K.J.

SOMAIYA INSTITUTE OF
MANAGEMENT AND
RESEARCH

A REPORT
ON
VODAFONE ESSAR
LIMITED

Submitted to: Submitted by:

1
 Prof.Monica Khanna
Rachi Agrawal(roll no.102)

Sahil Arora(roll no.

103)

Harihara Prasath(roll
no. 109)

Piyush Kohli(roll
no.121)

R
ahul Ravikumar(roll no.142)

Anupriya Singh(roll
no.150)

ACKNOWLEDGEMENT

We are extremely thankful to Dr. Monica Khanna, faculty at

K.J Somaiya Institute Of Management And Research who has
given us this opportunity to undertake this project.

We are also highly grateful to Mr. Nitin Jain, Senior

Manager, Vodafone Essar Limited for giving us valuable
time from his hectic schedule and provide us with very useful
information and insights regarding Vodafone Essar and its
operations.

We are thankful to all our friends who gave their remarkable

contributions and special thanks to our faculty in charge, Prof.
Monica Khanna who not only explained the topics very well but
also have thrown a good insight at the practical aspect too.

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CONTENTS:
page no.
1. Objectives 4

2. Introduction 5

3. Segmentation 6

4. Targeting
8

5. Positioning 8

5. Enterprise Services 9

6. Market and Competitive analysis

10

3
7. Brand and distribution
11

8. Macro and Micro economical factors

15

9. SWOT analysis
19

10. Future strategies

20

11. Ansoff Matrix

21

12. Product Life Cycle(PLC) analysis

23

13. Appendix 26

14. Interview
32

15. References
35

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 OBJECTIVES:

To understand the current Segmentation, Targeting,

Positioning and Marketing strategy of Vodafone. To study the
Macro and Micro Environmental factors affecting it. Analyse its
Market presence by studying the strengths, weaknesses,
Opportunities and threats. Drafting a future strategy using
Product – Market Matrix and PLC in order to increase the
market share, expand the presence and be prepared for the
possible threats.

5
 INTRODUCTION:

Vodafone Essar is an Indian subsidiary of Vodafone group and

commenced its operations in 1994 when its predecessor
Hutchison Telecom acquired the cellular license for Mumbai.
The company now has operations across the country with over
78.68 million GSM mobile customers. Over the years, Vodafone
Essar, has been named the ‘Most Respected Telecom
Company’, the ‘Best Mobile Service in the country ‘and the
‘Most Creative and Most Effective Advertiser of the Year’.

Vodafone is the world’s leading international mobile

communications group with approximately 315 million
proportionate customers as on 30 June 2009. Vodafone
acquired an indirect controlling interest in Vodafone Essar,
their local operating company in India, in 2007-08. Vodafone
currently has equity interests in 31 countries across five
continents and around 40 partner networks worldwide.

Vodafone Essar is now largest operating company for

Vodafone when measured by customer numbers and its sheer
scale and rapid growth makes it unique. It has nearly 10,000
employees and employs more than 90,000 contractors. The
network is rapidly expanding to meet demand and extend
telecommunications to more rural areas, with more than 2,500
new base stations deployed each month.

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 SEGMENTATION:
Product Segmentation

Telecommunication
means

Landline Mobiles

GSM CDMA

AIRCEL AIRTEL VODAFONE RELIANCE BSNL OTHERS

GSM

Consumer Segmentation
Customers are typically classified as prepaid or contract
customers. Prepaid customers pay in advance and are
generally not bound to minimum contractual commitments,
while contract customers usually sign up for a predetermined
length of time and are invoiced for their services, typically on a
monthly basis. Increasingly, Vodafone offers SIM only tariffs
allowing customers to benefit from the Vodafone network
whilst keeping their existing handset.

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○ The following segmentation variables are used by
Vodafone in order to segment the market :
Geographic :
Vodafone segments its market as metros, A-circle, B-circle and C- circle. Here, the segmentation is
done on the basis of regions in which they operate. Also, rural and semi-urban markets are fast
emerging as profitable market segment, so Vodafone is trying to enhance its operations effectively
further in these segment.

Demographic:
Income :
Vodafone further segments its market according to various income levels and have various plans
for every strata of society.
Age:
Vodafone does not primarily segment its market on the basis of age but they have specific
plans for youth.
Nature of the Customer:
Depending on the fact that whether the customer is institutional or sole, the services and plans
provided by Vodafone varies and thus, it forms an important bases for segmentation.

Psychographic:
Lifestyle and Personality:
Vodafone segments its users on the type of service they use based on their lifestyle
such as different plans for students, professionals etc .

