UNDERSTANDING THE CUSTOMER VALUE DELIVERY SYSTEM THROUGH VARIOUS MARKETING CHANNELS IN BHARTI...

7/29/2019 UNDERSTANDING THE CUSTOMER VALUE DELIVERY SYSTEM THROUGH VARIOUS MARKETING CHANNELS IN BHARTI

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UNDERSTANDING THECUSTOMER VALUE DELIVERY

SYSTEM THROUGH VARIOUS

MARKETING CHANNELS

IN

BHARTI AIRTEL, Hyderabad[CHANNEL MANAGEMENT]

2012

RAKESH SAI RAYAPUDI (11BSPHH010647)

PROJECT in BHARTI AIRTEL,HYD

6/1/2012


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A PROJECT REPORT

by

RAKESH SAI RAYAPUDI

11BSPHH010647

This report is submitted in a requirement of partial fulfillmentof MBA program at IBS, Hyderabad

Faculty Guide Company Guide

Dr.Ammani.P Mr.A.S.Giridhar


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Authorization Letter

I hereby declare that all works shown in this project is true to my

knowledge, and has been completed in and around Hyderabad. This

study was conducted over a span of 3 months from March 2012 to

June 2012. This project is meant for partial fulfillment of the MBA

program at IBS Business School, Hyderabad.

Yours Faithfully

Rakesh Sai Rayapudi

11BSPHH010647


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i.

Internship Certificate

This is to certify that Mr. Rakesh Sai Rayapudi Enroll no. 11BSPHH010647, student of IBS

Hyderabad, has undergone 12 weeks of Summer Internship in Bharti Airtel Ltd, HYD from March 13 th

2012 to June 2nd

2012 under the guidance of Mr.A.S.Giridhar (B2B Enterprise head for Bharti Airtel,Hyd)

During the period of internship with us he was ..

Date : 2/6/2012


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ii.

ACKNOWLEDGEMENT

I would like to express my profound gratitude to all those who have

been instrumental in the completion of my project.

Firstly, I would like to thank the organization Bharti Airtel Ltd for

providing me a fruitful association by way of summer internship.

This opportunity has provided me with a comprehensive insight into

Channel management and specially Telecom Industry, its

operations, challenges and opportunities.

I hereby regard my sincere thanks to my company guide Mr.A.S

Giridhar and Mrs. Sai Bhargavi Naidu for giving us their guidance

and support throughout my tenure in the company. I would also like

to thank them for their constant insights and encouragement.

I am deeply grateful to my faculty guide Dr.Ammani.P for her

invaluable support and guidance throughout the internship.

I also thank the staff of Bharti Airtel Ltd, and lastly I wish to thank

my Family and Friends for the valuable support and advice.


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iii. Executive Summary:

The process of understanding the customer value delivery system through various marketing channels in

Bharti Airtel is the sole reason for the consistent progress in sales and revenue by which the company as

well as the channel members would reap the benefits. Doing more business with the channel by reaching

periodical targets can pave the way in reaching long term goals and objectives of the company eventually.

The channel basically works in an organized manner having a channel partner under which few sales

executives work in carrying forward the products and services to the B2B market that include enterprise

systems along with small and medium business. Every field sales executive interact and bring out the

scope of new accounts and extension of service to the existing customers in the market. The variables

involved were setting the distribution objectives, channel design, logistics, image building, inventory

management, channel management, payment & credit, promotional assistance, setting targets, coveragefrequency and motivating channel members to perform.

The focus on effective channel management relies on key decisions such as: Designing of the marketing

channels, selecting of channel members, identifying the target set of customers by locating the area that

has the room for improvement and capturing the sale. To lead the channel productively, the

communication and knowledge of the products is however essential to all the sales executives. Driving

the appropriate and eligible sales force is again a challenging aspect for any channel to perform as per the

required standards. The study of channel and its performance is the vital part for a multi-national

company like Airtel.

This project consists of responses and feedback collected after interaction with various channel partners

and sales executives among few channels situated within the Hyderabad city. All this information is used

in preparing a questionnaire essential for the channel development. Based on the qualitative data obtained,

the eventual performance and skills of various channels are interpreted by which we can infer the valuable

output or desired results required for the company growth and development


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TABLE OF CONTENTS

i. Internship Certificate..iv

ii. Acknowledgement.v

iii.Executive Summary...vi

1. Introduction.9

1.1 Background...9

1.2 Objectives..9

1.3 Methodology.....10

1.4 Limitations10

2. Economy Industry Analysis..112.1 Introduction...10

2.2 Liberalization & Privitisation13

2.3 Regulatory Framework..15

2.4 Revenue & Growth16

2.5 Domestice Economic Conditions...17

2.6 Foreign Direct Investment Policy..18

2.7 Opportunity & Success factors..19

2.8 Major Players.20

3. Company Analysis.21

3.1 About Airtel21

3.2 Products & Services21

3.3 Business Life Cycle.23

3.4 Business Segmentation24

3.5 Competitor Analysis25

3.6 Promotional Practices..26

3.7 Branding Practice.27


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4. Project Specific Analysis..28

4.1 Background28

4.2 Literature Review..30

4.2.1 Channel Relations.30

4.2.2 Role of Channel Management...31

4.3 Distribution Channel in Airtel31

4.4 Physical Structure of Channels in Bharti Airtel.32

4.5 Conceptualisation33

5. Conclusion & Recommendations50

6. Contribution.51

7. Learnings..52

8. Reference..53

9. Annexure53


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1. Introduction

1.1 Background

The project is an extensive report on how Bharti Airtel company strategies itself to increase the

market share through the growth and development of channels. It also helps us to understand the customer

delivery value system through various marketing channels within the company across Hyderabad. The

line of products from Airtel offered is done through a method of channelizing that includes partners and

sales executives. It is ensured that there is a proper flow of channel from the company to the end user in

B2B market.The project also mainly deals with the analysis between management, channel partners and

field sales executives in developing a good working relationship at various levels. This can be acquired by

setting distribution objectives with a better channel design and factors like promotional assistance and

motivating channel members by building an adequate efficient workforce for the organization. All

channels under the company should be working with the same objective making it beneficial to the

company as well as the customers. In case of new account penetration, I was given the list of B2B

companies in and around Hyderabad and gathered information through tele-calling about the existence

and scope of acquiring the new accounts.

