INTRODUCTION.
Deregulation, increasing privatization, competition, and technological transformations in the telecom sector have ushered in new ways of doing businesses in the telecom sector. As voice communication is increasingly becoming a commodity business, there is stress on telecom firms to generate revenues from innovative and value added services. Technological changes such as those in chip design, internet based protocols and services for example, VOIP), carrier grade wireless networks, software radios, etc., has meant that innovations in new product and service design can no longer be limited to those with telecom expertise.
India is the fourth largest telecom market in Asia after China, Japan and South Korea. The Indian telecom network is the eighth largest in the world and the second largest among emerging economies.
Historically, the telecom network in India was owned and managed by the government. Considering it to be a natural monopoly and strategic service, it was perceived to be best managed under state’s control.
Reliance telecom technology
Reliance Infocomm was born in the year 2000 as a child of this market liberalization process with a vision to provide the latest telecommunication facilities to every Indian at the price of a post card.
Reliance Infocomm helped the mobile phone penetration in India to grow from 0.25 percent in early 2001 to about 5.7 percent in June 2005 and 60.77% in end of 2008 it can be assumed that it will grow 70% in by the end of 2009.
Reliance group is second highest revenue generator. In can be assumed that up to 2010 it become one of the biggest revenue generators in India.
To begin with, Reliance Infocomm networked 673 towns and cities.
In 2005 it has a presence in 1,850 towns and cities and 75,000 villages touching about 550 million Indians.
By end 2006, the company plans to connect two-thirds of all the 640,000 villages and 5161 odd towns and cities to each other and to the world in a seamless way.
But end of 2009 the company plans to connect all the 640,000 villages.
It aimed for prices as low as the cheapest alternative – the postcard.
Strategy adopted by Reliance
PRICING STRATEGY
“My vision is to provide the latest telecommunication facilities to every Indian at the price of a post card” – Dhirubhai Ambani.
"The pricing system is in line with Dhirubhai Ambani's dream and directive of making phone calls affordable for every Indian. It has been made possible due to the significant capital productivity achieved," said Mukesh Ambani.
A monthly telecom spend of Rs 2503 (US$5.6) would usher in a telecom revolution in India. At that rate, the telecom market will be around 600 million lines,” said B D Khurana, group president, Reliance Infocomm. Reliance Infocomm broke this mould with a tariff that can be described as the most ambitious ever listed by a telecom company in India. It aimed for prices as low as the cheapest alternative – the postcard. While other operators aimed for the higher value market, Reliance Infocomm realized that there is a market in driving volumes and aimed at creating a completely new market.
Dhirubhai Ambani Pioneer Offer – Democratizing Mobiles:
Announcing its launch of mobile services in December 2002 Reliance Infocomm offered an introductory scheme called the 'Dhirubhai Ambani Pioneer' offer. Under this scheme consumers were given a free digital mobile phone, unlimited free incoming calls, billing at 15-seconds pulse rate, for a one-time fee of Rs 3000 (US$66.7) as membership charges and Rs 600 (US$13.3) per month (paid in advance) as telephony charges. All incoming calls were offered free and outgoing calls were charged at 10 paise (0.2 US cents) for 15 seconds. The cost of a national long-distance call to any Reliance phone in the country was 40 paise (0.8 US cents) for a minute. In addition, the monthly charge included 400 minutes of outgoing calls. Only calls over and above this were charged extra. Value added services like voice mail, call waiting, call hold, call divert, call identification, call conferencing, dynamic locking and text messaging were offered for free. Internet access through the phones was also offered free initially. Exchange Rate 1 US$ = Rs 45
Monsoon Hungama Scheme - Showers of Mobiles:
In an attempt to further democratize telecommunication services, Reliance Infocomm followed up the Dhirubhai Ambani Pioneer offer with the Monsoon Hungama scheme on the 1st of July 2003. This unprecedented scheme allowed customers to get a mobile phone for an upfront payment of just Rs 501 (US$11), bringing down the entry barrier to a bare minimum. The scheme also permitted a low monthly spend, allowing the customer to restrict the fixed monthly outgoing (postpaid) to Rs.449 (US$10), inclusive of the Rs.200 (US$4.4) paid as club membership and privilege charges. Reliance Infocomm's Monsoon Hungama offer of a phone for Rs 501 (US$11) was a runaway success. Monsoon Hungama pushed Reliance to the top of the telecom market in terms of subscribers. It was the biggest promotional success in the history of mobile telephony in India. 1 million subscribers joined Reliance Infocomm in just 10 days after the launch of the Monsoon offer. The ripples of the offer were not limited to Reliance. This offer led GSM handset prices to fall to as low as Rs 1,500 (US$33.3). In the footsteps of Reliance Infocomm, during the same period, many competitors startedoffering flexible pre-paid options at less than Rs 500 (US$11.1) per month for their GSM mobile services.