Behavioural:
Benefits Sought:
Vodafone segments its customers on the basis of the benefits sought by them such as such as:
local call ,STD call or ISD call makers ; users of value added services, connectivity , coverage.
Usage Rate :
Vodafone also classify its users as one with heavy usage rate, medium usage rate and light
usage rate and have different targeting schemes for each of them.
Type of the service:
The Type of the service provided by Vodafone to its customers also plays a crucial role in
deciding the segmentation strategy implemented by Vodafone.

BUSINESS SEGMENTATION
The Group continues to grow usage and penetration across all
business segments. VGE manages the Group’s relationship

8
with Vodafone’s 270 largest multinational corporate customers.
VGE simplifies the provision of fixed, mobile and broadband
services for MNCs who need a single operational and
commercial relationship with Vodafone worldwide. It provides a
range of managed services such as central ordering, customer
self-serve web portals, telecommunications expense
management tools and device management coupled with a
single contract and guaranteed service level agreements.
The Group continues to expand its portfolio of innovative
solutions offered to small office home office (‘SoHo’), SME and
corporate customers. Increasingly these combine fixed and
mobile voice and data services integrated with productivity
tools.

Targeting:-
Vodafone has full market coverage with differentiated
offerings. Market is targeted through many different tariffs,
services and propositions for every segment according to
specific customer preferences and needs. These often bundle
together as: voice, messaging, data and increasing value
added services. The various examples for this include:
• Home calling cards for the family of those professionals who use to work
abroad.
• Rs.10 recharge for small users
• Cheap SMS facility for youths
• Facilities for circle users etc

POSITIONING:
Vodafone has continued to build brand value by delivering a
superior, consistent and differentiated customer experience.
Their tagline “Where ever you go our network follows”
gives the customer indication of their vast coverage.
They differentiated themselves from other mobile service
providers by delivering the promise of “helping customers
9
make the most of their time” and their communication strategy
has always focussed on “Happy to help” which tends to
strike an emotional chord with the customer.
The Group’s vision is “to be the communications leader in an
increasingly connected world” expanding the Group’s category
from mobile only to total communications. To enable the
consistent use of the Vodafone brand in all customer
interactions, a set of detailed guidelines has been developed in
areas such as advertising, retail, online and merchandising.
In April 2009 a campaign, focusing on the different value
added services (VAS) offered by the company was launched,
introduced new characters called the Zoozoos who seem to be
in between the world of animation and reality. Several
advertisements in which the Zoozoos featured were shown on
television during the Indian Premier League (IPL) Season 2 and
were instant hit among the customers but the conversion of
this excitement into revenue is yet to be seen.

ENTERPRISE SERVICES:
• Voice services
➢ Pre – Paid
➢ Post – Paid
• Value Added Services
➢ Tunes and downloads
➢ Entertainment
➢ Devotional
➢ Sports
➢ News and Updates
➢ Call Management Services
➢ Astrology
➢ Finance
➢ Travel

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 ➢ Mail, Messaging
➢ Dial in Services
➢ Bill Info
• Vodafone Live
• Vodafone Business Solutions
➢ Mail on the move
➢ Business application
➢ Vodafone Office
➢ Vodafone Business Solution

MARKET AND COMPETITIVE ANALYSIS

40 /existingusers/se 0

Vodafone Essar is the second largest GSM operator in India

after Airtel from the perspective of market share and
subscriber base and is increasingly expanding its share (the
detail figures are given in Appendix) . It still is quite far from
Airtel due to Airtel’s strong presence in rural areas and loyal
customer base along with larger reach and first mover
advantage.

Branding, Advertizing,Pricing and

Distribution:
Vodafone’s products and services are available directly, via
Vodafone stores and country specific Vodafone websites, and
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indirectly via third party service providers, independent
dealers, distributors and retailers, to both consumer and
business customers in the majority of markets under the
Vodafone brand.
Customer strategy and management
Customer Delight Index:(2008: 73.1,2007: 70.6, 2006: 69.9)
The Vodafone Group has created a Global Customer Value
Management team to support operating companies with their
aim to engage with customers directly through a data driven
approach. Recent examples of this include: rollout of a
consistent and innovative store, successful trial of an
innovative handset based self service solution and creation of a
global training academy for customer facing staff.
Vodafone continues to use a customer measurement system
called “customer delight” to monitor and drive customer
satisfaction in the Group’s controlled markets at a local and
global level which identifies areas for improvement and focus.
Marketing and brand :
1. 68.8 million Vodafone subscribers across India as at 31
March 2009 (up from 44.1 million as at 31 March 2008)
• 2 million new subscribers a month on average
• 18% market share

Logo
a new visual identity—from the deep pink logo of Hutchison-
Essar to Vodafone’s trademark deep red speech mark
introduced in 1998.