1.2 Objectives

To ensure in providing an accurate role for the company executives in developing

channel relations with the knowledge of channel design decisions by the Organization.

To understand channel behavior and nature of existing marketing channels in Bharti

Airtel.

Analyzing the channel management decision to increase its sales in B2B market of

small and medium enterprises.

Identifying non-penetrated account in Hyderabad

Study about different channel partners and channel management in Airtel

Channel development for new account penetration.


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1.3 Methodology

The methodology followed for the channel management is a culmination of research, best

practices implemented and experience. An effective channel management begins with ensuring that all the

companys processes & procedures are aligned with the goal of working with channel partners. It also

includes executive management support and operational issues like the pricing, order processing,

technical support, database management, end-user information capture etc along with the sales

compensation schemes.

The method includes reviewing the skills and knowledge of vendor or channel staff, and examining the

potential of conflict between internal systems and a sound channel philosophy. Outlining the processes to

monitor and enhance by measuring the channel performance and predicting the trends. The feedback or

the inputs from this project retrieved from the gathered information of all channels by interaction with

channel members can also act as the source for reviewing channel efficiencies and assisting in the

ongoing channel optimization process.

1.4 Limitations

- Possible to reach only two channels in a day.- Availability of FSEs only in particular time in most of the channels

- Chance of biased information from FSEs or Partners.

- Unavailability of few channels or its partners.

- Partial information from channels that are newly started in the market.

- Reaching system integrators as and when required


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2. ECONOMY INDUSTRY ANALYSIS

2.1 Introduction

Indian telecom sector is more than 165 years old. Telecommunications was first introduced in India in

1851 when the first operational land lines were laid by the government near Kolkata (then Calcutta),

although telephone services were formally introduced in India much later in 1881. Further, in 1883,

telephone services were merged with the postal system. In 1947, after India attained independence, all

foreign telecommunication companies were nationalized to form the Posts, Telephone and Telegraph

(PTT), a body that was governed by the Ministry of Communication. The Indian telecom sector was

entirely under government ownership until 1984, when the private sector was allowed in

telecommunication equipment manufacturing only. In 1975, theDepartment of Telecom (DoT) was

separated fromIndian Post & Telecommunication Department. DoT was responsible for telecom

services in entire country until 1985 when Mahanagar Telephone Nigam Limited (MTNL) was carved

out of DoT to run the telecom services ofDelhi and Mumbai. In 1990s the telecom sector was opened up

by the Government for private investment as a part ofLiberalization-Privatization-Globalization policy.

Therefore, it became necessary to separate the Government's policy wing from its operations wing.

The Government of India corporatized the operations wing of D.O.T on 1 October 2000 and named it

as Bharat Sanchar Nigam Limited (BSNL). Many private operators, such as Reliance

Communications, Tata Indicom, Vodafone, Loop Mobile,Airtel, Idea etc., successfully entered the high

potential Indian telecom market. The government concretised its earlier efforts towards developing R&D

in the sector by setting up an autonomous body Centre for Development of Tele-matics (C-DOT) in

1984 to develop state-of-the-art telecommunication technology to meet the growing needs of the Indian

telecommunication network. The actual evolution of the industry started after the Government separated

the Department of Post and Telegraph in 1985 by setting up the Department of Posts and the Department

of Telecommunications (DOT).

Role in Indias development

India's telecommunication system is highly developed. Indian telecom industry underwent a high pace of

market liberalization and growth since 1998. India is served by an extensive system of automatic

telephone exchanges connected by modern networks of fiber-optic cable, coaxial cable, microwave radio

