A study on channel management and attrition control of RELIANCE STD/PCO SERVICES ”

1

A Project Report On “A study on channel management and attrition control of RELIANCE STD/PCO SERVICES ”

Submitted in partial fulfillment for the degree of Management of Business Administration

FACULTY OF MANAGEMENT STUDIES MOHANLAL SUKHADIA UNIVERSITY UDAIPUR (RAJASTHAN) 2009-2011 Submitted by MANOJ KUMAR BEHRANI MBA (RMAT)-III

2

ACKNOWLEDGEMENT Main aim of this “Summer Training Project” on “A study on channel management and attrition control of RELIANCE STD/PCO SERVICES ” is to get practical knowledge about how the market changes with passage of time, how customer perception changes, the working in corporate sector and use of management in it. Project makes someone to know how theory is applied in practical situation. Right from start to end of my Summer Training Project, some persons played a key role both directly and indirectly. So I would like to thank all those persons without whose contribution this work proves too much for me. I am very thankful to “Mr. Manish Audichya” senior manager-sales, Reliance Communications, Udaipur, for suggesting the advice, keen interest, constant boost up, invaluable guidance throughout the project work and his continuous motivation to me for taking this challenging project I express my deep regards & gratitude to “Mr. Manish Sanadhya” manager-sales, Reliance Communications, Udaipur, who has provided me valuable resources which I needed during my project work. Last but not the least I would like to thanks “Dr. ANIL KOTHARI – Training and Placement Officer (Faculty of Management Studies, Udaipur)” have helped me in

3

making report of my project in a formulated manner.

CONTENTS INTRODUCTION TO “RELIANCE COMMUNICATION (ADAG) o o o o OVERVIEW BUSINESS VISION CHAIRMAN’S PROFILE

1 INDIAN TELECOM INDUSTRY
• TRAI PRESS RELEASE

2 ANALYTICAL FRAMEWORK OF RESEARCH
• • ORGANISATION STRUCTURE OF PREPAID STD/PCO SERVICES STUDY OF THE DISTRIBUTION SYSTEM

• WHAT ARE THE PARAMETER OF A DISTRIBUTION SYSTEM. • WHAT ARE THE PROBLEMS AND WHAT ARE THE SOLUTIONS.
4

•

STUDY OF DISTRIBUTION SYSTEM OF RELIANCE PCO.

3. STUDY OF CHURN/ATTRITION MANAGEMENT ENCLOSURE: SOFT COPY OF PROJECT REPORT

INTRODUCTION TO “RELIANCE COMMUNICATIONS”
o o o o OVERVIEW BUSINESS VISION CHAIRMAN’S PROFILE

5

OVERVIEW

“A dream comes true” “Think big think fast”

The Late Dhirubhai Ambani dreamt of a digital India — an India where the common man would have access to affordable means of information and communication. Dhirubhai, who single-handedly built India’s largest private sector company virtually from scratch, had stated as early as 1999: “Make the tools of information and communication available to people at an affordable cost. They will overcome the handicaps of illiteracy and lack of mobility.” It was with this belief in mind that Reliance Communications (formerly Reliance Infocom) started laying 60,000 route kilometers of a pan-India fiber optic backbone. This backbone was commissioned on 28 December 2002, the auspicious occasion of Dhirubhai’s 70th birthday, though sadly after his unexpected demise on 6 July, 2002. Reliance Communications has a reliable, high-capacity, integrated (both wireless and wire line) and convergent (voice, data and video) digital network. It is capable of delivering a range of services spanning the entire Infocom (information and communication) value chain,

6

including infrastructure and services — for enterprises as well as individuals, applications, and consulting. Today, Reliance Communications is revolutionizing the way India communicates and networks, truly bringing about a new way of life. Business:

Looking back, looking forward

Reliance – Anil Dhirubhai Ambani Group, an offshoot of the Reliance Group founded by Shri Dhirubhai Ambani (1932-2002), ranks among India’s top three private sector business houses in terms of net worth. The group has business interests that range from telecommunications (Reliance Communications Limited) to financial services (Reliance Capital Ltd) and the generation and distribution of power (Reliance Energy_Ltd). Reliance – ADA Group’s flagship company, Reliance Communications, is India's largest private sector information and Communications Company, with over 60 million subscribers. It has established a pan-India, highcapacity, integrated (wireless and wire line) and convergent (voice, data and video) digital network, to offer services spanning the entire Infocom value chain. Other major group companies — Reliance Capital and Reliance Energy — are widely acknowledged as the market leaders in their respective areas of operation

7

8

9

Type Founded Headquarters Maharashtra, India Chairman CEO Industry Products

: : : : : : :

Public access business 2004 Navi Mumbai, Anil Ambani (MD) S. P. Shukla telecommunication Telephone Wireless Internet Television US $ 5.16 billion 41,000 http://www.rcom.co.in/

Revenue Employees Website

: : :

India’s leading integrated Telecom Company:
10

Reliance Communications is the flagship company of the Anil Dhirubhai Ambani Group (ADAG) of companies. Listed on the National Stock Exchange and the Bombay Stock Exchange, it is India’s leading integrated telecommunication company with over 60 million customers. Our business encompasses a complete range of telecom services covering mobile and fixed line telephony. It includes broadband, national and international long distance services and data services along with an exhaustive range of value-added services and applications. Our constant endeavor is to achieve customer delight by enhancing the productivity of the enterprises and individuals we serve. Reliance Mobile (formerly Reliance India Mobile), launched on 28 December 2002, coinciding with the joyous occasion of the late Dhirubhai Ambani’s 70th birthday, was among the initial initiatives of Reliance Communications. It marked the auspicious beginning of Dhirubhai’s dream of ushering in a digital revolution in India. Today, we can proudly claim that we were instrumental in harnessing the true power of information and communication, by bestowing it in the hands of the common man at affordable rates. We endeavor to further extend our efforts beyond the traditional value chain by developing and deploying complete telecom solutions for the entire spectrum of society.