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Advertisement:
The inaugural TV commercial showed the trademark pug
(minus the boy) moving out of a pink kennel into a red one. An
energetic version of Hutch’s signature ‘You and I’ tune played
towards the end, as the super concluded, ‘Change is good.
Hutch is now Vodafone’. There were four more commercials
featuring Hutch’s animated boy and girl, introducing the new
brand’s logo to consumers.
Vodafone put in close to Rs 150 crore into the first phase of the
rebranding exercise—with Rs 60 crore in mass media and
another Rs 90 crore in retail activities.
In the second phase, Vodafone ushered in its global strapline
—“Make the most of now”, which replaced “How are you?” in
2001. By then it was apparent, the boy-and-pug chapter would
soon be over. In 2008, Vodafone used the platform of cricket
when it unveiled the ‘Happy to Help’ series during the first
season of the Indian Premier League (IPL).
This season the Zoozoos are all the rage. These characters
have virtually hijacked the online media as well as television—
to convey a value added service (VAS) offering in each of the
new commercials.
In Indian scenario when other major telecom service providers
are using celebrities(Airtel-Shahrukh Khan, BSNL-Deepika
Padukone, Aircel-Mahendra Singh Dhoni, Idea-Abhishek
Bachchan) as their brand ambassadors, Vodafone is standing
out proudly with Zoozoos and pug as successful ad campaign.

Products and services in India:

• Average cost of calls: 2 US cents per minute
• Average revenue per customer: US$6.4 per month
• 853,039 points of sale, covering 65% of the population

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 • With more than 3 million Vodafone-branded, affordable
handsets sold in 2008/09, Vodafone ranks among the top
five handset brands in India
Brand and customer communications
• In the BrandZ most powerful brands ranking: Ranked
11th globally.
• In telecom industry it proudly stands as world no. 2 after
China no. 2 GSM service provider in India after Airtel
A new Marketing Framework has been developed and
implemented across the business, which includes a new vision
of expanding the Group’s category from mobile only to total
communications “to be the communications leader in an
increasingly connected world”. Brand and customer
experience continues to implement Vodafone’s promise of
“helping customers make the most of their time”. The brand
function has also developed a methodology to develop
competitive local market brand positioning, with local brand
positioning projects now implemented in 12 markets.
In September 2007, Vodafone welcomed India with the “Hutch
is now Vodafone” campaign. The migration from Hutch to
Vodafone was one of the fastest and most comprehensive
brand transitions in the history of the Group, with 400,000
multi brand outlets, over 350 Vodafone stores, over 1,000 mini
stores, over 35 mobile stores and over 3,000 touchpoints
rebranded in two months, with 60% completed within 48 hours
of the launch.
Brand Health Tracking:
Vodafone regularly conducts Brand Health Tracking since 2002,
which is designed to measure the brand performance against a
number of key metrics and generate insights to assist the
management of the Vodafone brand across all Vodafone
branded operating companies.

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Sponsorships
Vodafone majorly sponsors the following teams and events,
apart from various regional and timely sponsorship:
Kshitij, Annual Techno-management festival of IIT Kharagpur,
Strategic Partner 2008
• Indian Premier League (Cricket), Associate sponsor
• England cricket team
• Vodafone McLaren Mercedes Formula One team, title
sponsor
• Triple 8 Race Engineering, V8 Supercars team, primary
sponsor (since 2007)

Distribution
Direct distribution-Number of directly owned stores - 1150
Vodafone directly owns and manages over 1,150 stores. These
stores sell services to new customers, renew or upgrade
services for existing customers, and in many cases also provide
customer support.
A standard store format, which was tested in 2006, was rolled
out in 11 markets during the 2008 financial year. All stores in
India were rebranded as Vodafone and over 40 stores were
refurbished to the Group’s standard format.
The Group also has 6,500 Vodafone branded stores, which sell
Vodafone products and services exclusively, by way of
franchise and exclusive dealer arrangements.
The internet is a key channel to promote and sell Vodafone’s
products and services and to provide customers with an easy,
user friendly and accessible way to manage their Vodafone
services and access support.
Additionally, in most operating companies, sales forces are in
place to sell directly to business customers and some
consumer segments.
Indirect distribution

15
The extent of indirect distribution varies between markets but
may include using third party service providers, independent
dealers, distributors and retailers.
The Group hosts MVNOs in a number of markets. These are
operators who buy access to existing networks and resell that
access to customers under a different brand name and
proposition. Where appropriate, Vodafone seeks to enter
mutually profitable relationships with MVNO partners as an
additional route to market.
Presence in India:
•Presence in all 23 Indian telecom circles (up from 16 in
2007/08)
•Over 78,000 base stations across India
•Around 2,600 new base stations deployed each month
•Network deployment and maintenance of 56,933 base stations
in 16 circles outsourced to Indus Towers, of which Vodafone
Essar has a 42% shareholding
•8,163base stations directly managed by Vodafone Essar in the
remaining seven circles
•A further 13,225 base stations shared with other operators

