 400 parts and
the average production capacity of each manufacturing unit of Nokia is around 20
million units
This level of manufacturing involves a total of 8 billion components per annum
requiring strong logistical support Nokias manufacturing facility needed to be
located close to a major international airport or sea port for quick supply of
components India met all these requirements and also enjoyed cheap manpower
costs and proximity to the rapidly growing Asia Pacific markets
Besides Nokia was the market leader in mobile communication devices in India
The company has been carrying out sales amp marketing customer care and research
amp development activities in the country Nokia considers India to be one of its most
important markets The companys Code Division Multiple Access (CDMA)5 facility is
located in Mumbai and provides software and technical support to CDMA consumers
in India and other Asia Pacific countries In 2004 Nokia was chosen as bdquothe most
respected consumer durables company by Businessworld6 The magazine wrote
ldquoThis Finnish companys debut at the top of the heap says two things
One that its strategies - including ones like developing a phone specifically for
India - are respected But more importantly Nokias win is also an endorsement of
the importance of the ubiquitous cell phone as a durable in todays world After all
unlike its competitors most of which offer a slew of durables Nokia is mostly a cell
phone companyrdquo
8
In 2005 Nokia was recognized as the bdquoBrand of the Year by the Confederation
of Indian Industry Indias apex industry association The company was chosen for
this award because of its high brand recall well established distribution channels
and being most preferred by the consumers
Enamoured of Nokias success in the Indian market Harvard University had
invited Nokia India to talk on bdquoHow Nokia cracked open the Indian market
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper
manufacturing company In 1920 Finnish Rubber Works became a part of the
company and later on in 1922 Finnish Cable Works joined them All the three
companies were merged in 1967 to form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and
electronics businesses and by 1987 consumer electronics became Nokias major
business Nokia created the NMT mobile phone standard in 1981 and launched the
first NMT phone Mobira Cityman in 1987 The company delivered the first GSM
network to Radkilinia a Finnish company in 1991 and in 1992 Nokia 1011 - a
precursor for all Nokias current GSM phones - was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world
Another significant move of the company during this period was the divestment of its
non-core operations like IT The company focused on two core businesses - mobile
phones and telecommunications networks Between 1992 and 1996 the company
exited from the rubber and cable businesses as well
Nokia entered the Indian market in 1994 The first ever GSM call in India was
made on a Nokia 2110 mobile phone on its own network in 1995 When Nokia
entered India the telecom policies were not conducive to the growth of the mobile
phone industry
The tariffs levied on importing mobile phones were as high as 27 usage
charges were at Rs16 per minute and at these high rates consumers did not take
to mobile phones Nokia also had to face tough competition from other powerful
global players like Motorola Sony Siemens and Ericsson
Nokia was quick to learn from its mistakes and adopted strategies to regain its
lost market share Globally during the first quarter of 2005 the companys sales
reached 74 billion euros with the company selling 54 million phones during the
period In India Nokia continued its leadership in GSM with a market share of 74 in
March 2005 Nokia also surpassed Samsung in color mobiles in the GSM segment
recording a share of 55 in the same month
9
Nokia reorganized itself at the global level in 2004 At this point a multimedia
division was formed
The divisions Indian operations concentrated on promoting the concept of high-
end telephones in smaller towns while going in for higher volumes in larger cities
The marketing division of the company concentrated on making distributors in small
towns sell high-end products Though the distributors were skeptical to start with by
the end of 2004 the process was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be
driven by voice multimedia and mobile services for organizations The teledensity in
India was estimated to increase to 182 by March 2009 with mobile subscription
rising to 14877 million by that time In many instances the cell phone has become
the only basic telephone link of a householdenterprise in India rather than a landline
phone It was turning out to be more economical and efficient than fixed line
telephones So there was great scope for further expansion with reduction in the
cost of ownership
Samsungs Strategy to Gain Market Share in The Indian Mobile Phone Market
The Samsung management has initiated a market-mapping exercise to get into our
fold distributors who have relevant knowledge of the market credibility a good
distribution network and will therefore contribute in strengthening Samsungs reach in
the market the new distribution strategy would take its penetration level in the
market from the current 55 percent to 85 percent by the end of the year
On the retail front it was taking initiatives to increase the number of retailers
enrolled as Samsung Mobile Privilege Partners (SMPPs) from around 100 in 2007 to
around 400 by the end of the year Single and multi-brand retailers had shown an
interest in becoming SMPP
In the same month the company launched five new mobile phone models and said
that it would launch another 13 by the middle of the year The models that were
launched included multimedia phones phones for corporate customers and a
comparatively lower priced model aimed at a bigger chunk of the market
The company as of early 2008 its mobile phones were priced between Rs 1700
and Rs 28000 but that the company would launch more expensive mobile phones
in the future
The company also announced its new positioning with the new pay-off line Next is
10
What and that it had roped in a leading actor of the Indian film industry Aamir Khan
(Aamir) as its brand ambassador Aamir would also feature in its new ads
Announcing the major celebrity endorsement for the brand HB Lee president and
CEO Samsung (South-West Asia) said The Samsung brand stands for qualities of
innovation change discovery self-expression and excellence in performance And
these very same qualities are epitomized by Aamir Khan whose quality and depth of
work as well as versatility as an actor have made him a much loved and respected
actor in India today We are indeed very proud and privileged to have him as our
brand ambassador
With Aamirs endorsement of Samsung the fight for the mobile phone market had
also become a four-way battle with other leading actors endorsing the rival brands -
Shah Rukh Khan endorsing Nokia Abhishek Bachchan endorsing Motorola and
Hrithik Roshan endorsing Sony Ericsson
According to Samsung the mobile phone market in India would be 100 million units
in 2008-09With all these new initiatives Samsung was confident of achieving its
objective of cornering a 15 percent market share in the country
The company said that it had the necessary infrastructure to ramp up its production
capacity at its manufacturing unit at Noida from the current 6 million units per annum
depending on the demand
Recently to have an impact on international prospective mobile phone users
Samsung has signed up Didier Drogba playing in Chelsea Football Club as its
2008 Mobile Phone category brand ambassador
As part of this partnership Drogba will appear in Samsung Mobile adverting
campaigns for a period of one year and will also make public appearances to
promote Samsung‟s products and corporate activities
ldquoExtending our association with Chelsea FC we are now thrilled to partner with
Drogba as Samsung‟s brand ambassadorrdquo says Chi Won Suh CEO
Samsung Middle East and Africa region ldquoAfrica is a key market for Samsung
Electronics with immense growth potential and we are confident that our
association with an internationally and locally acclaimed football star like Drogba
will bring us closer to the football loving population throughout the African
continentrdquo
Football sponsorship is one of the pillars of Samsung‟s sports marketing strategy It
is derived from the belief that sport especially football unites people of all ages
11
genders and races
Samsung bada to rival Android Linux
Samsung entered into the mobile OS arena with bada The software whose name is
based on the Korean for ocean is designed to be open and will compete directly
against rivals like Android or LiMo It will be based on universal standards and wont
consider even core aspects of the OS off-limits developers can not only use
contacts the dialer and other utilities but extend them with new features of their own
Most details are left vague but bada will have a central app store Carriers will also
have the option of customizing the OS to suit their own tastes
Samsung expects the very first device using bada to show in the first half of 2010
along with the initial app store More phones should be ready by the second half of
that year while the app store will expand to 30 different countries including key
countries in Europe A more formal unveiling is due in the UK for December and will
be followed by first looks for developers both in December and in January
The news backs analyst claims of Samsung moving to its own platform and adopting
modern open platforms including bada If fully representative it also signals the
likely ends of Symbian and Windows Mobile at Samsung as the forecast would have
Symbian gone entirely by 2011 and Microsofts OS at just 20 percent by 2012 where
it makes up 80 percent of Samsung phones today Such a gesture will also render
closed platforms like OS X iPhones and Windows Mobile the relative minority in
numbers though not necessarily market share
Recent happenings were the Samsung Corby which is a full-touch handset that
places users at the centre of the social media revolution with full support for a wide
range of social networks The new mobile compliments the Company‟s existing
touch screen strategy ldquotouch for every lifestylerdquo by broadening the market and
targeting the youth audience
The Corby represents a complete makeover for the youth segment with its eye-
catching design which marks a significant break from the way full touch phones are
usually designed The Samsung Corby is notable for both its body design and
colours it comes with bold colour options
With Ghazini swiping the box office Samsung has enchased on its brand
ambassador Amir Khan by launching Ghazini mobile games on selected models
which is a smart and innovative approach of marketing strategy
12
The future prospects of Samsung mobiles doesn‟t seem gloomy with the above
developments and with time to come there would be a tough competition with its
rivals So Next is what
4 Pricing Strategies
1 Penetration Pricing This pricing strategy is followed by companies with the
intention to maximize their market share They believe that a higher sales volume
will lead to lower unit costs amp higher long-run profit
Example China Mobile Phones in India
This is one of the fastest growing industries in India China mobile phones are cheap
and offer the same features as a expensive mobile from some other well known
manufacturers
Rs
12000
China-JN269
Rs
9900
China-MT3300
Rs
9800
China_Elitek_85
02
Rs
9500
China-GT-MD900
Rs
9400
China-6500S
Rs
8700
China_GT_Q71
8
Rs
6137
China-Elitek-
X6019
Rs
5200
China_Elitek_X6
011
Rs
4900
China_ELITEK_X6
010
Rs
4500
China_Elitek_X6
012
A few samples of Chinese mobiles are shown above Only problem that exist for the
Chinese mobile phones is that consumer generally have a low quality perception
associated with them and hence do not trust their quality However they are well
suited to people who want to enjoy features of a high end mobile without having a
budget for the same
2 Predatory Pricing
This pricing strategy is followed with the intention to wipe out the competition
13
Example In the year 2003 LG and Samsung along with Reliance came up with
Rs 500- mobile scheme where both handsets along with connections were
available for Rs 500- This was something which revolutionized the mobile
phone and telecom industry
3 Perceived value Pricing
In this case the pricing is done based on the customer‟s perception about the
company and its product Perceived value is made up of several elements such
as buyer‟s image of product performance the channel deliverables warranty
quality and even softer attributes such as supplier‟s reputation
Example A good example for this kind of pricing is Apple iPhones They are offered
in price range of Rs 31000- to Rs 42500-
Their price is set based on image of brand apple amp customer affinity towards it
Comparable mobiles phones from other manufacturers like Sony Ericson Nokia are
offered at relatively cheaper price For example comparable N series mobiles from
Nokia are offered at prices below Rs 30000- (Except for Nokia- N9 amp Nokia-8800
Carbon) Also SONYERICSSON ndash Satio is offered for Rs 31000- amp all other Sony
brands are available for prices below it
Apple can set higher prices since it feels that its customers will be ready to pay for it
based on its perceived value
14
Apple-iPhone-3G-S-32GB Price | Rate Rs 42500-
4 Value Pricing This is pricing strategy in which a company wins loyal customers
by charging a fairly low price for a high quality offering
Example Nokia E 63 Mobile
This mobile is priced at Rs 11260- This mobile offers a large number of high end
applications like Web-Browsing Email Data Network GPRS GPS amp Navigation
and lots of other facilities apart from serving the basic mobile functions At the same
time it has a sleek body amp robust structure
A image of this mobile has been shown below
15
5 Product form pricing Different versions of the same product are priced
differently
Examples Nokia-5000 is priced at Rs 4300- Whereas Nokia-7210C-Supernova is
priced at Rs 4800- offers almost the same features The reason for difference in
pricing is due to the sleek structure of Nokia-7210C
16
6 Promotional Pricing
1 Special Event Pricing In this case special prices are offered during special
occasions like festivals to increase the sales Example Last Diwali (September 2009) Samsung offered discounts on
Samsung Omnia mobile phone Their market price at that time was Rs
33990- whereas their discounted price for Diwali was Rs Rs 31990-
2 Low-Interest financing
Company can offer low interest financing to customer This will reduce the
burden of initial cost to the customer
Example In 2009 Nokia piloted a scheme in two Indian states where it sold
handsets on a weekly instalment of 100 rupees ($2) over 25 weeks period
3 Psychological Discounting
This is done to make the customer believe that product is priced cheaply or
some cases just break the price barrier that customer has in his mind like
price at price Rs 999- which is priced just below Rs 1000-
17
Example
MOTOYUVA - W156 prices at Rs 1099-
Samsung Guru- Rs 2999-
5 Current Trend in Mobile Industry
-- With saturation in the urban market growth in Indian mobile market will be driven
by an increased focus on the rural market aggressive promotions and handset
bundle offers
-- As of March 2007 mobile subscribers in rural India accounted just 20 of the
Indian mobile subscriber base However it is forecasted to grow at a CAGR of more
than 47 during 2007 to 2010
-- In order to remain competitive the mobile industry could see several mergers and
acquisitions roll out obligation and substantiate equity holding in more than one
telecom company
-- The major growth in mobile phone subscribers will be seen in C Circle and B
Circle in short-term
-- Enormous opportunities are emerging for the low cost handset manufacturers
along with low tariffs infrastructure development for mobile communication
-- Rural India will account for around 35-38 of the total mobile handset sales by
2010
18
The industrys spectacular growth in India is attracting the attention of several
international brands Glenn Smith reports
SECTOR INSIGHT
The growth of Indias mobile sector has not gone unnoticed Last year Virgin Mobile
agreed a deal to enter the market and Japans DoCoMo bought into mobile operator
Tata to stake its claim in the fast-expanding industry
India offers astounding growth statistics In October 2008 according to the Telecom
Regulatory Authority of India (Trai) 104 million Indians signed up for a phone
service pushing the national total to 3639 million a penetration of 315 per cent
Only 10 years earlier India had a mere 880000 phones most of them landlinesfor
one billion people Today fixed-line phones account for only 105 per cent - 382
million subscribers and this absolute number is slowly declining Wireless operators
meanwhile are surging ahead Many first-time phone buyers are opting for mobile
and will drive the total subscriber base to 500 million by 2010according toTrai
The expansion has been fuelled by recent economic prosperity but the accelerant is
an ever-increasing affordability of handsets and services Mobile phone service costs
have plummeted In March 1999 the effective charge was more than 1532 rupees
(US$031) per minute which fell by half in 2000 again in 2001 and repeatedly
dropped until today - at less than a rupee it is believed to be the cheapest rate in the
worldThe sectors expansion is not expected to be hit by the economic slowdown
Market growth is moving away from the cities and going into the villages and rural
areas says Shankari Panchapakesan executive director of mobile services The
Nielsen Company South Asia The macroeconomy wont impact this because rural
people are using phones in ways that make a difference in their life how they work
how they educate their children and how they access information
Fishermen for example use phones to find outlets for their catch Women earn a
living with phone exchanges Carpenters carve their numbers on village walls For
handsets the undisputed leader is Nokia The Finnish telephone giant has been in
India since 1994 and has invested in three RampD labs making facilities and
distribution partnerships
Naresh Priyadarshihead of Synovate Business Consulting says Nokia has 90000
distributors in India giving it a 90 per cent retail footprint There are also 30000plus
stores that sell Nokia exclusively Nokia has concept stores in at least seven major
cities
Together Indias retail outlets sold 132 million handsets worth 700 billion rupees in
2008 according to Synovate Nokias share of value was 59 per cent followed by
19
Sony Ericsson with a distant eight per cent Samsung with seven per cent and
Motorola with six per cent Smartphones account for 24 percent of sales according
to Synovate with mid-priced feature phones taking 28 per cent and the remainder -
48 per cent - being ultra-low-cost phones Handset makers see ultra-low-cost
phones as the road ahead despite the razorthin profit margins Already sales of
cheap handsets are depressing average prices Euromonitor estimates that unit
prices fell 50 per cent between 2004 and 2007 to an average of 2808 rupees
To put handsets within reach of Indias rural poor phone makers have had to rethink
product design The Nokia 1100 included a torch alarm clock and a radio Nokias
entry-level phones are now priced at 1500 rupees Spice Mobile halved that with its
Peoples Phone priced at 599 rupees including lifetime prepaid activation
To bond with rural users Nokia is launching a subscription-based service called Life
tools with information on agriculture and education Such phone services will serve
as the first online experience for rural Indians
Among affluent urban users value-added-services (VAS) for feature phones are
seen as the way forward Synovate reports VAS at 50 million rupees in 2008 and
fore- casts 70 per cent annual growth to push that to 165 million rupees by 2010 It is
this fast-growing rapidly diversifying market that is attractive to overseas firms
though they should not expect much profit in the short term
Some important facts about Rural Coverage-
bull About 70 percent of Indias near 12 billion inhabitants live in rural
communities
bull rural teledensity was a mere 126 percent
bull Rural wire line connections totaled 1068 million at the end of December
down by 246 percent from 1095 million at the end of Septemberr 2009
bull The rural wireless subscriber base hit 9315 million at the end of the year up
238 percent from 9098 million at the end of September
bull Department of Telecom and BSNL have signed an agreement to provide
861000 connections to individual users and government institutions through
rural and remote exchanges by 2014
bull To promote rural rollout by the private operators the Indian government
imposed Universal Service Obligations (USO) on the countrys operators to
build a fund that can finance the rollout of services in areas where there isnt
an obvious or pressing business case to do so
bull The first phase of mobile infrastructure deployment under the USO fund
scheme commissioned six different service providers to deploy 7871 towers
bull However by the end of October 2009 only 1934 towers had been installed
20
bull The second phase complete with a tender for an additional 11049 sites has
yet to be started
bull The phased rollouts associated with the USO scheme require an additional
40875 mobile towers to be erected
bull Add this to the number of towers required for the five new 2G networks
additional coverage and capacity for existing operators and the introduction
of 3G networks and there is a huge demand for new cell sites right across the
country
6 Future of Mobile Industry
Demand Among Poor Farmers Keeps an Industry Growing as Other Sectors of the
Economy Are Jolted Rural customers have been hungry for mobile phones for a
long time so demand will remain unaffected by the global jitters said SP Shukla
chief executive officer of the mobile business at Reliance Communications India Ltd
Indias second-largest cellular company by number of subscribers
Even amid the global economic slowdown one Indian industry continues to boom
selling cellphones to the rural poor
Economists have slashed Indian economic growth forecasts for this year and the
stock market is in the doldrums But cellphone companies are signing millions of new
subscribers a month making India the fastest growing mobile-phone market in the
world There is no sign of a slowdown yet figures to be released later this month are
expected to show that new subscriptions in January reached a record 11 million
The demand for cellphones is coming mainly from rural consumers who typically
earn less than $1000 a year These buyers havent been affected by plunging stock
and real-estate prices or tighter bank lending since they typically dont own land and
dont borrow A large majority of them dont have access to regular landline phone
networks -- there are only about 40 million landline subscribers in India -- so once
cellular coverage comes to their towns or villages they scramble to get their first
phones
In the village of Karanehalli a cluster of simple homes around an intersection of two
dirt roads about 40 miles from Indias high-tech capital of Bangalore Farmer KT
Srinivasa doesnt have a toilet for his home or a tractor for his field But when a red
and white cellular tower sprouted in his village he splurged on a cellphone
While the way his family threshes rice -- crushing it with a massive stone roller --
hasnt changed for generations his phone has changed the way he farms He uses it
to decide when to plant and harvest by calling other farmers to get the best prices
21
for his rice coconuts and jasmine by calling wholesalers and to save hours of time
waiting on the road for deliveries and pickups that rarely come on time
Life is much better with the cellphone he said from his rice paddy in the shadow of
the new tower I bring it with me to the fields and anyone can reach me here
Mr Srinivasa like close to half the 800 people in his village uses Idea Cellular Ltd
as it was the first to bring them service He paid the equivalent of about $60 for his
Nokia phone and spends about $6 each month for service Like most rural users
Mr Srinivasa uses his phone to make voice calls -- he doesnt know how to text
message or to download emails On average rural Indians use their phones around
85 hours a month up 10 over the past year
The story is the same across rural India home to more than 60 of Indias
population of 12 billion China Indonesia and Brazil also continue to show solid
growth in cellphone sales
The continued expansion of the cellphone industry in India stands in sharp contrast
to most other industries here Textile and software exporters are struggling Indias
brand new malls are sparsely populated and the sales of cars trucks tractors and
motorcycles have declined in recent months
But the cellphone industry recorded more than 10 million new subscribers in
December up from eight million a year earlier The industrys overall subscriber base
grew 48 in 2008 to 347 million customers
Rural customers have been hungry for mobile phones for a long time so demand
will remain unaffected
22
7 References
httpenwikipediaorgwikiCommunications_in_India
httpwwwicmrindiaorgcasestudiescatalogueBusiness20StrategyBSTR174htm
wwwvitalanalyticsin
httpwwwfonearenacommobile_phone_pricelisthtml
wwwmobile-prices-indiacom
httpwwwmobile-prices-indiacomNokia_Mobile_Phonesphp
httpwebebscohostcom
httpwwwindia-cellularcomMobile-Priceshtm
httpproquestumicompqdwebindex=8ampdid=1635821441ampSrchMode=1ampsid=3ampF
mt=3ampVInst=PRODampVType=PQDampRQT=309ampVName=PQDampTS=1264756239ampclien
tId=135690
8
In 2005 Nokia was recognized as the bdquoBrand of the Year by the Confederation
of Indian Industry Indias apex industry association The company was chosen for