relay and is being served by one of the largest domestic satellite systems ( INSAT ) of the world.
http://en.wikipedia.org/wiki/Department_of_Telecomhttp://en.wikipedia.org/wiki/Department_of_Telecomhttp://en.wikipedia.org/wiki/Department_of_Telecomhttp://en.wikipedia.org/w/index.php?title=Indian_Post_%26_Telecommunication_Department&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Indian_Post_%26_Telecommunication_Department&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Indian_Post_%26_Telecommunication_Department&action=edit&redlink=1http://en.wikipedia.org/wiki/Mahanagar_Telephone_Nigam_Limitedhttp://en.wikipedia.org/wiki/Delhihttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Liberalisationhttp://en.wikipedia.org/wiki/Privatizationhttp://en.wikipedia.org/wiki/Globalizationhttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Bharat_Sanchar_Nigam_Limitedhttp://en.wikipedia.org/wiki/Reliance_Communicationshttp://en.wikipedia.org/wiki/Reliance_Communicationshttp://en.wikipedia.org/wiki/Tata_Indicomhttp://en.wikipedia.org/wiki/Vodafone_Essarhttp://en.wikipedia.org/wiki/Loop_Mobile_Indiahttp://en.wikipedia.org/wiki/Bharti_Airtelhttp://en.wikipedia.org/wiki/Bharti_Airtelhttp://en.wikipedia.org/wiki/Bharti_Airtelhttp://en.wikipedia.org/wiki/Idea_Cellularhttp://en.wikipedia.org/wiki/INSAThttp://en.wikipedia.org/wiki/INSAThttp://en.wikipedia.org/wiki/Idea_Cellularhttp://en.wikipedia.org/wiki/Bharti_Airtelhttp://en.wikipedia.org/wiki/Loop_Mobile_Indiahttp://en.wikipedia.org/wiki/Vodafone_Essarhttp://en.wikipedia.org/wiki/Tata_Indicomhttp://en.wikipedia.org/wiki/Reliance_Communicationshttp://en.wikipedia.org/wiki/Reliance_Communicationshttp://en.wikipedia.org/wiki/Reliance_Communicationshttp://en.wikipedia.org/wiki/Bharat_Sanchar_Nigam_Limitedhttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Globalizationhttp://en.wikipedia.org/wiki/Privatizationhttp://en.wikipedia.org/wiki/Liberalisationhttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Delhihttp://en.wikipedia.org/wiki/Mahanagar_Telephone_Nigam_Limitedhttp://en.wikipedia.org/w/index.php?title=Indian_Post_%26_Telecommunication_Department&action=edit&redlink=1http://en.wikipedia.org/wiki/Department_of_Telecom


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India possesses a diversified communications systems that link all parts of the country by telephone,

Internet, radio, television and telegraph. The primary regulatory body of telecommunications in India is

the Telecom Regulatory Authority of India ( TRAI ).

India has the world's second-largest mobile phone user base with over 919 million users as of March

2012. It has the world's third-largest Internet users with over 121 million as of December 2011. In recent

times India has become the world's most competitive and one of the fastest growing telecom markets .

The industry is expected to reach a size of 344,921 crore (US$68.81 billion) by 2012 at a growth rate of

over 26 per cent, and generate employment opportunities for about 10 million people during the same

period. According to analysts, the sector would create direct employment for 2.8 million people and for 7

million indirectly. The total revenue of the Indian telecom sector grew by 7% to

283,207 crore (US$56.5 billion) for 201011 financial year, while revenues from telecom equipment

segment stood at 117,039 crore (US$23.35 billion).

The telecommunications industry in India is dominated by private-sector and two state-run businesses.

Most companies were formed by a recent revolution and restructuring launched within a decade, directed

by Ministry of Communications and IT, Department of Telecommunications and Minister of Finance.

Since then, most companies gained 2G,3G and 4G licenses and engaged fixed-line, mobile and internet

business in India. On landlines, intra-circle calls are considered local calls while inter-circle are

considered long distance calls. Foreign Direct Investment policy which increased the foreign ownership

cap from 49% to 74%. Currently Government is working to integrate the whole country in one telecom

circle. Some major telecom operators in India include Airtel, Vodafone, Idea, Aircel, BSNL, MTNL,

Reliance Communications, TATA Teleservices, Infotel, MTS, Uninor, TATA DoCoMo, Videocon,

Augere, Tikona Digital.

Telephone Subscribers (Wireless and Landline): 951.34 million (March 2012)

Land Lines: 32.17 million (March 2012)

Cell phones: 919.17 million (March 2012)

Monthly Net phone Addition: 7.85 million (Oct 2011 - Mar 2012)

Teledensity: 78.66 % (March 2012)

Projected Teledensity: 1 billion, 84% of population by 2012.
http://en.wikipedia.org/wiki/TRAIhttp://en.wikipedia.org/wiki/List_of_countries_by_number_of_mobile_phones_in_usehttp://en.wikipedia.org/wiki/List_of_Internet_users_by_countryhttp://en.wikipedia.org/wiki/Crorehttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Crorehttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Crorehttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Ministry_of_Communications_and_Information_Technology_(India)http://en.wikipedia.org/wiki/Department_of_Telecommunicationshttp://en.wikipedia.org/wiki/Minister_of_Finance_(India)http://en.wikipedia.org/wiki/2Ghttp://en.wikipedia.org/wiki/3Ghttp://en.wikipedia.org/wiki/4Ghttp://en.wikipedia.org/wiki/4Ghttp://en.wikipedia.org/wiki/3Ghttp://en.wikipedia.org/wiki/2Ghttp://en.wikipedia.org/wiki/Minister_of_Finance_(India)http://en.wikipedia.org/wiki/Department_of_Telecommunicationshttp://en.wikipedia.org/wiki/Ministry_of_Communications_and_Information_Technology_(India)http://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Crorehttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Crorehttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Crorehttp://en.wikipedia.org/wiki/List_of_Internet_users_by_countryhttp://en.wikipedia.org/wiki/List_of_countries_by_number_of_mobile_phones_in_usehttp://en.wikipedia.org/wiki/TRAI


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2.2 Liberalization and privatization of the market

The Indian government was composed of many factions (parties) which had different ideologies. Some of

them were willing to throw open the market to foreign players (the centrists) and others wanted the

government to regulate infrastructure and restrict the involvement of foreign players. Due to this political

background it was very difficult to bring about liberalisation in telecommunications. When a bill was in

parliament a majority vote had to be passed, and such a majority was difficult to obtain, given to the

number of parties having different ideologies.