11

Vision: To build a global enterprise for all our stakeholders - To build a great future for our country, - To give millions of young Indians the power to shape their destiny, - The means to realize their full potential
-

Value: Shareholder Interest People Care Consumer Focus Excellence in Execution Team Work Proactive Innovation Leadership by Empowerment Social Responsibility Respect for Competition

12

Founder: Sh. Dhirubhai Ambani

Few men in history have made as dramatic a contribution to their country’s economic fortunes as did the founder of Reliance, Sh. Dhirubhai H Ambani. Fewer still have left behind a legacy that is more enduring and timeless.

As with all great pioneers, there is more than one unique way of describing the true genius of Dhirubhai: The corporate visionary, the unmatched strategist, the proud patriot, the leader of men, the architect of India’s capital markets, and the champion of shareholder interest.

But the role Dhirubhai cherished most was perhaps that of India’s greatest wealth creator. In one lifetime, he built, starting from the proverbial scratch, India’s largest private sector enterprise.

When Dhirubhai embarked on his first business venture, he had a seed capital of barely US$ 300 (around Rs
13

14,000). Over the next three and a half decades, he converted this fledgling enterprise into an Rs 60,000 crore colossus—an achievement which earned Reliance a place on the global Fortune 500 list, the first ever Indian private company to do so.

Dhirubhai is widely regarded as the father of India’s capital markets. In 1977, when Reliance Textile Industries Limited first went public, the Indian stock market was a place patronized by a small club of elite investors which dabbled in a handful of stocks.

Undaunted, Dhirubhai managed to convince a large number of first-time retail investors to participate in the unfolding Reliance story and put their hard-earned money in the Reliance Textile IPO, promising them, in exchange for their trust, substantial return on their investments. It was to be the start of one of great stories of mutual respect and reciprocal gain in the Indian markets.

Under Dhirubhai’s extraordinary vision and leadership, Reliance scripted one of the greatest growth stories in corporate history anywhere in the world, and went on to become India’s largest private sector enterprise. Throughout this amazing journey, Dhirubhai always kept the interests of the ordinary shareholder uppermost in mind in the process making millionaires out of many of
14

the initial investors in the Reliance stock, and creating one of the world’s largest shareholder family.

Chairman’s Profile: Anil Dhirubhai Ambani

Anil Ambani (born June 4, 1959) is an Indian billionaire and a major shareholder in Reliance Anil Dhirubhai Ambani Group. Ambani joined Reliance, the company founded by his late father Dhirubhai Ambani, in 1983 as Co-Chief Executive Officer and is credited with having pioneered many financial innovations in the Indian capital markets. For example, he led India's first forays into overseas capital markets with international public offerings of global depositary receipts, convertibles and bonds. He directed Reliance in its efforts to raise, since 1991, around US$2 billion from overseas financial markets; with a 100-year Yankee bond issue in January 1997 being the high point, after which people regarded him as a financial wizard. He along with his brother, Mukesh
15

Ambani, has steered the Reliance Group to its current status as India's leading textiles, petroleum, petrochemicals, power, and telecom company Anil was the member of Uttar Pradesh Development Council (this council has now been scrapped). He is also the Chairman of Board of Governors of DA-IICT, Gandhinagar and a member of the Board of Governors of the Indian Institute of Technology, Kanpur. He is member of the Board of Governors, Indian Institute of Management, Ahmedabad. He is also a member of the Central Advisory Committee, Central Electricity Regulatory Commission. In June 2004, Anil was elected as an Independent Member of the Rajya Sabha - Upper House, Parliament of India with the support of the Samajwadi Party. In March 2006, he resigned. In 2007 his name was added to the list of Indian Trillionaires (in terms of Indian Rupee).

He has been linked with several starlets in his long career including his current wife of more than 15 years. He is a close friend of movie star Amitabh Bachchan and Subrata Roy. One of his major achievements in the entertainment industry is the takeover of Adlabs, the movie production to distribution to multiplex company that owns India's only dome theatre and the recently announced joint venture worth US$ 825 million with Steven Spielberg.

16

Awards and Recognition: - Voted the 3rd most powerful person in India in the 2009 India Today Power List, in March.
-

Voted Businessman of the Year 2006 by Times of India TNS poll.

- Adjudged as the CEO of the Year at the prestigious Platts Global Energy Awards for 2004. - Conferred 'The Entrepreneur of the Decade Award' by the Bombay Management Association, October 2002

17

-

Voted as ‘MTV’ Youth icon of the year for 2003 in September 2003. Awarded the First Wharton Indian Alumni Award by the Wharton India Economic Forum (WIEF) in recognition of his contribution to the establishment of Reliance as a global leader in many of its business areas, December 2001

-

- Conferred the ' Businessman of the Year 1997' award by India's leading business magazine Business India, December 1997

TRAI
18

PRESS

RELEASE

19

TELECOM REGULATORY AUTHORITY OF INDIA PRESS RELEASE (30th jun. 2010)

Telecom Regulatory Authority ofIndia The Indian Telecom Services Performance Indicators April–june 2010 New Delhi, India 30th jun. 2010

20

21

The Indian Telecom Services Performance Indicators April - June 2010 1. The number of telephone subscribers in India increased from 621.28 million in Mar-10 to 671.69 million at the end of Jun-10, registering a sequential growth of 8.1% over the previous quarter as against 10.52% during the QE Mar-10. This reflects year-on-year (Y-O-Y) growth of 44.5% over the same quarter of last year. The overall Teledensity in India has reached 56.83 as on 30th June 2010.