this award because of its high brand recall well established distribution channels
and being most preferred by the consumers
Enamoured of Nokias success in the Indian market Harvard University had
invited Nokia India to talk on bdquoHow Nokia cracked open the Indian market
About Nokia
Nokia was founded in 1865 by Fredrik Idestam in Finland as a paper
manufacturing company In 1920 Finnish Rubber Works became a part of the
company and later on in 1922 Finnish Cable Works joined them All the three
companies were merged in 1967 to form the Nokia Group
In the late 1970s Nokia started taking an active interest in the power and
electronics businesses and by 1987 consumer electronics became Nokias major
business Nokia created the NMT mobile phone standard in 1981 and launched the
first NMT phone Mobira Cityman in 1987 The company delivered the first GSM
network to Radkilinia a Finnish company in 1991 and in 1992 Nokia 1011 - a
precursor for all Nokias current GSM phones - was introduced
In the 1990s Nokia provided GSM services to 90 operators across the world
Another significant move of the company during this period was the divestment of its
non-core operations like IT The company focused on two core businesses - mobile
phones and telecommunications networks Between 1992 and 1996 the company
exited from the rubber and cable businesses as well
Nokia entered the Indian market in 1994 The first ever GSM call in India was
made on a Nokia 2110 mobile phone on its own network in 1995 When Nokia
entered India the telecom policies were not conducive to the growth of the mobile
phone industry
The tariffs levied on importing mobile phones were as high as 27 usage
charges were at Rs16 per minute and at these high rates consumers did not take
to mobile phones Nokia also had to face tough competition from other powerful
global players like Motorola Sony Siemens and Ericsson
Nokia was quick to learn from its mistakes and adopted strategies to regain its
lost market share Globally during the first quarter of 2005 the companys sales
reached 74 billion euros with the company selling 54 million phones during the
period In India Nokia continued its leadership in GSM with a market share of 74 in
March 2005 Nokia also surpassed Samsung in color mobiles in the GSM segment
recording a share of 55 in the same month
9
Nokia reorganized itself at the global level in 2004 At this point a multimedia
division was formed
The divisions Indian operations concentrated on promoting the concept of high-
end telephones in smaller towns while going in for higher volumes in larger cities
The marketing division of the company concentrated on making distributors in small
towns sell high-end products Though the distributors were skeptical to start with by
the end of 2004 the process was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be
driven by voice multimedia and mobile services for organizations The teledensity in
India was estimated to increase to 182 by March 2009 with mobile subscription
rising to 14877 million by that time In many instances the cell phone has become
the only basic telephone link of a householdenterprise in India rather than a landline
phone It was turning out to be more economical and efficient than fixed line
telephones So there was great scope for further expansion with reduction in the
cost of ownership
Samsungs Strategy to Gain Market Share in The Indian Mobile Phone Market
The Samsung management has initiated a market-mapping exercise to get into our
fold distributors who have relevant knowledge of the market credibility a good
distribution network and will therefore contribute in strengthening Samsungs reach in
the market the new distribution strategy would take its penetration level in the
market from the current 55 percent to 85 percent by the end of the year
On the retail front it was taking initiatives to increase the number of retailers
enrolled as Samsung Mobile Privilege Partners (SMPPs) from around 100 in 2007 to
around 400 by the end of the year Single and multi-brand retailers had shown an
interest in becoming SMPP
In the same month the company launched five new mobile phone models and said
that it would launch another 13 by the middle of the year The models that were
launched included multimedia phones phones for corporate customers and a
comparatively lower priced model aimed at a bigger chunk of the market
The company as of early 2008 its mobile phones were priced between Rs 1700
and Rs 28000 but that the company would launch more expensive mobile phones
in the future
The company also announced its new positioning with the new pay-off line Next is
10
What and that it had roped in a leading actor of the Indian film industry Aamir Khan
(Aamir) as its brand ambassador Aamir would also feature in its new ads
Announcing the major celebrity endorsement for the brand HB Lee president and
CEO Samsung (South-West Asia) said The Samsung brand stands for qualities of
innovation change discovery self-expression and excellence in performance And
these very same qualities are epitomized by Aamir Khan whose quality and depth of
work as well as versatility as an actor have made him a much loved and respected
actor in India today We are indeed very proud and privileged to have him as our
brand ambassador
With Aamirs endorsement of Samsung the fight for the mobile phone market had
also become a four-way battle with other leading actors endorsing the rival brands -
Shah Rukh Khan endorsing Nokia Abhishek Bachchan endorsing Motorola and
Hrithik Roshan endorsing Sony Ericsson
According to Samsung the mobile phone market in India would be 100 million units
in 2008-09With all these new initiatives Samsung was confident of achieving its
objective of cornering a 15 percent market share in the country
The company said that it had the necessary infrastructure to ramp up its production
capacity at its manufacturing unit at Noida from the current 6 million units per annum
depending on the demand
Recently to have an impact on international prospective mobile phone users
Samsung has signed up Didier Drogba playing in Chelsea Football Club as its
2008 Mobile Phone category brand ambassador
As part of this partnership Drogba will appear in Samsung Mobile adverting
campaigns for a period of one year and will also make public appearances to
promote Samsung‟s products and corporate activities
ldquoExtending our association with Chelsea FC we are now thrilled to partner with
Drogba as Samsung‟s brand ambassadorrdquo says Chi Won Suh CEO
Samsung Middle East and Africa region ldquoAfrica is a key market for Samsung
Electronics with immense growth potential and we are confident that our
association with an internationally and locally acclaimed football star like Drogba
will bring us closer to the football loving population throughout the African
continentrdquo
Football sponsorship is one of the pillars of Samsung‟s sports marketing strategy It
is derived from the belief that sport especially football unites people of all ages
11
genders and races
Samsung bada to rival Android Linux
Samsung entered into the mobile OS arena with bada The software whose name is
based on the Korean for ocean is designed to be open and will compete directly
against rivals like Android or LiMo It will be based on universal standards and wont
consider even core aspects of the OS off-limits developers can not only use
contacts the dialer and other utilities but extend them with new features of their own
Most details are left vague but bada will have a central app store Carriers will also
have the option of customizing the OS to suit their own tastes
Samsung expects the very first device using bada to show in the first half of 2010
along with the initial app store More phones should be ready by the second half of
that year while the app store will expand to 30 different countries including key
countries in Europe A more formal unveiling is due in the UK for December and will
be followed by first looks for developers both in December and in January
The news backs analyst claims of Samsung moving to its own platform and adopting
modern open platforms including bada If fully representative it also signals the
likely ends of Symbian and Windows Mobile at Samsung as the forecast would have
Symbian gone entirely by 2011 and Microsofts OS at just 20 percent by 2012 where
it makes up 80 percent of Samsung phones today Such a gesture will also render
closed platforms like OS X iPhones and Windows Mobile the relative minority in
numbers though not necessarily market share
Recent happenings were the Samsung Corby which is a full-touch handset that
places users at the centre of the social media revolution with full support for a wide
range of social networks The new mobile compliments the Company‟s existing
touch screen strategy ldquotouch for every lifestylerdquo by broadening the market and
targeting the youth audience
The Corby represents a complete makeover for the youth segment with its eye-
catching design which marks a significant break from the way full touch phones are
usually designed The Samsung Corby is notable for both its body design and
colours it comes with bold colour options
With Ghazini swiping the box office Samsung has enchased on its brand
ambassador Amir Khan by launching Ghazini mobile games on selected models
which is a smart and innovative approach of marketing strategy
12
The future prospects of Samsung mobiles doesn‟t seem gloomy with the above
developments and with time to come there would be a tough competition with its
rivals So Next is what
4 Pricing Strategies
1 Penetration Pricing This pricing strategy is followed by companies with the
intention to maximize their market share They believe that a higher sales volume
will lead to lower unit costs amp higher long-run profit
Example China Mobile Phones in India
This is one of the fastest growing industries in India China mobile phones are cheap
and offer the same features as a expensive mobile from some other well known
manufacturers
Rs
12000
China-JN269
Rs
9900
China-MT3300
Rs
9800
China_Elitek_85
02
Rs
9500
China-GT-MD900
Rs
9400
China-6500S
Rs
8700
China_GT_Q71
8
Rs
6137
China-Elitek-
X6019
Rs
5200
China_Elitek_X6
011
Rs
4900
China_ELITEK_X6
010
Rs
4500
China_Elitek_X6
012
A few samples of Chinese mobiles are shown above Only problem that exist for the
Chinese mobile phones is that consumer generally have a low quality perception
associated with them and hence do not trust their quality However they are well
suited to people who want to enjoy features of a high end mobile without having a
budget for the same
2 Predatory Pricing
This pricing strategy is followed with the intention to wipe out the competition
13
Example In the year 2003 LG and Samsung along with Reliance came up with
Rs 500- mobile scheme where both handsets along with connections were
available for Rs 500- This was something which revolutionized the mobile
phone and telecom industry
3 Perceived value Pricing
In this case the pricing is done based on the customer‟s perception about the
company and its product Perceived value is made up of several elements such
as buyer‟s image of product performance the channel deliverables warranty
quality and even softer attributes such as supplier‟s reputation
Example A good example for this kind of pricing is Apple iPhones They are offered
in price range of Rs 31000- to Rs 42500-
Their price is set based on image of brand apple amp customer affinity towards it
Comparable mobiles phones from other manufacturers like Sony Ericson Nokia are
offered at relatively cheaper price For example comparable N series mobiles from
Nokia are offered at prices below Rs 30000- (Except for Nokia- N9 amp Nokia-8800
Carbon) Also SONYERICSSON ndash Satio is offered for Rs 31000- amp all other Sony
brands are available for prices below it
Apple can set higher prices since it feels that its customers will be ready to pay for it
based on its perceived value
14
Apple-iPhone-3G-S-32GB Price | Rate Rs 42500-
4 Value Pricing This is pricing strategy in which a company wins loyal customers
by charging a fairly low price for a high quality offering
Example Nokia E 63 Mobile
This mobile is priced at Rs 11260- This mobile offers a large number of high end
applications like Web-Browsing Email Data Network GPRS GPS amp Navigation
and lots of other facilities apart from serving the basic mobile functions At the same
time it has a sleek body amp robust structure
A image of this mobile has been shown below
15
5 Product form pricing Different versions of the same product are priced
differently
Examples Nokia-5000 is priced at Rs 4300- Whereas Nokia-7210C-Supernova is
priced at Rs 4800- offers almost the same features The reason for difference in
pricing is due to the sleek structure of Nokia-7210C
16
6 Promotional Pricing
1 Special Event Pricing In this case special prices are offered during special
occasions like festivals to increase the sales Example Last Diwali (September 2009) Samsung offered discounts on
Samsung Omnia mobile phone Their market price at that time was Rs
33990- whereas their discounted price for Diwali was Rs Rs 31990-
2 Low-Interest financing
Company can offer low interest financing to customer This will reduce the
burden of initial cost to the customer
Example In 2009 Nokia piloted a scheme in two Indian states where it sold
handsets on a weekly instalment of 100 rupees ($2) over 25 weeks period
3 Psychological Discounting
This is done to make the customer believe that product is priced cheaply or
some cases just break the price barrier that customer has in his mind like
price at price Rs 999- which is priced just below Rs 1000-
17
Example
MOTOYUVA - W156 prices at Rs 1099-
Samsung Guru- Rs 2999-
5 Current Trend in Mobile Industry
-- With saturation in the urban market growth in Indian mobile market will be driven
by an increased focus on the rural market aggressive promotions and handset
bundle offers
-- As of March 2007 mobile subscribers in rural India accounted just 20 of the
Indian mobile subscriber base However it is forecasted to grow at a CAGR of more
than 47 during 2007 to 2010
-- In order to remain competitive the mobile industry could see several mergers and
acquisitions roll out obligation and substantiate equity holding in more than one
telecom company
-- The major growth in mobile phone subscribers will be seen in C Circle and B
Circle in short-term
-- Enormous opportunities are emerging for the low cost handset manufacturers
along with low tariffs infrastructure development for mobile communication
-- Rural India will account for around 35-38 of the total mobile handset sales by
2010
18
The industrys spectacular growth in India is attracting the attention of several
international brands Glenn Smith reports
SECTOR INSIGHT
The growth of Indias mobile sector has not gone unnoticed Last year Virgin Mobile
agreed a deal to enter the market and Japans DoCoMo bought into mobile operator
Tata to stake its claim in the fast-expanding industry
India offers astounding growth statistics In October 2008 according to the Telecom
Regulatory Authority of India (Trai) 104 million Indians signed up for a phone
service pushing the national total to 3639 million a penetration of 315 per cent
Only 10 years earlier India had a mere 880000 phones most of them landlinesfor
one billion people Today fixed-line phones account for only 105 per cent - 382
million subscribers and this absolute number is slowly declining Wireless operators
meanwhile are surging ahead Many first-time phone buyers are opting for mobile
and will drive the total subscriber base to 500 million by 2010according toTrai
The expansion has been fuelled by recent economic prosperity but the accelerant is
an ever-increasing affordability of handsets and services Mobile phone service costs
have plummeted In March 1999 the effective charge was more than 1532 rupees
(US$031) per minute which fell by half in 2000 again in 2001 and repeatedly
dropped until today - at less than a rupee it is believed to be the cheapest rate in the
worldThe sectors expansion is not expected to be hit by the economic slowdown
Market growth is moving away from the cities and going into the villages and rural
areas says Shankari Panchapakesan executive director of mobile services The
Nielsen Company South Asia The macroeconomy wont impact this because rural
people are using phones in ways that make a difference in their life how they work
how they educate their children and how they access information
Fishermen for example use phones to find outlets for their catch Women earn a
living with phone exchanges Carpenters carve their numbers on village walls For
handsets the undisputed leader is Nokia The Finnish telephone giant has been in
India since 1994 and has invested in three RampD labs making facilities and
distribution partnerships
Naresh Priyadarshihead of Synovate Business Consulting says Nokia has 90000
distributors in India giving it a 90 per cent retail footprint There are also 30000plus
stores that sell Nokia exclusively Nokia has concept stores in at least seven major
cities
Together Indias retail outlets sold 132 million handsets worth 700 billion rupees in
2008 according to Synovate Nokias share of value was 59 per cent followed by
19
Sony Ericsson with a distant eight per cent Samsung with seven per cent and
Motorola with six per cent Smartphones account for 24 percent of sales according
to Synovate with mid-priced feature phones taking 28 per cent and the remainder -
48 per cent - being ultra-low-cost phones Handset makers see ultra-low-cost
phones as the road ahead despite the razorthin profit margins Already sales of
cheap handsets are depressing average prices Euromonitor estimates that unit
prices fell 50 per cent between 2004 and 2007 to an average of 2808 rupees
To put handsets within reach of Indias rural poor phone makers have had to rethink
product design The Nokia 1100 included a torch alarm clock and a radio Nokias
entry-level phones are now priced at 1500 rupees Spice Mobile halved that with its
Peoples Phone priced at 599 rupees including lifetime prepaid activation
To bond with rural users Nokia is launching a subscription-based service called Life
tools with information on agriculture and education Such phone services will serve
as the first online experience for rural Indians
Among affluent urban users value-added-services (VAS) for feature phones are
seen as the way forward Synovate reports VAS at 50 million rupees in 2008 and
fore- casts 70 per cent annual growth to push that to 165 million rupees by 2010 It is
this fast-growing rapidly diversifying market that is attractive to overseas firms
though they should not expect much profit in the short term
Some important facts about Rural Coverage-
bull About 70 percent of Indias near 12 billion inhabitants live in rural
communities
bull rural teledensity was a mere 126 percent
bull Rural wire line connections totaled 1068 million at the end of December
down by 246 percent from 1095 million at the end of Septemberr 2009
bull The rural wireless subscriber base hit 9315 million at the end of the year up
238 percent from 9098 million at the end of September
bull Department of Telecom and BSNL have signed an agreement to provide
861000 connections to individual users and government institutions through
rural and remote exchanges by 2014
bull To promote rural rollout by the private operators the Indian government
imposed Universal Service Obligations (USO) on the countrys operators to
build a fund that can finance the rollout of services in areas where there isnt
an obvious or pressing business case to do so
bull The first phase of mobile infrastructure deployment under the USO fund
scheme commissioned six different service providers to deploy 7871 towers
bull However by the end of October 2009 only 1934 towers had been installed
20
bull The second phase complete with a tender for an additional 11049 sites has
yet to be started
bull The phased rollouts associated with the USO scheme require an additional
40875 mobile towers to be erected
bull Add this to the number of towers required for the five new 2G networks
additional coverage and capacity for existing operators and the introduction
of 3G networks and there is a huge demand for new cell sites right across the
country
6 Future of Mobile Industry
Demand Among Poor Farmers Keeps an Industry Growing as Other Sectors of the
Economy Are Jolted Rural customers have been hungry for mobile phones for a
long time so demand will remain unaffected by the global jitters said SP Shukla
chief executive officer of the mobile business at Reliance Communications India Ltd
Indias second-largest cellular company by number of subscribers
Even amid the global economic slowdown one Indian industry continues to boom
selling cellphones to the rural poor
Economists have slashed Indian economic growth forecasts for this year and the
stock market is in the doldrums But cellphone companies are signing millions of new
subscribers a month making India the fastest growing mobile-phone market in the
world There is no sign of a slowdown yet figures to be released later this month are
expected to show that new subscriptions in January reached a record 11 million
The demand for cellphones is coming mainly from rural consumers who typically
earn less than $1000 a year These buyers havent been affected by plunging stock
and real-estate prices or tighter bank lending since they typically dont own land and
dont borrow A large majority of them dont have access to regular landline phone
networks -- there are only about 40 million landline subscribers in India -- so once
cellular coverage comes to their towns or villages they scramble to get their first
phones
In the village of Karanehalli a cluster of simple homes around an intersection of two
dirt roads about 40 miles from Indias high-tech capital of Bangalore Farmer KT
Srinivasa doesnt have a toilet for his home or a tractor for his field But when a red
and white cellular tower sprouted in his village he splurged on a cellphone
While the way his family threshes rice -- crushing it with a massive stone roller --
hasnt changed for generations his phone has changed the way he farms He uses it
to decide when to plant and harvest by calling other farmers to get the best prices
21
for his rice coconuts and jasmine by calling wholesalers and to save hours of time
waiting on the road for deliveries and pickups that rarely come on time
Life is much better with the cellphone he said from his rice paddy in the shadow of
the new tower I bring it with me to the fields and anyone can reach me here
Mr Srinivasa like close to half the 800 people in his village uses Idea Cellular Ltd
as it was the first to bring them service He paid the equivalent of about $60 for his
Nokia phone and spends about $6 each month for service Like most rural users
Mr Srinivasa uses his phone to make voice calls -- he doesnt know how to text
message or to download emails On average rural Indians use their phones around
85 hours a month up 10 over the past year
The story is the same across rural India home to more than 60 of Indias
population of 12 billion China Indonesia and Brazil also continue to show solid
growth in cellphone sales
The continued expansion of the cellphone industry in India stands in sharp contrast
to most other industries here Textile and software exporters are struggling Indias
brand new malls are sparsely populated and the sales of cars trucks tractors and
motorcycles have declined in recent months
But the cellphone industry recorded more than 10 million new subscribers in
December up from eight million a year earlier The industrys overall subscriber base
grew 48 in 2008 to 347 million customers
Rural customers have been hungry for mobile phones for a long time so demand
will remain unaffected
22
7 References
httpenwikipediaorgwikiCommunications_in_India
httpwwwicmrindiaorgcasestudiescatalogueBusiness20StrategyBSTR174htm
wwwvitalanalyticsin
httpwwwfonearenacommobile_phone_pricelisthtml
wwwmobile-prices-indiacom
httpwwwmobile-prices-indiacomNokia_Mobile_Phonesphp
httpwebebscohostcom
httpwwwindia-cellularcomMobile-Priceshtm
httpproquestumicompqdwebindex=8ampdid=1635821441ampSrchMode=1ampsid=3ampF
mt=3ampVInst=PRODampVType=PQDampRQT=309ampVName=PQDampTS=1264756239ampclien
tId=135690
9
Nokia reorganized itself at the global level in 2004 At this point a multimedia
division was formed
The divisions Indian operations concentrated on promoting the concept of high-
end telephones in smaller towns while going in for higher volumes in larger cities
The marketing division of the company concentrated on making distributors in small
towns sell high-end products Though the distributors were skeptical to start with by
the end of 2004 the process was streamlined and the results started to show
The Future Prospects
According to industry analysts by 2010 the mobile phones industry in India will be
driven by voice multimedia and mobile services for organizations The teledensity in
India was estimated to increase to 182 by March 2009 with mobile subscription
rising to 14877 million by that time In many instances the cell phone has become
the only basic telephone link of a householdenterprise in India rather than a landline
phone It was turning out to be more economical and efficient than fixed line
telephones So there was great scope for further expansion with reduction in the
cost of ownership
Samsungs Strategy to Gain Market Share in The Indian Mobile Phone Market
The Samsung management has initiated a market-mapping exercise to get into our
fold distributors who have relevant knowledge of the market credibility a good
distribution network and will therefore contribute in strengthening Samsungs reach in
the market the new distribution strategy would take its penetration level in the
market from the current 55 percent to 85 percent by the end of the year
On the retail front it was taking initiatives to increase the number of retailers
enrolled as Samsung Mobile Privilege Partners (SMPPs) from around 100 in 2007 to