Liberalization started in 1981 when Prime Minister Indira Gandhi signed contracts with Alcatel CIT of

France to merge with the state owned Telecom Company (ITI), in an effort to set up 5,000,000 lines per

year. But soon the policy was let down because of political opposition. She invited Sam Pitroda a US

based Non-resident Indian NRI to set up a Center for Development of Telematics(C-DOT), however the

plan failed due to political reasons. During this period, after the assassination of Indira Gandhi, under theleadership ofRajiv Gandhi, many public sector organisations were set up like the Department of

Telecommunications (DoT), VSNL and MTNL. Many technological developments took place in this

regime but still foreign players were not allowed to participate in the telecommunications business.

The demand for telephones was ever increasing. It was during this period that the Narsimha Rao-led

government introduced the national telecommunications policy [NTP] in 1994 which brought changes in

the following areas: ownership, service and regulation of telecommunications infrastructure. They were

also successful in establishing joint ventures between state owned telecom companies and international

players. But still complete ownership of facilities was restricted only to the government owned

organisations. Foreign firms were eligible to 49% of the total stake. The multi-nationals were just

involved in technology transfer, and not policy making.

During this period, the World Bank and ITU had advised the Indian Government to liberalise long

distance services to release the monopoly of the state owned DoT and VSNL; and to enable competition

in the long distance carrier business which would help reduce tariff's and better the economy of the

country. The Rao run government instead liberalised the local services, taking the opposite political

parties into confidence and assuring foreign involvement in the long distance business after 5 years. The

country was divided into 20 telecommunication circles for basic telephony and 18 circles for mobile

services. These circles were divided into category A, B and C depending on the value of the revenue in

each circle. The government threw open the bids to one private company per circle along with

government owned DoT per circle.
http://en.wikipedia.org/wiki/Indira_Gandhihttp://en.wikipedia.org/w/index.php?title=Alcatel_CIT&action=edit&redlink=1http://en.wikipedia.org/wiki/Non-resident_Indian_and_Person_of_Indian_Originhttp://en.wikipedia.org/wiki/C-DOThttp://en.wikipedia.org/wiki/Rajiv_Gandhihttp://en.wikipedia.org/wiki/Department_of_Telecommunicationshttp://en.wikipedia.org/wiki/Department_of_Telecommunicationshttp://en.wikipedia.org/wiki/VSNLhttp://en.wikipedia.org/wiki/MTNLhttp://en.wikipedia.org/wiki/ITUhttp://en.wikipedia.org/wiki/ITUhttp://en.wikipedia.org/wiki/MTNLhttp://en.wikipedia.org/wiki/VSNLhttp://en.wikipedia.org/wiki/Department_of_Telecommunicationshttp://en.wikipedia.org/wiki/Department_of_Telecommunicationshttp://en.wikipedia.org/wiki/Department_of_Telecommunicationshttp://en.wikipedia.org/wiki/Rajiv_Gandhihttp://en.wikipedia.org/wiki/C-DOThttp://en.wikipedia.org/wiki/Non-resident_Indian_and_Person_of_Indian_Originhttp://en.wikipedia.org/w/index.php?title=Alcatel_CIT&action=edit&redlink=1http://en.wikipedia.org/wiki/Indira_Gandhi


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For cellular service two service providers were allowed per circle and a 15 years license was given to

each provider. During all these improvements, the government did face oppositions from ITI, DoT,

MTNL, VSNL and other labour unions, but they managed to keep away from all the hurdles.

After 1995 the government set up TRAI (Telecom Regulatory Authority of India) which reduced the

interference of Government in deciding tariffs and policy making. The DoT opposed this. The political

powers changed in 1999 and the new government under the leadership of Atal Bihari Vajpayee was more

pro-reforms and introduced better liberalisation policies. They split DoT in two- one policy maker and the

other service provider (DTS) which was later renamed as BSNL. The proposal of raising the stake of

foreign investors from 49% to 74% was rejected by the opposite political party and leftist thinkers.

Domestic business groups wanted the government to privatise VSNL. Finally in April 2002, the

government decided to cut its stake of 53% to 26% in VSNL and to throw it open for sale to private

enterprises. TATA finally took 25% stake in VSNL.

This was a gateway to many foreign investors to get entry into the Indian Telecom Markets. After March

2000, the government became more liberal in making policies and issuing licenses to private operators.

The government further reduced license fees for cellular service providers and increased the allowable

stake to 74% for foreign companies. Because of all these factors, the service fees finally reduced and the

call costs were cut greatly enabling every common middle class family in India to afford a cell phone.

Nearly 32 million handsets were sold in India. The data reveals the real potential for growth of the Indian

mobile market.

In March 2008 the total GSM and CDMA mobile subscriber base in the country was 375 million, which

represented a nearly 50% growth when compared with previous year. As the unbranded Chinese cell

phones which do not have International Mobile Equipment Identity (IMEI) numbers pose a serious

security risk to the country, Mobile network operators therefore planned to suspend the usage of around

30 million mobile phones (about 8 % of all mobiles in the country) by 30 April. 56 years the average

monthly subscribers additions were around 0.05 to 0.1 million only and the total mobile subscribers base

in December 2002 stood at 10.5 millions. However, after a number of proactive initiatives taken by

regulators and licensors, the total number of mobile subscribers has increased rapidly to 991 million

subscribers as of March 2012.