Pre-paid Offering - Market Consolidation:
As the market for post-paid mobile services started stabilizing, Relia Infocomm launched its first pre-paid offer. The pre-paid offer marked a fundamental shift in Reliance's strategy where it had built a post-paid customer base of over 6 million through the Pioneer and Hungama schemes. At a time when Reliance was finding it hard to manage its post-paid customers, the new strategy offered two advantages. First, there was the obvious advantage that cash is collected beforehand. Second, the cost of collecting bills - which is 1 to 3 per cent of revenue - vanished.
In February 2004, Reliance Infocomm announced another set of prepaid schemes, quite different from the earlier schemes. The schemes gave customers free recharge vouchers worth nearly the cost of a Reliance IndiaMobile (RIM) prepaid handset that they buy. In simple terms it meant that customers were getting the phone free rather than having to buy it as they would if they opted for a GSM pre-paid scheme. Also, the customers were allowed to remain connected for a full year without having to buy new 6 recharge vouchers. Under the Prepaid launch scheme, a customer had to pay Rs. 3,500 (US$77.8) for a Motorola C131 handset and received free Reliance Prepaid connection and recharge vouchers worth Rs. 3,240 (US$72) valid for six months and with additional six-month grace period. In this scheme, all local calls, intra-circle calls and inter-circle calls of less than 50 km to another mobile phone had a flat rate of Rs. 2.49 (US$0.06) per minute. All inter-circle calls of above 50 km to another mobile phone had a flat rate of Rs. 2.99 (US$0.07) per minute. All local calls, intra-circle calls and inter-circle calls of less than 200 km to a fixed phone had a flat rate of Rs. 2.99 (US$0.07) per minute and all inter circle calls of above 200 km had a flat rate of Rs. 3.99 (US$0.09) per minute.
Cost Management - The Inside Picture
The Reliance Infocomm pricing system was always in line with Dhirubhai Ambani's dream and directive of making phone calls affordable for every Indian, and has been possible due to the meticulous planning, ‘out of the box’ thinking in touch with reality, and significant capital productivity achieved on the strength of Reliance's track record in project management.
Advertising – Educating Masses and Evoking Passions:
Advertising was a marketing strategy which complemented the unconventional use of channels by Reliance Infocomm. The Reliance mobile brand was branded as India Mobile to cash in on patriotic feelings. Bundling of handsets along with the service a first time in India – allowed Reliance Infocomm to resort to a co-branding exercise with the handset makers. The Reliance Infocomm brand name embossed on every handset gave it a unique cachet, while the costs of many of the advertisements were discounted since they were also borne by the handset makers. A mega advertising campaign was launched across the media to mark the launch.
RWorld – Reliance Way of Putting the World in Your Hands:
Another important marketing strategy that Reliance Infocomm used was product
differentiation by mixing data applications with voice. Through RWorld – an inbuilt Java enabled data feature of all Reliance phones - the company guaranteed download speeds of up to 144 kbps from an applications suite which has over 120 applications ranging from interactive Guides such as TV programme guides and City Guides, Live News and TV news clips from channels like NDTV, CNBC, Aaj Tak and India TV to contests, video songs, Ring Tones, Cricket Information, Women's World and KidzWorld. It introduced numerous applications like news, streaming audio and video of movies and music clips, city & TV guides, exam results, astrology and stock prices. Apart from these, data applications again rode on the passions of India – cricket, movies and festivals. RWorld launched specific festival services for the Durga Puja and Dusshera festivals
Customer Service – Icing on the Marketing Cake:
Reliance Infocomm followed up the product innovation and marketing tactics with good customer service. A 24 by 7, 365 days a year customer service was set up in a central location in Mumbai. Taking into consideration the languages and cultural diversity of India, service was offered in 10 languages. This ensured that many customers, who are primarily people without much fluency in English, have a smooth experience.