around 400 by the end of the year Single and multi-brand retailers had shown an
interest in becoming SMPP
In the same month the company launched five new mobile phone models and said
that it would launch another 13 by the middle of the year The models that were
launched included multimedia phones phones for corporate customers and a
comparatively lower priced model aimed at a bigger chunk of the market
The company as of early 2008 its mobile phones were priced between Rs 1700
and Rs 28000 but that the company would launch more expensive mobile phones
in the future
The company also announced its new positioning with the new pay-off line Next is
10
What and that it had roped in a leading actor of the Indian film industry Aamir Khan
(Aamir) as its brand ambassador Aamir would also feature in its new ads
Announcing the major celebrity endorsement for the brand HB Lee president and
CEO Samsung (South-West Asia) said The Samsung brand stands for qualities of
innovation change discovery self-expression and excellence in performance And
these very same qualities are epitomized by Aamir Khan whose quality and depth of
work as well as versatility as an actor have made him a much loved and respected
actor in India today We are indeed very proud and privileged to have him as our
brand ambassador
With Aamirs endorsement of Samsung the fight for the mobile phone market had
also become a four-way battle with other leading actors endorsing the rival brands -
Shah Rukh Khan endorsing Nokia Abhishek Bachchan endorsing Motorola and
Hrithik Roshan endorsing Sony Ericsson
According to Samsung the mobile phone market in India would be 100 million units
in 2008-09With all these new initiatives Samsung was confident of achieving its
objective of cornering a 15 percent market share in the country
The company said that it had the necessary infrastructure to ramp up its production
capacity at its manufacturing unit at Noida from the current 6 million units per annum
depending on the demand
Recently to have an impact on international prospective mobile phone users
Samsung has signed up Didier Drogba playing in Chelsea Football Club as its
2008 Mobile Phone category brand ambassador
As part of this partnership Drogba will appear in Samsung Mobile adverting
campaigns for a period of one year and will also make public appearances to
promote Samsung‟s products and corporate activities
ldquoExtending our association with Chelsea FC we are now thrilled to partner with
Drogba as Samsung‟s brand ambassadorrdquo says Chi Won Suh CEO
Samsung Middle East and Africa region ldquoAfrica is a key market for Samsung
Electronics with immense growth potential and we are confident that our
association with an internationally and locally acclaimed football star like Drogba
will bring us closer to the football loving population throughout the African
continentrdquo
Football sponsorship is one of the pillars of Samsung‟s sports marketing strategy It
is derived from the belief that sport especially football unites people of all ages
11
genders and races
Samsung bada to rival Android Linux
Samsung entered into the mobile OS arena with bada The software whose name is
based on the Korean for ocean is designed to be open and will compete directly
against rivals like Android or LiMo It will be based on universal standards and wont
consider even core aspects of the OS off-limits developers can not only use
contacts the dialer and other utilities but extend them with new features of their own
Most details are left vague but bada will have a central app store Carriers will also
have the option of customizing the OS to suit their own tastes
Samsung expects the very first device using bada to show in the first half of 2010
along with the initial app store More phones should be ready by the second half of
that year while the app store will expand to 30 different countries including key
countries in Europe A more formal unveiling is due in the UK for December and will
be followed by first looks for developers both in December and in January
The news backs analyst claims of Samsung moving to its own platform and adopting
modern open platforms including bada If fully representative it also signals the
likely ends of Symbian and Windows Mobile at Samsung as the forecast would have
Symbian gone entirely by 2011 and Microsofts OS at just 20 percent by 2012 where
it makes up 80 percent of Samsung phones today Such a gesture will also render
closed platforms like OS X iPhones and Windows Mobile the relative minority in
numbers though not necessarily market share
Recent happenings were the Samsung Corby which is a full-touch handset that
places users at the centre of the social media revolution with full support for a wide
range of social networks The new mobile compliments the Company‟s existing
touch screen strategy ldquotouch for every lifestylerdquo by broadening the market and
targeting the youth audience
The Corby represents a complete makeover for the youth segment with its eye-
catching design which marks a significant break from the way full touch phones are
usually designed The Samsung Corby is notable for both its body design and
colours it comes with bold colour options
With Ghazini swiping the box office Samsung has enchased on its brand
ambassador Amir Khan by launching Ghazini mobile games on selected models
which is a smart and innovative approach of marketing strategy
12
The future prospects of Samsung mobiles doesn‟t seem gloomy with the above
developments and with time to come there would be a tough competition with its
rivals So Next is what
4 Pricing Strategies
1 Penetration Pricing This pricing strategy is followed by companies with the
intention to maximize their market share They believe that a higher sales volume
will lead to lower unit costs amp higher long-run profit
Example China Mobile Phones in India
This is one of the fastest growing industries in India China mobile phones are cheap
and offer the same features as a expensive mobile from some other well known
manufacturers
Rs
12000
China-JN269
Rs
9900
China-MT3300
Rs
9800
China_Elitek_85
02
Rs
9500
China-GT-MD900
Rs
9400
China-6500S
Rs
8700
China_GT_Q71
8
Rs
6137
China-Elitek-
X6019
Rs
5200
China_Elitek_X6
011
Rs
4900
China_ELITEK_X6
010
Rs
4500
China_Elitek_X6
012
A few samples of Chinese mobiles are shown above Only problem that exist for the
Chinese mobile phones is that consumer generally have a low quality perception
associated with them and hence do not trust their quality However they are well
suited to people who want to enjoy features of a high end mobile without having a
budget for the same
2 Predatory Pricing
This pricing strategy is followed with the intention to wipe out the competition
13
Example In the year 2003 LG and Samsung along with Reliance came up with
Rs 500- mobile scheme where both handsets along with connections were
available for Rs 500- This was something which revolutionized the mobile
phone and telecom industry
3 Perceived value Pricing
In this case the pricing is done based on the customer‟s perception about the
company and its product Perceived value is made up of several elements such
as buyer‟s image of product performance the channel deliverables warranty
quality and even softer attributes such as supplier‟s reputation
Example A good example for this kind of pricing is Apple iPhones They are offered
in price range of Rs 31000- to Rs 42500-
Their price is set based on image of brand apple amp customer affinity towards it
Comparable mobiles phones from other manufacturers like Sony Ericson Nokia are
offered at relatively cheaper price For example comparable N series mobiles from
Nokia are offered at prices below Rs 30000- (Except for Nokia- N9 amp Nokia-8800
Carbon) Also SONYERICSSON ndash Satio is offered for Rs 31000- amp all other Sony
brands are available for prices below it
Apple can set higher prices since it feels that its customers will be ready to pay for it
based on its perceived value
14
Apple-iPhone-3G-S-32GB Price | Rate Rs 42500-
4 Value Pricing This is pricing strategy in which a company wins loyal customers
by charging a fairly low price for a high quality offering
Example Nokia E 63 Mobile
This mobile is priced at Rs 11260- This mobile offers a large number of high end
applications like Web-Browsing Email Data Network GPRS GPS amp Navigation
and lots of other facilities apart from serving the basic mobile functions At the same
time it has a sleek body amp robust structure
A image of this mobile has been shown below
15
5 Product form pricing Different versions of the same product are priced
differently
Examples Nokia-5000 is priced at Rs 4300- Whereas Nokia-7210C-Supernova is
priced at Rs 4800- offers almost the same features The reason for difference in
pricing is due to the sleek structure of Nokia-7210C
16
6 Promotional Pricing
1 Special Event Pricing In this case special prices are offered during special
occasions like festivals to increase the sales Example Last Diwali (September 2009) Samsung offered discounts on
Samsung Omnia mobile phone Their market price at that time was Rs
33990- whereas their discounted price for Diwali was Rs Rs 31990-
2 Low-Interest financing
Company can offer low interest financing to customer This will reduce the
burden of initial cost to the customer
Example In 2009 Nokia piloted a scheme in two Indian states where it sold
handsets on a weekly instalment of 100 rupees ($2) over 25 weeks period
3 Psychological Discounting
This is done to make the customer believe that product is priced cheaply or
some cases just break the price barrier that customer has in his mind like
price at price Rs 999- which is priced just below Rs 1000-
17
Example
MOTOYUVA - W156 prices at Rs 1099-
Samsung Guru- Rs 2999-
5 Current Trend in Mobile Industry
-- With saturation in the urban market growth in Indian mobile market will be driven
by an increased focus on the rural market aggressive promotions and handset
bundle offers
-- As of March 2007 mobile subscribers in rural India accounted just 20 of the
Indian mobile subscriber base However it is forecasted to grow at a CAGR of more
than 47 during 2007 to 2010
-- In order to remain competitive the mobile industry could see several mergers and
acquisitions roll out obligation and substantiate equity holding in more than one
telecom company
-- The major growth in mobile phone subscribers will be seen in C Circle and B
Circle in short-term
-- Enormous opportunities are emerging for the low cost handset manufacturers
along with low tariffs infrastructure development for mobile communication
-- Rural India will account for around 35-38 of the total mobile handset sales by
2010
18
The industrys spectacular growth in India is attracting the attention of several
international brands Glenn Smith reports
SECTOR INSIGHT
The growth of Indias mobile sector has not gone unnoticed Last year Virgin Mobile
agreed a deal to enter the market and Japans DoCoMo bought into mobile operator
Tata to stake its claim in the fast-expanding industry
India offers astounding growth statistics In October 2008 according to the Telecom
Regulatory Authority of India (Trai) 104 million Indians signed up for a phone
service pushing the national total to 3639 million a penetration of 315 per cent
Only 10 years earlier India had a mere 880000 phones most of them landlinesfor
one billion people Today fixed-line phones account for only 105 per cent - 382
million subscribers and this absolute number is slowly declining Wireless operators
meanwhile are surging ahead Many first-time phone buyers are opting for mobile
and will drive the total subscriber base to 500 million by 2010according toTrai
The expansion has been fuelled by recent economic prosperity but the accelerant is
an ever-increasing affordability of handsets and services Mobile phone service costs
have plummeted In March 1999 the effective charge was more than 1532 rupees
(US$031) per minute which fell by half in 2000 again in 2001 and repeatedly
dropped until today - at less than a rupee it is believed to be the cheapest rate in the
worldThe sectors expansion is not expected to be hit by the economic slowdown
Market growth is moving away from the cities and going into the villages and rural
areas says Shankari Panchapakesan executive director of mobile services The
Nielsen Company South Asia The macroeconomy wont impact this because rural
people are using phones in ways that make a difference in their life how they work
how they educate their children and how they access information
Fishermen for example use phones to find outlets for their catch Women earn a
living with phone exchanges Carpenters carve their numbers on village walls For
handsets the undisputed leader is Nokia The Finnish telephone giant has been in
India since 1994 and has invested in three RampD labs making facilities and
distribution partnerships
Naresh Priyadarshihead of Synovate Business Consulting says Nokia has 90000
distributors in India giving it a 90 per cent retail footprint There are also 30000plus
stores that sell Nokia exclusively Nokia has concept stores in at least seven major
cities
Together Indias retail outlets sold 132 million handsets worth 700 billion rupees in
2008 according to Synovate Nokias share of value was 59 per cent followed by
19
Sony Ericsson with a distant eight per cent Samsung with seven per cent and
Motorola with six per cent Smartphones account for 24 percent of sales according
to Synovate with mid-priced feature phones taking 28 per cent and the remainder -
48 per cent - being ultra-low-cost phones Handset makers see ultra-low-cost
phones as the road ahead despite the razorthin profit margins Already sales of
cheap handsets are depressing average prices Euromonitor estimates that unit
prices fell 50 per cent between 2004 and 2007 to an average of 2808 rupees
To put handsets within reach of Indias rural poor phone makers have had to rethink
product design The Nokia 1100 included a torch alarm clock and a radio Nokias
entry-level phones are now priced at 1500 rupees Spice Mobile halved that with its
Peoples Phone priced at 599 rupees including lifetime prepaid activation
To bond with rural users Nokia is launching a subscription-based service called Life
tools with information on agriculture and education Such phone services will serve
as the first online experience for rural Indians
Among affluent urban users value-added-services (VAS) for feature phones are
seen as the way forward Synovate reports VAS at 50 million rupees in 2008 and
fore- casts 70 per cent annual growth to push that to 165 million rupees by 2010 It is
this fast-growing rapidly diversifying market that is attractive to overseas firms
though they should not expect much profit in the short term
Some important facts about Rural Coverage-
bull About 70 percent of Indias near 12 billion inhabitants live in rural
communities
bull rural teledensity was a mere 126 percent
bull Rural wire line connections totaled 1068 million at the end of December
down by 246 percent from 1095 million at the end of Septemberr 2009
bull The rural wireless subscriber base hit 9315 million at the end of the year up
238 percent from 9098 million at the end of September
bull Department of Telecom and BSNL have signed an agreement to provide
861000 connections to individual users and government institutions through
rural and remote exchanges by 2014
bull To promote rural rollout by the private operators the Indian government
imposed Universal Service Obligations (USO) on the countrys operators to
build a fund that can finance the rollout of services in areas where there isnt
an obvious or pressing business case to do so
bull The first phase of mobile infrastructure deployment under the USO fund
scheme commissioned six different service providers to deploy 7871 towers
bull However by the end of October 2009 only 1934 towers had been installed
20
bull The second phase complete with a tender for an additional 11049 sites has
yet to be started
bull The phased rollouts associated with the USO scheme require an additional
40875 mobile towers to be erected
bull Add this to the number of towers required for the five new 2G networks
additional coverage and capacity for existing operators and the introduction
of 3G networks and there is a huge demand for new cell sites right across the
country
6 Future of Mobile Industry
Demand Among Poor Farmers Keeps an Industry Growing as Other Sectors of the
Economy Are Jolted Rural customers have been hungry for mobile phones for a
long time so demand will remain unaffected by the global jitters said SP Shukla
chief executive officer of the mobile business at Reliance Communications India Ltd
Indias second-largest cellular company by number of subscribers
Even amid the global economic slowdown one Indian industry continues to boom
selling cellphones to the rural poor
Economists have slashed Indian economic growth forecasts for this year and the
stock market is in the doldrums But cellphone companies are signing millions of new
subscribers a month making India the fastest growing mobile-phone market in the
world There is no sign of a slowdown yet figures to be released later this month are
expected to show that new subscriptions in January reached a record 11 million
The demand for cellphones is coming mainly from rural consumers who typically
earn less than $1000 a year These buyers havent been affected by plunging stock
and real-estate prices or tighter bank lending since they typically dont own land and
dont borrow A large majority of them dont have access to regular landline phone
networks -- there are only about 40 million landline subscribers in India -- so once
cellular coverage comes to their towns or villages they scramble to get their first
phones
In the village of Karanehalli a cluster of simple homes around an intersection of two
dirt roads about 40 miles from Indias high-tech capital of Bangalore Farmer KT
Srinivasa doesnt have a toilet for his home or a tractor for his field But when a red
and white cellular tower sprouted in his village he splurged on a cellphone
While the way his family threshes rice -- crushing it with a massive stone roller --
hasnt changed for generations his phone has changed the way he farms He uses it
to decide when to plant and harvest by calling other farmers to get the best prices
21
for his rice coconuts and jasmine by calling wholesalers and to save hours of time
waiting on the road for deliveries and pickups that rarely come on time
Life is much better with the cellphone he said from his rice paddy in the shadow of
the new tower I bring it with me to the fields and anyone can reach me here
Mr Srinivasa like close to half the 800 people in his village uses Idea Cellular Ltd
as it was the first to bring them service He paid the equivalent of about $60 for his
Nokia phone and spends about $6 each month for service Like most rural users
Mr Srinivasa uses his phone to make voice calls -- he doesnt know how to text
message or to download emails On average rural Indians use their phones around
85 hours a month up 10 over the past year
The story is the same across rural India home to more than 60 of Indias
population of 12 billion China Indonesia and Brazil also continue to show solid
growth in cellphone sales
The continued expansion of the cellphone industry in India stands in sharp contrast
to most other industries here Textile and software exporters are struggling Indias
brand new malls are sparsely populated and the sales of cars trucks tractors and
motorcycles have declined in recent months
But the cellphone industry recorded more than 10 million new subscribers in
December up from eight million a year earlier The industrys overall subscriber base
grew 48 in 2008 to 347 million customers
Rural customers have been hungry for mobile phones for a long time so demand
will remain unaffected
22
7 References
httpenwikipediaorgwikiCommunications_in_India
httpwwwicmrindiaorgcasestudiescatalogueBusiness20StrategyBSTR174htm
wwwvitalanalyticsin
httpwwwfonearenacommobile_phone_pricelisthtml
wwwmobile-prices-indiacom
httpwwwmobile-prices-indiacomNokia_Mobile_Phonesphp
httpwebebscohostcom
httpwwwindia-cellularcomMobile-Priceshtm
httpproquestumicompqdwebindex=8ampdid=1635821441ampSrchMode=1ampsid=3ampF
mt=3ampVInst=PRODampVType=PQDampRQT=309ampVName=PQDampTS=1264756239ampclien
tId=135690
10
What and that it had roped in a leading actor of the Indian film industry Aamir Khan
(Aamir) as its brand ambassador Aamir would also feature in its new ads
Announcing the major celebrity endorsement for the brand HB Lee president and
CEO Samsung (South-West Asia) said The Samsung brand stands for qualities of
innovation change discovery self-expression and excellence in performance And
these very same qualities are epitomized by Aamir Khan whose quality and depth of
work as well as versatility as an actor have made him a much loved and respected
actor in India today We are indeed very proud and privileged to have him as our
brand ambassador
With Aamirs endorsement of Samsung the fight for the mobile phone market had
also become a four-way battle with other leading actors endorsing the rival brands -
Shah Rukh Khan endorsing Nokia Abhishek Bachchan endorsing Motorola and
Hrithik Roshan endorsing Sony Ericsson
According to Samsung the mobile phone market in India would be 100 million units
in 2008-09With all these new initiatives Samsung was confident of achieving its
objective of cornering a 15 percent market share in the country
The company said that it had the necessary infrastructure to ramp up its production
capacity at its manufacturing unit at Noida from the current 6 million units per annum
depending on the demand
Recently to have an impact on international prospective mobile phone users
Samsung has signed up Didier Drogba playing in Chelsea Football Club as its
2008 Mobile Phone category brand ambassador
As part of this partnership Drogba will appear in Samsung Mobile adverting
campaigns for a period of one year and will also make public appearances to
promote Samsung‟s products and corporate activities
ldquoExtending our association with Chelsea FC we are now thrilled to partner with
Drogba as Samsung‟s brand ambassadorrdquo says Chi Won Suh CEO
Samsung Middle East and Africa region ldquoAfrica is a key market for Samsung
Electronics with immense growth potential and we are confident that our
association with an internationally and locally acclaimed football star like Drogba
will bring us closer to the football loving population throughout the African
continentrdquo
Football sponsorship is one of the pillars of Samsung‟s sports marketing strategy It
is derived from the belief that sport especially football unites people of all ages
11
genders and races
Samsung bada to rival Android Linux
Samsung entered into the mobile OS arena with bada The software whose name is
based on the Korean for ocean is designed to be open and will compete directly
against rivals like Android or LiMo It will be based on universal standards and wont
consider even core aspects of the OS off-limits developers can not only use
contacts the dialer and other utilities but extend them with new features of their own
Most details are left vague but bada will have a central app store Carriers will also
have the option of customizing the OS to suit their own tastes
Samsung expects the very first device using bada to show in the first half of 2010
along with the initial app store More phones should be ready by the second half of
that year while the app store will expand to 30 different countries including key
countries in Europe A more formal unveiling is due in the UK for December and will
be followed by first looks for developers both in December and in January
The news backs analyst claims of Samsung moving to its own platform and adopting
modern open platforms including bada If fully representative it also signals the
likely ends of Symbian and Windows Mobile at Samsung as the forecast would have
Symbian gone entirely by 2011 and Microsofts OS at just 20 percent by 2012 where
it makes up 80 percent of Samsung phones today Such a gesture will also render
closed platforms like OS X iPhones and Windows Mobile the relative minority in
numbers though not necessarily market share
Recent happenings were the Samsung Corby which is a full-touch handset that
places users at the centre of the social media revolution with full support for a wide
range of social networks The new mobile compliments the Company‟s existing
touch screen strategy ldquotouch for every lifestylerdquo by broadening the market and
targeting the youth audience
The Corby represents a complete makeover for the youth segment with its eye-
catching design which marks a significant break from the way full touch phones are
usually designed The Samsung Corby is notable for both its body design and
colours it comes with bold colour options
With Ghazini swiping the box office Samsung has enchased on its brand
ambassador Amir Khan by launching Ghazini mobile games on selected models
which is a smart and innovative approach of marketing strategy
12
The future prospects of Samsung mobiles doesn‟t seem gloomy with the above
developments and with time to come there would be a tough competition with its
rivals So Next is what
4 Pricing Strategies
1 Penetration Pricing This pricing strategy is followed by companies with the
intention to maximize their market share They believe that a higher sales volume
will lead to lower unit costs amp higher long-run profit
Example China Mobile Phones in India
This is one of the fastest growing industries in India China mobile phones are cheap
and offer the same features as a expensive mobile from some other well known
manufacturers
Rs
12000
China-JN269
Rs
9900
China-MT3300
Rs
9800
China_Elitek_85
02
Rs
9500
China-GT-MD900
Rs
9400
China-6500S
Rs
8700
China_GT_Q71
8
Rs
6137
China-Elitek-
X6019
Rs
5200
China_Elitek_X6
011
Rs
4900
China_ELITEK_X6
010
Rs
4500
China_Elitek_X6
012
