A Project on Telecom Industry by Gopal Kumar Agarwal

DISSERTATION PROJECT REPORT ON ADVERTISING IN INDIAN TELECOM INDUSTRY & ITS IMPACT ON CUSTOMERS

Towards the Partial fulfillment of POST GRADUATE DIPLOMA IN MANAGEMENT Submitted By :GOPAL KUMAR AGARWAL AICTE NO. 08/OR/KBS/PGDM/FT/029 Under the Guidance of MR. SUSANTA KUMAR MISHRA KOUSTUV BUSINESS SCHOOL

KOUSTUV BUSINESS SCHOOL PATIA, BHUBANESWAR KOUSTUV BUSINESS SCHOOL

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KOUSTUV BUSINESS SCHOOL PATIA, BHUBANESWAR

DECLARATION I hereby declare that the project entitled “ A Project report on Advertising in Indian Telecom Industry & its impact on Customers has been prepared by me during my academic year 2008-2010 under the guidance of my faculty guide Mr. Susanta Kumar Mishra. I also declare that this project is the result of my effort and has not been submitted to any other University or Institution for the award of any degree, or personal favors whatsever. All the details and analysis provided in the report hold to the best of my knowledge.

Place : Bhubaneswar Date : May 2010

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GOPAL KUMAR AGARWAL

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CERTIFICATE This is to certify that Mr. GOPAL KUMAR AGARWAL, AICTE No. 08/OR/KBS/PGDM/FT/029, a student of Koustuv Business School, Bhubaneswar has successfully completed his interim report on “Advertising in Indian Telecom Industry and its Impact on Customers” under my guidance in partial fulfillment of PGDM program. This is an original work of his own and has not been carried out by anyone earlier.

Mr. Susanta Kumar Mishra (Faculty Guide ) Koustuv Business School

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ACKNOWLEDGEMENT In the course of this project I got an insight into the telecom industry, came to know a lot about that how the Advertising by Telecom Industry is putting impact on customers. First and foremost I am very proud to be a student of Koustuv Business School, Bhubaneswar and am most grateful for having been given the opportunity to do Research study. I avail this opportunity to convey my sincere thanks to Mr. K.N MISHRA, the H.O.D of Koustuv Business School. I am thankful to Mr. Susanta Kumar Mishra, my project guide for recommending me the necessary information for the report. His instilling support and enthusiasm, expert guidance and insight have lent my project a unique touch. I also express my sincere gratitude to Mr. K.N MISHRA, H.O.D of Koustuv Business School, for providing us an opportunity to interact with professional people in the real corporate world. I forward my gratitude for the compulsion of this most wonderful aspect of our MBA curriculum without which knowledge of management is incomplete and futile. My acknowledgement would be incomplete if I didn’t thank my team mates. During the research period we have developed a camaraderie which was very healthy and enjoyable. I am grateful for everyone’s support and help when needed. Without them this training would not have been the same. At last I am also thankful to my family member and friends who had given me their constructive advice, educative suggestions, encouragement and co-operation to prepare this report.

GOPAL KUMAR AGARWAL

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EXECUTIVE SUMMARY The main area of the study is to study the Advertising in Indian Telecom Industry and its Impact on Customers. The sources of data collection used in the study are both primary and secondary in nature. We are going to conduct a survey to know the impact of advertisements of telecom industry on customers which is part of primary data. The real aim of the project is to study the effectiveness and response towards advertisements provided by major players. In this project I have covered the Analysis of Telecom Industry of India. In this analysis I have shown history and present scenario of the Telecom industry in India. I have complemented this with the internal study of companies. I have shown history, growth, market share and advertising strategies adopted by Vodafone, Airtel, Reliance communication, BSNL and Idea cellular. The project is based on advertising so I have first explained about advertising, its importance, managing advertising decisions and types of advertising. I have analyzed the growth in ad volumes of telecom sector, share of telecom sector advertising, segment wise growth in telecom sector, share of key players in advertising, new brands advertised in telecom equipments and service and share of sales promotion in telecom sector. Primary data has been collected in which focus group study had been conducted to design the customer survey questionnaire with a sample size of 200 respondents. This survey has been conducted in BHUBANESWAR. Secondary data was collected through websites, newspapers, magazines and books.