22

2. Subscription in Urban Areas grew from 420.47 million in Mar-10 to 452.59 million at the end of June-10, taking the urban Teledensity from 119.73 to 128.20. Rural subscription increased from 200.81 million to 219.09 million, and the Rural Teledensity increased from 24.29 to 26.43 3. About 63% of the total net additions have been in urban areas as compared to 56% in the previous quarter. Rural subscription recorded a decline in rate of growth during the quarter, from 15.06% in Mar-10 to 9.11% in Jun-10. Rate of growth for urban subscription also declined from 8.47% in QE Mar-10 to 7.64% in QE Jun-10. The share of rural subscribers has increased slightly to 32.6% in total subscription from 32.3% in Mar-10.

23

4. With 51.18 million net additions during the quarter, total wireless (GSM + CDMA) subscriber base registered a growth of 8.76% over the previous quarter and increased from 584.32 million at the end of Mar10 to 635.51 million at the end of Jun-10. The year-on-year (Y-O-Y) growth over the same quarter of last year is 48.73%. Wireless Teledensity reached 53.77.

5. Wireline subscriber base further declined from 36.96 millions at the end of Mar-10 to 36.18 millions at the end of Jun-10, bringing down the wireline teledensity from 3.14 in Mar-10 to 3.06 end of Jun-10.

24

EXECUTIVE SUMMARY Number of Public Call Offices (PCOs) has decreased from 6.20 million in quarter ending march 2009 to 5.78 million in quarter ending March 2010.

During the current quarter an decrease of 98,221 PCOs has been Registered. Total number of PCOs in the country as on 31st March 2010 is 57,80,166 as compared to 62,00,335 in the quarter ending December 2009.The share of BSNL is 18,77,452 i.e. 30.26% of the total PCOs. The share of MTNL and other private operators combined is 2,15,627 (3.48%) and 41,11,087 (66.26%) respectively.

25

Market Share of Public Call Office as on 31.03.2010

Service providerwise market share of wireline as on 31-08-10

26

27

PCO segment:

28

About Reliance PCO
1. TYPES 2. FEATURES 3. SERVICES

29

There are two types of PCO landline and wireless. Wireless PCO uses 2 kinds of technology1. 2. CDMA GSM

Reliance and Tata Indicom are CDMA based prepaid PCO connection provider and Airtel, Idea and Vodafone are GSM based prepaid PCO connection providers. MTNL, BSNL and Airtel provide fixed landline postpaid PCO connections. Reliance PCO: Launch of Reliance PCOs: The tele density in India is currently 7 per 100 in urban and semi-urban areas. In other words it means that as much as 93 per cent of the population is dependent on PCOs to make telephone calls. However, Reliance feels that the full potential of the access medium has not been exploited and therefore plan to aggressively develop the various services to reach out to the market. The entry of RIL PCO in the map of Indian PCO market is based on a game-plan of making services affordable and accessible to all. The company seeks to capitalize on the growth opportunities that it believes are available in the Indian PCO market and consolidate its position to be an integrated telecommunications service provider, with a focus on dedicated Customer services. With this objective in mind Reliance PCO(R PCO) hit the Indian market on 18th March 2004. There hasn’t been any advertisement
30

done till date to create awareness among the Indian Public. Now instead of the prevailing PCO lines this company is providing a revolutionary FWT (Fixed Wireless Terminal) with a greater commission. This connection removes the traditional postpaid PCO system and is thoroughly prepaid. So, no more standing need in the long queues, for depositing the bills. This prepaid connection is compatible with any brand of PCO billing monitor. Reliance – No. 1 private sector PCO service provider: - Reliance launched PCO services on 18th MARCH 2004 - Reliance PCO has empowered and enriched the lives of more than 1.7 million small entrepreneurs all over India
-

Total Network: Our 3rd Generation CDMA Network is presently spread across 4 Lakh villages & 15,000 towns across 16 telecom circles covering 54 crore population in India and is growing on a daily basis Business Associates: Over 2000 satisfied entrepreneurs are part of the RELIANCE PCO family Local Presence: Reliance PCO is present in 18 states across India which is divided into telecom circles & further in clusters

-

-

- Every Circle has a Business Head who is responsible for the day to day business activities
31

Features of Reliance PCO: • The Reliance PCO tariffs are equal to the Government tariffs (MTNL/BSNL) but it provides a higher commission within those tariffs. • Good Return on Investment commission structure. through higher

• Based on prepaid payment method.[Prepaid is a payment method in which payment of money is made upfront through recharge cards for certain fixed talk time(usage)for a given period while in Postpaid for usage is made afterwards]. • As one uses, charges get deducted-Online & Real time • Based on Intelligent Network (IN) platform, first time in India that a PCO product is being launched on IN platform. • PCO connection is through Fixed wireless Terminal (FWT).
32

• Being wireless, reach (coverage) is excellent and installation is very quick. • Based on Recharge voucher: balance or expiry of validity date, whichever is earlier. • Self service to ensure that all customer needs are just a few buttons away

PCO Market: Facts & figures: • STD PCO booths as a franchisee model started in 1987 • Currently there are 19.24 lakhs PCOs in India • There is a PCO in every 2 square kilometers • Generates direct employment of about 1.7 million people • Total PCO revenue at Rs.4,100 Cr. Contributes to 9% of total telecom revenues and 24% of long distance revenues