A few samples of Chinese mobiles are shown above Only problem that exist for the
Chinese mobile phones is that consumer generally have a low quality perception
associated with them and hence do not trust their quality However they are well
suited to people who want to enjoy features of a high end mobile without having a
budget for the same
2 Predatory Pricing
This pricing strategy is followed with the intention to wipe out the competition
13
Example In the year 2003 LG and Samsung along with Reliance came up with
Rs 500- mobile scheme where both handsets along with connections were
available for Rs 500- This was something which revolutionized the mobile
phone and telecom industry
3 Perceived value Pricing
In this case the pricing is done based on the customer‟s perception about the
company and its product Perceived value is made up of several elements such
as buyer‟s image of product performance the channel deliverables warranty
quality and even softer attributes such as supplier‟s reputation
Example A good example for this kind of pricing is Apple iPhones They are offered
in price range of Rs 31000- to Rs 42500-
Their price is set based on image of brand apple amp customer affinity towards it
Comparable mobiles phones from other manufacturers like Sony Ericson Nokia are
offered at relatively cheaper price For example comparable N series mobiles from
Nokia are offered at prices below Rs 30000- (Except for Nokia- N9 amp Nokia-8800
Carbon) Also SONYERICSSON ndash Satio is offered for Rs 31000- amp all other Sony
brands are available for prices below it
Apple can set higher prices since it feels that its customers will be ready to pay for it
based on its perceived value
14
Apple-iPhone-3G-S-32GB Price | Rate Rs 42500-
4 Value Pricing This is pricing strategy in which a company wins loyal customers
by charging a fairly low price for a high quality offering
Example Nokia E 63 Mobile
This mobile is priced at Rs 11260- This mobile offers a large number of high end
applications like Web-Browsing Email Data Network GPRS GPS amp Navigation
and lots of other facilities apart from serving the basic mobile functions At the same
time it has a sleek body amp robust structure
A image of this mobile has been shown below
15
5 Product form pricing Different versions of the same product are priced
differently
Examples Nokia-5000 is priced at Rs 4300- Whereas Nokia-7210C-Supernova is
priced at Rs 4800- offers almost the same features The reason for difference in
pricing is due to the sleek structure of Nokia-7210C
16
6 Promotional Pricing
1 Special Event Pricing In this case special prices are offered during special
occasions like festivals to increase the sales Example Last Diwali (September 2009) Samsung offered discounts on
Samsung Omnia mobile phone Their market price at that time was Rs
33990- whereas their discounted price for Diwali was Rs Rs 31990-
2 Low-Interest financing
Company can offer low interest financing to customer This will reduce the
burden of initial cost to the customer
Example In 2009 Nokia piloted a scheme in two Indian states where it sold
handsets on a weekly instalment of 100 rupees ($2) over 25 weeks period
3 Psychological Discounting
This is done to make the customer believe that product is priced cheaply or
some cases just break the price barrier that customer has in his mind like
price at price Rs 999- which is priced just below Rs 1000-
17
Example
MOTOYUVA - W156 prices at Rs 1099-
Samsung Guru- Rs 2999-
5 Current Trend in Mobile Industry
-- With saturation in the urban market growth in Indian mobile market will be driven
by an increased focus on the rural market aggressive promotions and handset
bundle offers
-- As of March 2007 mobile subscribers in rural India accounted just 20 of the
Indian mobile subscriber base However it is forecasted to grow at a CAGR of more
than 47 during 2007 to 2010
-- In order to remain competitive the mobile industry could see several mergers and
acquisitions roll out obligation and substantiate equity holding in more than one
telecom company
-- The major growth in mobile phone subscribers will be seen in C Circle and B
Circle in short-term
-- Enormous opportunities are emerging for the low cost handset manufacturers
along with low tariffs infrastructure development for mobile communication
-- Rural India will account for around 35-38 of the total mobile handset sales by
2010
18
The industrys spectacular growth in India is attracting the attention of several
international brands Glenn Smith reports
SECTOR INSIGHT
The growth of Indias mobile sector has not gone unnoticed Last year Virgin Mobile
agreed a deal to enter the market and Japans DoCoMo bought into mobile operator
Tata to stake its claim in the fast-expanding industry
India offers astounding growth statistics In October 2008 according to the Telecom
Regulatory Authority of India (Trai) 104 million Indians signed up for a phone
service pushing the national total to 3639 million a penetration of 315 per cent
Only 10 years earlier India had a mere 880000 phones most of them landlinesfor
one billion people Today fixed-line phones account for only 105 per cent - 382
million subscribers and this absolute number is slowly declining Wireless operators
meanwhile are surging ahead Many first-time phone buyers are opting for mobile
and will drive the total subscriber base to 500 million by 2010according toTrai
The expansion has been fuelled by recent economic prosperity but the accelerant is
an ever-increasing affordability of handsets and services Mobile phone service costs
have plummeted In March 1999 the effective charge was more than 1532 rupees
(US$031) per minute which fell by half in 2000 again in 2001 and repeatedly
dropped until today - at less than a rupee it is believed to be the cheapest rate in the
worldThe sectors expansion is not expected to be hit by the economic slowdown
Market growth is moving away from the cities and going into the villages and rural
areas says Shankari Panchapakesan executive director of mobile services The
Nielsen Company South Asia The macroeconomy wont impact this because rural
people are using phones in ways that make a difference in their life how they work
how they educate their children and how they access information
Fishermen for example use phones to find outlets for their catch Women earn a
living with phone exchanges Carpenters carve their numbers on village walls For
handsets the undisputed leader is Nokia The Finnish telephone giant has been in
India since 1994 and has invested in three RampD labs making facilities and
distribution partnerships
Naresh Priyadarshihead of Synovate Business Consulting says Nokia has 90000
distributors in India giving it a 90 per cent retail footprint There are also 30000plus
stores that sell Nokia exclusively Nokia has concept stores in at least seven major
cities
Together Indias retail outlets sold 132 million handsets worth 700 billion rupees in
2008 according to Synovate Nokias share of value was 59 per cent followed by
19
Sony Ericsson with a distant eight per cent Samsung with seven per cent and
Motorola with six per cent Smartphones account for 24 percent of sales according
to Synovate with mid-priced feature phones taking 28 per cent and the remainder -
48 per cent - being ultra-low-cost phones Handset makers see ultra-low-cost
phones as the road ahead despite the razorthin profit margins Already sales of
cheap handsets are depressing average prices Euromonitor estimates that unit
prices fell 50 per cent between 2004 and 2007 to an average of 2808 rupees
To put handsets within reach of Indias rural poor phone makers have had to rethink
product design The Nokia 1100 included a torch alarm clock and a radio Nokias
entry-level phones are now priced at 1500 rupees Spice Mobile halved that with its
Peoples Phone priced at 599 rupees including lifetime prepaid activation
To bond with rural users Nokia is launching a subscription-based service called Life
tools with information on agriculture and education Such phone services will serve
as the first online experience for rural Indians
Among affluent urban users value-added-services (VAS) for feature phones are
seen as the way forward Synovate reports VAS at 50 million rupees in 2008 and
fore- casts 70 per cent annual growth to push that to 165 million rupees by 2010 It is
this fast-growing rapidly diversifying market that is attractive to overseas firms
though they should not expect much profit in the short term
Some important facts about Rural Coverage-
bull About 70 percent of Indias near 12 billion inhabitants live in rural
communities
bull rural teledensity was a mere 126 percent
bull Rural wire line connections totaled 1068 million at the end of December
down by 246 percent from 1095 million at the end of Septemberr 2009
bull The rural wireless subscriber base hit 9315 million at the end of the year up
238 percent from 9098 million at the end of September
bull Department of Telecom and BSNL have signed an agreement to provide
861000 connections to individual users and government institutions through
rural and remote exchanges by 2014
bull To promote rural rollout by the private operators the Indian government
imposed Universal Service Obligations (USO) on the countrys operators to
build a fund that can finance the rollout of services in areas where there isnt
an obvious or pressing business case to do so
bull The first phase of mobile infrastructure deployment under the USO fund
scheme commissioned six different service providers to deploy 7871 towers
bull However by the end of October 2009 only 1934 towers had been installed
20
bull The second phase complete with a tender for an additional 11049 sites has
yet to be started
bull The phased rollouts associated with the USO scheme require an additional
40875 mobile towers to be erected
bull Add this to the number of towers required for the five new 2G networks
additional coverage and capacity for existing operators and the introduction
of 3G networks and there is a huge demand for new cell sites right across the
country
6 Future of Mobile Industry
Demand Among Poor Farmers Keeps an Industry Growing as Other Sectors of the
Economy Are Jolted Rural customers have been hungry for mobile phones for a
long time so demand will remain unaffected by the global jitters said SP Shukla
chief executive officer of the mobile business at Reliance Communications India Ltd
Indias second-largest cellular company by number of subscribers
Even amid the global economic slowdown one Indian industry continues to boom
selling cellphones to the rural poor
Economists have slashed Indian economic growth forecasts for this year and the
stock market is in the doldrums But cellphone companies are signing millions of new
subscribers a month making India the fastest growing mobile-phone market in the
world There is no sign of a slowdown yet figures to be released later this month are
expected to show that new subscriptions in January reached a record 11 million
The demand for cellphones is coming mainly from rural consumers who typically
earn less than $1000 a year These buyers havent been affected by plunging stock
and real-estate prices or tighter bank lending since they typically dont own land and
dont borrow A large majority of them dont have access to regular landline phone
networks -- there are only about 40 million landline subscribers in India -- so once
cellular coverage comes to their towns or villages they scramble to get their first
phones
In the village of Karanehalli a cluster of simple homes around an intersection of two
dirt roads about 40 miles from Indias high-tech capital of Bangalore Farmer KT
Srinivasa doesnt have a toilet for his home or a tractor for his field But when a red
and white cellular tower sprouted in his village he splurged on a cellphone
While the way his family threshes rice -- crushing it with a massive stone roller --
hasnt changed for generations his phone has changed the way he farms He uses it
to decide when to plant and harvest by calling other farmers to get the best prices
21
for his rice coconuts and jasmine by calling wholesalers and to save hours of time
waiting on the road for deliveries and pickups that rarely come on time
Life is much better with the cellphone he said from his rice paddy in the shadow of
the new tower I bring it with me to the fields and anyone can reach me here
Mr Srinivasa like close to half the 800 people in his village uses Idea Cellular Ltd
as it was the first to bring them service He paid the equivalent of about $60 for his
Nokia phone and spends about $6 each month for service Like most rural users
Mr Srinivasa uses his phone to make voice calls -- he doesnt know how to text
message or to download emails On average rural Indians use their phones around
85 hours a month up 10 over the past year
The story is the same across rural India home to more than 60 of Indias
population of 12 billion China Indonesia and Brazil also continue to show solid
growth in cellphone sales
The continued expansion of the cellphone industry in India stands in sharp contrast
to most other industries here Textile and software exporters are struggling Indias
brand new malls are sparsely populated and the sales of cars trucks tractors and
motorcycles have declined in recent months
But the cellphone industry recorded more than 10 million new subscribers in
December up from eight million a year earlier The industrys overall subscriber base
grew 48 in 2008 to 347 million customers
Rural customers have been hungry for mobile phones for a long time so demand
will remain unaffected
22
7 References
httpenwikipediaorgwikiCommunications_in_India
httpwwwicmrindiaorgcasestudiescatalogueBusiness20StrategyBSTR174htm
wwwvitalanalyticsin
httpwwwfonearenacommobile_phone_pricelisthtml
wwwmobile-prices-indiacom
httpwwwmobile-prices-indiacomNokia_Mobile_Phonesphp
httpwebebscohostcom
httpwwwindia-cellularcomMobile-Priceshtm
httpproquestumicompqdwebindex=8ampdid=1635821441ampSrchMode=1ampsid=3ampF
mt=3ampVInst=PRODampVType=PQDampRQT=309ampVName=PQDampTS=1264756239ampclien
tId=135690
11
genders and races
Samsung bada to rival Android Linux
Samsung entered into the mobile OS arena with bada The software whose name is
based on the Korean for ocean is designed to be open and will compete directly
against rivals like Android or LiMo It will be based on universal standards and wont
consider even core aspects of the OS off-limits developers can not only use
contacts the dialer and other utilities but extend them with new features of their own
Most details are left vague but bada will have a central app store Carriers will also
have the option of customizing the OS to suit their own tastes
Samsung expects the very first device using bada to show in the first half of 2010
along with the initial app store More phones should be ready by the second half of
that year while the app store will expand to 30 different countries including key
countries in Europe A more formal unveiling is due in the UK for December and will
be followed by first looks for developers both in December and in January
The news backs analyst claims of Samsung moving to its own platform and adopting
modern open platforms including bada If fully representative it also signals the
likely ends of Symbian and Windows Mobile at Samsung as the forecast would have
Symbian gone entirely by 2011 and Microsofts OS at just 20 percent by 2012 where
it makes up 80 percent of Samsung phones today Such a gesture will also render
closed platforms like OS X iPhones and Windows Mobile the relative minority in
numbers though not necessarily market share
Recent happenings were the Samsung Corby which is a full-touch handset that
places users at the centre of the social media revolution with full support for a wide
range of social networks The new mobile compliments the Company‟s existing
touch screen strategy ldquotouch for every lifestylerdquo by broadening the market and
targeting the youth audience
The Corby represents a complete makeover for the youth segment with its eye-
catching design which marks a significant break from the way full touch phones are
usually designed The Samsung Corby is notable for both its body design and
colours it comes with bold colour options
With Ghazini swiping the box office Samsung has enchased on its brand
ambassador Amir Khan by launching Ghazini mobile games on selected models
which is a smart and innovative approach of marketing strategy
12
The future prospects of Samsung mobiles doesn‟t seem gloomy with the above
developments and with time to come there would be a tough competition with its
rivals So Next is what
4 Pricing Strategies
1 Penetration Pricing This pricing strategy is followed by companies with the
intention to maximize their market share They believe that a higher sales volume
will lead to lower unit costs amp higher long-run profit
Example China Mobile Phones in India
This is one of the fastest growing industries in India China mobile phones are cheap
and offer the same features as a expensive mobile from some other well known
manufacturers
Rs
12000
China-JN269
Rs
9900
China-MT3300
Rs
9800
China_Elitek_85
02
Rs
9500
China-GT-MD900
Rs
9400
China-6500S
Rs
8700
China_GT_Q71
8
Rs
6137
China-Elitek-
X6019
Rs
5200
China_Elitek_X6
011
Rs
4900
China_ELITEK_X6
010
Rs
4500
China_Elitek_X6
012
A few samples of Chinese mobiles are shown above Only problem that exist for the
Chinese mobile phones is that consumer generally have a low quality perception
associated with them and hence do not trust their quality However they are well
suited to people who want to enjoy features of a high end mobile without having a
budget for the same
2 Predatory Pricing
This pricing strategy is followed with the intention to wipe out the competition
13
Example In the year 2003 LG and Samsung along with Reliance came up with
Rs 500- mobile scheme where both handsets along with connections were
available for Rs 500- This was something which revolutionized the mobile
phone and telecom industry
3 Perceived value Pricing
In this case the pricing is done based on the customer‟s perception about the
company and its product Perceived value is made up of several elements such
as buyer‟s image of product performance the channel deliverables warranty
quality and even softer attributes such as supplier‟s reputation
Example A good example for this kind of pricing is Apple iPhones They are offered
in price range of Rs 31000- to Rs 42500-
Their price is set based on image of brand apple amp customer affinity towards it
Comparable mobiles phones from other manufacturers like Sony Ericson Nokia are
offered at relatively cheaper price For example comparable N series mobiles from
Nokia are offered at prices below Rs 30000- (Except for Nokia- N9 amp Nokia-8800
Carbon) Also SONYERICSSON ndash Satio is offered for Rs 31000- amp all other Sony
brands are available for prices below it
Apple can set higher prices since it feels that its customers will be ready to pay for it
based on its perceived value
14
Apple-iPhone-3G-S-32GB Price | Rate Rs 42500-
4 Value Pricing This is pricing strategy in which a company wins loyal customers
by charging a fairly low price for a high quality offering
Example Nokia E 63 Mobile
This mobile is priced at Rs 11260- This mobile offers a large number of high end
applications like Web-Browsing Email Data Network GPRS GPS amp Navigation
and lots of other facilities apart from serving the basic mobile functions At the same
time it has a sleek body amp robust structure
A image of this mobile has been shown below
15
5 Product form pricing Different versions of the same product are priced
differently
Examples Nokia-5000 is priced at Rs 4300- Whereas Nokia-7210C-Supernova is
priced at Rs 4800- offers almost the same features The reason for difference in
pricing is due to the sleek structure of Nokia-7210C
16
6 Promotional Pricing
1 Special Event Pricing In this case special prices are offered during special
occasions like festivals to increase the sales Example Last Diwali (September 2009) Samsung offered discounts on
Samsung Omnia mobile phone Their market price at that time was Rs
33990- whereas their discounted price for Diwali was Rs Rs 31990-
2 Low-Interest financing
Company can offer low interest financing to customer This will reduce the
burden of initial cost to the customer
Example In 2009 Nokia piloted a scheme in two Indian states where it sold
handsets on a weekly instalment of 100 rupees ($2) over 25 weeks period
3 Psychological Discounting
This is done to make the customer believe that product is priced cheaply or
some cases just break the price barrier that customer has in his mind like
price at price Rs 999- which is priced just below Rs 1000-
17
Example
MOTOYUVA - W156 prices at Rs 1099-
Samsung Guru- Rs 2999-
5 Current Trend in Mobile Industry
-- With saturation in the urban market growth in Indian mobile market will be driven
by an increased focus on the rural market aggressive promotions and handset
bundle offers
-- As of March 2007 mobile subscribers in rural India accounted just 20 of the
Indian mobile subscriber base However it is forecasted to grow at a CAGR of more
than 47 during 2007 to 2010
-- In order to remain competitive the mobile industry could see several mergers and
acquisitions roll out obligation and substantiate equity holding in more than one
telecom company
-- The major growth in mobile phone subscribers will be seen in C Circle and B
Circle in short-term
-- Enormous opportunities are emerging for the low cost handset manufacturers
along with low tariffs infrastructure development for mobile communication
-- Rural India will account for around 35-38 of the total mobile handset sales by
2010
18
The industrys spectacular growth in India is attracting the attention of several
international brands Glenn Smith reports
SECTOR INSIGHT
The growth of Indias mobile sector has not gone unnoticed Last year Virgin Mobile
agreed a deal to enter the market and Japans DoCoMo bought into mobile operator
Tata to stake its claim in the fast-expanding industry
India offers astounding growth statistics In October 2008 according to the Telecom
Regulatory Authority of India (Trai) 104 million Indians signed up for a phone
service pushing the national total to 3639 million a penetration of 315 per cent
Only 10 years earlier India had a mere 880000 phones most of them landlinesfor
one billion people Today fixed-line phones account for only 105 per cent - 382
million subscribers and this absolute number is slowly declining Wireless operators
meanwhile are surging ahead Many first-time phone buyers are opting for mobile
and will drive the total subscriber base to 500 million by 2010according toTrai
The expansion has been fuelled by recent economic prosperity but the accelerant is
an ever-increasing affordability of handsets and services Mobile phone service costs
have plummeted In March 1999 the effective charge was more than 1532 rupees
(US$031) per minute which fell by half in 2000 again in 2001 and repeatedly
dropped until today - at less than a rupee it is believed to be the cheapest rate in the
worldThe sectors expansion is not expected to be hit by the economic slowdown
Market growth is moving away from the cities and going into the villages and rural
areas says Shankari Panchapakesan executive director of mobile services The
Nielsen Company South Asia The macroeconomy wont impact this because rural
people are using phones in ways that make a difference in their life how they work
how they educate their children and how they access information
Fishermen for example use phones to find outlets for their catch Women earn a
living with phone exchanges Carpenters carve their numbers on village walls For
handsets the undisputed leader is Nokia The Finnish telephone giant has been in
India since 1994 and has invested in three RampD labs making facilities and
distribution partnerships
Naresh Priyadarshihead of Synovate Business Consulting says Nokia has 90000
distributors in India giving it a 90 per cent retail footprint There are also 30000plus
stores that sell Nokia exclusively Nokia has concept stores in at least seven major
cities
Together Indias retail outlets sold 132 million handsets worth 700 billion rupees in
2008 according to Synovate Nokias share of value was 59 per cent followed by
19
Sony Ericsson with a distant eight per cent Samsung with seven per cent and
Motorola with six per cent Smartphones account for 24 percent of sales according
to Synovate with mid-priced feature phones taking 28 per cent and the remainder -
48 per cent - being ultra-low-cost phones Handset makers see ultra-low-cost
phones as the road ahead despite the razorthin profit margins Already sales of
cheap handsets are depressing average prices Euromonitor estimates that unit
prices fell 50 per cent between 2004 and 2007 to an average of 2808 rupees
To put handsets within reach of Indias rural poor phone makers have had to rethink
product design The Nokia 1100 included a torch alarm clock and a radio Nokias
entry-level phones are now priced at 1500 rupees Spice Mobile halved that with its
Peoples Phone priced at 599 rupees including lifetime prepaid activation
To bond with rural users Nokia is launching a subscription-based service called Life
tools with information on agriculture and education Such phone services will serve
as the first online experience for rural Indians
Among affluent urban users value-added-services (VAS) for feature phones are
seen as the way forward Synovate reports VAS at 50 million rupees in 2008 and
fore- casts 70 per cent annual growth to push that to 165 million rupees by 2010 It is
this fast-growing rapidly diversifying market that is attractive to overseas firms
though they should not expect much profit in the short term
Some important facts about Rural Coverage-
bull About 70 percent of Indias near 12 billion inhabitants live in rural
communities
bull rural teledensity was a mere 126 percent
bull Rural wire line connections totaled 1068 million at the end of December
