CHAPTER – I INTRODUCTION AND DESIGN OF THE STUDY
Transcript of CHAPTER – I INTRODUCTION AND DESIGN OF THE STUDY
CHAPTER – I
INTRODUCTION AND DESIGN OF THE STUDY
1.1 INTRODUCTION
In the modern world, marked by hustle and bustle coupled with ceaseless
activities, people have come to depend increasingly on mobile phones to carry out
their day to day chores. Cell phone is a man-made communicator, the application of
which is confined to the area of roaming. It is applied in a wide variety of settings – at
work, at home, and for convenience and security. This equipment has become such an
integral part of life today that it enslaves man to a great extent.
Cell phones are available with an incredible range of functions. Depending on
the cell phone model, one can store information, make task or do lists, keep track of
appointments and set reminders, use the built-in calculator for simple mathematics,
send or receive e-mails, get information from the internet, play games and integrate
other devices such as Personal Digital Assistants (PDAs), MP3 players and GPS
receivers.
Cell phones provide up-to-date information about business and economy
through SMS and MMS. In addition, the greatest advantage derived in the use of cell
phone is that it saves a lot of time and energy of man. Hence, the absence of cell
phone renders man miserable and its very presence becomes all the more
indispensable to him.
1.1.1 ADVENT OF CELL PHONE
Digital, wireless and cellular roots were introduced in 1940s. The Bahrain
Telephone Company (Batelco External Link) began operating a commercial cellular
telephone system. It probably marks the first time in the world when individuals
started using mobile cellular radio. And the first mobile phones made their
appearance on June 17, 1946. They were installed by South Western Bell Telephone
Company, in the cars of two different customers one at St. Louis and another at
Missouri of the United States of America. Bell Laboratories introduced the idea of
cellular communication in 1947 with the police car technology under the guidance of
Joel Engel, Head of Research, Bell Laboratories. However, Motorola was the first to
incorporate the technology into a portable device. Martin Cooper, a former General
Manager for the systems division at Motorola, is considered the inventor of the first
modern portable handset.
1.1.2 CELL PHONE AND ITS WORKING
Cell phone is an electronic device, which connects people around the world. It
is similar to a Walkie – Talkie. The difference between a cell phone and a walkie-
talkie is that two people can communicate at the same time through cell phones and
only one person can talk at a time with a walkie-talkie, cell phone uses two
frequencies, which is why one can talk and listen at the same time. Cell phone can
travel from area to area or cell to cell (cell phone tower coverage area) as device out.
The only limit to where the cell phone can go is how many towers are there to carry
and transmit the frequencies. This is a remarkable improvement over radio telephones
which carry the signals from one control antenna with a range of less than 50 miles.
Basically, cellular radio provides mobile telephone service by employing a
network of cell sites, distributed over a wide area. A cell site consists of a radio
transistor and a base station controller which manages to send and receive traffic from
the mobiles in its geographical area to a cell phone switch. It also employs a tower
and antennas, and provides a link to the distant cellular switch called a Mobile
Telecommunication Switching Office (MTSO).
Advanced mobile phone service using a novel cellular approach operates in 25
to 45 MHZ Bands and 870 to 890 MHZ Bands and 1800 MHZ (Dual Bands).
Recently, the large number of channels available in the new bands has made cellular
approach more practical. It is the usage of frequency which enables a person to talk
and listen at the same time.
On a ‗complexity per cubic inch‘ scale, cell phones are some of the most
intricate devices people play with on a daily basis; modern digital cell phones can
process millions of calls per second in order to compress and decompress the voice
stream. Because of these facilities in cell phones, the demand for them increases
tremendously and so the companies providing services and channels of service also
increase much.
1.2 STATEMENT OF THE PROBLEM
At present, the demand for cell phone is increasing. There are many players in
the cell phone industry. To market their services, every company is adding many new
features. The subscribers are provided with various schemes of cell phone services.
And the market for cell phone has become very competitive. There is cut throat
competition between private players and public sector undertakings such as Bharat
Sanchar Nigam Ltd. (BSNL). Due to poor area coverage, many cell phone industries
lost their market. Non-existence of towers in rural areas resulted in a great loss for
many cell phone industries. Subscribers also face many problems such as battery
break down, abrupt call cuts, poor area coverage and over billing.
In this backdrop, an in-depth study on the cell phone services throws insight into
their strengths and weaknesses and in addition, may suggest enhancements in
appropriate areas for better functionality and/or serviceability. Such a study may also
manifest the opportunities and threats that system faces and puts forward possible
corrective and control measures to be taken in the future.
1.3 REVIEW OF LITERATURE
Extensive literature survey is an integral part of every research. Review of
literature is necessary for the exact understanding of the topic under study. As the
present topic is related to cell phone services, an attempt is made here to review a few
important studies conducted by various management researchers and professionals on
these services. There are only a limited number of studies because the cell phone is of
recent origin. A separate chapter is not allotted for the review due to this reason.