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Table Of Contents Topics

Page No.

1. Introduction 1.1 Research Problem

8

1.2 Objectives of the Project

8

1.3 Limitations of the Project

8

1.4 Methodology

9

2. SWOT Analysis of Telecom Industry

12

3. Major Players in Telecom Industry

12

4. Advertising by Telecom Industry

14

5. Data Analysis & Interpretation

22

6. Findings

33

7. Suggestions

34

8. Annexure

34

8.1 Questionnaire 9. Bibliography

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INTRODUCTION RESEARCH PROBLEM OBJECTIVE OF THE PROJECT LIMITATIONS OF THE PROJECT METHODOLOGY

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RESEARCH PROBLEM Advertising of Telecom Industry in India and its impact on customers.

OBJECTIVES OF THE PROJECT To study the performance of Telecom Industry in India. To know the impact of advertisements of telecom industry on customers. To study the effectiveness and response towards advertisements provided by major players. To analyze the growth in ad volumes of telecom sector.

LIMITATIONS OF THE STUDY 1. 2. 3.

Respondents were reluctant to share their experience accurately. Unwillingness of respected personnel’s of Telecom Companies to provide relevant data for my studies. Time allotted for the project was not sufficient to go for detailed analysis of the research problem.

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METHODOLOGY RESEARCH DESIGN: The research design is Descriptive studies. Descriptive studies are well structured, they tend to be rigid and its approach cannot be changed every now and then. Descriptive studies are undertaken in many circumstances: When the researcher is interested in knowing the characteristics of certain groups such as age, profession. When the researcher is interested in knowing the proportion of people in given population who have behaved in a particular manner, making projection of certain things. The objective of this kind of study is to answer the why, who, what, when and how of the subject under consideration. I have taken descriptive because my research includes the knowing the behavior of customer towards advertisement. I have analyzed how people of various age groups respond to different advertising or their perception towards advertisement. Also my survey is related to companies like Vodafone, Airtel, Reliance communications, BSNL and Idea cellular.

Types of Questions:

OPEN ENDED: They give the respondents complete freedom to decide the form , length and detail of the answer. Open questions are preferred when the researchers is

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interested in knowing what is upper most in the mind of respondents.

DICHOTOMOUS: This type of questions have only two type of answer, yes or no. true or false etc.

MULTIPLE CHOICE QUESTIONS: In the case of multiple choice question the respondents is offered two or more choices. The researcher exhausts all the possible choices and the respondent has to indicate which one is applicable in this case. The research methodology that I undertook for the purpose of this study is enumerated below:

PRIMARY RESEARCH: This consisted questionnaire and interaction from various people. A focus group study will be conducted to design the customer survey questionnaire with a sample size of 200 respondents.

SECONDARY RESEARCH: Sources of secondary data were primarily the Internet, journals, newspaper, annual report, database available in the library, catalogues and presentations.