India has opted for the use of both the GSM (global system for mobile communications) and CDMA

(code-division multiple access) technologies in the mobile sector. In addition to landline and mobile

phones, some of the companies also provide the WLL service. The mobile tariffs in India have also

become lowest in the world. A new mobile connection can be activated with a monthly commitment of

US$0.15 only. In 2005 alone additions increased to around 2 million per month in 200304 and 200405.
http://en.wikipedia.org/wiki/Indian_Telephone_Industrieshttp://en.wikipedia.org/wiki/Telecom_Regulatory_Authority_of_Indiahttp://en.wikipedia.org/wiki/Atal_Bihari_Vajpayeehttp://en.wikipedia.org/wiki/BSNLhttp://en.wikipedia.org/w/index.php?title=Cell_phone_service&action=edit&redlink=1http://en.wikipedia.org/wiki/GSMhttp://en.wikipedia.org/wiki/CDMAhttp://en.wikipedia.org/wiki/International_Mobile_Equipment_Identityhttp://en.wikipedia.org/wiki/Mobile_network_operatorhttp://en.wikipedia.org/wiki/Global_System_for_Mobile_Communicationshttp://en.wikipedia.org/wiki/Code_division_multiple_accesshttp://en.wikipedia.org/wiki/Code_division_multiple_accesshttp://en.wikipedia.org/wiki/Mobile_phonehttp://en.wikipedia.org/wiki/Landlinehttp://en.wikipedia.org/wiki/Wireless_local_loophttp://en.wikipedia.org/wiki/Wireless_local_loophttp://en.wikipedia.org/wiki/Landlinehttp://en.wikipedia.org/wiki/Mobile_phonehttp://en.wikipedia.org/wiki/Code_division_multiple_accesshttp://en.wikipedia.org/wiki/Code_division_multiple_accesshttp://en.wikipedia.org/wiki/Code_division_multiple_accesshttp://en.wikipedia.org/wiki/Global_System_for_Mobile_Communicationshttp://en.wikipedia.org/wiki/Mobile_network_operatorhttp://en.wikipedia.org/wiki/International_Mobile_Equipment_Identityhttp://en.wikipedia.org/wiki/CDMAhttp://en.wikipedia.org/wiki/GSMhttp://en.wikipedia.org/w/index.php?title=Cell_phone_service&action=edit&redlink=1http://en.wikipedia.org/wiki/BSNLhttp://en.wikipedia.org/wiki/Atal_Bihari_Vajpayeehttp://en.wikipedia.org/wiki/Telecom_Regulatory_Authority_of_Indiahttp://en.wikipedia.org/wiki/Indian_Telephone_Industries


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In June 2009, the Government of India banned the import of several mobile phones manufactured

in China citing concerns over quality and the lack of IMEI's which make it difficult for authorities in

India to track the sale and use of such phones. In April 2010, the Government was also reported to be

blocking Indian service providers from purchasing Chinese mobile technology citing concerns that

Chinese hackers could compromise the Indian telecommunications network during times of national

emergency. A series ofattacks on Indian government websites and computer networks by suspected

Chinese hackers has also made Indian regulators suspicious with regards to the import of potentially

sensitive equipment from China. The companies reported to be affected by this are Huawei

Technologies and ZTE.

GSM Sector

In terms of the Global System for Mobile Communication (GSM) subscriber base, it places India third

after China and

Russia. China had 401.7 million GSM subscribers.

2.3 Regulatory Framework

The Telecom Regulatory Authority of India (TRAI) was set up in March 1997 as a regulator for Telecom

sector. The TRAIs functions are recommendatory, regulatory and tariff setting in telecom sector.

Telecom Disputes Settlement and Appellate Tribunal (TDSAT) came into existence in May, 2000.

TDSAT has been empowered to adjudicate any dispute

between a licensor and a licensee

between two or more service providers

between a service provider and a group of consumers

hear and dispose of appeal against any direction, decision or order of TRAI.
http://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/People%27s_Republic_of_Chinahttp://en.wikipedia.org/wiki/International_Mobile_Equipment_Identityhttp://en.wikipedia.org/wiki/GhostNethttp://en.wikipedia.org/wiki/Computer_networkhttp://en.wikipedia.org/wiki/Huawei_Technologieshttp://en.wikipedia.org/wiki/Huawei_Technologieshttp://en.wikipedia.org/wiki/ZTEhttp://en.wikipedia.org/wiki/ZTEhttp://en.wikipedia.org/wiki/Huawei_Technologieshttp://en.wikipedia.org/wiki/Huawei_Technologieshttp://en.wikipedia.org/wiki/Huawei_Technologieshttp://en.wikipedia.org/wiki/Computer_networkhttp://en.wikipedia.org/wiki/GhostNethttp://en.wikipedia.org/wiki/International_Mobile_Equipment_Identityhttp://en.wikipedia.org/wiki/People%27s_Republic_of_Chinahttp://en.wikipedia.org/wiki/Government_of_India


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Tariffs for telecommunication services have evolved from a regime where tariffs were determined by

Telecom Regulatory Authority of India to a regime where tariffs are largely under forbearance. TRAI

intervenes by regulating the tariffs for only those services, the markets of which are not

competitive.Universal Service Obligation Fund (USOF) exclusively for meeting the Universal Service.

Obligation was established in April, 2002. The Universal Service Levy is presently 5 per cent of the

Adjusted Gross Revenue (AGR) of all telecom service providers except the pure value added service

providers like Internet, Voice Mail, E-Mail service providers etc. Indian Telegraph Act has been amended

in October2006 to provide support for all telegraph services including mobile and broadband to bridge

the digital divide. With the introduction of the Unified Access Licensing Regime, operators can offer

telecom access services to consumers in a technology neutral manner, subject to fulfilling certain

conditions. Introduction of this regime has also broken the legal/regulatory impasse between the cellular

and basic service providers. Issuance of Intra-Circle Merger and Acquisition Guidelines provide investors

an opportunity to take stakes in existing telecom operations.