down by 246 percent from 1095 million at the end of Septemberr 2009
bull The rural wireless subscriber base hit 9315 million at the end of the year up
238 percent from 9098 million at the end of September
bull Department of Telecom and BSNL have signed an agreement to provide
861000 connections to individual users and government institutions through
rural and remote exchanges by 2014
bull To promote rural rollout by the private operators the Indian government
imposed Universal Service Obligations (USO) on the countrys operators to
build a fund that can finance the rollout of services in areas where there isnt
an obvious or pressing business case to do so
bull The first phase of mobile infrastructure deployment under the USO fund
scheme commissioned six different service providers to deploy 7871 towers
bull However by the end of October 2009 only 1934 towers had been installed
20
bull The second phase complete with a tender for an additional 11049 sites has
yet to be started
bull The phased rollouts associated with the USO scheme require an additional
40875 mobile towers to be erected
bull Add this to the number of towers required for the five new 2G networks
additional coverage and capacity for existing operators and the introduction
of 3G networks and there is a huge demand for new cell sites right across the
country
6 Future of Mobile Industry
Demand Among Poor Farmers Keeps an Industry Growing as Other Sectors of the
Economy Are Jolted Rural customers have been hungry for mobile phones for a
long time so demand will remain unaffected by the global jitters said SP Shukla
chief executive officer of the mobile business at Reliance Communications India Ltd
Indias second-largest cellular company by number of subscribers
Even amid the global economic slowdown one Indian industry continues to boom
selling cellphones to the rural poor
Economists have slashed Indian economic growth forecasts for this year and the
stock market is in the doldrums But cellphone companies are signing millions of new
subscribers a month making India the fastest growing mobile-phone market in the
world There is no sign of a slowdown yet figures to be released later this month are
expected to show that new subscriptions in January reached a record 11 million
The demand for cellphones is coming mainly from rural consumers who typically
earn less than $1000 a year These buyers havent been affected by plunging stock
and real-estate prices or tighter bank lending since they typically dont own land and
dont borrow A large majority of them dont have access to regular landline phone
networks -- there are only about 40 million landline subscribers in India -- so once
cellular coverage comes to their towns or villages they scramble to get their first
phones
In the village of Karanehalli a cluster of simple homes around an intersection of two
dirt roads about 40 miles from Indias high-tech capital of Bangalore Farmer KT
Srinivasa doesnt have a toilet for his home or a tractor for his field But when a red
and white cellular tower sprouted in his village he splurged on a cellphone
While the way his family threshes rice -- crushing it with a massive stone roller --
hasnt changed for generations his phone has changed the way he farms He uses it
to decide when to plant and harvest by calling other farmers to get the best prices
21
for his rice coconuts and jasmine by calling wholesalers and to save hours of time
waiting on the road for deliveries and pickups that rarely come on time
Life is much better with the cellphone he said from his rice paddy in the shadow of
the new tower I bring it with me to the fields and anyone can reach me here
Mr Srinivasa like close to half the 800 people in his village uses Idea Cellular Ltd
as it was the first to bring them service He paid the equivalent of about $60 for his
Nokia phone and spends about $6 each month for service Like most rural users
Mr Srinivasa uses his phone to make voice calls -- he doesnt know how to text
message or to download emails On average rural Indians use their phones around
85 hours a month up 10 over the past year
The story is the same across rural India home to more than 60 of Indias
population of 12 billion China Indonesia and Brazil also continue to show solid
growth in cellphone sales
The continued expansion of the cellphone industry in India stands in sharp contrast
to most other industries here Textile and software exporters are struggling Indias
brand new malls are sparsely populated and the sales of cars trucks tractors and
motorcycles have declined in recent months
But the cellphone industry recorded more than 10 million new subscribers in
December up from eight million a year earlier The industrys overall subscriber base
grew 48 in 2008 to 347 million customers
Rural customers have been hungry for mobile phones for a long time so demand
will remain unaffected
22
7 References
httpenwikipediaorgwikiCommunications_in_India
httpwwwicmrindiaorgcasestudiescatalogueBusiness20StrategyBSTR174htm
wwwvitalanalyticsin
httpwwwfonearenacommobile_phone_pricelisthtml
wwwmobile-prices-indiacom
httpwwwmobile-prices-indiacomNokia_Mobile_Phonesphp
httpwebebscohostcom
httpwwwindia-cellularcomMobile-Priceshtm
httpproquestumicompqdwebindex=8ampdid=1635821441ampSrchMode=1ampsid=3ampF
mt=3ampVInst=PRODampVType=PQDampRQT=309ampVName=PQDampTS=1264756239ampclien
tId=135690
12
The future prospects of Samsung mobiles doesn‟t seem gloomy with the above
developments and with time to come there would be a tough competition with its
rivals So Next is what
4 Pricing Strategies
1 Penetration Pricing This pricing strategy is followed by companies with the
intention to maximize their market share They believe that a higher sales volume
will lead to lower unit costs amp higher long-run profit
Example China Mobile Phones in India
This is one of the fastest growing industries in India China mobile phones are cheap
and offer the same features as a expensive mobile from some other well known
manufacturers
Rs
12000
China-JN269
Rs
9900
China-MT3300
Rs
9800
China_Elitek_85
02
Rs
9500
China-GT-MD900
Rs
9400
China-6500S
Rs
8700
China_GT_Q71
8
Rs
6137
China-Elitek-
X6019
Rs
5200
China_Elitek_X6
011
Rs
4900
China_ELITEK_X6
010
Rs
4500
China_Elitek_X6
012
A few samples of Chinese mobiles are shown above Only problem that exist for the
Chinese mobile phones is that consumer generally have a low quality perception
associated with them and hence do not trust their quality However they are well
suited to people who want to enjoy features of a high end mobile without having a
budget for the same
2 Predatory Pricing
This pricing strategy is followed with the intention to wipe out the competition
13
Example In the year 2003 LG and Samsung along with Reliance came up with
Rs 500- mobile scheme where both handsets along with connections were
available for Rs 500- This was something which revolutionized the mobile
phone and telecom industry
3 Perceived value Pricing
In this case the pricing is done based on the customer‟s perception about the
company and its product Perceived value is made up of several elements such
as buyer‟s image of product performance the channel deliverables warranty
quality and even softer attributes such as supplier‟s reputation
Example A good example for this kind of pricing is Apple iPhones They are offered
in price range of Rs 31000- to Rs 42500-
Their price is set based on image of brand apple amp customer affinity towards it
Comparable mobiles phones from other manufacturers like Sony Ericson Nokia are
offered at relatively cheaper price For example comparable N series mobiles from
Nokia are offered at prices below Rs 30000- (Except for Nokia- N9 amp Nokia-8800
Carbon) Also SONYERICSSON ndash Satio is offered for Rs 31000- amp all other Sony
brands are available for prices below it
Apple can set higher prices since it feels that its customers will be ready to pay for it
based on its perceived value
14
Apple-iPhone-3G-S-32GB Price | Rate Rs 42500-
4 Value Pricing This is pricing strategy in which a company wins loyal customers
by charging a fairly low price for a high quality offering
Example Nokia E 63 Mobile
This mobile is priced at Rs 11260- This mobile offers a large number of high end
applications like Web-Browsing Email Data Network GPRS GPS amp Navigation
and lots of other facilities apart from serving the basic mobile functions At the same
time it has a sleek body amp robust structure
A image of this mobile has been shown below
15
5 Product form pricing Different versions of the same product are priced
differently
Examples Nokia-5000 is priced at Rs 4300- Whereas Nokia-7210C-Supernova is
priced at Rs 4800- offers almost the same features The reason for difference in
pricing is due to the sleek structure of Nokia-7210C
16
6 Promotional Pricing
1 Special Event Pricing In this case special prices are offered during special
occasions like festivals to increase the sales Example Last Diwali (September 2009) Samsung offered discounts on
Samsung Omnia mobile phone Their market price at that time was Rs
33990- whereas their discounted price for Diwali was Rs Rs 31990-
2 Low-Interest financing
Company can offer low interest financing to customer This will reduce the
burden of initial cost to the customer
Example In 2009 Nokia piloted a scheme in two Indian states where it sold
handsets on a weekly instalment of 100 rupees ($2) over 25 weeks period
3 Psychological Discounting
This is done to make the customer believe that product is priced cheaply or
some cases just break the price barrier that customer has in his mind like
price at price Rs 999- which is priced just below Rs 1000-
17
Example
MOTOYUVA - W156 prices at Rs 1099-
Samsung Guru- Rs 2999-
5 Current Trend in Mobile Industry
-- With saturation in the urban market growth in Indian mobile market will be driven
by an increased focus on the rural market aggressive promotions and handset
bundle offers
-- As of March 2007 mobile subscribers in rural India accounted just 20 of the
Indian mobile subscriber base However it is forecasted to grow at a CAGR of more
than 47 during 2007 to 2010
-- In order to remain competitive the mobile industry could see several mergers and
acquisitions roll out obligation and substantiate equity holding in more than one
telecom company
-- The major growth in mobile phone subscribers will be seen in C Circle and B
Circle in short-term
-- Enormous opportunities are emerging for the low cost handset manufacturers
along with low tariffs infrastructure development for mobile communication
-- Rural India will account for around 35-38 of the total mobile handset sales by
2010
18
The industrys spectacular growth in India is attracting the attention of several
international brands Glenn Smith reports
SECTOR INSIGHT
The growth of Indias mobile sector has not gone unnoticed Last year Virgin Mobile
agreed a deal to enter the market and Japans DoCoMo bought into mobile operator
Tata to stake its claim in the fast-expanding industry
India offers astounding growth statistics In October 2008 according to the Telecom
Regulatory Authority of India (Trai) 104 million Indians signed up for a phone
service pushing the national total to 3639 million a penetration of 315 per cent
Only 10 years earlier India had a mere 880000 phones most of them landlinesfor
one billion people Today fixed-line phones account for only 105 per cent - 382
million subscribers and this absolute number is slowly declining Wireless operators
meanwhile are surging ahead Many first-time phone buyers are opting for mobile
and will drive the total subscriber base to 500 million by 2010according toTrai
The expansion has been fuelled by recent economic prosperity but the accelerant is
an ever-increasing affordability of handsets and services Mobile phone service costs
have plummeted In March 1999 the effective charge was more than 1532 rupees
(US$031) per minute which fell by half in 2000 again in 2001 and repeatedly
dropped until today - at less than a rupee it is believed to be the cheapest rate in the
worldThe sectors expansion is not expected to be hit by the economic slowdown
Market growth is moving away from the cities and going into the villages and rural
areas says Shankari Panchapakesan executive director of mobile services The
Nielsen Company South Asia The macroeconomy wont impact this because rural
people are using phones in ways that make a difference in their life how they work
how they educate their children and how they access information
Fishermen for example use phones to find outlets for their catch Women earn a
living with phone exchanges Carpenters carve their numbers on village walls For
handsets the undisputed leader is Nokia The Finnish telephone giant has been in
India since 1994 and has invested in three RampD labs making facilities and
distribution partnerships
Naresh Priyadarshihead of Synovate Business Consulting says Nokia has 90000
distributors in India giving it a 90 per cent retail footprint There are also 30000plus
stores that sell Nokia exclusively Nokia has concept stores in at least seven major
cities
Together Indias retail outlets sold 132 million handsets worth 700 billion rupees in
2008 according to Synovate Nokias share of value was 59 per cent followed by
19
Sony Ericsson with a distant eight per cent Samsung with seven per cent and
Motorola with six per cent Smartphones account for 24 percent of sales according
to Synovate with mid-priced feature phones taking 28 per cent and the remainder -
48 per cent - being ultra-low-cost phones Handset makers see ultra-low-cost
phones as the road ahead despite the razorthin profit margins Already sales of
cheap handsets are depressing average prices Euromonitor estimates that unit
prices fell 50 per cent between 2004 and 2007 to an average of 2808 rupees
To put handsets within reach of Indias rural poor phone makers have had to rethink
product design The Nokia 1100 included a torch alarm clock and a radio Nokias
entry-level phones are now priced at 1500 rupees Spice Mobile halved that with its
Peoples Phone priced at 599 rupees including lifetime prepaid activation
To bond with rural users Nokia is launching a subscription-based service called Life
tools with information on agriculture and education Such phone services will serve
as the first online experience for rural Indians
Among affluent urban users value-added-services (VAS) for feature phones are
seen as the way forward Synovate reports VAS at 50 million rupees in 2008 and
fore- casts 70 per cent annual growth to push that to 165 million rupees by 2010 It is
this fast-growing rapidly diversifying market that is attractive to overseas firms
though they should not expect much profit in the short term
Some important facts about Rural Coverage-
bull About 70 percent of Indias near 12 billion inhabitants live in rural
communities
bull rural teledensity was a mere 126 percent
bull Rural wire line connections totaled 1068 million at the end of December
down by 246 percent from 1095 million at the end of Septemberr 2009
bull The rural wireless subscriber base hit 9315 million at the end of the year up
238 percent from 9098 million at the end of September
bull Department of Telecom and BSNL have signed an agreement to provide
861000 connections to individual users and government institutions through
rural and remote exchanges by 2014
bull To promote rural rollout by the private operators the Indian government
imposed Universal Service Obligations (USO) on the countrys operators to
build a fund that can finance the rollout of services in areas where there isnt
an obvious or pressing business case to do so
bull The first phase of mobile infrastructure deployment under the USO fund
scheme commissioned six different service providers to deploy 7871 towers
bull However by the end of October 2009 only 1934 towers had been installed
20
bull The second phase complete with a tender for an additional 11049 sites has
yet to be started
bull The phased rollouts associated with the USO scheme require an additional
40875 mobile towers to be erected
bull Add this to the number of towers required for the five new 2G networks
additional coverage and capacity for existing operators and the introduction
of 3G networks and there is a huge demand for new cell sites right across the
country
6 Future of Mobile Industry
Demand Among Poor Farmers Keeps an Industry Growing as Other Sectors of the
Economy Are Jolted Rural customers have been hungry for mobile phones for a
long time so demand will remain unaffected by the global jitters said SP Shukla
chief executive officer of the mobile business at Reliance Communications India Ltd
Indias second-largest cellular company by number of subscribers
Even amid the global economic slowdown one Indian industry continues to boom
selling cellphones to the rural poor
Economists have slashed Indian economic growth forecasts for this year and the
stock market is in the doldrums But cellphone companies are signing millions of new
subscribers a month making India the fastest growing mobile-phone market in the
world There is no sign of a slowdown yet figures to be released later this month are
expected to show that new subscriptions in January reached a record 11 million
The demand for cellphones is coming mainly from rural consumers who typically
earn less than $1000 a year These buyers havent been affected by plunging stock
and real-estate prices or tighter bank lending since they typically dont own land and
dont borrow A large majority of them dont have access to regular landline phone
networks -- there are only about 40 million landline subscribers in India -- so once
cellular coverage comes to their towns or villages they scramble to get their first
phones
In the village of Karanehalli a cluster of simple homes around an intersection of two
dirt roads about 40 miles from Indias high-tech capital of Bangalore Farmer KT
Srinivasa doesnt have a toilet for his home or a tractor for his field But when a red
and white cellular tower sprouted in his village he splurged on a cellphone
While the way his family threshes rice -- crushing it with a massive stone roller --
hasnt changed for generations his phone has changed the way he farms He uses it
to decide when to plant and harvest by calling other farmers to get the best prices
21
for his rice coconuts and jasmine by calling wholesalers and to save hours of time
waiting on the road for deliveries and pickups that rarely come on time
Life is much better with the cellphone he said from his rice paddy in the shadow of
the new tower I bring it with me to the fields and anyone can reach me here
Mr Srinivasa like close to half the 800 people in his village uses Idea Cellular Ltd
as it was the first to bring them service He paid the equivalent of about $60 for his
Nokia phone and spends about $6 each month for service Like most rural users
Mr Srinivasa uses his phone to make voice calls -- he doesnt know how to text
message or to download emails On average rural Indians use their phones around
85 hours a month up 10 over the past year
The story is the same across rural India home to more than 60 of Indias
population of 12 billion China Indonesia and Brazil also continue to show solid
growth in cellphone sales
The continued expansion of the cellphone industry in India stands in sharp contrast
to most other industries here Textile and software exporters are struggling Indias
brand new malls are sparsely populated and the sales of cars trucks tractors and
motorcycles have declined in recent months
But the cellphone industry recorded more than 10 million new subscribers in
December up from eight million a year earlier The industrys overall subscriber base
grew 48 in 2008 to 347 million customers
Rural customers have been hungry for mobile phones for a long time so demand
will remain unaffected
22
7 References
httpenwikipediaorgwikiCommunications_in_India
httpwwwicmrindiaorgcasestudiescatalogueBusiness20StrategyBSTR174htm
wwwvitalanalyticsin
httpwwwfonearenacommobile_phone_pricelisthtml
wwwmobile-prices-indiacom
httpwwwmobile-prices-indiacomNokia_Mobile_Phonesphp
httpwebebscohostcom
httpwwwindia-cellularcomMobile-Priceshtm
httpproquestumicompqdwebindex=8ampdid=1635821441ampSrchMode=1ampsid=3ampF
mt=3ampVInst=PRODampVType=PQDampRQT=309ampVName=PQDampTS=1264756239ampclien
tId=135690
13
Example In the year 2003 LG and Samsung along with Reliance came up with
Rs 500- mobile scheme where both handsets along with connections were
available for Rs 500- This was something which revolutionized the mobile
phone and telecom industry
3 Perceived value Pricing
In this case the pricing is done based on the customer‟s perception about the
company and its product Perceived value is made up of several elements such
as buyer‟s image of product performance the channel deliverables warranty
quality and even softer attributes such as supplier‟s reputation
Example A good example for this kind of pricing is Apple iPhones They are offered
in price range of Rs 31000- to Rs 42500-
Their price is set based on image of brand apple amp customer affinity towards it
Comparable mobiles phones from other manufacturers like Sony Ericson Nokia are
offered at relatively cheaper price For example comparable N series mobiles from
Nokia are offered at prices below Rs 30000- (Except for Nokia- N9 amp Nokia-8800
Carbon) Also SONYERICSSON ndash Satio is offered for Rs 31000- amp all other Sony
brands are available for prices below it
Apple can set higher prices since it feels that its customers will be ready to pay for it
based on its perceived value
14
Apple-iPhone-3G-S-32GB Price | Rate Rs 42500-
4 Value Pricing This is pricing strategy in which a company wins loyal customers
by charging a fairly low price for a high quality offering
Example Nokia E 63 Mobile
This mobile is priced at Rs 11260- This mobile offers a large number of high end
applications like Web-Browsing Email Data Network GPRS GPS amp Navigation
and lots of other facilities apart from serving the basic mobile functions At the same
time it has a sleek body amp robust structure
A image of this mobile has been shown below
15
5 Product form pricing Different versions of the same product are priced
differently
Examples Nokia-5000 is priced at Rs 4300- Whereas Nokia-7210C-Supernova is
priced at Rs 4800- offers almost the same features The reason for difference in
pricing is due to the sleek structure of Nokia-7210C
16
6 Promotional Pricing
1 Special Event Pricing In this case special prices are offered during special
occasions like festivals to increase the sales Example Last Diwali (September 2009) Samsung offered discounts on
Samsung Omnia mobile phone Their market price at that time was Rs
33990- whereas their discounted price for Diwali was Rs Rs 31990-
2 Low-Interest financing
Company can offer low interest financing to customer This will reduce the
burden of initial cost to the customer
Example In 2009 Nokia piloted a scheme in two Indian states where it sold
handsets on a weekly instalment of 100 rupees ($2) over 25 weeks period
3 Psychological Discounting
This is done to make the customer believe that product is priced cheaply or
some cases just break the price barrier that customer has in his mind like
price at price Rs 999- which is priced just below Rs 1000-
17
Example
MOTOYUVA - W156 prices at Rs 1099-
Samsung Guru- Rs 2999-
5 Current Trend in Mobile Industry
-- With saturation in the urban market growth in Indian mobile market will be driven
by an increased focus on the rural market aggressive promotions and handset
bundle offers
-- As of March 2007 mobile subscribers in rural India accounted just 20 of the
Indian mobile subscriber base However it is forecasted to grow at a CAGR of more
than 47 during 2007 to 2010
-- In order to remain competitive the mobile industry could see several mergers and
acquisitions roll out obligation and substantiate equity holding in more than one
telecom company
-- The major growth in mobile phone subscribers will be seen in C Circle and B
Circle in short-term
-- Enormous opportunities are emerging for the low cost handset manufacturers
along with low tariffs infrastructure development for mobile communication
-- Rural India will account for around 35-38 of the total mobile handset sales by
2010
18
The industrys spectacular growth in India is attracting the attention of several
international brands Glenn Smith reports
SECTOR INSIGHT
The growth of Indias mobile sector has not gone unnoticed Last year Virgin Mobile
agreed a deal to enter the market and Japans DoCoMo bought into mobile operator
Tata to stake its claim in the fast-expanding industry
India offers astounding growth statistics In October 2008 according to the Telecom
Regulatory Authority of India (Trai) 104 million Indians signed up for a phone
service pushing the national total to 3639 million a penetration of 315 per cent
Only 10 years earlier India had a mere 880000 phones most of them landlinesfor
one billion people Today fixed-line phones account for only 105 per cent - 382
million subscribers and this absolute number is slowly declining Wireless operators
meanwhile are surging ahead Many first-time phone buyers are opting for mobile
and will drive the total subscriber base to 500 million by 2010according toTrai
The expansion has been fuelled by recent economic prosperity but the accelerant is
an ever-increasing affordability of handsets and services Mobile phone service costs
have plummeted In March 1999 the effective charge was more than 1532 rupees
(US$031) per minute which fell by half in 2000 again in 2001 and repeatedly
dropped until today - at less than a rupee it is believed to be the cheapest rate in the
worldThe sectors expansion is not expected to be hit by the economic slowdown
Market growth is moving away from the cities and going into the villages and rural
areas says Shankari Panchapakesan executive director of mobile services The
Nielsen Company South Asia The macroeconomy wont impact this because rural
people are using phones in ways that make a difference in their life how they work