Deregulation, increasing privatization, competition, and technological transformations in the telecom sector have ushered in new ways of doing businesses in the telecom sector. As voice communication is increasingly becoming a commodity business, there is stress on telecom firms to generate revenues from innovative and value added services. Technological changes such as those in chip design, internet based protocols and services for example, VOIP), carrier grade wireless networks, software radios, etc., has meant that innovations in new product and service design can no longer be limited to those with telecom expertise.
India is the fourth largest telecom market in Asia after China, Japan and South Korea. The Indian telecom network is the eighth largest in the world and the second largest among emerging economies.
Telecom Sector in India
Telecommunications in India is a fast changing industry with major changes in government policies and market structure taking place in the past decade. As on March 2008, the total numbers of mobile subscribers had increased to over 315 million, from 217 million in March 2007. The wired line subscriber base stood at 40.1 million on March 2007 compared to 41.5 million in March 2003.
Historically, the telecom network in India was owned and managed by the government. Considering it to be a natural monopoly and strategic service, it was perceived to be best managed under state’s control.
Reliance telecom technology
Reliance Infocomm was born in the year 2000 as a child of this market liberalization process with a vision to provide the latest telecommunication facilities to every Indian at the price of a post card.
Reliance Infocomm helped the mobile phone penetration in India to grow from 0.25 percent in early 2001 to about 5.7 percent in June 2005 and 60.77% in end of 2008 it can be assumed that it will grow 70% in by the end of 2009.
Reliance group is second highest revenue generator. In can be assumed that up to 2010 it become one of the biggest revenue generators in India.
To begin with, Reliance Infocomm networked 673 towns and cities.
In 2005 it has a presence in 1,850 towns and cities and 75,000 villages touching about 550 million Indians.
By end 2006, the company plans to connect two-thirds of all the 640,000 villages and 5161 odd towns and cities to each other and to the world in a seamless way.
But end of 2009 the company plans to connect all the 640,000 villages.
It aimed for prices as low as the cheapest alternative – the postcard.
Strategy adopted by Reliance
PRICING STRATEGY
“My vision is to provide the latest telecommunication facilities to every Indian at the price of a post card” – Dhirubhai Ambani.
"The pricing system is in line with Dhirubhai Ambani's dream and directive of making phone calls affordable for every Indian. It has been made possible due to the significant capital productivity achieved," said Mukesh Ambani.
A monthly telecom spend of Rs 2503 (US$5.6) would usher in a telecom revolution in India. At that rate, the telecom market will be around 600 million lines,” said B D Khurana, group president, Reliance Infocomm. Reliance Infocomm broke this mould with a tariff that can be described as the most ambitious ever listed by a telecom company in India. It aimed for prices as low as the cheapest alternative – the postcard. While other operators aimed for the higher value market, Reliance Infocomm realized that there is a market in driving volumes and aimed at creating a completely new market.
Dhirubhai Ambani Pioneer Offer – Democratizing Mobiles:
Announcing its launch of mobile services in December 2002 Reliance Infocomm offered an introductory scheme called the 'Dhirubhai Ambani Pioneer' offer. Under this scheme consumers were given a free digital mobile phone, unlimited free incoming calls, billing at 15-seconds pulse rate, for a one-time fee of Rs 3000 (US$66.7) as membership charges and Rs 600 (US$13.3) per month (paid in advance) as telephony charges. All incoming calls were offered free and outgoing calls were charged at 10 paise (0.2 US cents) for 15 seconds. The cost of a national long-distance call to any Reliance phone in the country was 40 paise (0.8 US cents) for a minute. In addition, the monthly charge included 400 minutes of outgoing calls. Only calls over and above this were charged extra. Value added services like voice mail, call waiting, call hold, call divert, call identification, call conferencing, dynamic locking and text messaging were offered for free. Internet access through the phones was also offered free initially. Exchange Rate 1 US$ = Rs 45
Monsoon Hungama Scheme - Showers of Mobiles:
In an attempt to further democratize telecommunication services, Reliance Infocomm followed up the Dhirubhai Ambani Pioneer offer with the Monsoon Hungama scheme on the 1st of July 2003. This unprecedented scheme allowed customers to get a mobile phone for an upfront payment of just Rs 501 (US$11), bringing down the entry barrier to a bare minimum. The scheme also permitted a low monthly spend, allowing the customer to restrict the fixed monthly outgoing (postpaid) to Rs.449 (US$10), inclusive of the Rs.200 (US$4.4) paid as club membership and privilege charges. Reliance Infocomm's Monsoon Hungama offer of a phone for Rs 501 (US$11) was a runaway success. Monsoon Hungama pushed Reliance to the top of the telecom market in terms of subscribers. It was the biggest promotional success in the history of mobile telephony in India. 1 million subscribers joined Reliance Infocomm in just 10 days after the launch of the Monsoon offer. The ripples of the offer were not limited to Reliance. This offer led GSM handset prices to fall to as low as Rs 1,500 (US$33.3). In the footsteps of Reliance Infocomm, during the same period, many competitors startedoffering flexible pre-paid options at less than Rs 500 (US$11.1) per month for their GSM mobile services.
