Assignment on Advertising in Telecom Sector
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Transcript of Assignment on Advertising in Telecom Sector
ASSIGNENT OF MARKETING MANAGEMENT :
ON
ADVERTISING
IN
TELECOM SECTOR
Submitted to: Submitted by:
Dr. Satinder Kumar Arpandeep Kaur
M.B.A.1(c)
Roll No. 5218
TELECOMMUNICATION INDUSTRY OVERVIEW
Telecommunication is the transmission of messages over significant distances for
the purpose of communication. In the modern age of electricity,
telecommunications has involved the use of electric means such as the telegraph
and telephone, the use of microwave communications and the use of fiber optics.
The telecom industry plays an important role in the world economy
Approximately 20% of the world population has access to the Internet. The
telecom industry is vast and offers a wide range of career opportunities on both
the hardware and software fronts. These prospects include functional jobs in
mobile telephony, internet protocol media systems, wireless communications,
GSM, GPRS and CDMA technology, VoIP, data networks and optical networks
amongst others. The global leaders in the field are companies like AT&T,
Vodafone, Verizon, SBC Communications and Qwest Communications, who are all
trying to take the advantage of the industry’s spiraling growth. The focus of
telecom companies going forward is likely to be on leveraging more sophisticated
telecommunication platforms like broadband technologies, LAN-WAN inter
networking, optical networking, voice over Internet protocol and wireless data
service etc.
TELECOM SUBSCRIBER BASE IN INDIA
Indian telecommunication Industry is one of the fastest growing telecom market
in the world. The mobile sector has grown from around 10 million subscribers in
2002 to reach 150 million by early 2007 registering an average growth of over
90%.
The two major reasons that have fuelled this growth are low tariffs coupled with
falling handset prices.Surprisingly, CDMA market has increased it market share up
to 30%thanks to Reliance Communication. However, across the globe,CDMA has
been losing out numbers to popular GSM technology,contrary to the scenario in
India.
The other reason that has tremendously helped the telecom Industry is the
regulatory changes and reforms that have been pushed for last 10 years by
successive Indian governments. According to Telecom Regulatory Authority of
India (TRAI) the rate of market expansion would increase with further regulatory
and structural reforms. Even though the fixed line market share has been
dropping consistently, the overall (fixed and mobile) subscribers have risen to
more than 200 million by first quarter of 2007. The telecom reforms have allowed
the foreign telecommunication companies to enter Indian market which has still
got huge potential. International telecom companies like Vodafone have made
entry into Indian market in a big way. Currently the Indian Telecommunication
market is valued at around $100 billion (Rupees 400,000 crore). Two telecom
players dominate this market - Bharti Airtel with 27% market share and Reliance
Communication with 20% along with other players like BSNL (Bharat Sanchar
Nigam Limited). The Ministry of Communications and Information Technology
(MCIT) is has very aggressive plans to increase the pace of growth, targeting 500
million telephone subscribers by the end of 2010
SCOPE OF TELECOM INDUSTRY
The telecom industry is growing at a great pace and the growth rate is expected
to double with every passing year. There are many new developments in the
telecomm sector, including the ingress of 3G technology that the Indian market is
witnessing at present.
PUBLIC AND PRIVATE PLAYERS
MTNL, BSNL, VSNL are the major Public Players, whereas Airtel, Idea, Hutch, Tata,
Reliance, BPL are the leading Private Players in the country. Some of them are
entering foreign markets as well.
MAJOR PLAYERS IN TELECOM INDUSTRY
TOP FIVE COMPANIES:
The Top five companies, on the basis of ‘Market Share’as on 31st January,
2010 are:
•Bharti Airtel Ltd.
•Reliance Communications Ltd.
•Vodafone Essar Ltd.
•BSNL
•Idea Cellular + Spice
INTRODUCTION- ADVERTISING
Advertising is a form of communication that typically attempts to persuade
potential customers to purchase or to consume more of a particular brand of
product or service. “While now central to the contemporary global economy and
the reproduction of global production networks, it is only quite recently that
advertising has been more than a marginal influence on patterns of sales and
production. The formation of modern advertising was intimately bound up with
the emergence of new forms of monopoly capitalism around the end of the 19th
and beginning of the 20th century as one element in corporate strategies to
create, organize and where possible control markets, especially for mass
produced consumer goods. Mass production necessitated mass consumption, and
this in turn required a certain homogenization of consumer tastes for final
products. At its limit, this involved seeking to create ‘world cultural convergence’,
to homogenize consumer tastes and engineer a ‘convergence of lifestyle, culture
and behaviors among consumer segments across the world’.
Many advertisements are designed to generate increased consumption of those
products and services through the creation and reinvention of the "brand image".
For these purposes, advertisements sometimes embed their persuasive message
with factual information. Every major medium is used to deliver these messages,
including television, radio, cinema, magazines, newspapers, video games, the
Internet, carrier bags and billboards. Advertising is often placed by an advertising
agency on behalf of a company or other organization.