how they educate their children and how they access information
Fishermen for example use phones to find outlets for their catch Women earn a
living with phone exchanges Carpenters carve their numbers on village walls For
handsets the undisputed leader is Nokia The Finnish telephone giant has been in
India since 1994 and has invested in three RampD labs making facilities and
distribution partnerships
Naresh Priyadarshihead of Synovate Business Consulting says Nokia has 90000
distributors in India giving it a 90 per cent retail footprint There are also 30000plus
stores that sell Nokia exclusively Nokia has concept stores in at least seven major
cities
Together Indias retail outlets sold 132 million handsets worth 700 billion rupees in
2008 according to Synovate Nokias share of value was 59 per cent followed by
19
Sony Ericsson with a distant eight per cent Samsung with seven per cent and
Motorola with six per cent Smartphones account for 24 percent of sales according
to Synovate with mid-priced feature phones taking 28 per cent and the remainder -
48 per cent - being ultra-low-cost phones Handset makers see ultra-low-cost
phones as the road ahead despite the razorthin profit margins Already sales of
cheap handsets are depressing average prices Euromonitor estimates that unit
prices fell 50 per cent between 2004 and 2007 to an average of 2808 rupees
To put handsets within reach of Indias rural poor phone makers have had to rethink
product design The Nokia 1100 included a torch alarm clock and a radio Nokias
entry-level phones are now priced at 1500 rupees Spice Mobile halved that with its
Peoples Phone priced at 599 rupees including lifetime prepaid activation
To bond with rural users Nokia is launching a subscription-based service called Life
tools with information on agriculture and education Such phone services will serve
as the first online experience for rural Indians
Among affluent urban users value-added-services (VAS) for feature phones are
seen as the way forward Synovate reports VAS at 50 million rupees in 2008 and
fore- casts 70 per cent annual growth to push that to 165 million rupees by 2010 It is
this fast-growing rapidly diversifying market that is attractive to overseas firms
though they should not expect much profit in the short term
Some important facts about Rural Coverage-
bull About 70 percent of Indias near 12 billion inhabitants live in rural
communities
bull rural teledensity was a mere 126 percent
bull Rural wire line connections totaled 1068 million at the end of December
down by 246 percent from 1095 million at the end of Septemberr 2009
bull The rural wireless subscriber base hit 9315 million at the end of the year up
238 percent from 9098 million at the end of September
bull Department of Telecom and BSNL have signed an agreement to provide
861000 connections to individual users and government institutions through
rural and remote exchanges by 2014
bull To promote rural rollout by the private operators the Indian government
imposed Universal Service Obligations (USO) on the countrys operators to
build a fund that can finance the rollout of services in areas where there isnt
an obvious or pressing business case to do so
bull The first phase of mobile infrastructure deployment under the USO fund
scheme commissioned six different service providers to deploy 7871 towers
bull However by the end of October 2009 only 1934 towers had been installed
20
bull The second phase complete with a tender for an additional 11049 sites has
yet to be started
bull The phased rollouts associated with the USO scheme require an additional
40875 mobile towers to be erected
bull Add this to the number of towers required for the five new 2G networks
additional coverage and capacity for existing operators and the introduction
of 3G networks and there is a huge demand for new cell sites right across the
country
6 Future of Mobile Industry
Demand Among Poor Farmers Keeps an Industry Growing as Other Sectors of the
Economy Are Jolted Rural customers have been hungry for mobile phones for a
long time so demand will remain unaffected by the global jitters said SP Shukla
chief executive officer of the mobile business at Reliance Communications India Ltd
Indias second-largest cellular company by number of subscribers
Even amid the global economic slowdown one Indian industry continues to boom
selling cellphones to the rural poor
Economists have slashed Indian economic growth forecasts for this year and the
stock market is in the doldrums But cellphone companies are signing millions of new
subscribers a month making India the fastest growing mobile-phone market in the
world There is no sign of a slowdown yet figures to be released later this month are
expected to show that new subscriptions in January reached a record 11 million
The demand for cellphones is coming mainly from rural consumers who typically
earn less than $1000 a year These buyers havent been affected by plunging stock
and real-estate prices or tighter bank lending since they typically dont own land and
dont borrow A large majority of them dont have access to regular landline phone
networks -- there are only about 40 million landline subscribers in India -- so once
cellular coverage comes to their towns or villages they scramble to get their first
phones
In the village of Karanehalli a cluster of simple homes around an intersection of two
dirt roads about 40 miles from Indias high-tech capital of Bangalore Farmer KT
Srinivasa doesnt have a toilet for his home or a tractor for his field But when a red
and white cellular tower sprouted in his village he splurged on a cellphone
While the way his family threshes rice -- crushing it with a massive stone roller --
hasnt changed for generations his phone has changed the way he farms He uses it
to decide when to plant and harvest by calling other farmers to get the best prices
21
for his rice coconuts and jasmine by calling wholesalers and to save hours of time
waiting on the road for deliveries and pickups that rarely come on time
Life is much better with the cellphone he said from his rice paddy in the shadow of
the new tower I bring it with me to the fields and anyone can reach me here
Mr Srinivasa like close to half the 800 people in his village uses Idea Cellular Ltd
as it was the first to bring them service He paid the equivalent of about $60 for his
Nokia phone and spends about $6 each month for service Like most rural users
Mr Srinivasa uses his phone to make voice calls -- he doesnt know how to text
message or to download emails On average rural Indians use their phones around
85 hours a month up 10 over the past year
The story is the same across rural India home to more than 60 of Indias
population of 12 billion China Indonesia and Brazil also continue to show solid
growth in cellphone sales
The continued expansion of the cellphone industry in India stands in sharp contrast
to most other industries here Textile and software exporters are struggling Indias
brand new malls are sparsely populated and the sales of cars trucks tractors and
motorcycles have declined in recent months
But the cellphone industry recorded more than 10 million new subscribers in
December up from eight million a year earlier The industrys overall subscriber base
grew 48 in 2008 to 347 million customers
Rural customers have been hungry for mobile phones for a long time so demand
will remain unaffected
22
7 References
httpenwikipediaorgwikiCommunications_in_India
httpwwwicmrindiaorgcasestudiescatalogueBusiness20StrategyBSTR174htm
wwwvitalanalyticsin
httpwwwfonearenacommobile_phone_pricelisthtml
wwwmobile-prices-indiacom
httpwwwmobile-prices-indiacomNokia_Mobile_Phonesphp
httpwebebscohostcom
httpwwwindia-cellularcomMobile-Priceshtm
httpproquestumicompqdwebindex=8ampdid=1635821441ampSrchMode=1ampsid=3ampF
mt=3ampVInst=PRODampVType=PQDampRQT=309ampVName=PQDampTS=1264756239ampclien
tId=135690
14
Apple-iPhone-3G-S-32GB Price | Rate Rs 42500-
4 Value Pricing This is pricing strategy in which a company wins loyal customers
by charging a fairly low price for a high quality offering
Example Nokia E 63 Mobile
This mobile is priced at Rs 11260- This mobile offers a large number of high end
applications like Web-Browsing Email Data Network GPRS GPS amp Navigation
and lots of other facilities apart from serving the basic mobile functions At the same
time it has a sleek body amp robust structure
A image of this mobile has been shown below
15
5 Product form pricing Different versions of the same product are priced
differently
Examples Nokia-5000 is priced at Rs 4300- Whereas Nokia-7210C-Supernova is
priced at Rs 4800- offers almost the same features The reason for difference in
pricing is due to the sleek structure of Nokia-7210C
16
6 Promotional Pricing
1 Special Event Pricing In this case special prices are offered during special
occasions like festivals to increase the sales Example Last Diwali (September 2009) Samsung offered discounts on
Samsung Omnia mobile phone Their market price at that time was Rs
33990- whereas their discounted price for Diwali was Rs Rs 31990-
2 Low-Interest financing
Company can offer low interest financing to customer This will reduce the
burden of initial cost to the customer
Example In 2009 Nokia piloted a scheme in two Indian states where it sold
handsets on a weekly instalment of 100 rupees ($2) over 25 weeks period
3 Psychological Discounting
This is done to make the customer believe that product is priced cheaply or
some cases just break the price barrier that customer has in his mind like
price at price Rs 999- which is priced just below Rs 1000-
17
Example
MOTOYUVA - W156 prices at Rs 1099-
Samsung Guru- Rs 2999-
5 Current Trend in Mobile Industry
-- With saturation in the urban market growth in Indian mobile market will be driven
by an increased focus on the rural market aggressive promotions and handset
bundle offers
-- As of March 2007 mobile subscribers in rural India accounted just 20 of the
Indian mobile subscriber base However it is forecasted to grow at a CAGR of more
than 47 during 2007 to 2010
-- In order to remain competitive the mobile industry could see several mergers and
acquisitions roll out obligation and substantiate equity holding in more than one
telecom company
-- The major growth in mobile phone subscribers will be seen in C Circle and B
Circle in short-term
-- Enormous opportunities are emerging for the low cost handset manufacturers
along with low tariffs infrastructure development for mobile communication
-- Rural India will account for around 35-38 of the total mobile handset sales by
2010
18
The industrys spectacular growth in India is attracting the attention of several
international brands Glenn Smith reports
SECTOR INSIGHT
The growth of Indias mobile sector has not gone unnoticed Last year Virgin Mobile
agreed a deal to enter the market and Japans DoCoMo bought into mobile operator
Tata to stake its claim in the fast-expanding industry
India offers astounding growth statistics In October 2008 according to the Telecom
Regulatory Authority of India (Trai) 104 million Indians signed up for a phone
service pushing the national total to 3639 million a penetration of 315 per cent
Only 10 years earlier India had a mere 880000 phones most of them landlinesfor
one billion people Today fixed-line phones account for only 105 per cent - 382
million subscribers and this absolute number is slowly declining Wireless operators
meanwhile are surging ahead Many first-time phone buyers are opting for mobile
and will drive the total subscriber base to 500 million by 2010according toTrai
The expansion has been fuelled by recent economic prosperity but the accelerant is
an ever-increasing affordability of handsets and services Mobile phone service costs
have plummeted In March 1999 the effective charge was more than 1532 rupees
(US$031) per minute which fell by half in 2000 again in 2001 and repeatedly
dropped until today - at less than a rupee it is believed to be the cheapest rate in the
worldThe sectors expansion is not expected to be hit by the economic slowdown
Market growth is moving away from the cities and going into the villages and rural
areas says Shankari Panchapakesan executive director of mobile services The
Nielsen Company South Asia The macroeconomy wont impact this because rural
people are using phones in ways that make a difference in their life how they work
how they educate their children and how they access information
Fishermen for example use phones to find outlets for their catch Women earn a
living with phone exchanges Carpenters carve their numbers on village walls For
handsets the undisputed leader is Nokia The Finnish telephone giant has been in
India since 1994 and has invested in three RampD labs making facilities and
distribution partnerships
Naresh Priyadarshihead of Synovate Business Consulting says Nokia has 90000
distributors in India giving it a 90 per cent retail footprint There are also 30000plus
stores that sell Nokia exclusively Nokia has concept stores in at least seven major
cities
Together Indias retail outlets sold 132 million handsets worth 700 billion rupees in
2008 according to Synovate Nokias share of value was 59 per cent followed by
19
Sony Ericsson with a distant eight per cent Samsung with seven per cent and
Motorola with six per cent Smartphones account for 24 percent of sales according
to Synovate with mid-priced feature phones taking 28 per cent and the remainder -
48 per cent - being ultra-low-cost phones Handset makers see ultra-low-cost
phones as the road ahead despite the razorthin profit margins Already sales of
cheap handsets are depressing average prices Euromonitor estimates that unit
prices fell 50 per cent between 2004 and 2007 to an average of 2808 rupees
To put handsets within reach of Indias rural poor phone makers have had to rethink
product design The Nokia 1100 included a torch alarm clock and a radio Nokias
entry-level phones are now priced at 1500 rupees Spice Mobile halved that with its
Peoples Phone priced at 599 rupees including lifetime prepaid activation
To bond with rural users Nokia is launching a subscription-based service called Life
tools with information on agriculture and education Such phone services will serve
as the first online experience for rural Indians
Among affluent urban users value-added-services (VAS) for feature phones are
seen as the way forward Synovate reports VAS at 50 million rupees in 2008 and
fore- casts 70 per cent annual growth to push that to 165 million rupees by 2010 It is
this fast-growing rapidly diversifying market that is attractive to overseas firms
though they should not expect much profit in the short term
Some important facts about Rural Coverage-
bull About 70 percent of Indias near 12 billion inhabitants live in rural
communities
bull rural teledensity was a mere 126 percent
bull Rural wire line connections totaled 1068 million at the end of December
down by 246 percent from 1095 million at the end of Septemberr 2009
bull The rural wireless subscriber base hit 9315 million at the end of the year up
238 percent from 9098 million at the end of September
bull Department of Telecom and BSNL have signed an agreement to provide
861000 connections to individual users and government institutions through
rural and remote exchanges by 2014
bull To promote rural rollout by the private operators the Indian government
imposed Universal Service Obligations (USO) on the countrys operators to
build a fund that can finance the rollout of services in areas where there isnt
an obvious or pressing business case to do so
bull The first phase of mobile infrastructure deployment under the USO fund
scheme commissioned six different service providers to deploy 7871 towers
bull However by the end of October 2009 only 1934 towers had been installed
20
bull The second phase complete with a tender for an additional 11049 sites has
yet to be started
bull The phased rollouts associated with the USO scheme require an additional
40875 mobile towers to be erected
bull Add this to the number of towers required for the five new 2G networks
additional coverage and capacity for existing operators and the introduction
of 3G networks and there is a huge demand for new cell sites right across the
country
6 Future of Mobile Industry
Demand Among Poor Farmers Keeps an Industry Growing as Other Sectors of the
Economy Are Jolted Rural customers have been hungry for mobile phones for a
long time so demand will remain unaffected by the global jitters said SP Shukla
chief executive officer of the mobile business at Reliance Communications India Ltd
Indias second-largest cellular company by number of subscribers
Even amid the global economic slowdown one Indian industry continues to boom
selling cellphones to the rural poor
Economists have slashed Indian economic growth forecasts for this year and the
stock market is in the doldrums But cellphone companies are signing millions of new
subscribers a month making India the fastest growing mobile-phone market in the
world There is no sign of a slowdown yet figures to be released later this month are
expected to show that new subscriptions in January reached a record 11 million
The demand for cellphones is coming mainly from rural consumers who typically
earn less than $1000 a year These buyers havent been affected by plunging stock
and real-estate prices or tighter bank lending since they typically dont own land and
dont borrow A large majority of them dont have access to regular landline phone
networks -- there are only about 40 million landline subscribers in India -- so once
cellular coverage comes to their towns or villages they scramble to get their first
phones
In the village of Karanehalli a cluster of simple homes around an intersection of two
dirt roads about 40 miles from Indias high-tech capital of Bangalore Farmer KT
Srinivasa doesnt have a toilet for his home or a tractor for his field But when a red
and white cellular tower sprouted in his village he splurged on a cellphone
While the way his family threshes rice -- crushing it with a massive stone roller --
hasnt changed for generations his phone has changed the way he farms He uses it
to decide when to plant and harvest by calling other farmers to get the best prices
21
for his rice coconuts and jasmine by calling wholesalers and to save hours of time
waiting on the road for deliveries and pickups that rarely come on time
Life is much better with the cellphone he said from his rice paddy in the shadow of
the new tower I bring it with me to the fields and anyone can reach me here
Mr Srinivasa like close to half the 800 people in his village uses Idea Cellular Ltd
as it was the first to bring them service He paid the equivalent of about $60 for his
Nokia phone and spends about $6 each month for service Like most rural users
Mr Srinivasa uses his phone to make voice calls -- he doesnt know how to text
message or to download emails On average rural Indians use their phones around
85 hours a month up 10 over the past year
The story is the same across rural India home to more than 60 of Indias
population of 12 billion China Indonesia and Brazil also continue to show solid
growth in cellphone sales
The continued expansion of the cellphone industry in India stands in sharp contrast
to most other industries here Textile and software exporters are struggling Indias
brand new malls are sparsely populated and the sales of cars trucks tractors and
motorcycles have declined in recent months
But the cellphone industry recorded more than 10 million new subscribers in
December up from eight million a year earlier The industrys overall subscriber base
grew 48 in 2008 to 347 million customers
Rural customers have been hungry for mobile phones for a long time so demand
will remain unaffected
22
7 References
httpenwikipediaorgwikiCommunications_in_India
httpwwwicmrindiaorgcasestudiescatalogueBusiness20StrategyBSTR174htm
wwwvitalanalyticsin
httpwwwfonearenacommobile_phone_pricelisthtml
wwwmobile-prices-indiacom
httpwwwmobile-prices-indiacomNokia_Mobile_Phonesphp
httpwebebscohostcom
httpwwwindia-cellularcomMobile-Priceshtm
httpproquestumicompqdwebindex=8ampdid=1635821441ampSrchMode=1ampsid=3ampF
mt=3ampVInst=PRODampVType=PQDampRQT=309ampVName=PQDampTS=1264756239ampclien
tId=135690
15
5 Product form pricing Different versions of the same product are priced
differently
Examples Nokia-5000 is priced at Rs 4300- Whereas Nokia-7210C-Supernova is
priced at Rs 4800- offers almost the same features The reason for difference in
pricing is due to the sleek structure of Nokia-7210C
16
6 Promotional Pricing
1 Special Event Pricing In this case special prices are offered during special
occasions like festivals to increase the sales Example Last Diwali (September 2009) Samsung offered discounts on
Samsung Omnia mobile phone Their market price at that time was Rs
33990- whereas their discounted price for Diwali was Rs Rs 31990-
2 Low-Interest financing
Company can offer low interest financing to customer This will reduce the
burden of initial cost to the customer
Example In 2009 Nokia piloted a scheme in two Indian states where it sold
handsets on a weekly instalment of 100 rupees ($2) over 25 weeks period
3 Psychological Discounting
This is done to make the customer believe that product is priced cheaply or
some cases just break the price barrier that customer has in his mind like
price at price Rs 999- which is priced just below Rs 1000-
17
Example
MOTOYUVA - W156 prices at Rs 1099-
Samsung Guru- Rs 2999-
5 Current Trend in Mobile Industry
-- With saturation in the urban market growth in Indian mobile market will be driven
by an increased focus on the rural market aggressive promotions and handset
bundle offers
-- As of March 2007 mobile subscribers in rural India accounted just 20 of the
Indian mobile subscriber base However it is forecasted to grow at a CAGR of more
than 47 during 2007 to 2010
-- In order to remain competitive the mobile industry could see several mergers and
acquisitions roll out obligation and substantiate equity holding in more than one
telecom company
-- The major growth in mobile phone subscribers will be seen in C Circle and B
Circle in short-term
-- Enormous opportunities are emerging for the low cost handset manufacturers
along with low tariffs infrastructure development for mobile communication
-- Rural India will account for around 35-38 of the total mobile handset sales by
2010
18
The industrys spectacular growth in India is attracting the attention of several
international brands Glenn Smith reports
SECTOR INSIGHT
The growth of Indias mobile sector has not gone unnoticed Last year Virgin Mobile
agreed a deal to enter the market and Japans DoCoMo bought into mobile operator
Tata to stake its claim in the fast-expanding industry
India offers astounding growth statistics In October 2008 according to the Telecom
Regulatory Authority of India (Trai) 104 million Indians signed up for a phone
service pushing the national total to 3639 million a penetration of 315 per cent
Only 10 years earlier India had a mere 880000 phones most of them landlinesfor
one billion people Today fixed-line phones account for only 105 per cent - 382
million subscribers and this absolute number is slowly declining Wireless operators
meanwhile are surging ahead Many first-time phone buyers are opting for mobile
and will drive the total subscriber base to 500 million by 2010according toTrai
The expansion has been fuelled by recent economic prosperity but the accelerant is
an ever-increasing affordability of handsets and services Mobile phone service costs
have plummeted In March 1999 the effective charge was more than 1532 rupees
(US$031) per minute which fell by half in 2000 again in 2001 and repeatedly
dropped until today - at less than a rupee it is believed to be the cheapest rate in the
worldThe sectors expansion is not expected to be hit by the economic slowdown
Market growth is moving away from the cities and going into the villages and rural
areas says Shankari Panchapakesan executive director of mobile services The
Nielsen Company South Asia The macroeconomy wont impact this because rural
people are using phones in ways that make a difference in their life how they work
how they educate their children and how they access information
Fishermen for example use phones to find outlets for their catch Women earn a
living with phone exchanges Carpenters carve their numbers on village walls For
handsets the undisputed leader is Nokia The Finnish telephone giant has been in
India since 1994 and has invested in three RampD labs making facilities and
distribution partnerships
Naresh Priyadarshihead of Synovate Business Consulting says Nokia has 90000
distributors in India giving it a 90 per cent retail footprint There are also 30000plus
stores that sell Nokia exclusively Nokia has concept stores in at least seven major
cities
Together Indias retail outlets sold 132 million handsets worth 700 billion rupees in
2008 according to Synovate Nokias share of value was 59 per cent followed by
19
Sony Ericsson with a distant eight per cent Samsung with seven per cent and
Motorola with six per cent Smartphones account for 24 percent of sales according
to Synovate with mid-priced feature phones taking 28 per cent and the remainder -
48 per cent - being ultra-low-cost phones Handset makers see ultra-low-cost
phones as the road ahead despite the razorthin profit margins Already sales of
cheap handsets are depressing average prices Euromonitor estimates that unit
prices fell 50 per cent between 2004 and 2007 to an average of 2808 rupees
To put handsets within reach of Indias rural poor phone makers have had to rethink
product design The Nokia 1100 included a torch alarm clock and a radio Nokias
entry-level phones are now priced at 1500 rupees Spice Mobile halved that with its
Peoples Phone priced at 599 rupees including lifetime prepaid activation
To bond with rural users Nokia is launching a subscription-based service called Life