Key Drivers:
33

• Good Return on Investment through higher commission structure • Entry of private operators • Easy to set up and start PCO business • Low operation/maintenance cost • Dedicated Customer Care • Retail for prepaid cards and calling cards • Sale of telephone connection • Cyber Cafe • Photocopying • Employment opportunities • Competent focus on PCO through dedicated team for acquisition and servicing. Services provided by Reliance PCO: Reliance PCO offers both wire line & wireless solutions. Our bouquets of products & services include: Reliance CCB PCO (Coin Collection Box): This connection is ideal to provide basic telephony to the public at large as it comes with multiple calling facilities to make local, STD & ISD calls. It is easy to use & can operate in a completely unmanned environment and needs very little space in your shop/outlet. Reliance Booth PCO:
34

Reliance Booth PCO facilitates STD , ISD & Local calling service to the public at various communication booths across the country. Conveniently placed inside a booth, it provides the needed privacy to talk in peace. This is undoubtedly a primary source of income for many of our customers across the country. Reliance all-in-one STD: This is an all-in-one STD set-up which comes with a sleek, trendy & compact Fixed Wireless Phone which consists of an in-built LCD monitor. Now, the good news! It is cheaper than a normal Booth PCO set-up as this does not need huge investments to purchase an STD display monitor, bill printer or battery backup

Rural Community Phone: In order to provide public access phones to the remotest corners of the country, Reliance Communications introduced RCP (Rural Community Phone). These PCO connections are specifically set up for the rural areas with special subsidized tariffs and forms part of Reliance Communications’ Endeavour to be omnipresent in all segments.

35

HOW RELIANCE’S PUBLIC CALL OFFICE WORKS? RIL supports PCO connection through its FWT.The features of Reliance FWT are as follows:

36

FIXED WIRELESS TECHNOLOGY (FWT) Reliance presented revolutionary Fixed Wireless Terminal (FWT), a marvel of CDMA2000 (1X) technology. It gives a connection, which is far superior to the ordinary landline. This wireless telephone connection can be deployed for PBX (board lines) / KTS / cordless phone / parallel connections. What's more, being wireless, your connection remains unaffected by cable cuts, rains or similar other problems.
37

Business strategy: Reliance Infocom strategic objective for its PCO business is to have a presence in circles having high telecommunications revenue potential, with a particular focus on high density business and industrial districts, and to become the leading provider of services to public call booth segment.

Need of the Project
Project assigned to me during my summer training at “RELIANCE COMMUNICATION-UDAIPUR REGION” comprises of two resons:Reason no. 1--- To get a deep study on distribution or channel management. Reason no. 2--- To study the churn of reliance PCO and finding the reasons and their solutions.
38

39

Organisation Structure of PREPAID PCO and VPT SERVICES

40

Organisation Structure of PREPAID PCO and VPT SERVICES

Mr. Gurpreet Singh
(CEO-Reliance communication-

Mr. Jamal Khan

Mr. Prabhash C jayeswal
( Circle Lead PCO Sales )

Mr. Manish Audichya
(Zonal Lead –Udaipur)

Mr. Manish sanadhya
(SE-Udaipur)

41

STUDY OF THE DISTRIBUTION SYSTEM
1. 2. 3. PARAMETERS PROBLEMS SOLUTIONS

42

Section-1 In very starting of this session I would like to focus on the term distribution thereafter I will state the distribution of channels and what are the advantages and disadvantages of distribution networks what are the parameters of distributor and how a distributor work what problems he faces and what are the solutions. Distribution of goods and services plays an important role in the sales system. Distribution system varies company to company and place to place. The distribution system gives strength to the company by helping to increase the reach of the product to various parts of the region, country or even in foreign markets an effective distribution system helps in making available goods in right quantity at the right time when they are required and giving a reasonable earnings to those who are associated with the distribution system. Of all the living things on earth, ants are known to be the most hardworking. All of us would have seen ants scurrying along, one behind the other, transporting food from wherever they find it, to their dwelling places. Any obstruction in the path does not deter these little creatures from moving forward. They quickly locate the most efficient path around the obstruction and once again resume their journey. Just as these little creatures transport that they need from where they are available to their destination or place of storage, in the business world too, goods and products are transported from the place of manufacturing to the places where they are required.

43

In the highly competitive business environment of today, companies find it difficult to maintain their competitive advantage over others only by developing innovative strategies pertaining to the product, prices, places or promotion though they have tried out various methods to build a competitive advantages for themselves like making changes in the product design, pricing the product differently and even trying to reduce the cycle time. Thus the emphasis of all companies today is to build a sustainable competitive advantage and distribution system provides a means by which they can do just that. Growth of telecom business is directly proportionate to the dealers network the telecom companies provide a variety of incentives/commissions to the dealers/channel partner for encouraging them to acquire more and more business for telecom company . At the same time they are required to provide huge amounts towards marketing schemes, in their budget for attracting the customer to buy their products. Now we will understand the term distributor or a LBA or a channel, a distributor or a LBA is the person who is authorized from the company to run the business, who helps the company to manage the sales and revenue. A distributor is the chain between company and customer. Competition has begun and evolved with life. With resources being limited, competition among similar species has led to the vanquishing of one species by another and the extinction of species, the notable examples of being the dinosaurs. To survive every

44

species need to have an inherent advantage over others of the same genus. The law of nature is applicable on business world too. Only those who displace their competitor can survive in the business. To have the benefit of this business world need to have something extra and unique advantage which can differentiate from others, these can be price, product, place, promotion or customer services which help to gain the lead over others. First of all, every business needs to control over the manufacturing costs and in need to adopt the competitive pricing strategy. Every business can invent new marketing practices and methods to get the competitive advantage over others. To make available their goods and services to the end users at lower prices and better quality. To achieve this distribution or channels are very important. Every business must concentrate on the efficiency and performance of the distribution system and channel management. Behind every service or product that a consumer uses has an integral part without that we cannot even imagine about the success of the product or service and that integral part is distribution system or a channel management. The distribution channels is a set of interdependent individuals and organizations involved in the process of making a service available to the end users for consumption or use. These have evolved over time. The evolution is influenced by the marketing forces, which
45

bring about the institutional change, reallocation of functions and changes in relationship among channel intermediaries. These complex things reshape distribution channel and play a dominant role in their growth. The distribution system’s role: The key constituents of a distribution system are manufacturer or the company (Reliance communication), intermediaries and end user (in our case is it is the PCO owner). The term manufacturer or the company refers to the producers of the goods or services that is being sold. The distribution members negotiate with buyers on sales and merchandising terms.