Money spent on advertising has increased dramatically in recent years. In 2007,
spending on advertising has been estimated at over $150 billion in the United
States and $385 billion worldwide, and the latter to exceed $450 billion by 2010.
Types of Advertising
Commercial advertising media can include
--wall paintings, billboards, street furniture components, printed flyers and rack
cards, radio, cinema and television adverts, web banners, mobile telephone
screens, shopping carts, web popup, skywriting, bus stop benches, human
billboards, magazines, newspapers, town criers, sides of buses, banners attached
to or sides of airplanes ("logo jets"), in-flight advertisements on seatback tray
tables or overhead storage bins, taxicab doors, roof mounts and passenger
screens, musical stage shows, subway platforms and trains, elastic bands on
disposable diapers, stickers on apples in supermarkets, shopping cart handles
(grabertising), the opening section of streaming audio and video, posters, and the
backs of event tickets and supermarket receipts. Any place an "identified"
sponsor pays to deliver their message through a medium is advertising.
Covert advertising
Covert advertising is when a product or brand is embedded in entertainment and
media. For example, in a film, the main character can use an item or other of a
definite brand, as in the movie Minority Report, where Tom Cruise's character
John Anderson owns a phone with the Nokia logo clearly written in the top
corner.
Television commercials
The TV commercial is generally considered the most effective mass-market
advertising format, as is reflected by the high prices TV networks charge for
commercial airtime during popular TV events. The annual Super Bowl football
game in the United States is known as the most prominent advertising event on
television. The average cost of a single thirty-second TV spot during this game has
reached $3 million (as of 2009).
The majority of television commercials features is a song or jingle that listeners
soon relate to the product.
Infomercials
There are two types of infomercials, described as long form and short form. Long
form infomercials have a time length of 30 minutes. Short form infomercials are
30 seconds to 2 minutes long. Infomercials are also known as direct response
television (DRTV) commercials or direct response marketing.
The main objective in an infomercial is to create an impulse purchase, so that the
consumer sees the presentation and then immediately buys the product through
the advertised toll-free telephone number or website. Infomercials describe,
display, and often demonstrate products and their features, and commonly have
testimonials from consumers and industry professionals.
Celebrities
This type of advertising focuses upon using celebrity power, fame, money,
popularity to gain recognition for their products and promote specific stores or
products. Advertisers often advertise their products, for example, when
celebrities share their favorite products or wear clothes by specific brands or
designers. Celebrities are often involved in advertising campaigns such as
television or print adverts to advertise specific or general products.
Media and advertising approaches
Increasingly, other media are overtaking television because of a shift towards
consumer's usage of the Internet as well as devices such as TiVo.
Advertising on the World Wide Web is a recent phenomenon. Prices of Web-
based advertising space are dependent on the "relevance" of the surrounding
web content and the traffic that the website receives.
E-mail advertising is another recent phenomenon. Unsolicited bulk E-mail
advertising is known as "spam".
Some companies have proposed placing messages or corporate logos on the side
of booster rockets and the International Space Station. Controversy exists on the
effectiveness of subliminal advertising, and the pervasiveness of mass messages.
- turning it into a generic term which means that its legal protection as a
trademark is lost.
As the mobile phone became a new mass media in 1998 when the first paid
downloadable content appeared on mobile phones in Finland, it was only a
matter of time until mobile advertising followed, also first launched in Finland in
2000. By 2007 the value of mobile advertising had reached $2.2 billion and
providers such as Admob delivered billions of mobile ads.
ADVERTISING TREND IN TELECOM
Telecom advertising is an overlooked field. Almost all ad agencies would love to
have a telecom operator client as they are among the top 10 advertising spenders
in all countries; usually they regret that afterwards though due to the short lead
times, long working hours, and over demanding clients (mostly from technical
backgrounds); all of which result in a relatively low quality end product.
Telecom advertising is a very specific industry in many ways different from
conventional advertising mostly due to the nature of the beast (it is a media
within itself that is constantly expanding to include more and more industries)
and constant evolution. Advertising agencies rarely have such experts though,
due to the high turn-over of people on the accounts, mostly due to the reasons
mentioned in the first paragraph.
Despite their differences all telecom operators require the same campaigns,
usually in the following order from launch date (I will use a mobile operator for
the sake of the example as they do the most advertising):
1. A teaser / announcement to indicate their launch date
2. A brand launches campaign
3. Corporate Social Responsibility campaigns
4. Core Product campaigns (usually prepaid and post-paid)
5. Coverage Campaign (to show that their networks are now complete)
6. Payment methods campaign (listing the channels in which can pay their bills)
7. 3G campaign (focusing on their innovative technology, and claiming first to
market)
8. Roaming campaign (mentioning how many operators they have roaming
agreements with)
9. Airport campaigns (selling their ‘visitor’ lines, asking inbound roamers to switch
to their networks, promoting their mobile internet roaming capabilities, and
mentioning how you can feel at home while roaming on their network)
10. Store opening campaigns (indicating that new stores are opening and
mentioning their locations)
11. International call rate reduction campaign
12. Tariff reduction campaign
13. Mobile Content campaign (focusing on the mobile portal and what content it
includes, mostly music, ring tones, ring back tones, news etc.)