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TELECOM SUBSCRIBER BASE IN INDIA Indian telecommunication Industry is one of the fastest growing telecom market in the world. The mobile sector has grown from around 10 million subscribers in 2002 to reach 150 million by early 2007 registering an average growth of over 90%. The two major reasons that have fuelled this growth are low tariffs coupled with falling handset prices. Surprisingly, CDMA market has increased it market share up to 30% thanks to Reliance Communication. However, across the globe, CDMA has been losing out numbers to popular GSM technology, contrary to the scenario in India. The other reason that has tremendously helped the telecom Industry is the regulatory changes and reforms that have been pushed for last 10 years by successive Indian governments. According to Telecom Regulatory Authority of India (TRAI) the rate of market expansion would increase with further regulatory and structural reforms. Even though the fixed line market share has been dropping consistently, the overall (fixed and mobile) subscribers have risen to more than 200 million by first quarter of 2007. The telecom reforms have allowed the foreign telecommunication companies to enter Indian market which has still got huge potential. International telecom companies like Vodafone have made entry into Indian market in a big way. Currently the Indian Telecommunication market is valued at around $100 billion (Rupees 400,000 crore). Two telecom players dominate this market - Bharti Airtel with 27% market share and Reliance Communication with 20% along with other players like BSNL (Bharat Sanchar Nigam Limited). The Ministry of Communications and Information Technology (MCIT) is has very aggressive plans to increase the pace of growth, targeting 500 million telephone subscribers by the end of 2010.

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SWOT ANALYSIS OF INDIAN TELECOM INDUSTRY To summarize the SWOT analysis we can draw the following framework for telecom industry:

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MAJOR PLAYERS IN TELECOM INDUSTRY

TOP FIVE COMPANIES:

The Top five companies, on the basis of ‘Market Share’ as on 31st January, 2010 are: Bharti Airtel Ltd. Reliance Communications Ltd. Vodafone Essar Ltd. BSNL Idea Cellular + Spice

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ADVERTISING BY TELECOM INDUSTRY ON TV Key Findings:  2007 Telecom sector advertising on TV grew by 61 per cent during 2007 compared to 2006. Telecommunication Services segment had more than 60 per cent share of overall Telecom sector advertising on TV. Telecommunication Services has seen a rise of 108 per cent in TV advertising, whereas Telecommunication Equipments saw a rise of 17 per cent during 2007 over 2006. Bharti Airtel Ltd was the number one advertiser under Telecommunication Services and Nokia Corporation led Telecommunication Equipments advertising on TV during 2007.

 2008 TV advertising of Telecom sector saw a rise of 99 per cent during January August 2008 compared to January - August 2007. 'Telecommunication Services' garnered a high share of Telecom sector advertising on TV during January - August 2008. TV advertising of 'Telecommunication Equipments' saw a growth of 45 per cent and that of 'Telecommunication Services' grew by 127 per cent during January - August 2008.

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'Nokia Corporation' leads in advertising of 'Telecommunication Equipments' and ' Vodafone Essar Ltd' was number one advertisers for 'Telecommunication Services' on TV during January - August 2008. 'R Madhavan' had the maximum ad volumes of Celebrity Endorsement of Telecom sector on TV during January - August 2008.

 2009 Telecom sector has seen a decline of 16 per cent in its TV ad volumes during Jan - Mar '09 compared to Jan - Mar '08. High share of 'telecommunication services' advertising on TV during JanMar '09. 'Sony Ericsson (India)' was the top advertisers under 'telecommunication equipments' and 'Bharti Airtel Ltd' leads in 'telecommunication services' advertising on TV during Q1 '09. 'Sony Ericsson W595' and 'Sony Ericsson F305' were top two new brands advertised under 'telecommunication equipments' on TV during Q1 '09. Virgin vGlide Phones (slider) topped the chart of new 'telecommunication services' advertised on TV during Q1 '09.

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GROWTH IN ADS VOLUMES OF TELECOM SECTOR  2009

16 per cent drop in telecom sector advertising on TV during first quarter of 2009 compared to same period in 2008

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SHARE OF SEGMENTS OF TELECOM SECTOR  2009

With 87 per cent share 'telecommunication services' leads in advertising of 'telecom sector' on TV, followed by 'telecommunication equipments' and 'corporate brand image' with 11 per cent and two per cent share respectively during Q1 '09.