2.4 Revenue and growth

The total revenue in the telecom service sector was 86,720 crore (US$17.3 billion) in 200506 as

against 71,674 crore (US$14.3 billion) in 20042005, registering a growth of 21%.estimted revenue of

FY'2011 is Rs.835 crore (US$ 19 Bn Approx).The total investment in the telecom services sector

reached 200,660 crore (US$40 billion) in 200506, up from 178,831 crore (US$35.7 billion) in the

previous fiscal.

Telecommunication is the lifeline of the rapidly growing Information Technology industry. Internet

subscriber base has risen to more than a 121 million in 2011. Out of this 11.47 million were broadband

connections. More than a billion people use the Internet globally. Under the Bharat Nirman Programme,

the Government of India will ensure that 66,822 revenue villages in the country, which have not yet been

provided with a Village Public Telephone (VPT), will be connected. However doubts have been raised

about what it would mean for the poor in the country.

It is difficult to ascertain fully the employment potential of the telecom sector but the enormity of the

opportunities can be gauged from the fact that there were 3.7 million Public Call Offices in December

2005 up from 2.3 million in December 2004.
http://en.wikipedia.org/wiki/Crorehttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Crorehttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Crorehttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Crorehttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/w/index.php?title=Bharat_Nirman_Programme&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Bharat_Nirman_Programme&action=edit&redlink=1http://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Crorehttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Crorehttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Crorehttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Crore


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The Total Revenue of Indian Telecom Services company is likely to exceed Rs 200000 Cr ( US$ 44 Bn

approx) for FY 1112 based on FY 1011 nos and latest quarterly results. These are consolidated nos

including foreign operation of Bharti Airtel. The major contributions to this revenue are as follows: Bharti

Airtel 65,060 Reliance Comm 31,468 Idea Cellular 16,936 Tata Comm 11,931 MTNL 4,380 TTML

2,248 BSNL 32,045 Voda 18,376 TataTeleservice 9,200 Aircel 7,968 SSTL 600 Uninor 660 Loop 560

Stel 60 HFCL 204 Videocon Telecom 254 DB Etisalat/ Allianz 47 Grand Total Rs 201,997 Crs

contributed by Sanjay Banka, FCA.

2.5 Domestic Economic conditions :

The Government has taken the following main initiatives for the growth of the Telecom

Sector :

All telecom services have been opened up for free competition for unprecedented growth.

Availability of low cost mobile handsets.

The International Long Distance Services (ILDS) opened with effect from April 2002. Calling

party pays (CPP) regime was implemented with effect from 1st May .

In April 2004, license fee for Unified Access Service Providers (UAS) was reduced by 2 percent.

Entry fee for NLD licenses was reduced to 2.5Crore from 100Crores nad Entry fee for ILD also

reduced from 25Crore to 2.5Crore.

Lease line charges have been reduced to make the bandwidth available at competitive prices to

facilitate growth in IT enabled services.

One India plan i.e single tariff of Re.1/- per minute to anywhere in India was introduced from 1st

March 2006 by the public sector undertakings.

The Governments policy is neutral on use of technology by telecom service providers subject toavailability of scarce resources such as spectrum etc.

License fee 6-10per cent of Adjusted Gross revenue(AGR).


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2.6 Foreign Direct Investment Policy

Foreign direct investment (FDI) was permitted in the telecom sector beginning with the telecom

manufacturing segment in 1991-when Indian embarked on economic liberalization .FDI is defined as

investment made by Non-resident Indians (NRLs),Overseas corporate bodies (OCB),foreign entities,

Foreign institutional investors (FIIs),American Depository Reciepts (ADR) / Global Depository receipts

(GDRs) etc

Present FDI policy for the Telecom Sector :

In Basic, Cellular Mobile, National Long Distance, International Long Distance, value added

Services and Global Mobile Personal Communications by satellite. FDI is limited to 49 percent

(under automatic route) subject to grant of license from the Department of Telecommunications

and adherence by the companies(who are investing and the companies in which investment is

being made) to the license conditions for foreign equity cap and lock-in period for transfer and

addition of equity and other license provisions.

Foreign Direct Investment upto 74 percent permitted, subject to licensing and security

requirements for the following :

Internet Service (with gateways)

Infrastructure Providers

Radio Paging Service

FDI upto 100 percent permitted in respect to the following telecom services

ISPs not providing gateways (Both for satellite ans submarine cables)

Infrastructure providers providing dark fibre

Electronic mail

Voice mail.


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2.7 Opportunities & Success factors

India offers an unprecedented opportunity for telecom service operators, infrastructure vendors,

manufacturers and associated services companies. A host of factors are contributing to enlarged

opportunities for growth and investment in telecom sector:

An expanding Indian economy with increased focus on the services sector.

Population mix moving favorably towards a younger age profile.

Urbanization with increasing incomes.

Investors can look to capture the gains of the Indian telecom boom and diversify their operations outside

developed economies that are marked by saturated telecom markets and lower GDP growth rates.

Telecommunication Sector Opportunities in Indiahave grown phenomenally in the past 3 years as has

been surveyed by Indian Ministry of Communications and Information Technology in New Delhi very

recently. The telecom sector is one of the leading contributors to India's flourishing economy.

According to the statement of Indian Ministry of Communications and Information Technology, the

telecom opportunities in India has been growing by 20 to 40 percent every year since past 3 years. Thetelecom services in India have been recognized as a world-class tool for the socio-economic development

in India. India is known to rank fourth in the telecom industry in Asia after China, Japan, and South

Korea and the telecom network in India is known to stand in the eighth position across the globe .