EVOLUTION OF CELL PHONES
MOA Report (2004) says that the mobile phones are often regarded as a fairly
recent innovation; however, they have been freely available in the UK for over 20
years. The first type of mobile phone was large and cumbersome and similar in size to
a large briefcase. These phones were analogue based and in the early days not overtly
reliable, due to the two existing network operators needed to install an effective
infrastructure of network coverage quickly. With the launch of the second generation
(2G) cell phones, consumer popularity towards cell phones rose steadily. Mobile
phones became smaller and easier to handle. Network coverage improved greatly and
it became more reliable. During the period from December 1999 to December 2000,
a total of 46,000 new users a day joined the UK mobile phone network. In UK, during
the Christmas period in 2000, 5.1 million bought mobile phones.
According to Rastogi (2003), mobile phones and fixed line phones are good
substitutes for each other and therefore, the entry of mobile phones in 1995 started
competing with the fixed line phones. At the time of entry of mobile phones into the
market in 1996, the call rate was Rs. 12 per minute for STD calls, which came down
to Rs. 8 per minute in the year 2000. A substantial reduction in intracircle, intercircle,
and international call rates is observed on a regular basis during these ten years after
the entry of mobile phones into the market. The total number of fixed line users
started declining whereas the total number of mobile users showed an increase. In
metro cities, the mobile phones have outnumbered fixed lines. This trend has also
started penetrating into cities and big towns.
DEVELOPMENT OF CELL PHONE INDUSTRY
Bijli (2006) states that Tata Tele Services (TTSL), the second largest CDMA
operator in the country, chalked out a major expansion plan to enhance its retail
presence, investing somewhere between Rs. 800 million and 1 billion by March 2007.
TTSL looks forward to increase its retail count from present 2,700 outlets to 3,500
outlets. The operator currently enjoyed a customer base of 12 million and forecast an
increase by another 50 per cent at the end of the year 2007.
REASONS FOR THE GROWTH OF TELECOM SERVICES IN INDIA
Arumugasamy (2005) opines that there are two factors responsible for the
growth of telecom services in India. One of the reasons is availability of cheaper
handsets with lesser functionality which suits the Indian conditions with dust
resistance and battery capacity. The other reason is the significant dip in tariffs from a
level of around Rs.16 per call for an STD, to a low tariff regime of Re.1 a call
nationwide.
TURNOVER OF TELECOM INDUSTRY
Jharwal (2005) states that the annual turnover of telecom industry during the
year 2005 was more than Rs. 51,600 crores. The telecom operators contribute about
Rs. 6000 to 6,500 crores per annum to the central exchequer in the form of license
fee, USO levy, spectrum charges, and dividends etc. BSNL alone contributed about
Rs. 2500 crores to the central exchequer during the year 2005.
GROWTH OF GDP THROUGH CELL PHONE SERVICES
Business Line (2007) reports that according to a new study of three developing
markets - China, India and Philippines conducted by global consultancy giant Mc
Kinsey, the economic impact of all wireless activities on the economy of these
countries is upto four times of the combined value of the mobile operators. The
wireless activities in India contributed about 2 per cent of the country‘s GDP in 2005;
the study says that the rise goes ahead as the mobile penetration was a mere seven
percent in the year 2004. India, the world‘s largest growing telecom market, is
expected to grow with 500 million mobile users by 2010 and 250 million by 2007
from the current 150 million.
GROWTH OF CELL PHONES
Vivek Gupta (2003) observes that after shipping 20 million phones, Bharti has
become the largest manufacture of telephone instruments globally outside China. The
company is targeting the next 10 million phones by 2005.
Kuber (2005) asserts that the sales of camera phones from all makers topped
84 million units worldwide during the year 2003. It is also no secret that more and
more people now prefer to buy camera phones against ordinary ones. Reliance offers
camera phones at a low price of Rs. 4,500; the penetration is expected to rise further.
The first camera phone was introduced in Japan by a leading mobile operator
belonging to the Vodafone group and was manufactured by Sharp. Today, even the
entry level models from Nokia, Sony Ericsson, Motorola and others offer basic
imaging capabilities and some are also offering video capture and viewing capabilities
and image editing software.
Kuber (2005) opines that among the Asian markets mainly, India and China
are leading the overall mobile phone market. In US, camera phone penetration
reached 14 per cent of the total cell phone user base during the year 2004. In the same
year, the camera phone shipments around the world went up by 200 per cent.
Dhaliwal (2006) reports that India had set to record 3rd
largest mobile
population in world during 2007 as middle classes ‗went mobile‘. Mobile ownership
was expected to cross 100 million in 2007, as the largest middle class in the world
took up ownership.
Krishnaswamy (2006) says that during 2010, India is expected to be the second
largest market for Nokia in terms of volumes. The company claims, it was the first
vendor to manufacture both devices and network equipment. It is on track for the
$150 million project at the start of production. A comparatively late start in the
country, Nokia has gained great brand image.
Indian Minister for Telecommunications (2007) reports that according to 2001
census, the population of India was 109 crores and 80 lakhs. In India, 70 lakh cell
phones are manufactured annually and 20 crore people are cell phone users. Nokia
manufactured 400 lakhs (40 million) cell phones worldwide during 2007.