MACRO AND MICRO ENVIRONMENTAL FACTORS:

Factors affecting growth of mobile telecommunication

• Market potential
• Buying decision process
• Infrastructure
• Country’s political, social and economic scenario
• Government policies and business climate(Interest rates
and Inflation)
• Technology and Special zones
• Competition
• Income levels

16
• Employee skills and unionization of employees
• Ethical considerations
• Changing Lifestyles of Consumers

PRINCIPAL RISK FACTORS AND UNCERTAINTIES:

The following discussion of principal risk factors and
uncertainties identifies the most significant risks that may
adversely affect the Group’s business, operations, liquidity,
financial position or future performance.
Adverse macro economic conditions in the markets in
which the Group operates could impact the Group’s
results of operations.
Adverse macro economic conditions and further deterioration
in the global economic environment, such as a deepening
recession or further economic slowdown in the markets in
which the Group operates, may lead to a reduction in the level
of demand from the Group’s customers for existing and new
products and services. In difficult economic conditions,
consumers may seek to reduce discretionary spending by
reducing their use of the Group’s products and services,
including data services, or by switching to lower-cost
alternatives offered by the Group’s competitors. Similarly,
under these conditions the enterprise customers may delay
purchasing decisions, delay full implementation of service
offerings or reduce their use of the Group’s services. In
addition, number of the Group’s consumer and enterprise
customers that are unable to pay for existing or additional
services might increase, having material adverse effect on the
Group’s results of operations.
The continued volatility of worldwide financial markets
may make it more difficult for the Group to raise capital
externally, which could have a negative impact on the
Group’s access to finance.

17
The Group’s key sources of liquidity in the foreseeable future
are likely to be cash generated from operations and borrowings
through long term and short term issuances in the capital
markets as well as committed bank facilities. Due to the recent
volatility experienced in capital and credit markets around the
world, new issuances of debt securities may experience
decreased demand. Adverse changes in credit markets or
Vodafone’s credit ratings could increase the cost of borrowing
and banks may be unwilling to renew credit facilities on
existing terms.
Regulatory decisions and changes in the regulatory
environment could adversely affect the Group’s
business.
As the Group has ventures in a large number of geographic
areas, it must comply with an extensive range of requirements
that regulate and supervise the licensing, construction and
operation of its telecommunications networks and services. In
particular, there are agencies which regulate and supervise the
allocation of frequency spectrum and which monitor and
enforce regulation and competition laws which apply to the
mobile telecommunications industry. Decisions by regulators
regarding the granting, amendment or renewal of licences, to
the Group or to third parties, could adversely affect the Group’s
future operations in these geographic areas. Additionally,
decisions by regulators and new legislation, such as those
relating to international roaming charges and call termination
rates, could affect the pricing for, or adversely affect the
revenue from, the services the Group offers.
Increased competition may reduce market share and
revenue.
The Group faces intensifying competition and its ability to
compete effectively will depend on, among other things,
network quality, capacity and coverage, the pricing of services
and equipment, the quality of customer service, development
of new and enhanced products and services, the reach and
quality of sales and distribution channels and capital resources.

18
Competition could lead to a reduction in the rate at which the
Group adds new customers, a decrease in the size of the
Group’s market.
The focus of competition in many of the Group’s markets
continues to shift from customer acquisition to customer
retention as the market for mobile telecommunications has
become increasingly penetrated. In addition, the Group could
face increased competition should there be an award of
additional licences in jurisdictions in which a member of the
Group already has a licence.
The Group uses technologies from a number of vendors and
makes significant capital expenditures in connection with the
deployment of such technologies. The introduction of software
and other network components may also be delayed. The
failure of vendor performance or technology performance to
meet the Group’s expectations or the failure of a technology to
achieve commercial acceptance could result in additional
capital expenditures by the Group or a reduction in
profitability.
The Group may experience a decline in revenue or
profitability notwithstanding its efforts to increase
revenue from the introduction of new services.
As part of its strategy, the Group will continue to offer new
services to its existing customers and seek to increase non-
voice service revenue as a percentage of total service revenue.
However, the Group may not be able to introduce these new
services commercially, or may experience significant delays
due to problems such as the availability of new mobile
handsets, higher than anticipated prices of new handsets or
availability of new content services. In addition, there is no
assurance that revenue from such services will increase ARPU
or maintain profit margins.
Expected benefits from cost reduction initiatives may
not be realised.
The Group has entered into several cost reduction initiatives
principally relating to network sharing, the outsourcing of IT