Roles of channel members: Channel members perform various roles in their capacity as a medium of distribution of goods and services. Some roles that are performed by channel members are described below: Facilitate the search process of buyer and sellers:distribution member or channel member facilitate the search process of buyers and sellers and help reduce uncertainty in them. By making products and services available to end users, channel members lower uncertainty among the end users regarding product or services availability. In the absence of channel members or proper distribution System Company is too unclear
46

about how to reach the end users. For example: in Reliance PCO Business the LBA is the distributor without whom we cannot deal or even cannot image about the business. Contractual efficiency: In a marketing channel several relationship results from transactions or exchanges that occur between various channel members. A transaction in a distribution channel involves the product flow from the company to the end users same time money is flow in the reverse direction. Helps in revenue generation: A distributor or a Local business associate is the only person who helps in generating the revenue by selling the product to the end users. If a distributor does not sell the product then revenue cannot be generated.

Helps in better functioning of the business: A distributor is the main component of a business. Without the distributor it becomes very difficult to manage the business. As the market is very large and to handle the business at the micro level a company must possess the appropriate distribution system. Making the transactions routine: A proper distribution system helps out in solving the complexity of the business. Whatever the process a distributor adopts benefit will go to the company because it is very difficult to manage all the transactions by
47

company executive. To take the benefit at micro level a distributor is very essential part. Helps in customer retention: A distributor is the middle man between the company and end user. He knows very well about the customer. He is well known about the paying capacity of the customer. He helps in customer relationship program. Distribution functions: Distribution functions involve all the activities by means of which products flow from manufacturer to end users. During the flow the product goes from the company to the end users. Distribution functions play an important role in determining the distribution channels structure. As the product moves through different stages in the marketing channels, various members in the system plays different roles. Facilitate in the strategic aim of channel members:Marketing channel facilitate the strategic aim of channel members and help them in attaining the goals.

Fulfilling the interactions process:marketing channel manage the ordering system, delivery timing and the availability of the products. Market development : apart from making goods and services available to existing and potential customer and providing support services. The channel partner also helps in expanding the

48

company’s business or market share by soliciting new business from customer. New customer accounts solicited by the channel intermediary add to the company’s market share. Market information:Marketing channels can be a valuable source of information. As they directly interact with the customers, they provide valuable data on customer preference. However analyst feels that marketing channels are yet to reach the desired level of performance in providing market information Inventory management:a proper distribution channel helps out in managing the inventory. The channels have to maintain a certain level of inventory so that they can meet with demand of the customer. Risk taking:if the company itself take the responsibility of distributing the goods there would be an exposure of risk such as physical damage of goods, theft or product obsolesce. Marketing channels by taking on the responsibility of these minimize the risk area.

DISTRIBUTION STRUCTURE:-

49

COMPANY

D I S T R I B U T O R

CONSUMER

Distribution system of Reliance PCO :In reliance communication distributor is known as a LBA(Local business associate). LBA is the person who look after the business of the company, he generates the sales and revenue. Reliance manages its business by the help of LBAs. There may be certain different criteria to choose the LBA but in reliance communication it is different.

Process of selecting a distributor:-

50

In reliance, first of all the company executive makes a plan that where we will make the LBA, what would be the location, what would be the territory and so on. after selecting the location qualifications and other criteria is selected like the security amount, educational qualification, experience, contacts, goodwill, knowledge about the product and so on. In reliance the security amount is 60000/-. The person who wants to take the LBA ship, he must be well qualified, he must have very good image as well as very good experience in related field. He should have a good office at the very good location which should be in the center of the city. A person who fulfills these all requirements he is screened and thereafter the company that only who is best in these all aspect. Udaipur cluster work in eight districts and almost covers whole the south Rajasthan. And udaipur cluster is on the top in the Rajasthan in PCO department which generate the revenue of around eighty LAKHS and the sale of PCO is more than 800 nos. in a month. This figure itself shows that reliance is the market leader in the PCO business.

The LBAs of reliance PCO
51

The LBAs of reliance PCO are much satisfied then the other company’s distributor. They have the full faith on the executive (MANISH AUDHICHYA SIR AND MANISH SANADHYA SIR) of the company. I have the very good experience of this that how to make the good image and win the confidence of the distributors. Whatever they promise by the LBAs they deliver it. This shows that a good image always helps to give the returns. that is the only reason of their great performance. Working style of the managers must be very simple and confidential there should not be any hidden thing.