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GROWTH IN AD VOL.S OF SEGMENTS OF TELECOM SECTOR  2009

'Telecommunication services' have seen a decline of 7 per cent in its TV ad volumes during Jan - Mar '09 compared to Jan - Mar '08. TV advertising of 'telecommunication equipments' recorded a drop of 56 per cent during Q1 '09 compared to Q1 '08.

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TOP FIVE ADVERTISERS UNDER THE TELECOM SEGMENTS  2009

'Bharti Airtel Ltd', 'Vodafone Essar Ltd' and 'Bharat Sanchar Nigam Ltd' the top three key players of 'telecommunication services' together accounted for 65 per cent share on TV during Q1 '09. During Q1 '09, top three advertiser together contributed for 83 per cent of overall 'telecommunication equipment' TV advertising share viz. 'Sony Ericsson (India)', 'Nokia Corporation' and 'LG Electronics India Ltd'.

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NEW BRANDS ADVERTISED IN TELECOM EQUIPMENTS AND SERVICES  2009

Top 3 'telecom services' advertised on TV were 'Virgin vGlide Phones (slider)', 'Vodafone Blackberry Storm' and 'Apple Music Caller Tunes'. 'Sony Ericsson W595 ', 'Sony Ericsson F305' and 'Samsung Guru 1410' were the top three new 'telecommunication equipments' advertised on TV during Q1 '09. Top 10 list of new brands of 'telecommunication equipments' advertised on TV, comprised of three brands of 'Sony Ericsson' and two were of 'HTC Corporation' during Q1 '09.

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TOP ADVERTISERS WITH CELEBRITY ENDORSEMENT AD VOLUMES  2009

Top three celebrities endorsing telecom products on TV during the first quarter of 2009 were 'Deepika Padukone', 'Saif Ali Khan' and 'Kareena Kapoor'

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DATA ANALYSIS AND INTERPRETATION The main area of the study is the Advertising in Telecom Industry in India and its Impact on Customers. For this purpose I conducted a survey of 200 people in BHUBANESWAR city.

GENDER

VALUE

PERCENTAGE

MALE

118

59%

FEMALE

82

41%

GENDER

FEMALE 41% MALE 59%

MALE FEMALE

Out of 200 respondents, 118 were male and 82 were female.

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Age:

(a) 15-25

(b) 26-35

(c) 36-45 (d) Above 45

AGE

VALUE

PERCENTAGE

15-25

64

32%

26-35

60

30%

36-45

56

28%

Above 45

20

10%

AGE 45 AND ABOVE 10% 26-35 30%

36-45 28%

45 AND ABOVE

36-45 15-25 32%

15-25

26-35

Out of 200 respondents, 64 were between the age of 15-25, 60 were between the age of 26-35, 56 were between the age of 36-45 and 20 were above 45.

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Education:

(a) Matriculate

(b) Intermediate

(C) Graduation

(d)

Postgraduate

EDUCATION

VALUE

PERCENTAGE

MATRICULATE

28

14%

INTERMEDIATE

40

20%

GRADUATE

72

36%

POSTGRADUATE

60

30%

EDUCATION

Postgraduate 30%

Matriculate 14% Intermediate 20%

Matriculate Intermediate

Graduate 36%

Graduate

Postgraduate

Out of 200 respondents 28 were matriculate, 40 were intermediate, 72 were graduate and 60 were postgraduate.

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Who is your current service provider? (a) Airtel

(b) Vodafone

(c)

Reliance

(d) BSNL

(e) Idea

(f) other

CURRENT SERVICE PROVIDER

VALUE

PERCENTAGE

AIRTEL

50

25%

VODAFONE

34

17%

RELIANCE

36

18%

BSNL

26

13%

IDEA

22

11%

OTHER

32

16%

CURRENT SERVICE PROVIDER

IDEA 11%

OTHER 16%

RELIANCE 18%

RELIANCE VODAFONE 17%

BSNL 13% AIRTEL 25%

VODAFONE

AIRTEL BSNL

IDEA OTHER

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Out of 200 respondents 50 were using Airtel, 34 were using Vodafone, 36 were using Reliance, 26 were using BSNL, 22 were using Idea and 32 were using others.