14. Value added services campaigns (these are dispersed throughout the
communication plan depending on when a new service is rolled out)
15. Mobile Internet campaign (on both accessing the internet through your
phone, or data cards that plug into your laptop)
16. Customer service campaigns
17. Business campaign (launching their business services division)
18. Business product campaigns (mostly data-cards, push email, and closed user
groups)
19. Focusing on the Youth segment (through universities, and hip music)
20. High end packages (special numbers / elite services etc)
21. Loyalty programs
22. Bundling of products and services
23. Bouquet ads mentioning all of the offerings of the operator
Usually due to urgency, wanting to communicate so many messages at the same
time, and the need to claim first-to-market (because innovation is a key platform);
these operator end up with badly managed campaigns that are not fully
integrated (mostly newspaper ads and mentions on their website and in stores),
and sacrifice on the creative quality of their communications. All of the above
results in a confused customer who knows that an operator has many services but
cannot indicate or quantify them.
ADVERTISING TRENDS IN INDIAN TELECOM
The way telecom firms advertise, gives an approximate idea about the telecom
trends. I would try to uncover some of them, which come to my mind. At the
initial launch of the mobile services, they were advertised as lifestyle products.
The message that sought to be conveyed was that if you have a mobile phone,
you have arrived in life. A few well-healed people could afford the high call rates
at that time. It was in no way for the masses. I am sure that the mobile companies
made a large profit out of it. Perhaps for the first time, Indians were exposed to
concepts alien to them: Customer Care Support. It saw a booming of the ancillary
services and fresh graduates, stunted in mental development though, came out in
droves for the well-paid jobs.
Airtel then sought the services of Sachin Tendulkar. He was the brand ambassador
and saw his earnings sharply increasing. I saw his picture everywhere exhorting
me buy the mobile prepaid card. After the initial publicity passed away, A.R.
Rahman gave his now famous tune. All the other companies have variously tried
other gimmicks to sell their connections.
However, the landscape changed after Reliance came in the mobile services.
Mukesh Ambani was seen telling people about his fathers dream. The initial
launch was lackluster. With the launch of the prepaid services, the punch line was
“mujhme hai who baat or I have that thing! how many people actually signed
up after those ads. . Reliance was able to ramp up its numbers. Then came the ad
line Kar lo duniya muthi mein. (Have the world in your fist). Creative heads of the
ad agency.
The icing on the cake goes to Hutch. They designed the simple ad with the kid and
cute Chinese Pug. It was a hit of all sorts. It conveyed the effectiveness of the
message succinctly. I believe that it drove Hutch connections across the places
where it offered its services. However, it was considered too elitist for the
masses. The advertisement should be able to convey the message effectively; one
with which people could identify with. In this regard, BSNL could claim something.
BSNL advertisements depicted typically government mentality for awarding the
contract to lowest in the tender process. The quality clearly shows. Is there
anyway people could identify themselves with that advertisements? What of
those places where BSNL is the sole service provider?
As the title goes, advertising trends are reflective of the current scenario in
telecom. Airtel has been advertising its group card labeled as Friends. In fact, until
now, the market was treated as homogenous. Over the period, classification has
been sought to target the specific customers with specific needs. Airtel took the
lead in announcing Senior citizen cards targeted at those above 60. The Friends
card is for those who wish to restrict themselves to their group with low calling
rates and some free messages.
Reliance has realized early on about targeting the businesses. Its offer of flat rate
for making STD calls to anyone across its network is unparalleled. This way it can
ensure that there would be higher converts towards it services. R-Connect is its
portal that differentiated Reliance early on from other operators. It knows that
future revenues are going to come from value added services. This way it has
foreseen the development in the industry.
CONCLUSION
With the mobile handset population poised to top 500 million in India by 2010, it
has become a huge and vibrant communication platform, which no brand
marketer can afford to ignore. The Indian advertising industry registered a
compounded annual growth rate of 17.1 per cent during the last three years.
Taking all these facts and figures into the consideration it is clearly proved that
Advertising contributes efficient sales force for any product, but when it comes to
Telecom sector, it turns up very fast.
500 million subscriber in a country, where in the market is driven by almost more
than half of its rural users. It becomes necessary to get its touchpoint. Undoubtly;
Advertising approach has been constantly changing and rolling throughout its
experiments to grab the attention. The rural audience takes this approach in a
very sensible manner, most of them like this “sentimental” approach of
advertising. Advertising giants like O &M, JWT, Lowe and others are leading ones
who implemented but initiated by Airtel, Vodafone and others.