MODERN FEATURES AVAILABLE IN RECENT CELL PHONES
Kuber (2005) observes that the early camera phones were limited in their
effectiveness due to the limited number of colours produced on a phone screen. The
storage capacity was also limited, hampering their capabilities and price. These
storage problems have vanished with the integration of higher built-in memory and
most camera phones now support memory cards capable of storing gigabytes of data.
With blue tooth gaining popularity amongst these phones, exchanging photos is no
longer a painful process.
REASONS FOR THE DEMAND OF CELL PHONES
Chandiran (2005) points out that yesterday‘s luxuries are today‘s necessities.
Today, there are a number of cell phone service providers in the market and they differ
in network capacities used, reputation, tariff on calls made, etc. In the present world,
even middle class people are using cell phones and they replace the postal, telephone
and telegram services. By considering this situation, cell phone service providers have
come up with different names. But users prefer to avail services from favourite
service providers due to various reasons. It is obvious that coverage area, billing
system, plans offered and low service charges lead to the high use of cell phone
services by the customers.
Sukumar (2006) observes India was the fourth largest market for Nokia after
China, US and UK, in the beginning of the year 2006. At the end of the year, Nokia
was expected to gain the third or second largest market in India.
SUCCESS SECRET OF NOKIA
According to Vivek Gupta (2007), the Indian GSM handset market is growing
at a rapid pace witnessing a 100 per cent growth in volume. Nokia is considered to be
the market leader in India. Nokia‘s leadership is due to its ability to offer a wide
variety of products with style, technology and design that the customer prefers.
EMPLOYEES IN NOKIA
Sukumar (2006) opines that by the end of the year 2005, Nokia employed
around 58,900 personnel worldwide. Out of this, 40 per cent of the employees were
found in Finland. Less than 10 per cent of the work force was based in China, its
number one market.
MARKET SHARE OF CELL PHONES
Gupta (2005) opines that during the year June 2005, dominated largely by
Nokia with a total market share of 59 per cent, and followed by Samsung (13 per cent)
and Motorola (7 per cent) respectively, the Indian mobile handset market catered to 45
million GSM subscribers. According to Gartner, the total number of mobile phones
sold was around 21 million in India in 2004, which is estimated to be 34 million in
2005. To tap the market potential, many large Electronic Manufacturing Services
(EMS) companies are seriously considering setting up their handset facilities in India.
Singh (2006) furnishes the fact that Nokia, Samsung, Sony Ericson and LG
have established their manufacturing base in India to embrace cost effectiveness and
fight the market share battle more effectively. Nokia‘s market share was a staggering
78.8 per cent in February 2006.
Vivek Gupta (2007) asserts that although Nokia is considered to be the leader
in sales, the market share fell down from 80 per cent in December 2005 to 70 per cent
in December 2006. At the same time, Motorola and Sony Ericson gained 10 per cent
and 8 per cent market share respectively. With five to six million subscribers added
every month, handset companies captured a huge market in India during 2007.
Nokia‘s fall in the market share may not affect its volume of sales and profitability.
Industry analysts opine that Nokia‘s market share may stabilize around 70 to 72 per
cent by offering products that are relevant and customized to local needs.
AMOUNT SPENT ON PURCHASE OF CELL PHONES
Parthasarathy (2006) says that the average amount spent on the purchase of
handset, which is around Rs. 5000, represents nearly half a month‘s salary for most of
the customers in India, while for British people, it amounts to just five per cent of their
salary.
FAVOURITE CEL PHONE BRANDS
According to Parthasarathy (2006), Nokia and Samsung are the favourite
brands for Indians and this is same as the global preference. Internationally, Motorola
is in the third place followed by Sony Ericsson and LG.
MARKETING THROUGH CELL PHONES
Bauer (2005) states that the leading industry brands and marketers commit
from five to 25 per cent of their advertising and promotional marketing budgets to
interactive digital media including the mobile phones.
Hanley (2006) briefs mobile marketing as the practice of leveraging mobile
channel for marketing. It is the practice of brands and marketers interacting with their
audience through the mobile channels which include messaging (SMS, MMS, and E-
mail), voice message, alternative alerts, bluetooth, mobile internet, wireless
advertising and data services like mobile TV, picture recognition, mobile portals etc.
The Direct Marketing Association (2006) notes that marketers are employing mobile
marketing for response fulfilment, sales promotion support, direct sales (through
downloadable content), 'interactivity' (such as voting and competitions), customer
service support, research and data collection, couponing and ticketing, Customer
Relationship Management (CRM), advertising and branding .
PROBLEMS FACED BY CUSTOMERS
Sawa (2004) reveals that the cell phone weighing about 100 grams is made
of electronic components. Popularization of cell phones, no doubt, benefits
manufacturers of those components, but has few ripple effects on other industries.
Cell phones consume little power, but cell phone bills are a burden to family
heads, college students, many middle school and high school students. Cell-phone
bills tend to dampen house hold spending.
Gigi Vijayakumar (2005) points out that the users find the current mobile
devices to be ineffective, particularly with respect to restricted keyboards, and pocket
size screens, limiting the usability of mobile commerce. In addition, because of the
limited storage capacity and information access speed of most smart phones and PDAs
(Personal Digital Assistant), it is often difficult or impossible to download large files
to these devices.