19
application, development and maintenance, data centre
consolidation, supply chain management and a business
transformation programme to implement a single, integrated
operating model using one ERP system. However, there is no
assurance that the full extent of the anticipated benefits will be
realised in the timeline envisaged.
Changes in assumptions underlying the carrying value
of certain Group assets could result in impairment.
Vodafone completes a review of the carrying value of its assets
annually, or more frequently where the circumstances require,
to assess whether those carrying values can be supported by
the net present value of future cash flows derived from such
assets.This includes an assessment of discount rates and long
term growth rates, future technological developments and
timing and quantum of future capital expenditure, as well as
several factors which may affect revenue and profitability
identified within other risk factors in this section such as
intensifying competition, pricing pressures, regulatory changes
and the timing for introducing new products or services.
The Group’s geographic expansion may increase
exposure to unpredictable economic, political and legal
risks.
As the Group increasingly enters into emerging markets, the
value of the Group’s investments may be adversely affected by
political, economic and legal developments which are beyond
the Group’s control.
Expected benefits from investment in networks,
licences and new technology may not be realised.
The Group has made substantial investments in the acquisition
of licences and in its mobile networks, including the roll out of
3G networks.There can be no assurance that the introduction
of new services will proceed according to anticipated schedules
or that the level of demand for new services will justify the cost
of setting up and providing new services.

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The Group’s business would be adversely affected by
the non-supply of equipment and support services by a
major supplier.
Companies within the Group, source network infrastructure and
other equipments as well as network-related and other
significant support services, from third party suppliers. The
withdrawal or removal from the market of one or more of these
major third party suppliers could adversely affect the Group’s
operations and could result in additional capital or operational
expenditures by the Group.

SWOT analysis:
Strengths

• Strong international presence and brand recognition

• Well-defined cost reduction initiatives,managed
outsourcing
• Stable operating profit
• The India operations is backed by its huge expertise and
diversified geographical portfolio.
• Sharing of network infrastructure
• Leading presence in India
• Brand value built by delivering a superior, consistent and
differentiated customer experience.
• Vodafone’s customer strategy endeavours to ensure that
customers’ needs are at the core of all products and
services.
Weakness
• Benefits of investment in technology are not realized
• Little penetration in rural market
• Have not entered broadband services,smart phones
segment

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 • Advertising campaigns do not have the emotional connect
to the lower income classes and rural customers
• Perception of customers in lower segment that Vodafone
is a costly brand

Opportunities
• Focus on capturing rural sector through cost reductions
improving returns
• Research and development of new mobile technologies
• Mobile Broadband
• Improve accessibility to wide range of customers
• Vodafone can offer voice, messaging, data and fixed
broadband services through multiple solutions and
supporting technologies to deliver on its total
communications strategy.
• The advancements in 3G networks and download speeds,
handset capabilities and the mobilisation of internet
services, could contribut to an acceleration of data
services usage growth.
Threats
• Existing competitive market
• Entry of many new players in immediate future
• Government regulations
• Change in technology
• Change in consumer preference
• Adverse macroeconomic conditions like recession and
economic slow down
• non-supply of equipment and support services by a major
supplier
• emergencies like war, terrorism, natural calamity etc.

FUTURE STRATEGIES:
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Factors and Trends Relevant for Future Policy Initiatives

• Based on global trends and Indian experience, the rate

of growth of cellular mobile services would continue to
be higher for a number of years. Its two important
implications are further lowering of average cost per
line and cellular mobile/WLL-M becoming a major
tool of expansion in rural areas.
• The capital requirement for investments in the
next five years are expected to be lower than the
present cost due to continuing decline in equipment
cost as well as lower network costs due to competition
resulting from entry of infrastructure providers
Railways, Power Grid Corporation, etc. and huge
capacity addition by other players.
• A small portion of the subscriber base provides a
large share of call revenue. High revenue subscriber
category would form the core of competition among
operators which may lead to a fall in the tariffs
applicable to this type i.e. long distance calls. As a
result, long distance tariffs may be even lower than
those specified by the regulator.
• Margin of surplus will decline over time due to
competition. However, the break-even revenue per
subscriber will also be lower due to decline in costs.
• Data services are expected to grow much faster than
voice telephony. This underlines the need in due course
to focus on broad-band linkages to enable the provision
of these services at the required rate.
• Due to large uncovered areas in rural and remote
regions of the country which are also expected to be
low paying is going to bring the next revolution in the
telecom sector.
The trend towards convergence of services may lead to major
changes in the structure of industry and markets.