tools with information on agriculture and education Such phone services will serve
as the first online experience for rural Indians
Among affluent urban users value-added-services (VAS) for feature phones are
seen as the way forward Synovate reports VAS at 50 million rupees in 2008 and
fore- casts 70 per cent annual growth to push that to 165 million rupees by 2010 It is
this fast-growing rapidly diversifying market that is attractive to overseas firms
though they should not expect much profit in the short term
Some important facts about Rural Coverage-
bull About 70 percent of Indias near 12 billion inhabitants live in rural
communities
bull rural teledensity was a mere 126 percent
bull Rural wire line connections totaled 1068 million at the end of December
down by 246 percent from 1095 million at the end of Septemberr 2009
bull The rural wireless subscriber base hit 9315 million at the end of the year up
238 percent from 9098 million at the end of September
bull Department of Telecom and BSNL have signed an agreement to provide
861000 connections to individual users and government institutions through
rural and remote exchanges by 2014
bull To promote rural rollout by the private operators the Indian government
imposed Universal Service Obligations (USO) on the countrys operators to
build a fund that can finance the rollout of services in areas where there isnt
an obvious or pressing business case to do so
bull The first phase of mobile infrastructure deployment under the USO fund
scheme commissioned six different service providers to deploy 7871 towers
bull However by the end of October 2009 only 1934 towers had been installed
20
bull The second phase complete with a tender for an additional 11049 sites has
yet to be started
bull The phased rollouts associated with the USO scheme require an additional
40875 mobile towers to be erected
bull Add this to the number of towers required for the five new 2G networks
additional coverage and capacity for existing operators and the introduction
of 3G networks and there is a huge demand for new cell sites right across the
country
6 Future of Mobile Industry
Demand Among Poor Farmers Keeps an Industry Growing as Other Sectors of the
Economy Are Jolted Rural customers have been hungry for mobile phones for a
long time so demand will remain unaffected by the global jitters said SP Shukla
chief executive officer of the mobile business at Reliance Communications India Ltd
Indias second-largest cellular company by number of subscribers
Even amid the global economic slowdown one Indian industry continues to boom
selling cellphones to the rural poor
Economists have slashed Indian economic growth forecasts for this year and the
stock market is in the doldrums But cellphone companies are signing millions of new
subscribers a month making India the fastest growing mobile-phone market in the
world There is no sign of a slowdown yet figures to be released later this month are
expected to show that new subscriptions in January reached a record 11 million
The demand for cellphones is coming mainly from rural consumers who typically
earn less than $1000 a year These buyers havent been affected by plunging stock
and real-estate prices or tighter bank lending since they typically dont own land and
dont borrow A large majority of them dont have access to regular landline phone
networks -- there are only about 40 million landline subscribers in India -- so once
cellular coverage comes to their towns or villages they scramble to get their first
phones
In the village of Karanehalli a cluster of simple homes around an intersection of two
dirt roads about 40 miles from Indias high-tech capital of Bangalore Farmer KT
Srinivasa doesnt have a toilet for his home or a tractor for his field But when a red
and white cellular tower sprouted in his village he splurged on a cellphone
While the way his family threshes rice -- crushing it with a massive stone roller --
hasnt changed for generations his phone has changed the way he farms He uses it
to decide when to plant and harvest by calling other farmers to get the best prices
21
for his rice coconuts and jasmine by calling wholesalers and to save hours of time
waiting on the road for deliveries and pickups that rarely come on time
Life is much better with the cellphone he said from his rice paddy in the shadow of
the new tower I bring it with me to the fields and anyone can reach me here
Mr Srinivasa like close to half the 800 people in his village uses Idea Cellular Ltd
as it was the first to bring them service He paid the equivalent of about $60 for his
Nokia phone and spends about $6 each month for service Like most rural users
Mr Srinivasa uses his phone to make voice calls -- he doesnt know how to text
message or to download emails On average rural Indians use their phones around
85 hours a month up 10 over the past year
The story is the same across rural India home to more than 60 of Indias
population of 12 billion China Indonesia and Brazil also continue to show solid
growth in cellphone sales
The continued expansion of the cellphone industry in India stands in sharp contrast
to most other industries here Textile and software exporters are struggling Indias
brand new malls are sparsely populated and the sales of cars trucks tractors and
motorcycles have declined in recent months
But the cellphone industry recorded more than 10 million new subscribers in
December up from eight million a year earlier The industrys overall subscriber base
grew 48 in 2008 to 347 million customers
Rural customers have been hungry for mobile phones for a long time so demand
will remain unaffected
22
7 References
httpenwikipediaorgwikiCommunications_in_India
httpwwwicmrindiaorgcasestudiescatalogueBusiness20StrategyBSTR174htm
wwwvitalanalyticsin
httpwwwfonearenacommobile_phone_pricelisthtml
wwwmobile-prices-indiacom
httpwwwmobile-prices-indiacomNokia_Mobile_Phonesphp
httpwebebscohostcom
httpwwwindia-cellularcomMobile-Priceshtm
httpproquestumicompqdwebindex=8ampdid=1635821441ampSrchMode=1ampsid=3ampF
mt=3ampVInst=PRODampVType=PQDampRQT=309ampVName=PQDampTS=1264756239ampclien
tId=135690
16
6 Promotional Pricing
1 Special Event Pricing In this case special prices are offered during special
occasions like festivals to increase the sales Example Last Diwali (September 2009) Samsung offered discounts on
Samsung Omnia mobile phone Their market price at that time was Rs
33990- whereas their discounted price for Diwali was Rs Rs 31990-
2 Low-Interest financing
Company can offer low interest financing to customer This will reduce the
burden of initial cost to the customer
Example In 2009 Nokia piloted a scheme in two Indian states where it sold
handsets on a weekly instalment of 100 rupees ($2) over 25 weeks period
3 Psychological Discounting
This is done to make the customer believe that product is priced cheaply or
some cases just break the price barrier that customer has in his mind like
price at price Rs 999- which is priced just below Rs 1000-
17
Example
MOTOYUVA - W156 prices at Rs 1099-
Samsung Guru- Rs 2999-
5 Current Trend in Mobile Industry
-- With saturation in the urban market growth in Indian mobile market will be driven
by an increased focus on the rural market aggressive promotions and handset
bundle offers
-- As of March 2007 mobile subscribers in rural India accounted just 20 of the
Indian mobile subscriber base However it is forecasted to grow at a CAGR of more
than 47 during 2007 to 2010
-- In order to remain competitive the mobile industry could see several mergers and
acquisitions roll out obligation and substantiate equity holding in more than one
telecom company
-- The major growth in mobile phone subscribers will be seen in C Circle and B
Circle in short-term
-- Enormous opportunities are emerging for the low cost handset manufacturers
along with low tariffs infrastructure development for mobile communication
-- Rural India will account for around 35-38 of the total mobile handset sales by
2010
18
The industrys spectacular growth in India is attracting the attention of several
international brands Glenn Smith reports
SECTOR INSIGHT
The growth of Indias mobile sector has not gone unnoticed Last year Virgin Mobile
agreed a deal to enter the market and Japans DoCoMo bought into mobile operator
Tata to stake its claim in the fast-expanding industry
India offers astounding growth statistics In October 2008 according to the Telecom
Regulatory Authority of India (Trai) 104 million Indians signed up for a phone
service pushing the national total to 3639 million a penetration of 315 per cent
Only 10 years earlier India had a mere 880000 phones most of them landlinesfor
one billion people Today fixed-line phones account for only 105 per cent - 382
million subscribers and this absolute number is slowly declining Wireless operators
meanwhile are surging ahead Many first-time phone buyers are opting for mobile
and will drive the total subscriber base to 500 million by 2010according toTrai
The expansion has been fuelled by recent economic prosperity but the accelerant is
an ever-increasing affordability of handsets and services Mobile phone service costs
have plummeted In March 1999 the effective charge was more than 1532 rupees
(US$031) per minute which fell by half in 2000 again in 2001 and repeatedly
dropped until today - at less than a rupee it is believed to be the cheapest rate in the
worldThe sectors expansion is not expected to be hit by the economic slowdown
Market growth is moving away from the cities and going into the villages and rural
areas says Shankari Panchapakesan executive director of mobile services The
Nielsen Company South Asia The macroeconomy wont impact this because rural
people are using phones in ways that make a difference in their life how they work
how they educate their children and how they access information
Fishermen for example use phones to find outlets for their catch Women earn a
living with phone exchanges Carpenters carve their numbers on village walls For
handsets the undisputed leader is Nokia The Finnish telephone giant has been in
India since 1994 and has invested in three RampD labs making facilities and
distribution partnerships
Naresh Priyadarshihead of Synovate Business Consulting says Nokia has 90000
distributors in India giving it a 90 per cent retail footprint There are also 30000plus
stores that sell Nokia exclusively Nokia has concept stores in at least seven major
cities
Together Indias retail outlets sold 132 million handsets worth 700 billion rupees in
2008 according to Synovate Nokias share of value was 59 per cent followed by
19
Sony Ericsson with a distant eight per cent Samsung with seven per cent and
Motorola with six per cent Smartphones account for 24 percent of sales according
to Synovate with mid-priced feature phones taking 28 per cent and the remainder -
48 per cent - being ultra-low-cost phones Handset makers see ultra-low-cost
phones as the road ahead despite the razorthin profit margins Already sales of
cheap handsets are depressing average prices Euromonitor estimates that unit
prices fell 50 per cent between 2004 and 2007 to an average of 2808 rupees
To put handsets within reach of Indias rural poor phone makers have had to rethink
product design The Nokia 1100 included a torch alarm clock and a radio Nokias
entry-level phones are now priced at 1500 rupees Spice Mobile halved that with its
Peoples Phone priced at 599 rupees including lifetime prepaid activation
To bond with rural users Nokia is launching a subscription-based service called Life
tools with information on agriculture and education Such phone services will serve
as the first online experience for rural Indians
Among affluent urban users value-added-services (VAS) for feature phones are
seen as the way forward Synovate reports VAS at 50 million rupees in 2008 and
fore- casts 70 per cent annual growth to push that to 165 million rupees by 2010 It is
this fast-growing rapidly diversifying market that is attractive to overseas firms
though they should not expect much profit in the short term
Some important facts about Rural Coverage-
bull About 70 percent of Indias near 12 billion inhabitants live in rural
communities
bull rural teledensity was a mere 126 percent
bull Rural wire line connections totaled 1068 million at the end of December
down by 246 percent from 1095 million at the end of Septemberr 2009
bull The rural wireless subscriber base hit 9315 million at the end of the year up
238 percent from 9098 million at the end of September
bull Department of Telecom and BSNL have signed an agreement to provide
861000 connections to individual users and government institutions through
rural and remote exchanges by 2014
bull To promote rural rollout by the private operators the Indian government
imposed Universal Service Obligations (USO) on the countrys operators to
build a fund that can finance the rollout of services in areas where there isnt
an obvious or pressing business case to do so
bull The first phase of mobile infrastructure deployment under the USO fund
scheme commissioned six different service providers to deploy 7871 towers
bull However by the end of October 2009 only 1934 towers had been installed
20
bull The second phase complete with a tender for an additional 11049 sites has
yet to be started
bull The phased rollouts associated with the USO scheme require an additional
40875 mobile towers to be erected
bull Add this to the number of towers required for the five new 2G networks
additional coverage and capacity for existing operators and the introduction
of 3G networks and there is a huge demand for new cell sites right across the
country
6 Future of Mobile Industry
Demand Among Poor Farmers Keeps an Industry Growing as Other Sectors of the
Economy Are Jolted Rural customers have been hungry for mobile phones for a
long time so demand will remain unaffected by the global jitters said SP Shukla
chief executive officer of the mobile business at Reliance Communications India Ltd
Indias second-largest cellular company by number of subscribers
Even amid the global economic slowdown one Indian industry continues to boom
selling cellphones to the rural poor
Economists have slashed Indian economic growth forecasts for this year and the
stock market is in the doldrums But cellphone companies are signing millions of new
subscribers a month making India the fastest growing mobile-phone market in the
world There is no sign of a slowdown yet figures to be released later this month are
expected to show that new subscriptions in January reached a record 11 million
The demand for cellphones is coming mainly from rural consumers who typically
earn less than $1000 a year These buyers havent been affected by plunging stock
and real-estate prices or tighter bank lending since they typically dont own land and
dont borrow A large majority of them dont have access to regular landline phone
networks -- there are only about 40 million landline subscribers in India -- so once
cellular coverage comes to their towns or villages they scramble to get their first
phones
In the village of Karanehalli a cluster of simple homes around an intersection of two
dirt roads about 40 miles from Indias high-tech capital of Bangalore Farmer KT
Srinivasa doesnt have a toilet for his home or a tractor for his field But when a red
and white cellular tower sprouted in his village he splurged on a cellphone
While the way his family threshes rice -- crushing it with a massive stone roller --
hasnt changed for generations his phone has changed the way he farms He uses it
to decide when to plant and harvest by calling other farmers to get the best prices
21
for his rice coconuts and jasmine by calling wholesalers and to save hours of time
waiting on the road for deliveries and pickups that rarely come on time
Life is much better with the cellphone he said from his rice paddy in the shadow of
the new tower I bring it with me to the fields and anyone can reach me here
Mr Srinivasa like close to half the 800 people in his village uses Idea Cellular Ltd
as it was the first to bring them service He paid the equivalent of about $60 for his
Nokia phone and spends about $6 each month for service Like most rural users
Mr Srinivasa uses his phone to make voice calls -- he doesnt know how to text
message or to download emails On average rural Indians use their phones around
85 hours a month up 10 over the past year
The story is the same across rural India home to more than 60 of Indias
population of 12 billion China Indonesia and Brazil also continue to show solid
growth in cellphone sales
The continued expansion of the cellphone industry in India stands in sharp contrast
to most other industries here Textile and software exporters are struggling Indias
brand new malls are sparsely populated and the sales of cars trucks tractors and
motorcycles have declined in recent months
But the cellphone industry recorded more than 10 million new subscribers in
December up from eight million a year earlier The industrys overall subscriber base
grew 48 in 2008 to 347 million customers
Rural customers have been hungry for mobile phones for a long time so demand
will remain unaffected
22
7 References
httpenwikipediaorgwikiCommunications_in_India
httpwwwicmrindiaorgcasestudiescatalogueBusiness20StrategyBSTR174htm
wwwvitalanalyticsin
httpwwwfonearenacommobile_phone_pricelisthtml
wwwmobile-prices-indiacom
httpwwwmobile-prices-indiacomNokia_Mobile_Phonesphp
httpwebebscohostcom
httpwwwindia-cellularcomMobile-Priceshtm
httpproquestumicompqdwebindex=8ampdid=1635821441ampSrchMode=1ampsid=3ampF
mt=3ampVInst=PRODampVType=PQDampRQT=309ampVName=PQDampTS=1264756239ampclien
tId=135690
17
Example
MOTOYUVA - W156 prices at Rs 1099-
Samsung Guru- Rs 2999-
5 Current Trend in Mobile Industry
-- With saturation in the urban market growth in Indian mobile market will be driven
by an increased focus on the rural market aggressive promotions and handset
bundle offers
-- As of March 2007 mobile subscribers in rural India accounted just 20 of the
Indian mobile subscriber base However it is forecasted to grow at a CAGR of more
than 47 during 2007 to 2010
-- In order to remain competitive the mobile industry could see several mergers and
acquisitions roll out obligation and substantiate equity holding in more than one
telecom company
-- The major growth in mobile phone subscribers will be seen in C Circle and B
Circle in short-term
-- Enormous opportunities are emerging for the low cost handset manufacturers
along with low tariffs infrastructure development for mobile communication
-- Rural India will account for around 35-38 of the total mobile handset sales by
2010
18
The industrys spectacular growth in India is attracting the attention of several
international brands Glenn Smith reports
SECTOR INSIGHT
The growth of Indias mobile sector has not gone unnoticed Last year Virgin Mobile
agreed a deal to enter the market and Japans DoCoMo bought into mobile operator
Tata to stake its claim in the fast-expanding industry
India offers astounding growth statistics In October 2008 according to the Telecom
Regulatory Authority of India (Trai) 104 million Indians signed up for a phone
service pushing the national total to 3639 million a penetration of 315 per cent
Only 10 years earlier India had a mere 880000 phones most of them landlinesfor
one billion people Today fixed-line phones account for only 105 per cent - 382
million subscribers and this absolute number is slowly declining Wireless operators
meanwhile are surging ahead Many first-time phone buyers are opting for mobile
and will drive the total subscriber base to 500 million by 2010according toTrai
The expansion has been fuelled by recent economic prosperity but the accelerant is
an ever-increasing affordability of handsets and services Mobile phone service costs
have plummeted In March 1999 the effective charge was more than 1532 rupees
(US$031) per minute which fell by half in 2000 again in 2001 and repeatedly
dropped until today - at less than a rupee it is believed to be the cheapest rate in the
worldThe sectors expansion is not expected to be hit by the economic slowdown
Market growth is moving away from the cities and going into the villages and rural
areas says Shankari Panchapakesan executive director of mobile services The
Nielsen Company South Asia The macroeconomy wont impact this because rural
people are using phones in ways that make a difference in their life how they work
how they educate their children and how they access information
Fishermen for example use phones to find outlets for their catch Women earn a
living with phone exchanges Carpenters carve their numbers on village walls For
handsets the undisputed leader is Nokia The Finnish telephone giant has been in
India since 1994 and has invested in three RampD labs making facilities and
distribution partnerships
Naresh Priyadarshihead of Synovate Business Consulting says Nokia has 90000
distributors in India giving it a 90 per cent retail footprint There are also 30000plus
stores that sell Nokia exclusively Nokia has concept stores in at least seven major
cities
Together Indias retail outlets sold 132 million handsets worth 700 billion rupees in
2008 according to Synovate Nokias share of value was 59 per cent followed by
19
Sony Ericsson with a distant eight per cent Samsung with seven per cent and
Motorola with six per cent Smartphones account for 24 percent of sales according
to Synovate with mid-priced feature phones taking 28 per cent and the remainder -
48 per cent - being ultra-low-cost phones Handset makers see ultra-low-cost
phones as the road ahead despite the razorthin profit margins Already sales of
cheap handsets are depressing average prices Euromonitor estimates that unit
prices fell 50 per cent between 2004 and 2007 to an average of 2808 rupees
To put handsets within reach of Indias rural poor phone makers have had to rethink
product design The Nokia 1100 included a torch alarm clock and a radio Nokias
entry-level phones are now priced at 1500 rupees Spice Mobile halved that with its
Peoples Phone priced at 599 rupees including lifetime prepaid activation
To bond with rural users Nokia is launching a subscription-based service called Life
tools with information on agriculture and education Such phone services will serve
as the first online experience for rural Indians
Among affluent urban users value-added-services (VAS) for feature phones are
seen as the way forward Synovate reports VAS at 50 million rupees in 2008 and
fore- casts 70 per cent annual growth to push that to 165 million rupees by 2010 It is
this fast-growing rapidly diversifying market that is attractive to overseas firms
though they should not expect much profit in the short term
Some important facts about Rural Coverage-
bull About 70 percent of Indias near 12 billion inhabitants live in rural
communities
bull rural teledensity was a mere 126 percent
bull Rural wire line connections totaled 1068 million at the end of December
down by 246 percent from 1095 million at the end of Septemberr 2009
bull The rural wireless subscriber base hit 9315 million at the end of the year up
238 percent from 9098 million at the end of September
bull Department of Telecom and BSNL have signed an agreement to provide
861000 connections to individual users and government institutions through
rural and remote exchanges by 2014
bull To promote rural rollout by the private operators the Indian government
imposed Universal Service Obligations (USO) on the countrys operators to
build a fund that can finance the rollout of services in areas where there isnt
an obvious or pressing business case to do so
bull The first phase of mobile infrastructure deployment under the USO fund
scheme commissioned six different service providers to deploy 7871 towers
bull However by the end of October 2009 only 1934 towers had been installed
20
bull The second phase complete with a tender for an additional 11049 sites has
yet to be started
bull The phased rollouts associated with the USO scheme require an additional
40875 mobile towers to be erected
bull Add this to the number of towers required for the five new 2G networks
additional coverage and capacity for existing operators and the introduction
of 3G networks and there is a huge demand for new cell sites right across the
country
6 Future of Mobile Industry
Demand Among Poor Farmers Keeps an Industry Growing as Other Sectors of the
Economy Are Jolted Rural customers have been hungry for mobile phones for a
long time so demand will remain unaffected by the global jitters said SP Shukla
chief executive officer of the mobile business at Reliance Communications India Ltd
Indias second-largest cellular company by number of subscribers
Even amid the global economic slowdown one Indian industry continues to boom
selling cellphones to the rural poor
Economists have slashed Indian economic growth forecasts for this year and the
stock market is in the doldrums But cellphone companies are signing millions of new
subscribers a month making India the fastest growing mobile-phone market in the
world There is no sign of a slowdown yet figures to be released later this month are
expected to show that new subscriptions in January reached a record 11 million
The demand for cellphones is coming mainly from rural consumers who typically
earn less than $1000 a year These buyers havent been affected by plunging stock
and real-estate prices or tighter bank lending since they typically dont own land and
dont borrow A large majority of them dont have access to regular landline phone
networks -- there are only about 40 million landline subscribers in India -- so once
cellular coverage comes to their towns or villages they scramble to get their first
phones
In the village of Karanehalli a cluster of simple homes around an intersection of two
dirt roads about 40 miles from Indias high-tech capital of Bangalore Farmer KT
Srinivasa doesnt have a toilet for his home or a tractor for his field But when a red
and white cellular tower sprouted in his village he splurged on a cellphone