Selvaraj (2005) opines that the customers face the problems of cell coverage,
connectivity and billing patterns. Customers also feel that a long time is taken by the
cell phone service providers to rectify the complaints made by them. Women often
find it difficult to carry the handsets with them, while men carry them through their
shirt/pant packets. Customers also fear about the risk from exposure to Radio
Frequency (RF) emission from wireless phones.
Banumathy (2006) opines that the customers face problems like poor coverage
of area, voice clarity, difficulty in getting connections etc.
INDIAN NETWORK CAPACITY IN THE GLOBAL SCENARIO
Jharwal (2005) says that telecom sector is one of the fastest growing sectors of
the Indian economy. During 2005, India had more than 100 million telephone
networks considered to be one of the largest networks in the world. In the year 2005,
India was the fifth largest network in the world after china, USA, Japan and Germany.
GROWTH OF CELL PHONE SERVICES
Krishnan (2004) says that Bharti had 31.9 million mobile users at the end of
2006 compared to 16 million at the end of 2005. Its broadband and telephone
subscriber‘s base grew from 1.2 million to 1.7 million over the one year period. The
revenues and net profit for the nine months was Rs. 13,126 crores and Rs. 2,904
crores; a growth of 59 per cent and 84 per cent respectively compared to the year
2004.
According to Economic Times (2004), 4.06 crore people in India used cell
phone facilities during the year 2004. The subscribers with GSM technology touched
3.20 crores in the year 2004 and the rest of the 86 lakhs subscribers used CDMA
technology in India. BSNL started its service in the year 2002. During August 2004
alone, BSNL added 6.30 lakh subscribers. The overall subscribers‘ base of BSNL till
August 2004 was 69 lakhs, Reliance had 78 lakh subscribers, Bharti Airtel 83 lakh
subscribers, and Hutch had 62 lakh subscribers.
Kumarakaushalam (2005)
reports that according to P.H. Rao, Managing
Director, Bharti Mobinet, the mobile market of Airtel had touched two lakh subscriber
mark, while the Chennai cell phone market had crossed the four lakh figures in
December 2002. The total of
62 million cell phone subscribers in the Indian
Telephone Market is divided between GSM and CDMA and its proportion was 3.8: 1,
and 750 million numbers of cell phones sales was expected worldwide in the year
2005.
According to Business Today (2005), India added 19.6 million mobile
telephone connections in 2004 and 1.44 million increase during the year 2005. During
the next 5 years, above 90 per cent of connections added were expected to be mobile.
In the year 2005, around 80 per cent of India‘s 54 million mobile telephone customers
were those who used pre-paid cards. The remaining 20 per cent customers accounted
for postpaid connections.
Makkar (2005) reveals that there were 34.6 million mobile phone subscribers
in the country as on April 2004 (Cellular Operators Association of India and
Association of Basic Telecom Operators). With approximately seven million
subscribers, Airtel commanded nearly 20 per cent share of the market – making it the
number one brand in the country. Airtel‘s world class service and innovative products
enabled it to establish this position of leadership.
There was a drastic rise in the number of subscribers for Airtel from 1.14
million in 1999 to 3.27 million at the end of January 2001. It had almost doubled to
6.4 million subscribers in the year 2002. As on March 2002, out of the total of 6
million subscribers, 2.4 million subscribers were postpaid subscribers, prepaid
subscribers were about 3.5 million. (Selvaraj 2005)
Bansal (2005) reports that India is the fastest growing mobile communication
market in the world. It was one of the early adopters of Global System for Mobile
Communication (GSM) technology and during 2005 there were over 30 million GSM
subscribers in the country, an increase of 100 per cent over the year 2004. In addition,
there were over 10 million Code-Division Multiple Access (CDMA) subscribers. In
order to keep pace with the world, India should widely adopt third generation (3G)
technology.
Gupta (2005) says that from a slow start in 1995, the Indian mobile phone
industry has shown a growth of more than 100 per cent annually and there is an
increasing demand for better services and lower prices. India has emerged as the
second largest mobile handset market in the world, poised for explosive growth by
2007.
According to Jayaram (2005), the global 3G experience has been far from
good. Almost a year after, full-blown 3G services were launched, there are only 45
million 3G users world-wide across 25 telecom networks. That is just 2.36 per cent of
the 1.9 billion mobile subscribers worldwide during the year 2005. Vodafone, which
has 154.8 million subscribers globally, has just 2.4 million 3G subscribers. The most
optimistic industry forecasts suggest one percent of the mobile subscriber base in India
is shifting to 3G in two years of starting operations. During the year 2005, 60 million
mobile subscribers were available in India. The mobile operators worked towards
meeting the target of 200 million mobile subscribers by the end of 2007.
Bauer (2005) states that in 1997, there were 297 million mobile
subscribers worldwide and in just 10 years, the subscriber rate has ballooned to an
incredible 1.8 billion. Europe is the most mature market with 96 per cent
penetration rates, followed by Japan (79 per cent), the United States (64 per cent),
and the rest of the world is following suit with increased rates of mobile services
adoption.