The tele-density has grown leaps and bounds in the past few years from 2.3 percent in 1999 to 4.8 percent

in 2002. The world average percentage for the telecom industry as against the Indian average is 7.5 times

while the Asian average against the same was 4.5 times. The current market range of the

telecommunication industry in India has been estimated to USD 8 billion and this is expected to undergoan accretion by the end of 2012.


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The growth witnessed by the telecom market in India has increased the number of opportunities for the

industry and this has been fueled by the growing mobile sector, which has attained the consumer level of

10 million by the end of December 2002 that was almost 100 percent in the year.

This outstanding growth in the mobile sector explains the advent of digital cellular technology and

reduced tariffs as a consequence of competitive pressures. The growth in the cellular subscribers has

surpassed the benchmark of subscriber base. The telecom market has increased dramatically with the

advent of Wireless in Local Loop Technology .

Telecommunication Sector Opportunities in India assures a transparent, safe, and secured ambiance for

the telecom market. Around 300 million population of highly consumable middle-class status that is

advantageous for the industry surrounds the telecom sector in India. This is because, in some of the Indian

that possess land line telephones can be substituted by mobile phones that is very unlike the developed

countries. Therefore, it adds up to the growth in mobile sector in Indian telecom industry.

Few more Telecommunication Sector Opportunities in India include introduction of Internet telephony

services, privatization of VSNL, and introduction of a number of international long distance services

sector. The opportunities in the Indian telecom sector is increasing at a massive pace with the introduction

of newer and innovative schemes in various sectors and at present the telecom sector in India is claimed

to be one of the major contributors in India's flourishing economy.

2.8 Major Players

There are three types of players in telecom services:

State owned companies (BSNL and MTNL)

Private Indian owned companies (Reliance Infocomm, Tata Teleservices,)

Foreign invested companies (Hutchison-Essar, Bharti Tele-Ventures, Escotel, Idea

Cellular, BPL Mobile, Spice Communications).


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3. COMPANY ANALYSIS

3.1 About Airtel

Sunil Bharti Mittal founded the Bharti Group. Bharti Airtel Limited is a leading telecommunications

company with operations in 20 countries across Asia and Africa. Headquartered in New Delhi, the

company ranks amongst the top 5 mobile service providers globally in terms of subscribers. In India, the

company's product offerings include 2G, 3G and 4G services, fixed line, high speed broadband through

DSL, IPTV, DTH, enterprise services including national & international long distance services to carriers.

In the rest of the geographies, it offers 2G, 3G mobile services. Bharti Airtel had over 246 million

customers across its operations at the end of February 2012. It is the largest provider of mobile

telephony and second largest provider offixed telephony in India, and is also a provider ofbroadband and

subscription television services. It offers its telecom services under the airtel brand, and is the first Indian

telecom service provider to achieve Cisco Gold Certification. It also acts as a carrier for national and

international long distance communication services. The company has a submarine cable landing station

at Chennai, which connects the submarine cable connecting Chennai and Singapore.

3.2 Products & Services

The basic business divisions of Bharti Airtel as classified as:

Mobile Services

Data & IP solutions

Tele-media Services

Enterprise Services and

Airtel Money

Mobile Services:

Bharti airtel offers GSM mobile services in all the 22-telecom circles of India and is the largest mobile

service provider in the country, based on the number of customers.It consists of Pre-paid, Post-paid and

Blackberry services. Voice connections are the pre-paid & post-paid sim cards used in mobile phones to

make voice and video calls. It also includes mobile number portability (MNP).
http://en.wikipedia.org/wiki/Mobile_telephonyhttp://en.wikipedia.org/wiki/Mobile_telephonyhttp://en.wikipedia.org/wiki/Fixed_telephonyhttp://en.wikipedia.org/wiki/Broadband_Internet_accesshttp://en.wikipedia.org/wiki/Pay_televisionhttp://en.wikipedia.org/wiki/Ciscohttp://en.wikipedia.org/wiki/Chennaihttp://en.wikipedia.org/wiki/Chennaihttp://en.wikipedia.org/wiki/Ciscohttp://en.wikipedia.org/wiki/Pay_televisionhttp://en.wikipedia.org/wiki/Broadband_Internet_accesshttp://en.wikipedia.org/wiki/Fixed_telephonyhttp://en.wikipedia.org/wiki/Mobile_telephonyhttp://en.wikipedia.org/wiki/Mobile_telephonyhttp://en.wikipedia.org/wiki/Mobile_telephony


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Data & IP solutions:

Data and IP services helps in doing business at ease. From keeping our mission critical applications

running to managing the flow of information across the globe, our comprehensive suite of data

technologies and infrastructure support. Data services include mobile internet and 3G dongles (data card).

It also includes special internet wi-fi devices that connect to 5 systems simultaneously but these are

catered only to corporate clients who request such services.

Tele-media Services:

The group offers high-speed broadband with the best in class network with fixed line services in 87 cities.

The broadband, fixed lines, internet lease port and DTH services are covered under these tele-media

services. Airtel has made strong entry into tele services with Airtel TV. It offers best quality DTH

services and is emerging as a tough competitor to dish TV.

Enterprise Services:

Enterprise Services provides a broad portfolio of services to large Enterprise and Carrier customers. This

division comprises of the Carrier and Corporate business unit. Enterprise Services is regarded as the

trusted communications partner to India's leading organizations, helping them to meet the challenges of

growth.This business unit delivers end to end telecom solutions to Indias large corporates. It serves as

the single point of contact for all telecommunication needs for corporate customers in India by providing

full suite of communication services across data, voice and managed services.