RELIANCE’S LBAs IN UDAIPUR CLUSTER

LBA NAME Shreeji cyber world Aadinath gas agency Telecom world Shivam sales Shrinath & Shrinath Krishna enterprises Krishna soap & communication Pareek computers and
52

CITY Nathdwara Dungerpur Beawar Pindwara Bhilwara Chittorgarh Bhilwara outer Beawar

communication Mahesh enterprises Agarwal telecom Mateswari enterprises R.D. communication Balaji communication Nav durga agency Roopvarsha Kun enterprises Mahi enterprises Preet communication Apsara service centre New life time network Rushda communication Nakoda communication Rishabh communication D.M. communication Shiv general store Sandeep communication Chandra Infocom Damodar medical store Jain tele solution Mahesh mobile Shoppe Dhanlaxmi enterprises Vaibhav communication Chirag telecom Darshan enterprises We look after the following area:1. 2. 3. 4.
53

Pratapgarh Jahajpur (Bhilwara) Nimbahera Aasind Gulabpura Dungla Choti sadri Begun Sahapura Gangapur Udaipur Rajsamand kankroli Udaipur Banswara Dungarpur Sirohi Abu road Khairwara Udaipur Deogarh Bhim Ghatoal Pindwara Garhi Abu road Mavli

sales revenue churn control satisfaction level of the distributor

SALES:- This is the major and important part where a company must pay attention. This important part covers the life cycle of the company. If the sales part is not well taken care then definitely there will not be any future of the company. in RELIANCE communication we were very much concerned about the sales part. every month there is a different target and every LBA must achieve the target. we don’t take the target as the months ending activity where most of the company and individuals fulfill their targets in the end of the month. We divide the sales target on the very first day of the month and the target was made on the daily basis . so that it becomes very easy to cover it, and definitely our this strategy helps us in becoming the top performer. On the very first day the target letter of every LBA is made and a strategy is made. Reliance gives 900 rs. On the sale of any product (it is for those LBA whose base is more then 500 customers and 700 to those whose base is less then 500 though he is just in the beginning phase of the business. REVENUE:- second most important rather I can say that it is also as important as the sales. without this we cannot even imagine about the profit. Revenue generation is not an easy job , it is really very difficult. It is always difficult to get the money from the person. But a proper strategy and a proper planning with exact facts and figures made then nothing is impossible, and the Reliance PCO udaipur is quite ahead then any other player. Due to the a proper strategy and planning we always achieve our targets. This is possible only by our LBA s. We provide very good promotional schemes like wise normally company gives two percent to its LBA s and if they achieve the 105 % of the target then company gives 4 % more and total they get 6%. This is very much lucrative and along with this there are also some more promotional schemes which are given time by time. Company also give the PJP(permanent journey plan)which helps the LBA in tracing the customer.
54

Local Business Associate’s (LBA) Responsibilities: Reliance is doing its PCO sales through LBA’s (Local Business Associates).An LBA plays
a mediator between the Customer (i.e PCO owners) and the Company (i.e Reliance).LBAs responsibilities are as follows:

Booking of PCO line

Fills the Customer Application Forms (CAF) for booking a PCO Line for the interested PCO owners.

Installation of FWT

Within 24 hours of acceptance of CAF and payment realization.

Fault Repair

Complaint log in: 90% within 4 hours 10% within 12 hours

Voucher Management

Voucher Recharge delivery at PCO premises within 1 hour of Request log in

Relationship Management

Enhanced Service levels, Personalized services Dispute Resolution

Customer Delight 55

Customer Help line for knowing the balance online

The Customer service to the PCO operator is the critical differentiating factor between Reliance and the competition . For these services the LBA is given a 2% commission on all recharge coupons sold by him . Process of work :-

LBA (local business associate) is the main authority which is directly authorized by the company, he gets the right of running the business in the supervision of the company, he sales he generates the revenue and he is only the prime person who is responsible for that. He generally keeps three FOS(feet on street). The term FOS itself shows the meaning of the word. it is related with the person who work for the LBA. one FOS work to generate the sales another work for the recharges and third may sit in the office and can work on the PJP and can remind the customer for recharges.

56

Discontinue the service of the LBA:If any LBA does not work according to the company’s profile then company has the right of discontinuing the LBA ship. It simply means that when the LBA does not fulfill the required targets and does not sale according to the targets given, then definitely company will discontinue the LBA Ship after giving the notice. Company will map his area to other distributor after fulfilling certain conditions. Findings: Generally company’s executive pay attention and do their best to solve the problem of the LBA s although some problems arise these are as follows:1. 2. 3. 4. 5. 6.

Lack of proper commission Problems in generation of revenue Lack of resources Lack of workforce Decline phase of the product Not proper sales promotion

57

Recommendation: Today there is a lot of competition in the market and if we will not compete with this cutthroat competition then we may go bankrupts. LBA s are the important assets of the company so Company should provide proper commission to the LBA so that the interest should be continue, because this is the human nature which gets attracted by the money. Company should provide proper resources to its LBA s. company should organize such program by which the LBA gets motivation. The company should study the strategy of the competitors and thereafter it should give the comparative analysis. Company should focus on sales promotion techniques (glow sign board , gift to the LBA like diary pen etc.) And I am sure that this will definitely improve the sales as well as revenue. And the main task which must be prioritized by the company is improvement of the features of the products, so that its declining phase gets over. A huge amount must be invested into the advertisement part and call rates must be competitive as compare to mobile because these will only the reason which can help in rising the revenue and sales. Some other facility should also be provided. Win town approach must be introduced and start work on modern technique. Looking at the above findings, following recommendations are made by me to enhance the customer satisfaction level for RELIANCE STD/PCO/CCB customers these recommendations will not only provide good customer relationship but also reduce “CHURNING” by considerable amount.

58

1)As RELIANCE is leader in the market with regards to it’s service quality but it lack in giving customer the so called “after sales service”. Now this after sales service is to be given by RELIANCE LBA’S to the customers. So, cluster office (Udaipur) should make attempt to bound LBA so that they look forward to Customers for there connection related problems. 2)RELIANCE STD/PCO/CCB also lacks in an important “P” of marketing mix, that is “PROMOTION”. Focus should be made so that any customer related information should be passed to them without any distortion. In Udaipur “MONTHLY CUSTOMER SERVICE CAMP” is an proper alternative to overcome the above difficulty. It will allow the customer to come and enquire about the features, express there problems, on the other hand it is equally important for the company as it will enable to find the loop holes, ideas of new scheme to be launched in market, sensing the behavior of customer. This will also trigger the sales figure as more and more people come to know about the existing features of RELIANCE and this will allow them to compare brand with other, and as we RELIANCE is having a very high quality service so definitely ball will be in our court.