Agarwal (2006) opines that the mobile subscribers‘ base in India crossed the
100 million mark, from 55 million in May 2005 to 101 million in May 2006.
Connections have grown to 84 per cent, forcing handset vendors to put more thought
into low cost phones aimed at first time buyers.
Sachithanand (2006) points out that during the year 2005, the mobile telephone
base was expected to grow by 38 percent in the metros, 120.6 per cent in ‗C‘ circles,
and 67 percent in ‗B‘ circles. The handset manufacturers tried to make a market out of
small cities, big towns, small towns and even rural India in an effort that spans
everything from Rs. 200 prepaid recharge coupons and Rs.999 life time connections
for mobile phones.
Lath (2006) reveals that India had 5.9 million mobile subscribers in August
2006, the highest in the world (China had 5.19 million). At the end of August 2006,
India had 116.5 million mobile subscribers. This is the first time since the onset of
cell phones in India in 2004, the country is adding more subscribers than China.
Paul (2006) asserts that in January 2006 India added 4.7 million mobile
telephone connections, an average of 105 a minute. That took the total number of
mobile telephone subscribers in India to 81 million. At the time of the official
opening of Nokia‘s Chennai factory, the number had risen to over 85 million.
‗Research and Markets Estimates‘ show that by 2007, India is expected to become the
third largest mobile telephone market in the world after China and the US; another
estimate by Portio Research foretold that India would add 358 million mobile
connections between 2006 and 2011 as compared to China‘s 354 million, the same
study extrapolates that by 2011, China and India together will boast of over a billion
mobile connection to their credit.
Taneja (2007) reveals that the number of telecom subscribers in India was
expected to reach a staggering 250 million by the end of 2007, as competition in
the segment intensified with aggressive expansion plans of regional and global
players. The country‘s total mobile subscriber base stood at about 13 crores, with
an addition of 66 lakh subscribers in the month of October 2007. While GSM
based cell phone subscriber base touched 9.6 crores in October 2007, the CDMA
based mobile user base had swelled to 3.3 crores during the month, according to
the data released by Trade Associations COAI and AUSPI respectively.
Kumar (2007) opines that in India BSNL introduced its service during 2002
October. In India nearly 3 crore BSNL mobile connections were available during the
year 2007. Among the 3 crores, 2 crore connections were in Tamil Nadu. Only 2000
cell phone towers were available in Tamil Nadu in the year 2007. In Kanyakumari
District, one lakh people used BSNL mobile service during 2007. Tamil Nadu had the
majority of BSNL customers in the year 2007.
Pandya (2007) enumerates the facts that at least 110 million new mobile phone
subscribers will be added during the next three years. According to US based
investment bank Morgan Stanley, India‘s mobile market was expected to add a
compound average rate of 40 per cent until 2007. India has also emerged as the
second largest market after china for cell phone handset makers such as Nokia,
Siemens, Sony Ericson, and Korea‘s LG. They have models in the market to keep
pace with the demands from people.
Arumugasamy (2007) brings to light that the mobile services were launched in
1994 in India. The major boost to the sector however began in 2000 after the
announcement of NTP 1999 (New Telecom Policy), which led to a drop in code tariff.
This was followed by the miraculous growth in the years 2003 to 2005, when
telephone connections almost doubled from 54.62 millions in March 2003 to 95
millions in January 2005, i.e., 41 million connections were added in less than two
years.
Sify (2007) reveals that mobile phone users have outstripped traditional
landline connections in the industry, marking a major lifestyle and communications
milestone for the country. A survey conducted by Voice and Data, India‘s leading
telecom magazine, found that 45 million possess mobile phones in India compared to
44 million who have landlines. It took landline phone subscriptions 50 years to get to
the 40 millions mark while mobile phone touched it in nine years and four months.
Among the world‘s countries with billion-plus subscribers, India and China provide
rich pick ups for an industry looking outside the mobile-saturated Europe.
LEADING SERVICE PROVIDERS IN INDIA
Thiagarajan (2004) opines that both Bharti and Hutch continue to pose a
challenge to BSNL. Bharti has maintained its lead in GSM market share over BSNL
at 25.8 per cent during the year 2004. The recent acquisition of Aircel has given
Hutch a higher market share of 23.6 per cent compared to BSNL‘s 21.5 per cent.
EXTRA FACILITIES PROVIDED BY CELL PHONE SERVICES
Sahu (2005) says that the cell phone services were used in their own
transactions such as sending the mobile service charges, bill payment and account
reviews, change in tariffs, new plans and other offers through SMS, MMS etc.
Companies providing information services have initialized to deliver financial, sports
news and traffic updates through M-Commerce applications. Service providers
provide ball-to-ball score up-dates live when a cricket match is being played. By
implementing LBS (Location Based Service), mobile holders‘ location at the top of
the mobile phone can be displayed. In future using the LBS, the mobile holder can
know about the traffic density, travel routes, preferred hotel locations, emergency
services available in the vicinity. Downloading of music, logo, and picture is also
possible through the extra facilities provided by service providers.