While the way his family threshes rice -- crushing it with a massive stone roller --
hasnt changed for generations his phone has changed the way he farms He uses it
to decide when to plant and harvest by calling other farmers to get the best prices
21
for his rice coconuts and jasmine by calling wholesalers and to save hours of time
waiting on the road for deliveries and pickups that rarely come on time
Life is much better with the cellphone he said from his rice paddy in the shadow of
the new tower I bring it with me to the fields and anyone can reach me here
Mr Srinivasa like close to half the 800 people in his village uses Idea Cellular Ltd
as it was the first to bring them service He paid the equivalent of about $60 for his
Nokia phone and spends about $6 each month for service Like most rural users
Mr Srinivasa uses his phone to make voice calls -- he doesnt know how to text
message or to download emails On average rural Indians use their phones around
85 hours a month up 10 over the past year
The story is the same across rural India home to more than 60 of Indias
population of 12 billion China Indonesia and Brazil also continue to show solid
growth in cellphone sales
The continued expansion of the cellphone industry in India stands in sharp contrast
to most other industries here Textile and software exporters are struggling Indias
brand new malls are sparsely populated and the sales of cars trucks tractors and
motorcycles have declined in recent months
But the cellphone industry recorded more than 10 million new subscribers in
December up from eight million a year earlier The industrys overall subscriber base
grew 48 in 2008 to 347 million customers
Rural customers have been hungry for mobile phones for a long time so demand
will remain unaffected
22
7 References
httpenwikipediaorgwikiCommunications_in_India
httpwwwicmrindiaorgcasestudiescatalogueBusiness20StrategyBSTR174htm
wwwvitalanalyticsin
httpwwwfonearenacommobile_phone_pricelisthtml
wwwmobile-prices-indiacom
httpwwwmobile-prices-indiacomNokia_Mobile_Phonesphp
httpwebebscohostcom
httpwwwindia-cellularcomMobile-Priceshtm
httpproquestumicompqdwebindex=8ampdid=1635821441ampSrchMode=1ampsid=3ampF
mt=3ampVInst=PRODampVType=PQDampRQT=309ampVName=PQDampTS=1264756239ampclien
tId=135690
18
The industrys spectacular growth in India is attracting the attention of several
international brands Glenn Smith reports
SECTOR INSIGHT
The growth of Indias mobile sector has not gone unnoticed Last year Virgin Mobile
agreed a deal to enter the market and Japans DoCoMo bought into mobile operator
Tata to stake its claim in the fast-expanding industry
India offers astounding growth statistics In October 2008 according to the Telecom
Regulatory Authority of India (Trai) 104 million Indians signed up for a phone
service pushing the national total to 3639 million a penetration of 315 per cent
Only 10 years earlier India had a mere 880000 phones most of them landlinesfor
one billion people Today fixed-line phones account for only 105 per cent - 382
million subscribers and this absolute number is slowly declining Wireless operators
meanwhile are surging ahead Many first-time phone buyers are opting for mobile
and will drive the total subscriber base to 500 million by 2010according toTrai
The expansion has been fuelled by recent economic prosperity but the accelerant is
an ever-increasing affordability of handsets and services Mobile phone service costs
have plummeted In March 1999 the effective charge was more than 1532 rupees
(US$031) per minute which fell by half in 2000 again in 2001 and repeatedly
dropped until today - at less than a rupee it is believed to be the cheapest rate in the
worldThe sectors expansion is not expected to be hit by the economic slowdown
Market growth is moving away from the cities and going into the villages and rural
areas says Shankari Panchapakesan executive director of mobile services The
Nielsen Company South Asia The macroeconomy wont impact this because rural
people are using phones in ways that make a difference in their life how they work
how they educate their children and how they access information
Fishermen for example use phones to find outlets for their catch Women earn a
living with phone exchanges Carpenters carve their numbers on village walls For
handsets the undisputed leader is Nokia The Finnish telephone giant has been in
India since 1994 and has invested in three RampD labs making facilities and
distribution partnerships
Naresh Priyadarshihead of Synovate Business Consulting says Nokia has 90000
distributors in India giving it a 90 per cent retail footprint There are also 30000plus
stores that sell Nokia exclusively Nokia has concept stores in at least seven major
cities
Together Indias retail outlets sold 132 million handsets worth 700 billion rupees in
2008 according to Synovate Nokias share of value was 59 per cent followed by
19
Sony Ericsson with a distant eight per cent Samsung with seven per cent and
Motorola with six per cent Smartphones account for 24 percent of sales according
to Synovate with mid-priced feature phones taking 28 per cent and the remainder -
48 per cent - being ultra-low-cost phones Handset makers see ultra-low-cost
phones as the road ahead despite the razorthin profit margins Already sales of
cheap handsets are depressing average prices Euromonitor estimates that unit
prices fell 50 per cent between 2004 and 2007 to an average of 2808 rupees
To put handsets within reach of Indias rural poor phone makers have had to rethink
product design The Nokia 1100 included a torch alarm clock and a radio Nokias
entry-level phones are now priced at 1500 rupees Spice Mobile halved that with its
Peoples Phone priced at 599 rupees including lifetime prepaid activation
To bond with rural users Nokia is launching a subscription-based service called Life
tools with information on agriculture and education Such phone services will serve
as the first online experience for rural Indians
Among affluent urban users value-added-services (VAS) for feature phones are
seen as the way forward Synovate reports VAS at 50 million rupees in 2008 and
fore- casts 70 per cent annual growth to push that to 165 million rupees by 2010 It is
this fast-growing rapidly diversifying market that is attractive to overseas firms
though they should not expect much profit in the short term
Some important facts about Rural Coverage-
bull About 70 percent of Indias near 12 billion inhabitants live in rural
communities
bull rural teledensity was a mere 126 percent
bull Rural wire line connections totaled 1068 million at the end of December
down by 246 percent from 1095 million at the end of Septemberr 2009
bull The rural wireless subscriber base hit 9315 million at the end of the year up
238 percent from 9098 million at the end of September
bull Department of Telecom and BSNL have signed an agreement to provide
861000 connections to individual users and government institutions through
rural and remote exchanges by 2014
bull To promote rural rollout by the private operators the Indian government
imposed Universal Service Obligations (USO) on the countrys operators to
build a fund that can finance the rollout of services in areas where there isnt
an obvious or pressing business case to do so
bull The first phase of mobile infrastructure deployment under the USO fund
scheme commissioned six different service providers to deploy 7871 towers
bull However by the end of October 2009 only 1934 towers had been installed
20
bull The second phase complete with a tender for an additional 11049 sites has
yet to be started
bull The phased rollouts associated with the USO scheme require an additional
40875 mobile towers to be erected
bull Add this to the number of towers required for the five new 2G networks
additional coverage and capacity for existing operators and the introduction
of 3G networks and there is a huge demand for new cell sites right across the
country
6 Future of Mobile Industry
Demand Among Poor Farmers Keeps an Industry Growing as Other Sectors of the
Economy Are Jolted Rural customers have been hungry for mobile phones for a
long time so demand will remain unaffected by the global jitters said SP Shukla
chief executive officer of the mobile business at Reliance Communications India Ltd
Indias second-largest cellular company by number of subscribers
Even amid the global economic slowdown one Indian industry continues to boom
selling cellphones to the rural poor
Economists have slashed Indian economic growth forecasts for this year and the
stock market is in the doldrums But cellphone companies are signing millions of new
subscribers a month making India the fastest growing mobile-phone market in the
world There is no sign of a slowdown yet figures to be released later this month are
expected to show that new subscriptions in January reached a record 11 million
The demand for cellphones is coming mainly from rural consumers who typically
earn less than $1000 a year These buyers havent been affected by plunging stock
and real-estate prices or tighter bank lending since they typically dont own land and
dont borrow A large majority of them dont have access to regular landline phone
networks -- there are only about 40 million landline subscribers in India -- so once
cellular coverage comes to their towns or villages they scramble to get their first
phones
In the village of Karanehalli a cluster of simple homes around an intersection of two
dirt roads about 40 miles from Indias high-tech capital of Bangalore Farmer KT
Srinivasa doesnt have a toilet for his home or a tractor for his field But when a red
and white cellular tower sprouted in his village he splurged on a cellphone
While the way his family threshes rice -- crushing it with a massive stone roller --
hasnt changed for generations his phone has changed the way he farms He uses it
to decide when to plant and harvest by calling other farmers to get the best prices
21
for his rice coconuts and jasmine by calling wholesalers and to save hours of time
waiting on the road for deliveries and pickups that rarely come on time
Life is much better with the cellphone he said from his rice paddy in the shadow of
the new tower I bring it with me to the fields and anyone can reach me here
Mr Srinivasa like close to half the 800 people in his village uses Idea Cellular Ltd
as it was the first to bring them service He paid the equivalent of about $60 for his
Nokia phone and spends about $6 each month for service Like most rural users
Mr Srinivasa uses his phone to make voice calls -- he doesnt know how to text
message or to download emails On average rural Indians use their phones around
85 hours a month up 10 over the past year
The story is the same across rural India home to more than 60 of Indias
population of 12 billion China Indonesia and Brazil also continue to show solid
growth in cellphone sales
The continued expansion of the cellphone industry in India stands in sharp contrast
to most other industries here Textile and software exporters are struggling Indias
brand new malls are sparsely populated and the sales of cars trucks tractors and
motorcycles have declined in recent months
But the cellphone industry recorded more than 10 million new subscribers in
December up from eight million a year earlier The industrys overall subscriber base
grew 48 in 2008 to 347 million customers
Rural customers have been hungry for mobile phones for a long time so demand
will remain unaffected
22
7 References
httpenwikipediaorgwikiCommunications_in_India
httpwwwicmrindiaorgcasestudiescatalogueBusiness20StrategyBSTR174htm
wwwvitalanalyticsin
httpwwwfonearenacommobile_phone_pricelisthtml
wwwmobile-prices-indiacom
httpwwwmobile-prices-indiacomNokia_Mobile_Phonesphp
httpwebebscohostcom
httpwwwindia-cellularcomMobile-Priceshtm
httpproquestumicompqdwebindex=8ampdid=1635821441ampSrchMode=1ampsid=3ampF
mt=3ampVInst=PRODampVType=PQDampRQT=309ampVName=PQDampTS=1264756239ampclien
tId=135690
19
Sony Ericsson with a distant eight per cent Samsung with seven per cent and
Motorola with six per cent Smartphones account for 24 percent of sales according
to Synovate with mid-priced feature phones taking 28 per cent and the remainder -
48 per cent - being ultra-low-cost phones Handset makers see ultra-low-cost
phones as the road ahead despite the razorthin profit margins Already sales of
cheap handsets are depressing average prices Euromonitor estimates that unit
prices fell 50 per cent between 2004 and 2007 to an average of 2808 rupees
To put handsets within reach of Indias rural poor phone makers have had to rethink
product design The Nokia 1100 included a torch alarm clock and a radio Nokias
entry-level phones are now priced at 1500 rupees Spice Mobile halved that with its
Peoples Phone priced at 599 rupees including lifetime prepaid activation
To bond with rural users Nokia is launching a subscription-based service called Life
tools with information on agriculture and education Such phone services will serve
as the first online experience for rural Indians
Among affluent urban users value-added-services (VAS) for feature phones are
seen as the way forward Synovate reports VAS at 50 million rupees in 2008 and
fore- casts 70 per cent annual growth to push that to 165 million rupees by 2010 It is
this fast-growing rapidly diversifying market that is attractive to overseas firms
though they should not expect much profit in the short term
Some important facts about Rural Coverage-
bull About 70 percent of Indias near 12 billion inhabitants live in rural
communities
bull rural teledensity was a mere 126 percent
bull Rural wire line connections totaled 1068 million at the end of December
down by 246 percent from 1095 million at the end of Septemberr 2009
bull The rural wireless subscriber base hit 9315 million at the end of the year up
238 percent from 9098 million at the end of September
bull Department of Telecom and BSNL have signed an agreement to provide
861000 connections to individual users and government institutions through
rural and remote exchanges by 2014
bull To promote rural rollout by the private operators the Indian government
imposed Universal Service Obligations (USO) on the countrys operators to
build a fund that can finance the rollout of services in areas where there isnt
an obvious or pressing business case to do so
bull The first phase of mobile infrastructure deployment under the USO fund
scheme commissioned six different service providers to deploy 7871 towers
bull However by the end of October 2009 only 1934 towers had been installed
20
bull The second phase complete with a tender for an additional 11049 sites has
yet to be started
bull The phased rollouts associated with the USO scheme require an additional
40875 mobile towers to be erected
bull Add this to the number of towers required for the five new 2G networks
additional coverage and capacity for existing operators and the introduction
of 3G networks and there is a huge demand for new cell sites right across the
country
6 Future of Mobile Industry
Demand Among Poor Farmers Keeps an Industry Growing as Other Sectors of the
Economy Are Jolted Rural customers have been hungry for mobile phones for a
long time so demand will remain unaffected by the global jitters said SP Shukla
chief executive officer of the mobile business at Reliance Communications India Ltd
Indias second-largest cellular company by number of subscribers
Even amid the global economic slowdown one Indian industry continues to boom
selling cellphones to the rural poor
Economists have slashed Indian economic growth forecasts for this year and the
stock market is in the doldrums But cellphone companies are signing millions of new
subscribers a month making India the fastest growing mobile-phone market in the
world There is no sign of a slowdown yet figures to be released later this month are
expected to show that new subscriptions in January reached a record 11 million
The demand for cellphones is coming mainly from rural consumers who typically
earn less than $1000 a year These buyers havent been affected by plunging stock
and real-estate prices or tighter bank lending since they typically dont own land and
dont borrow A large majority of them dont have access to regular landline phone
networks -- there are only about 40 million landline subscribers in India -- so once
cellular coverage comes to their towns or villages they scramble to get their first
phones
In the village of Karanehalli a cluster of simple homes around an intersection of two
dirt roads about 40 miles from Indias high-tech capital of Bangalore Farmer KT
Srinivasa doesnt have a toilet for his home or a tractor for his field But when a red
and white cellular tower sprouted in his village he splurged on a cellphone
While the way his family threshes rice -- crushing it with a massive stone roller --
hasnt changed for generations his phone has changed the way he farms He uses it
to decide when to plant and harvest by calling other farmers to get the best prices
21
for his rice coconuts and jasmine by calling wholesalers and to save hours of time
waiting on the road for deliveries and pickups that rarely come on time
Life is much better with the cellphone he said from his rice paddy in the shadow of
the new tower I bring it with me to the fields and anyone can reach me here
Mr Srinivasa like close to half the 800 people in his village uses Idea Cellular Ltd
as it was the first to bring them service He paid the equivalent of about $60 for his
Nokia phone and spends about $6 each month for service Like most rural users
Mr Srinivasa uses his phone to make voice calls -- he doesnt know how to text
message or to download emails On average rural Indians use their phones around
85 hours a month up 10 over the past year
The story is the same across rural India home to more than 60 of Indias
population of 12 billion China Indonesia and Brazil also continue to show solid
growth in cellphone sales
The continued expansion of the cellphone industry in India stands in sharp contrast
to most other industries here Textile and software exporters are struggling Indias
brand new malls are sparsely populated and the sales of cars trucks tractors and
motorcycles have declined in recent months
But the cellphone industry recorded more than 10 million new subscribers in
December up from eight million a year earlier The industrys overall subscriber base
grew 48 in 2008 to 347 million customers
Rural customers have been hungry for mobile phones for a long time so demand
will remain unaffected
22
7 References
httpenwikipediaorgwikiCommunications_in_India
httpwwwicmrindiaorgcasestudiescatalogueBusiness20StrategyBSTR174htm
wwwvitalanalyticsin
httpwwwfonearenacommobile_phone_pricelisthtml
wwwmobile-prices-indiacom
httpwwwmobile-prices-indiacomNokia_Mobile_Phonesphp
httpwebebscohostcom
httpwwwindia-cellularcomMobile-Priceshtm
httpproquestumicompqdwebindex=8ampdid=1635821441ampSrchMode=1ampsid=3ampF
mt=3ampVInst=PRODampVType=PQDampRQT=309ampVName=PQDampTS=1264756239ampclien
tId=135690
20
bull The second phase complete with a tender for an additional 11049 sites has
yet to be started
bull The phased rollouts associated with the USO scheme require an additional
40875 mobile towers to be erected
bull Add this to the number of towers required for the five new 2G networks
additional coverage and capacity for existing operators and the introduction
of 3G networks and there is a huge demand for new cell sites right across the
country
6 Future of Mobile Industry
Demand Among Poor Farmers Keeps an Industry Growing as Other Sectors of the
Economy Are Jolted Rural customers have been hungry for mobile phones for a
long time so demand will remain unaffected by the global jitters said SP Shukla
chief executive officer of the mobile business at Reliance Communications India Ltd
Indias second-largest cellular company by number of subscribers
Even amid the global economic slowdown one Indian industry continues to boom
selling cellphones to the rural poor
Economists have slashed Indian economic growth forecasts for this year and the
stock market is in the doldrums But cellphone companies are signing millions of new
subscribers a month making India the fastest growing mobile-phone market in the
world There is no sign of a slowdown yet figures to be released later this month are
expected to show that new subscriptions in January reached a record 11 million
The demand for cellphones is coming mainly from rural consumers who typically
earn less than $1000 a year These buyers havent been affected by plunging stock
and real-estate prices or tighter bank lending since they typically dont own land and
dont borrow A large majority of them dont have access to regular landline phone
networks -- there are only about 40 million landline subscribers in India -- so once
cellular coverage comes to their towns or villages they scramble to get their first
phones
In the village of Karanehalli a cluster of simple homes around an intersection of two
dirt roads about 40 miles from Indias high-tech capital of Bangalore Farmer KT
Srinivasa doesnt have a toilet for his home or a tractor for his field But when a red
and white cellular tower sprouted in his village he splurged on a cellphone
While the way his family threshes rice -- crushing it with a massive stone roller --
hasnt changed for generations his phone has changed the way he farms He uses it
to decide when to plant and harvest by calling other farmers to get the best prices
21
for his rice coconuts and jasmine by calling wholesalers and to save hours of time
waiting on the road for deliveries and pickups that rarely come on time
Life is much better with the cellphone he said from his rice paddy in the shadow of
the new tower I bring it with me to the fields and anyone can reach me here
Mr Srinivasa like close to half the 800 people in his village uses Idea Cellular Ltd
as it was the first to bring them service He paid the equivalent of about $60 for his
Nokia phone and spends about $6 each month for service Like most rural users
Mr Srinivasa uses his phone to make voice calls -- he doesnt know how to text
message or to download emails On average rural Indians use their phones around
85 hours a month up 10 over the past year
The story is the same across rural India home to more than 60 of Indias
population of 12 billion China Indonesia and Brazil also continue to show solid
growth in cellphone sales
The continued expansion of the cellphone industry in India stands in sharp contrast
to most other industries here Textile and software exporters are struggling Indias
brand new malls are sparsely populated and the sales of cars trucks tractors and
motorcycles have declined in recent months
But the cellphone industry recorded more than 10 million new subscribers in
December up from eight million a year earlier The industrys overall subscriber base
grew 48 in 2008 to 347 million customers
Rural customers have been hungry for mobile phones for a long time so demand
will remain unaffected
22
7 References
httpenwikipediaorgwikiCommunications_in_India
httpwwwicmrindiaorgcasestudiescatalogueBusiness20StrategyBSTR174htm
wwwvitalanalyticsin
httpwwwfonearenacommobile_phone_pricelisthtml
wwwmobile-prices-indiacom
httpwwwmobile-prices-indiacomNokia_Mobile_Phonesphp
httpwebebscohostcom
httpwwwindia-cellularcomMobile-Priceshtm
httpproquestumicompqdwebindex=8ampdid=1635821441ampSrchMode=1ampsid=3ampF
mt=3ampVInst=PRODampVType=PQDampRQT=309ampVName=PQDampTS=1264756239ampclien
tId=135690
21
for his rice coconuts and jasmine by calling wholesalers and to save hours of time
waiting on the road for deliveries and pickups that rarely come on time
Life is much better with the cellphone he said from his rice paddy in the shadow of
the new tower I bring it with me to the fields and anyone can reach me here
Mr Srinivasa like close to half the 800 people in his village uses Idea Cellular Ltd
as it was the first to bring them service He paid the equivalent of about $60 for his
Nokia phone and spends about $6 each month for service Like most rural users
Mr Srinivasa uses his phone to make voice calls -- he doesnt know how to text
message or to download emails On average rural Indians use their phones around
85 hours a month up 10 over the past year
The story is the same across rural India home to more than 60 of Indias
population of 12 billion China Indonesia and Brazil also continue to show solid
growth in cellphone sales
The continued expansion of the cellphone industry in India stands in sharp contrast
to most other industries here Textile and software exporters are struggling Indias
brand new malls are sparsely populated and the sales of cars trucks tractors and
motorcycles have declined in recent months
But the cellphone industry recorded more than 10 million new subscribers in
December up from eight million a year earlier The industrys overall subscriber base
grew 48 in 2008 to 347 million customers
Rural customers have been hungry for mobile phones for a long time so demand
will remain unaffected
22
7 References
httpenwikipediaorgwikiCommunications_in_India
httpwwwicmrindiaorgcasestudiescatalogueBusiness20StrategyBSTR174htm
wwwvitalanalyticsin
httpwwwfonearenacommobile_phone_pricelisthtml
wwwmobile-prices-indiacom
httpwwwmobile-prices-indiacomNokia_Mobile_Phonesphp
httpwebebscohostcom
httpwwwindia-cellularcomMobile-Priceshtm
httpproquestumicompqdwebindex=8ampdid=1635821441ampSrchMode=1ampsid=3ampF
mt=3ampVInst=PRODampVType=PQDampRQT=309ampVName=PQDampTS=1264756239ampclien
tId=135690
22
7 References
httpenwikipediaorgwikiCommunications_in_India
httpwwwicmrindiaorgcasestudiescatalogueBusiness20StrategyBSTR174htm
wwwvitalanalyticsin
httpwwwfonearenacommobile_phone_pricelisthtml
wwwmobile-prices-indiacom
httpwwwmobile-prices-indiacomNokia_Mobile_Phonesphp
httpwebebscohostcom
httpwwwindia-cellularcomMobile-Priceshtm
httpproquestumicompqdwebindex=8ampdid=1635821441ampSrchMode=1ampsid=3ampF
mt=3ampVInst=PRODampVType=PQDampRQT=309ampVName=PQDampTS=1264756239ampclien
tId=135690