59

3)Advertisement material provided to customer is a very important issue that should be considered by RELIANCE on urgent basis. Customer has taken connection for earning money and hence he requires adequate and suitable advertisement material to display its product/service. Customers have strong dissatisfaction towards service provider for not providing enough of advertisement material to them, and competitor is taking this is an opportunity. So, according to me even if it is not possible currently to meet the entire advertisement material demand, But company should provide at least a “BANNER WITH SHOP NAME AND RELIANCE LOGO” to the customers, so as to reduce the dissatisfaction level. “LARGE SIZE GLOWSINE BOARDS” can be provided to two categories of customers…. 1) Customers who’s Average Revenue Per Unit (ARPU) crosses a considerable figure for the last couple of months and the shop earns revenue mainly from telecom services. 2) Customer who demands for it and ready to pay certain share of money for that ,here the glow sine board will remain property of RELIANCE and will be taken back as the customer disconnect the connection within a time frame say 1 year or 2 year .This will bind the customer to the connection and reduce churning as well..

60

ATRRITION CONTROL/ CHURN
1.DEFINITION 2.WORKING 3.REASONS 4. TECHQUINES

61

Churn:- is the process of customer turnover. In the mobile telecommunications market, a 1995 report by Digital Equipment Corp. estimated the cost of churn at around $400 per new subscriber. Churn is not restricted to the telecommunications market – it occurs wherever stiff competition provides incentives for customers to switch providers. Industries such as credit card issuers, insurance companies and ISP’s are all subject to increasing levels of churn. ISP’s have hinted at churn rates as great as 50 percent, the mobile telecommunication rate appears to vary around the 30 percent mark. As the market plateaus in these industry sectors (save perhaps for ISP’s) the problem of churn is becoming ever more critical. Churn in common way is understood as the process in which a customer discontinue the connection or switch over to new company or may leave to use the services which are being provided by the current service provider. Churn has become the very critical problem for most of the companies. For example : if a company adds or sales 1000 new connections and in the same period it looses 600 connection or the 600 existing customer discontinue the connection then the net sale will be only 400 nos.. this clearly state the problem of churn hw it is affecting the current business, today there is cuttahroat competition in the market and for every company who wants to stay in the market needs to control on the churn aspect.
62

CHURN RATE Churn rate is also sometimes called attrition rate. It is one of two primary factors that determine the steady-state level of customers a business will support. In its broadest sense, churn rate is a measure of the number of individuals or items moving into or out of a collection over a specific period of time. The term is used in many contexts, but is most widely applied in business with respect to a contractual customer base. For instance, it is an important factor for any business ith a subscriber-based service model, including mobile telephone networks and Pay TV operators. The term is also used to refer to participant turnover in peer-to-peer networks. The phrase is based on the English idiom "to churn up", meaning to agitate or produce violent motion. Definition:Customer base Churn rate, as applied to a customer base, refers to the proportion of contractual customers or subscribers who leave a supplier during a given time period. It is a possible indicator of customer dissatisfaction, cheaper and/or better offers from the competition, more successful sales and/or marketing by the competition, or reasons having to do with the customer life cycle. The distinction is usually made between voluntary and involuntary churn. Involuntary churn occurs when the company terminates the customers' contract or account - usually on the basis of a poor payment history. Voluntary churn is when the customer decides to take their business elsewhere (Berry and Linoff, 2000).
63

The churn rate can be minimized by creating barriers which discourage customers to change suppliers (contractual binding periods, use of proprietary technology, unique business models, etc.), or through retention activities such as loyalty programs. It is possible to overstate the churn rate, as when a consumer drops the service but then restarts it within the same year. Thus, a clear distinction needs to be made between 'gross churn', the total number of absolute disconnections, and 'net churn', the overall loss of subscribers or members. The difference between the two measures is the number of new subscribers or members that have joined during the same period. Suppliers may find that if they offer a loss-leader "introductory special", it can lead to a higher churn rate and subscriber abuse, as some subscribers will sign on, let the service lapse, then sign on again to take continuous advantage of current specials. Peer-to-peer Within a peer-to-peer network, the churn rate refers to the number of peers leaving the system during a given period—usually an hour—rather than a year. It is a significant problem for large-scale systems, as they must maintain consistent information about peers in the system in order to operate most effectively. For example, with a large churn rate it may be impossible to index file locations, making some files inaccessible even though peers have them available. Employee turnover In some business contexts, churn rate could also refer to high employee turnover within a company. For instance, most fast food restaurants have a routinely high churn rate among employees. Employee moves Churn rate can also describe the number of employees that move within a certain period. For example, the annual churn rate would be the total
64

number of moves completed in a 12-month period divided by the average number of occupants during the same 12-month period multiplied by 100 percent. Monthly and quarterly churn rates can also be calculated.

HOW DOES CHURN WORK? Churn is usually expressed as a percentage that documents the percentage of customers who leave or switch to another service provider. If 1 in 20 wireless subscribers decided to jump ship and head over to another company, the churn would be 5%. This would be an invaluable measure for any company looking to track the amount of subscribers they lost to their competition. The higher level of churn results from a higher mix of consumers looking to switch providers. Churn rates become increasingly important to Wireless Providers as they look at their business objectives and look to add competitive strategies within their companies.