FACTORS INFLUENCING CELL PHONE SERVICES
Revathy (2005) found the various factors like poor service from Department of
Telecommunications (DOT), lower service charges offered by DOT than by other
private players, convenience of contact, accessibility, improvement of own
business/profession, prestige and status symbol as the influencing factors for the
possession of cell phone connections.
CUSTOMER ATTITUDE TOWARDS CELL PHONE SERVICES
Selvaraj (2005) states that the existing customers are satisfied with the current
services and the cell phone companies have good prospective customers. By creating
more awareness, better coverage, connectivity and new schemes, the prospects for cell
phone service can be generated. The researcher concluded that ―a bird without wings
cannot fly; likewise a man without cell can not dwell in future‖.
According to Banumathy (2006), the customers feel the cost of the handset is
high, so the manufacturers should reduce the cost to enable more people to buy and
use the cell phones. The subscriber should be well informed about the availability of
services and the methods of using the cell phones. The outgoing charges for cell
phones are felt to be very high. Similarly, incoming charges especially while roaming
are also considered to be high by the customers.
FACTORS INFLUENCING THE SATISFACTION OF CELL PHONE
SUBSCRIBERS
Vijayakumar (2006) observes that the satisfaction derived by the subscribers of
Airtel Network has been influenced by the clarity of signals, availability of plan
options, low call charges and activation formalities.
FACTORS INFLUENCING THE MIGRATION OF CUSTOMERS FROM
PREPAID TO POSTPAID CONNECTIONS
Sudhakar (2005) asserts that there are various reasons for the factors
influencing the migration of cell phone customers from prepaid to postpaid services.
They are the schemes and tariff plans, increased usage of mobile connections, need for
additional services, low air time rates of postpaid in comparison to the prepaid at the
time of purchase, reference group influence, prepaid proving economical and
availability of corporate connections.
FACTORS INFLUENCING THE MIGRATION OF CUSTOMERS FROM
POSTPAID TO PREPAID CONNECTIONS
Sudhakar (2005) reveals the reasons for the customers migrating from postpaid
to prepaid connections. The customers feel that the monthly bill is higher than what
they can afford, high rental charges, service dissatisfaction and decrease in usage of
postpaid services are the various reasons which make the customers migrate from
postpaid to prepaid.
POSITION OF SERVICE PROVIDERS AMONG THE PUBLIC
Banumathy (2006) reveals the position of various service providers. The
customers of Tuticorin district gave first priority to Aircel, second to BSNL, third to
BPL, fourth to Reliance and fifth to Airtel in the year 2006. The service providers are
expected to bridge the gap between the services promised and services offered. BSNL
must improve the quality of services to compete with the private service providers.
PROMOTIONAL STRATEGIES FOLLOWED BY SERVICE PROVIDERS
Thiagarajan (2004) reveals that when Reliance launched its ‗Independence Day
Special Plan‘ during 2004 for its prepaid subscribers at Ps. 0.99 per minute, BSNL set
its prepaid tariff 10 per cent lower than Reliance, but also opened another front by
slashing its postpaid tariff.
Chandiran (2005) brings to light the various promotion strategies followed by
the cell phone services during the growth stage. Brand building, emotional bondage
and mass media are the effective advertising strategies followed as promotional tools.
As sales promotion strategies, the schemes, tariff plans, event sponsoring, special
package for the corporate world, and co-promotion should be given importance during
the growth stage of the cell phone services. In the personal selling process, the
suitable strategies to be followed are focused personal selling and corporate accounts
strategy. In the distribution process, in-depth retailing and high-reach strategies can
be entertained to make the services successful in the near future.
Makkar (2005) asserts that the new brand strategy is focused on meeting the
evolving needs of mobile service customers. It is designed to create a stronger
relevance for a large segment of potential young customers. The strategic framework
will bring new, exciting and innovative world class services through world class
technology with a new look that takes forward the core strength of Airtel.
FINANCIAL REQUIREMENT TO MEET CUSTOMER EXPECTATIONS
Srivastava (2006) points to the financial requirement of the cell phone
companies to meet the customer expectations. The GSM operators already fear that
they would have to invest Rs.3, 000 crores more on base stations if the CDMA
operators bag additional spectrum. Obviously, it is cheaper to get spectrum. But this
would also require the government to convince the Defence Ministry to provide some
spectrum for the development of cell phone industry.
SERVICE QUALITY OF MOBILE OPERATORS
Panandikar (2005) points out that the degree of consumer satisfaction bears a
direct impact on the quality of service where good quality of services gives better
customer satisfaction and bad quality of services leads to dissatisfaction of the
consumer. In a monopoly situation, a customer has no choice but to accept the quality
of services of whatever level of standard that the monopoly operator provides.
However, by bringing in competition and giving free choice to select an operator, the
market share of an operator would largely depend on the quality of services and the
price. More discerning customers might even opt to pay a higher price for a better
quality of services. Consumer complaints represent the negative perception of quality
of services. Quality of service as perceived by a customer largely depends on Service
Support Performance: ability of an operator to provide services and maintain them;
Service Operability Performance: service user–friendliness, simplicity and ease of use;
Service Integrity Performance: transmission performance to the pre-established
performance criteria; Service Ability Performance: accessibility, retainability and
reliability signifying, making available the services to a customer on request and
ability to provide them without interruption.