23
The new mantra for the Telecom sector is:

“ROTI, KAPDA, MAKAAN AUR MOBILE”

Market /Products Present New

Present Prepaid/Post-paid Wi-max,3G

services

New Rural Sector M2M services,WiBro

Analysis of Ansoff’s Matrix:

1. Market penetration (Present market/Present products):

Since Vodafone is still riding high on it’s current zoo zoo

advertising campaign, it should capitalize on this and try to
increase their presence by opting for further emphasis on their
urban distribution network. As the impact of any promotional
strategy does not last for more than a limited timeframe, it is
imperative for Vodafone to make sure that they retain their
current popularity levels by pushing forward their advertising
campaign in a much more aggressive manner. In the case of
Mumbai, Vodafone has made it’s presence felt by opening
25000 distribution outlets and has hence captured the numero
uno slot in this metropolis. A similar business model can be
adapted and customized as per the regional parameters in
order to become the nation’s leading cellular service provider.
2. Market Development:

24
India is still an agrarian economy and 70 percent of it’s
population still dwells in rural areas. According to recently
conducted surveys, statistics showed that 45% of the overall
telecomm sector growth is to come from the rural sector. A
major chunk of vodafone’s revenue is still generated from tier
1 and tier 2 cities. This leads us to conclude that Vodafone
needs to place further focus on rural penetration so as to
create economies of scale as well as the top line growth of
revenues. Development of infrastructure in rural areas is a
bottleneck due to the cost factor associated with it. Project
MOST (Mobile Operators' Shared Towers) by COAI was initiated
in order to reduce these heavy costs by sharing infrastructure
between the service providers, hence resulting in better
coverage and quality. Optimal rural penetration can be
achieved by taking into account the economic environment
prevailing in the rural sector. This would encompass the socio
economic factors and would hence provide a more regional
focus to the adversting and promotional strategies in order to
establish a good connect with the rural customers.
3. Product Development:

Vodafone is further trying to provide new services in order to

establish a stronger foothold in it’s current subscriber base. It
is in the process of rolling out it’s 3G service in india which
would be a quantum leap for browsing and internet based
mobile applications and services. 3G would also result in
improved connectivity and clearer reception as it provides a
greater network capacity which is achieved through improved
spectral efficiency. This step is being implemented by
Vodafone to further enhance the revenue generated from it’s
“premium” segment. Also WiMAX service implementation in
india would result in a significant surge in vodafone’s revenue
from the segment mentioned above. According to recently

25
updated government regulations, the 3G market is open only
to 4 telecom sector players in that particular circle. Hence
getting the license for providing 3G services in india would
further give Vodafone a distinct advantage over it’s
competitors.
4.Diversification:

In order to diversify it’s current market portfolio, Vodafone is

launching a global Machine to Machine (M2M) service platform
for helping companies to deploy and manage large, wireless
M2M projects for applications in customer service
enhancement and central control and automation of projects.
In the Indian context, M2M is an untapped sector with
enormous potential for growth. WiBRO (Wireless Broadband) ,
has the capacity to overcome data rate of limitation of mobile
phones by providing a staggering 30 to 50 MB/s speed. As in
the case of M2M platforms , WiBRO is a very promising market
in india. Providing these two services in india would open new
avenues of growth for Vodafone and would help it diversify into
different market verticals.

PRODUCT LIFE CYCLE:

Marketing Strategies: Growth Stage

• Rapid increase in sales if product has acceptance:

26
The current perception of Vodafone in india is that of a brand
that provides high quality customer service at reasonable
prices. Even though Vodafone has not hired a known face to
endorse itself, it has still managed to establish a very high
“emotional connect” with it’s customers through it’s brilliantly
conceived marketing strategies. Excellent examples of this
would be the recent “Zoozoo” campaign and the well received
“Vodafone Pug” campaign. In the case of the “Pug” campaign,
Vodafone managed to project itself as a service provider which
would always be “following” the customer through the tagline “
Wherever you go, our network follows.”. And in the case of the
“Zoozoo” campaign, Vodafone further strengthened their
image among their customer base and the market in general.
• New competition enters as opportunity presents itself:

Vodafone currently faces stiff competition since new players

have also entered the fray recently. Players like Loop, Hash10,
MTS etc are set to roll out their services due to which Vodafone
may find it difficult to maintain it’s current share of customer
base in india. Expansion, further focusing on it’s current
segments, implementation of a revised business model and
intensive marketing would be the key features Vodafone
should be concentrating on in order to retain it’s current
position in india.
• Introduce new product features:

Vodafone is currently in the process of adding further verticals

to it’s market portfolio in order to increase it’s presence and
expand it’s customer base. 3G services are currently in the
pipeline. Also Vodafone can venture into providing broadband
and WiMAX services which have a very high potential for
revenue generation. M2M or Machine to Machine platform is
also present on Vodafone’s strategy for market diversification.

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The platform, which is an enterprise solution designed by
Vodafone for providing automation and wireless controlling is
still under the process of patenting. But once patented, it can
be a key factor in vodafone’s enterprise market expansion.