Pre-paid Offering - Market Consolidation:
As the market for post-paid mobile services started stabilizing, Relia Infocomm launched its first pre-paid offer. The pre-paid offer marked a fundamental shift in Reliance's strategy where it had built a post-paid customer base of over 6 million through the Pioneer and Hungama schemes. At a time when Reliance was finding it hard to manage its post-paid customers, the new strategy offered two advantages. First, there was the obvious advantage that cash is collected beforehand. Second, the cost of collecting bills - which is 1 to 3 per cent of revenue - vanished.
In February 2004, Reliance Infocomm announced another set of prepaid schemes, quite different from the earlier schemes. The schemes gave customers free recharge vouchers worth nearly the cost of a Reliance IndiaMobile (RIM) prepaid handset that they buy. In simple terms it meant that customers were getting the phone free rather than having to buy it as they would if they opted for a GSM pre-paid scheme. Also, the customers were allowed to remain connected for a full year without having to buy new 6 recharge vouchers. Under the Prepaid launch scheme, a customer had to pay Rs. 3,500 (US$77.8) for a Motorola C131 handset and received free Reliance Prepaid connection and recharge vouchers worth Rs. 3,240 (US$72) valid for six months and with additional six-month grace period. In this scheme, all local calls, intra-circle calls and inter-circle calls of less than 50 km to another mobile phone had a flat rate of Rs. 2.49 (US$0.06) per minute. All inter-circle calls of above 50 km to another mobile phone had a flat rate of Rs. 2.99 (US$0.07) per minute. All local calls, intra-circle calls and inter-circle calls of less than 200 km to a fixed phone had a flat rate of Rs. 2.99 (US$0.07) per minute and all inter circle calls of above 200 km had a flat rate of Rs. 3.99 (US$0.09) per minute.
Cost Management - The Inside Picture
The Reliance Infocomm pricing system was always in line with Dhirubhai Ambani's dream and directive of making phone calls affordable for every Indian, and has been possible due to the meticulous planning, ‘out of the box’ thinking in touch with reality, and significant capital productivity achieved on the strength of Reliance's track record in project management.
Advertising – Educating Masses and Evoking Passions:
Advertising was a marketing strategy which complemented the unconventional use of channels by Reliance Infocomm. The Reliance mobile brand was branded as India Mobile to cash in on patriotic feelings. Bundling of handsets along with the service a first time in India – allowed Reliance Infocomm to resort to a co-branding exercise with the handset makers. The Reliance Infocomm brand name embossed on every handset gave it a unique cachet, while the costs of many of the advertisements were discounted since they were also borne by the handset makers. A mega advertising campaign was launched across the media to mark the launch.
RWorld – Reliance Way of Putting the World in Your Hands:
Another important marketing strategy that Reliance Infocomm used was product
differentiation by mixing data applications with voice. Through RWorld – an inbuilt Java enabled data feature of all Reliance phones - the company guaranteed download speeds of up to 144 kbps from an applications suite which has over 120 applications ranging from interactive Guides such as TV programme guides and City Guides, Live News and TV news clips from channels like NDTV, CNBC, Aaj Tak and India TV to contests, video songs, Ring Tones, Cricket Information, Women's World and KidzWorld. It introduced numerous applications like news, streaming audio and video of movies and music clips, city & TV guides, exam results, astrology and stock prices. Apart from these, data applications again rode on the passions of India – cricket, movies and festivals. RWorld launched specific festival services for the Durga Puja and Dusshera festivals
Customer Service – Icing on the Marketing Cake:
Reliance Infocomm followed up the product innovation and marketing tactics with good customer service. A 24 by 7, 365 days a year customer service was set up in a central location in Mumbai. Taking into consideration the languages and cultural diversity of India, service was offered in 10 languages. This ensured that many customers, who are primarily people without much fluency in English, have a smooth experience.