PROBLEMS AND ISSUES IN TELECOM SECTOR
Srivastava (2006) asserts that increasing competition, emerging markets,
retaining customers, government regulations and maintaining cost are the basic
problems faced by telecom sector. Increase of rivalry between various service
providers leads to price war. In the growing market, the subscribers have a vast range
of choices from various service providers. The challenge for the companies is to give
the customers a good low cost plan. Due to growing competition, the existing
customers might switch over to other connections which are highly beneficial
compared with the existing ones. Telecom Regularity Authority of India (TRAI)
norms are stringent and the service providers find it difficult to meet the norms as per
government regulations. The service providers feel that the maintaining cost for
hotline centres and the staff is high.
SUGGESTIONS TO SERVICE PROVIDERS
Rigin (1993) points out that like manufacturing organizations, service
organizations also face problems of marketing. Hence, service organizations
including cell phone companies have to use promotional strategies such as advertising,
sales promotion, public relations and personal selling. The use of single promotional
tool or combination of tools is normally determined by various factors such as market
conditions, market forces, behavioural pattern of consumers etc. Updated knowledge
and applying appropriate promotional tools in a comprehensive and potential way
which suits the market strategies will have significant influence over the success.
Srivastava (2006) opines that for the survival of telecom companies, they
continuously need to provide customers extra value added features, high quality
services at competitive price, so that the customers do not switch to other service
providers.
Taneja (2007) reveals that price plays an important role in the growing or
emerging market like telecom sector. For telecom companies to survive, be
competitive or even grow, they continuously need to provide customers extra
value added features, high quality services at competitive price, so that customers
do not switch to other operators. Although the other companies are in a growth
phase, they cannot afford to be complacent and need to continuously innovate
through aggressive pricing, attractive schemes and superior service to retain and
add more customers.
So, the need is felt to study the cell phone services on various aspects such as
their importance, growth, marketing, customer attitudes, satisfaction levels and other
problems faced by the customers, dealers and retailers on cell phones and their
services. Based on the mentioned aspects, the following objectives have been framed.
1.4 OBJECTIVES OF THE STUDY
The present study has the following objectives:
1. To study the origin, growth and development of cell phone industry.
2. To identify the customers‘ perceptions regarding the services rendered by
cell phone industry.
3. To analyse the intermediaries involved in the cell phone industry.
4. To find the various types of services provided by the various players and
their marketing strategies in the cell phone industry.
5. To perceive the problems of the customers, the intermediaries and the
service providers encountered in recent years.
6. To offer suggestions to solve the problems and to improve the services.
1.5 HYPOTHESES OF THE STUDY
1. Personal factors do not have influence over the customers towards cell phones.
2. Economic factors do not have influence over the attitude of the customers
towards cell phones.
3. No significant difference exists between different sim card dealers and their
satisfaction levels.
4. Correlation exists between media of advertisement and gender.
5. No significant difference exists in satisfaction levels of sim card dealers in the
different taluks of Kanyakumari District of Tamil Nadu, India.
1.6 SCOPE OF THE STUDY
1. The present study is an attempt to throw light on the preference of cell
phone users with postpaid and prepaid mobile services in Kanyakumari
District, Tamil Nadu, India.
2. This study is an attempt to analyse
(i) the awareness among cell phone users about the various facilities
provided by cell companies and service providers.
(ii) problems faced by the users and dealers.
(iii) the factors influencing the choice for cell phones and cell connections.
3. The study would further highlight the strategies followed by intermediaries in
the mobile services and also the problems faced by them.
1.7 SPECIAL CONCEPTS
Special concepts help to know the technical words involved in the study and
their meanings.
GSM ARCHITECTURE
GSM stands for Global System for Mobile Communication. Another mobile
form CDMA means Code Division Multiple Access. The difference between GSM
and CDMA is any GSM subscriber can easily change the services of an operator in a
single mobile and this is not possible in CDMA. In other words, CDMA is
preformatted with particular service provider‘s choice.
POSTPAID SERVICES
Pay after use is called postpaid service. The cell phone users pay the rentals
and other charges after using the mobile services for a fixed period, usually one
month. It is similar to used landline payment.
PREPAID SERVICES
Pay before use facility is known as prepaid. The cell phone users pay a fixed
sum and get talk time. When the user dials to another, his talk time decreases. This is
similar to ITC (India Telecommunication Card). To avail prepaid service, the cell
phone users buy a starter pack and are given a SIM card and to continue the usage,
recharge coupons are available.
EASY CHARGE
Easy charge is a facility provided by most of the dealers and retailers to the
customers to facilitate immediate recharge. The customers can recharge their mobile
wherever and whenever they like. When they make a call or send a message to the
dealer or retailer, the requested amount will be added to their mobile account
immediately.
LAPU SERVER
LAPU means Load As a Per cent of Use. LAPU server plays a main role in
the easy charge process. In the easy charge process, the requested amount of the
customer is accounted immediately with the help of this server. As soon as the
message is received from the customer by the dealer, he accesses his account using
LAPU server. The LAPU server increases the requested amount as the balance of the
customer immediately.