• Expand distribution:

The current distribution model of Vodafone has been very

successful in penetration of the urban segment. It has a
presence in all the 23 Indian telecom circles and has set up
78,000 base stations spread across India. And Vodafone is still
deploying 2,600 base stations each month. Even in Mumbai,
Vodafone has a total of 25,000 distribution outlets, out of which
35 are Vodafone Stores. Even though the presence is
considerable, Vodafone needs to focus on a more intensive
distributional model in order to keep up with competitors like
Airtel etc.

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 APPENDIX:
1) Quarter 1 – 10 RESULTS:-For the quarter ended June 30th
2009, Vodafone India has reported an increase 23 percent in
revenue at constant exchange rates, and 33 percent, taking
into account exchange rate fluctuations. The revenues included
a 7 percent benefit of revenue from their stake in Indus
Towers. Data revenues for Vodafone remained flat quarter on
quarter, but were up 30 percent year on year. Strangely
enough, messaging (SMS) revenues declined on quarter.

ARPU & Minutes Of Use:

However, much like Bharti Airtel and Idea Cellular, Vodafone

India reported a decline in ARPU, impacted by the mobile
termination rate cut.

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In terms of Minutes of Use, Vodafone clocked 10% higher
minutes of use, at 71,775 million minutes, up from 65,276
million minutes used in Q4-09.

Customer Base

Of its total customer base, 93.2 percent was Pre-paid. The

companys average customer base grew by 56 percent year on
year, on launching in seven new circles.

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Net additions for the company declined quarter on quarter -
Vodafone India added 7.68 million subscribers in the quarter,
as opposed to 7.83 million subscribers added in the previous
quarter.
Much like other operators, Vodafone India has suggested that
usage per customer declined on account of multiple SIM usage,
which is being attributed to the free minutes and free SIM
cards being given by operators, particularly in new circles.
Churn
Vodafone reports churn on an annualized basis, and the
company saw a pre-paid churn of 26.3 percent churn for the
last four quarters, with a Pre-paid churn of 26.4 percent, and a
post-paid churn of 25.3 percent

2) GSM AND CDMA SUBSCRIBER BASE IN 2008-09 IN

INDIA

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3) SOME STATISTICS ON SCENE OF GSM IN INDIA

GSM subscription numbers and growth:

Year GSM Subscribers (millions) GSM Annual growth
2000 3.1 94%
2001 5.05 76%
2002 10.5 91%
2003 22.0 110%
2004 37.4 70%
2005 58.5 57%
2006 105.4 80%
2007 180.0 71%

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4) GOVERNMENT ACTS FOR REGULATION OF TELECOM
INDUSTRY

The various telecom India related acts by the Department of

Telecommunications India are:
 Indian Telegraph Act 1885: This act empowered the
government of India to take control of the existing telegraph
lines and lay down the necessary infrastructure for further
expansion of telecommunications in India.
 IndianTelegraph (amendment) Rules 2004: This act set
the guidelines for the set up and development of public
telecom services in India.
 Indian Wireless Act 1993: According to this act wireless
telecom services could be set up only after due licensing from
the telegraphy authority of India.
 Information Technology Act 2000: The act defines the
information technology based communications in India.
Telecom Industry of India was shown e-commerce way
through this act in a legal manner.
 Communication Convergence Bill 2001: This bill declared
the establishment of Communications Commission of India to
regulate the transfer of all form of communication including
broadcasting, telecommunications and multimedia.
Telecom Regulatory Authority of India (TRAI) Act 1997:
The act established TRAI for the regulation of telecom business
in India. Further amendments were made in the act as per the
needs of the Indian telecom market that surfaced in the
telecom market analysis and research conducted.

TELECOM SERVICE PROVIDERS IN INDIA:

The Indian telecom directory shows two major divisions:

Fixed Service Providers (FSP's):
These include the basic service providers that are the state
operators like MTNL India and BSNL India who collectively

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account to over 90% of the total basic telecom services and
private sector telecom service providers in india who mainly
focus on leased lines, ISDN, videoconferencing and other high-
end services.

Cellular Service Providers (CSP's):

The cellular services in India are also categorized as GSM
(Global Mobile Communications System) and CDMA (Code
Division Multiple access) system. The leading GSM services
providers in the Indian telecom industry 2009 are Vodafone
Essar, Airtel, Idea Telecom, Tata, Reliance and Aircel. These
include both pre-paid and post paid mobile phone cards and
services providers. The leading CDMA providers are still
Reliance communications and Tata Indicom with Airtel and
Touchtel just entering the market.

INTERVIEW
Vodafone India is barely two years old. Can you see the
direction in which it is heading?