65

Reasons of the churn:1. Natural reasons 2. Artificial reasons Natural reasons:- Natural reasons are those reasons which are bound to happen. There is no control over these reasons these may be as follows: (a) Closing of the Businessb) Loss due to fire or theftc) Low ARPUa) Closing of the business:- if the owner of the shop or the business wants to close the business due to any personal reason then definitely there will be a churn or customer will leave the connection. (b) Loss due to fire or theft:- if the customer gets a loss due to fire or theft then definitely he will not be in the condition of running the connection and that will cause the churn. (c) Low ARPU:- Low ARPU( average revenue per unit) is the major factor behind the churn. If the customer is not getting required revenue then definitely he will
66

discontinue the service. Low ARPU always causes the churn. Artificial Reasons:-

(A)

Competitor Companies:Competitor companies are the very major cause of the churn. They create such a situation and that causes the churn. Sometimes that will be legal or sometimes that may not be legal. They give such a scheme which forces the customer to leave the company.

In this diagram I am showing that how a customer leaves the company or switch over to another company. Suppose today he is using the Reliance and after some time he may go for the IDEA or AIRTEL

67

(B)

LBA or the Distributor:- when the distributor or the LBA does not fulfill the targets or wants to get the profit by illegal way then he tries to churn the connection. For example the reliance PCO connection cost is 500rs and in that company is giving 500 talk value in that and 45 days validity, When any customer comes to get the recharge then the LBA may try to give new connection and that causes churn. Some time other LBA in the same territory also do the churn.

(C)

Improper service Provided by the LBA:when LBA does not provide proper service to the customer like availability of recharge coupons or the service after the connection causes the churn. (D) Lack of network:- when the customer does not satisfied with service provided by the company then he likes to discontinue the service like if he is not getting the proper network coverage then he gets dissatisfied by the company and may leave the company. (E) Lack of Income:- if the customer is not getting the income by running the connection then he may switch over to another company.

TECHNIQUES TO CONTROL THE CHURN:Customer relationship management:- company should do a proper customer relationship management program. Customer relationship programs are those programs by which relationship between the company and customer is always make updated. There
(1) 68

are so many techniques through which customer relationship can be made. Today CRM is the main and very fruitful technique which is used in every organization. (2) PJP control:- PJP (Permanent Journey Plan) is the very important technique in which a journey plan is made and that is analyzed . a proper working is done on the PJP then defiantly churn can be stopped around 35 % because mainly customer discontinue the connection due to lack of service provided by the LBA. (3) Review Sheet :- review sheet must be followed very strictly. Where we have all information regarding the customer. We can control a lot because we know the date when the projected churn will be happened. (4) Some other efforts should also be done by the LBA and company. Attractive and promotional scheme must be introduced in he market time to time. Talk value and validity must be updated and very logical. The recharge which have life time or validity of one year should be launched. Call rate must be economical. some tempting offer should be given time to time like free talk time, festival season offer, holiday trip, free on particular network and many more.

Findings:• Churning in RELIANCE PCO is also in alarming stage. • Churn mainly caused by the LBA and dissatisfaction by the service provided by the LBA.

69

• There is also some reasons related with sales promotions. Company is not spending much amount on its advertising part. • Customer is not getting what they want like glow sign board, PPA, and other things like TATA is providing A BOOTH for PCO. • There is also some lack of schemes like reliance is not having LIFE TIME validity and that is provided in other service provider company. • Commission given to LBA is not appropriate according to the market. Recommendation:• Reliance should run a very good sales promotional campaign, Life time scheme should be launched. Some schemes like free talk time or free to free on a particular network should be introduced. • The main and important thing that company should become strict against the LBA. They must be panelized if they try to churn the connection.

• Company should keep a watch on the competitors and always try to make its products very competitive. If we will not compete with the competitors then defiantly we will be able to control the churn. • Company should give a good amount of commission to the LBA.
70

BIBLIOGRAPHY

71

BIBLIOGRAPHY 1.
2. 3.

4. 5. 1.

Brochures of Reliance communication Telecom Regulatory Authority of India’s (TRAI) ICFAI Journals and books Magazines: -Business World Newspaper: -The Times of India, ECONOMICS TIMES

72

http://www.trai.gov.in Telecom Regulatory Authority of India Web Sites Preferred Relaince Infocomm Private Investment Promotion in Indian Telecom Tata Indicomm Mahanagar telephone Nigam Ltd. Bharti teleservices International Telecommunication Union Ministry of Communications & Information Technology Wireless Planning & Coordination Wing Bharat Sanchar Nigam Ltd. Indian Telephone Industries Limited Videsh Sanchar Nigam Limited Mahanagar Telephone Nigam Limited Sancharnet (BSNL Internet Service) Ministry of Information Technology Federation of Indian Chambers of Commerce and Industry Cellular Operators 73 Association of India(COAI) Communications, IT & Broadcasting NEWS http://www.relainceinfocomm.c For the completion of the om http://www.investindiatele com.com www.tata.com www.mtnl.com www.bharti.com http://www.itu.int/home/ http://www.moc.gov.in/

http://www.dotindia.com/ wpcc/spectrum-home.htm http://www.bsnl.co.in/ http://www.itiltdindia.com http://www.vsnl.net.in http://www.mtnl.net.in http://www.sancharnet.in http://www.mit.gov.in http://www.bisnetindia.co m/ http://coai.com/ http://www.telecomlive.co m/

Different term used:
-

CCB (Coin collection Box) – one of the product in the PCO industry. CDMA (Code Division Multiple Access) – Advanced technology used by Reliance for Telecom Application. FWT (Fixed Wireless Terminal) – External device for receiving the Signal. FWP (Fixed Wireless Phone) – Phone integrated with FWT. MDN (Mobile Directory Number) – Unique Communication number of customer. RCV (Recharge Voucher) – Voucher by which customer can load his prepaid account. STD (Subscriber Trunk Dialing) – One of the products in the PCO industry. FOS (Feet on Street) – person for door to door service

74



doc_700029730.doc