1.8 SAMPLING TECHNIQUES
The study is an empirical study based on survey method. Primary and
secondary data were collected by the researcher herself.
Stratified random sampling technique was adopted to collect details on
customers‘ perceptions regarding the cell phones. A sample of 660 respondents has
been selected on the basis of random sampling method. The respondents are drawn
from four groups of people connected with the cell phone industry. Altogether, 300
cell phone users were contacted and interviewed with the help of the questionnaire
specially designed for the purpose.
To detain information regarding marketing strategies followed by
intermediaries, 360 intermediaries such as 120 cell phone dealers, 120 cell phone
service distributors/dealers, 120 retailers of various service providers were contacted
and interviewed.
1.9 AREA PROFILE
Kanyakumari District is a fertile land with an area of 1672 sq.kms. It occupies
1.29 per cent of the total extent of Tamil Nadu. It ranks first in literacy among other
districts in Tamil Nadu. According to the census of India 2001, the population of the
district is 16, 76,034, of which 8, 32,269 are males and 8, 43,765 are females. There
are 13, 08,322 literates in the district, out of which 6, 68,667 are males and the rest are
females.
1.10 STUDY AREA
The present study, Cell Phone Services in KanyaKumari District, is an
attempt to analyse the market structure of cell phone industry and customers‘
perceptions towards cell phones with special reference to Kanyakumari District. The
taluks of Vilavancode, Kalkulam, Agasteeswaram and Thovalai of the district have
been taken as the representative regions of Kanyakumari District.
1.11 PILOT STUDY
A pilot study was conducted covering 100 cell phone users for assessing the
customer‘s perceptions regarding cell phones and cell connections.
Again to gain information regarding marketing strategies followed by
intermediaries, additional 150 intermediaries such as 50 cell phone dealers, 50 cell
phone service distributors/dealers, 50 retailers of various service providers were
contacted and interviewed. Based on the requirements of the research study, the
questionnaire was suitably restructured and used for collecting requisite information to
meet the objectives of the study.
1.12 TOOLS USED FOR COLLECTION OF DATA
The study is based on both the primary and secondary data. To collect general
information regarding cell phone services, secondary data were collected from various
journals, published reports, books and the like. The questionnaire on customers‘
attitudes towards cell phones was prepared and administered to collect information
concerning the customers‘ perceptions about cell phone industry. To collect
information regarding the marketing of cell phones, a questionnaire ‗Survey of
Intermediaries involved in Cell Phone Industry‘ was prepared and administered.
1.13 TOOLS USED FOR ANALYSIS AND INTERPRETATION
Simple statistical tools such as averages, percentages, Chi-square, Rank
Correlation, Weighted Average and ANOVA have been used for analysis and
interpretation of the data collected.
1.14 LIMITATIONS OF THE STUDY
1. The study is mainly based on random sampling method instead of census
method. Hence the findings of the study cannot be generalized.
2. It was also very difficult to obtain necessary information from the
customers, dealers and retailers because they are reluctant to disclose all the
information available with them.
3. Since the findings are arrived at from the study of Kanyakumari district
only, the findings cannot be generalized.
4. Due to the explosive growth of the cell phone industry, generalizations of
the facts deduced within the duration of two years could not fully be realized or relied
on. However, the analysis made is as scientific as possible giving attention to all these
limitations.
1.15 SCHEME OF REPORTING
The present study has been reported through eight chapters:
The first chapter is devoted to ‘Introduction and Design of the Study’. This
chapter also includes importance of the study, advent of cell phone, working of cell
phone, statement of the problem, review of literature, objectives of the study,
hypotheses of the study, scope of the study, period of study, special concepts used,
sampling techniques, area profile, study area, pilot study, tools used for collection of
data, tools used for analysis and interpretation, limitations of the study and scheme of
reporting.
The second chapter discusses the ‗Origin and Growth of Cell Phone Services’,
in India as well as in Tamil Nadu. This chapter also discusses about the top 15 cell
phone subscribers, world-wide market share of mobile phones, and history of cell
phones in India, growth of subscribers in Tamil Nadu and BSNL‘s mobile subscriber
additions.
The third chapter, ‗Service Providers of Cell Phones in Kanyakumari
District’, deals with the different types of prepaid and postpaid services provided by
various service providers and the economics of cell phone industry in Kanyakumari
district of south Tamil Nadu.
The fourth chapter, ‘Intermediaries in the Cell Phone Services’, deals with
the market structure, channels involved and occupational details of the intermediaries
involved in cell phone services.
The fifth chapter, ‘Customer Attitude towards the Cell Phones’, describes
the social and occupational background of the cell phone users as well as the
customers‘ perceptions regarding various cell phones.
The sixth chapter, ‘Problems and Prospects of Cell Phone Services’, deals
with the specific problems faced in the marketing as well as using of cell phones. It
also suggests possible remedial measures to overcome difficulties and challenges in
the field of cell phone industry.
The seventh chapter, ‗Findings and Suggestions’, being the concluding
chapter, is devoted to summarise the major findings of the study. Suggestions have
been offered to solve the problems faced by the cell phone industry. In the final
chapter, certain areas have been identified and recommended for future study.