For how long you are using this mobile connection? (a) Less than 6 months.

(b) 6 to 12 months.

(c) Above 12 months.

TIME PERIOD

VALUE

PERCENTAGE

LESS THAN 6 MONTHS

22

11%

6 TO 12 MONTHS

56

28%

ABOVE 12 MONTHS

120

61%

TIME PERIOD OF CONNECTION LESS THEN 6 MONTHS 11%

MORE THAN 12 MONTHS 61%

6-12 MONTHS 28%

LESS THEN 6 MONTHS

6-12 MONTHS MORE THAN 12 MONTHS

Out of 200 respondents 22 were using the current connection for less than 6 months, 56 were using it from 6-12 months and 120 were using it from more than 1 year.

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What were the reasons for choosing this mobile connection? (a) Recommended by friends or relatives.

(b) Recommended by retailers.

(c) Brand image

(d) Advertisement

BUYING FORCE

VALUE

PERCENTAGE

FRIENDS / RELATIVES

76

38%

RETAILERS

24

12%

BRAND IMAGE

16

8%

ADVERTISEMENT

84

42%

BUYING FORCE

ADVERTISEMENT 42%

FRIENDS RELATIVE 38%

FRIENDS RELATIVE

RETAILERS RETAILERS 12%

BRAND IMAGE

ADVERTISEMENT

BRAND IMAGE 8%

Out of 200 respondents 76 were influenced by friends and relatives, 24 were influenced by retailers, 16 were influenced by brand image and 84 were influenced by advertisements.

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While purchasing a connection advertising plays any role?

(a) Yes

(b) No

ADVERTISING IN PURCHASE

VALUE

PERCENTAGE

YES

168

84%

NO

32

16%

ROLE OF ADVERTISING IN PURCHASE NO 16%

YES YES 84%

NO

Out of 200 respondents 168 agreed that advertisements play a role in making purchase decision and 32 did not agree on that. From where do you watch advertisements the most? (a) Television

(b) Radio

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(c) Newspaper

(d) Magazines (e) Other

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SOURCE OF ADVERTISEMENT

VALUE

PERCENTAGE

TELEVISION

110

55%

RADIO

6

3%

NEWSPAPER

50

25%

MAGAZINE

14

7%

OTHER

20

10%

SOURCE OF ADVERTISEMENT MAGAZINES 7%

OTHERS 10% TELEVISION

NEWSPAPERS 25%

TELEVISION 55%

RADIO NEWSPAPERS

MAGAZINES OTHERS

RADIO 3%

Out of 200 respondents 110 replied Television, 6 replied Radio, 50 replied Newspapers, 14 replied Magazines and 20 replied Others. Which telecommunication company has good advertising? (a) Airtel

(b) Vodafone

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(c)

Reliance

(d) BSNL

(e) Idea

(f) other

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GOOD ADVERTISING

VALUE

PERCENTAGE

AIRTEL

50

25%

VODAFONE

64

32%

RELIANCE

30

15%

BSNL

16

8%

IDEA

40

20%

OTHER

0

0%

OTHER 0%

IDEA 20%

GOOD ADVERTISING BSNL RELIANCE 8% 15%

RELIANCE

VODAFONE

AIRTEL 25%

VODAFONE 32%

AIRTEL

IDEA BSNL OTHER

Out of 200 respondents 50 liked the advertisements of Airtel, 64 liked advertisements of Vodafone, 30 liked the advertisements of Reliance, 16 liked the advertisements of BSNL and 40 liked the advertisements of IDEA.