Vodafone has experienced a fairly good run in the past few

years. It has emerged as one of the premium players in the
telecom. Within a short period being second in the industry is a
tremendous achievement. It is one of the few players which
has a pan-India presence and it caters to not only the Premium
segment but also to the rural segments as well. Plus, Vodafone
is at the forefront of ushering in new technology e.g. 3G and
Wi-max is about to roll out within the next few months so
Vodafone is on solid-turf.

What are your strategies for penetrating rural market?

For entry into any sector, say rural or urban, there should be
focus on network coverage and distribution. In addition to

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that, the affordability and penetration also comes into picture.
Considerable effort is being put in from our side to increase our
network coverage, customer satisfaction. We have one of the
best and largest customer support service which Is twice the
size of our nearest competitor.

The telecom sector already is experiencing cut-throat

competition. With DOCOMO introducing second-based
call rates how difficult will it be for other players?

It is very difficult already for the existing players as profit

margins are reducing with increase in number of players. The
profits have reduced due to the slashing of call rates. However,
the profits realized are due to increasing usage rates. Docomo
is a very good launch and I believe it will change the rules of
the game altogether.

What are your future strategies?

Our strategies are more towards customer service, value

added services etc rather than changing tariffs frequently. For
instance, Vodafone India has 35 owned stores in Mumbai to
provide help and customer services. This I believe has made
Vodafone the leading player in Mumbai. Our next competitor
does not have half the number of service centers that we have.

How are your strategies in India different from those of

other countries?

Strategies are very different not only from country to country

but also from region to region. Our strategy for Europe which is
a mature market is different from that for India and Africa
which are developing markets. While Europe market is
important in terms of revenues, Indian market is promising in
terms of growth.

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What are the new products that are in the pipeline?
Scope of 3G in India?

We have an Enterprise Fund that invests regularly to develop

better products and services. A whole lot of services can be
delivered to our customers if 3G materializes soon.

What effect will Airtel-MTN deal have on Vodafone?

Vodafone has better expertise and technology than Airtel/MTN

and even though it will benefit them mutually the effect would
not be much on Vodafone and Airtel in India. Airtel is already a
leader in India and it will remain the same for some time. Our
strategy is focused on how to be a market leader.

Can you say something about the effect of Zoo-Zoo

campaign on the customers?

It has almost created a wave and impact has been very

encouraging. Existing customers loved the campaign and many
responded to the campaign through phone and internet. The
Zoo-Zoos’ effect has caught the public’s imagination so much
that there were Zoo-Zoo Ganapati and rakhis selling. We also
captured the attention of the public through our pug dog
advertisements. Advertising is something which differentiates
Vodafone from others. While the rates of all the service
providers are almost same, you need to do something so that
the customer chooses your service over your competitors’
while opting for a mobile connection.

In your opinion which are the major hindrances, in the

way of regulations and government policies, faced by
the telecom sector ?

There are many blocks affecting our growth because of

government regulations.

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They are:

1.Delay of licensing 3G services

2.Change in licensing methodology

First it was for CDMA, later it was for GSM and now they have
planned to offer an unified license.

3.Increase in number of licenses offered and increase in

number of operators who can operate in a circle has created a
huge competition.

What measures do you take to measure customer

satisfaction?

We maintain a very good relation with customers through our

customer satisfaction surveys, customer delight studies. The
sample drawn is random sampling and not done only for
Vodafone customers.

Can you throw some light on the distribution network of

Vodafone India?

Vodafone India has a very good distribution network. We have

25000 operators functioning now. We also undertake special
programs to drive better distribution in every circle. Since we
have better distribution network in the country we are the
benchmark of the Indian telecom sector.

What are the other external factors that you feel had
affected the telecom sector in the recent past?

Every national event affects the industry as a whole. The

drought in India affected the disposable income in rural India.
Naturally the spending on these services will decrease. The
sector is not immune to terrorist attacks or even Swine flu

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scare as it affects the movement of tourists and in turn adverse
affects our revenues from roaming charges.

Why did you choose to enter India through Hutchinson

Essar rather than entering directly?

It is a strategical move by Vodafone. It is a way of faster

routing. For instance, for DOCOMO it took them 2 years after
getting license to start their operations. It involved building of
newer infrastructure whereas we chose to cut costs by
operating through Hutchinson Essar.

REFERENCES:
1. www. vodafone .in

2. www. trai.gov.in

3. www.google.com

4. en. wikipedia.org

5. www. essar.com / telecom

6. www. coai. com

7. wireless federation.com

8. telecomtalk.info

9. www.vodafone.com

10.telecomindiaonline.com

11.www.bestof indya.com

12. www.afaqs.com

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Marketing Management- A South Asian Perspective-13th edition-
Philip Kotler, Mithileshwar Jha, Abrahim Koshy, Kevin Keller.

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