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Do you think that advertisement made by company informs you about their products? (a) Yes

(b) No

(c) Undecided

INFORMATION IN ADS

VALUE

PERCENTAGE

YES

140

70%

NO

48

24%

UNDECIDED

12

6%

UNDECIDED 6%

INFORMATION IN ADVERTISEMENTS

NO 24% YES YES 70%

NO UNDECIDED

Out of 200 respondents 140 were in favor of that advertisements provides information about the products, 48 were not in favor of that and 12 were not able to decide.

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Based on advertisements made by company, would you like to go for more connections for you or your family in future? (a) Yes.

(b) No.

(c) Undecided.

ADS FOR REFERENCE

VALUE

PERCENTAGE

YES

148

74%

NO

44

22%

UNDECIDED

8

4%

ADVERTISEMENTS AS FUTURE REFERENCE UNDECIDED 4%

NO 22% YES YES 74%

NO UNDECIDED

Out of 200 respondents 148 agreed that they would buy connection on the basis of advertisement made by companies, 44 did not agree and 8 were not able to decide.

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FINDINGS 74% of the people believes that advertisements play a role while making purchase decision for new connection. So the companies should handle the advertising properly and should try to deliver the information properly. In telecom industry the most important factor which affects the purchase decision of the customers is advertisement. Suggestions of friends and relatives also plays major role in this. So the companies should take care of the existing customers so that they can be recommended to others. 55% of the people likes to watch advertisements on television. And after television people rated newspapers. So the companies should focus more on television ads and newspaper ads. 32% of the people like Vodafone advertisements more than others. After that Airtel and Idea comes. So the other companies should try to make advertisements which can connect to the customers. 74% of the people believe that advertisements provide information about the products. So the companies should try to deliver all the information about the plans and offers through advertisements. Majority of the people wants to buy the connections for family and friends on the basis of advertisements. So advertisements should be given more focus and importance by the telecom companies.

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SUGGESTIONS Information may be communicated to the customers regularly for better feedback from customers. The Companies may focus more on Television ads & Newspapers ads to increase the effectiveness of the ads. The Advertisements can provide all the relevant information to the customers which are necessary for them. The Companies may focus on rural areas while designing advertisement campaign.

ANNEXURE QUESTIONNAIRE 1. Name _________________________________________

2. Gender:

3. Age:

(a) Male

(a) 15-25

4. Education:

(b) Female

(b) 26-35

(c) 36-45 (d) Above 45

(a) Matriculate

(b) Intermediate

(C) Graduation

(d)

Postgraduate

5. Who is your current service provider? (a) Airtel

(b) Vodafone

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(c)

Reliance

(d) BSNL

(e) Idea

(f) other

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6. For how long you are using this mobile connection? (a) Less than 6 months.

(b) 6 to 12 months.

(c) Above 12 months.

7. What were the reasons for choosing this mobile connection? (a) Recommended by friends or relatives. (b) Recommended by retailers. (c) Brand image (d) Advertisement

8. While purchasing a connection advertising plays any role?

(a) Yes

(b) No

9. From where do you watch advertisements the most? (a) Television

(b) Radio

(c) Newspaper

(d) Magazines (e) Other

10. Which telecommunication company has good advertising? (a) Airtel

(b) Vodafone

(c)

Reliance

(d) BSNL

(e) Idea

(f) other

11. Do you think that advertisement made by company informs you about their products? (a) Yes

(b) No

(c) Undecided

12. Based on advertisements made by company , would you like to go for more connections for you or your family in future? (a) Yes.

(b) No.

(c) Undecided.

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BIBLIOGRAPHY Faculty Guide: MR. SUSHANT KUMAR MISHRA Websites:  www.vodafone.in  www.airtel.in  www.rcom.co.in  www.bsnl.co.in  www.ideacellular.com  www.google.com

Newspapers:  Dainik Bhaskar  Rajasthan Patrika  The Times Of India

Books:  Foundations of advertising by S.A. Chunawala & K.C. Sethia  Advertising management by Rajeev Batra & John Myers  Advertising and promotion by George & Michal Belch

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