Airtel Money:

This is Airtels new product where in people can send money, pay utility bills, shopping bills etc through

phone. One needs to activate Airtel money by paying Rs.100, 50 of which will be credited back to the

customers account. Airtel is tying up with shopping malls, hospitals etc to make Airtel money easy for its

customers.


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3.3 Business Life Cycle:

In 1983, Mittal was in an agreement with Germany's Siemens to manufacture push-button telephone

models for the Indian market.

In 1986, Mittal incorporated Bharti Telecom Limited (BTL), and his company became the first in India to

offer push-button telephones, establishing the basis of Bharti Enterprises. By the early 1990s, Sunil Mittal

had also launched the country's first fax machines and its first cordless telephones.

In 1992, Mittal won a bid to build a cellular phone network in Delhi. In 1995, Mittal incorporated the

cellular operations as Bharti Tele-Ventures and launched service in Delhi. In 1996, cellular service was

extended to Himachal Pradesh.

In 1999, Bharti Enterprises acquired control of JT Holdings, and extended cellular operations to

Karnataka and Andhra Pradesh. In 2000, Bharti acquired control of Skycell Communications, in Chennai.

In 2001, the company acquired control of Spice Cell in Calcutta.

In 2002 Bharti Enterprises went public, and the company was listed on Bombay Stock Exchange and

National Stock Exchange of India.

In 2003, the cellular phone operations were rebranded under the single Airtel brand. In 2004, Bharti

acquired control of Hexacom and entered Rajasthan.

In 2005, Bharti extended its network to Andaman and Nicobar. This expansion allowed it to offer voice

services all across India.

In 2009, Airtel launched its first international mobile network in Sri Lanka. Today, Airtel is the largest

cellular service provider in India and the fourth largest in the world.

August 7, 2008: Bharti Airtel adjudged the 'Best Cellular Service Provider' and 'Best Broadband Service

Provider' at the 2008 V&D 100 Awards.

May 26, 2008: Airtel was honoured with the prestigious 'Wireless Service Provider of the Year' award at

the 2008 Frost & Sullivan Asia Pacific ICT Awards.

Since then it has won many awards and honours for its unmatched network and services and formed a

strong brand image in the minds of Indian customers.

3G: On May 18, 2010, 3G spectrum auction was completed and Airtel paid the Indian government

122.95 billion (US$2.45 billion) for spectrum in 13 circles, the most amount spent by an operator in

this auction. Airtel won 3G licences in 13 telecom circles of India: Delhi, Mumbai, Andhra

Pradesh, Karnataka, Tamil Nadu, Uttar Pradesh (east), Rajasthan, West Bengal, Himachal Pradesh, Bihar,


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Assam, North East, and Jammu & Kashmir. Airtel also operates 3G services in Maharashtra,

Goa, Kanpur and Kolkata through an agreement with Vodafone and in Gujarat through an agreement

with Idea. This gives Airtel a 3G presence in 15 out of 22 circles in India.

4G: On 19 May 2010, the broadband wireless access (BWA) or 4G spectrum auction in India ended.

Airtel paid 33.1436 billion for spectrum in 4 circles. On 10 April 2012, Airtel launched 4G services

using TD-LTE technology in Kolkata, becoming the first company in India to offer 4G services. Airtel

launched 4G in Bangalore on 7 May 2012.It will launch services next in Pune and Chandigarh.

This way Airtel has become the largest provider of mobile telephony and second largest provider of fixed

telephony in India, and is also a provider of broadband and subscription television services.

3.4 Business Segmentation:

Airtel has segmented its customers mainly into two segments:

1. Business to Customers B2C ( retail ):

Retail segment targets all the common people who use prepaid services of Airtel. Their distributors

are the common retail stores where recharge coupons are sold and easy recharges are done. These are

not the main source of revenue for Airtel. Voice connections, data services (internet), Airtel moneyand tele services (Airtel TV DTH) are sold under retail segment.

2. Business to business B2B (AES & SME) :

This is the main source of revenue for Airtel as it is confined only to post paid and catered to business

enterprises. Here the business enterprises are divided into two sub segments. AES and SME. Voice

connections, data services, Airtel money, tele services and business applications are sold under AES.

AES: Airtel enterprise services.All business enterprises having annual turnover of more than 1000

Crore are included in AES. There is an AES team in every circle that covers all AES corporate

accounts. There are channels who act as distributors for Airtel. A voice accounts manager is liaised to

each channel to coordinate the sales process. Every channel partner has Field Sales Executives who

work on field for corporate sales.


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SME: Small and Medium enterprises. All business enterprises that have an employee base of at least

5 persons are taken under SME. There is an SME team in every circle with territory managers liaised

to each channel. Special schemes and offers are put up exclusively for B2B customers to avail bulk

sales and capture good accounts.

3.5 Competitor Analysis:

Airtel is the market leader in terms of subscriptions. It is followed closely by Vodafone which is a big

international player. Coming to voice connections Airtel is almost unbeatable due to its unmatched

network and connectivity. Airtel also has the advantage of being an early mover into the market. Though

Airtel charges a little more than its competitors, customers find it justified due to the better network and

connectivity provided by Airtel compared to other networks. Brand image of Airtel also plays a very

important role in Airtels success story.

The only threat to Airtel in terms of voice connections could be Vodafone as its subscribers are increasing

at a faster rate due to cheap tariff plans and schemes. Idea recently started emerging as a strong brand

with 3G speeds and strong marketing strategies involving bollywood stars like Abhishek bachchan. But is

yet to reach the position from where it can threaten Airtel.

Coming to data services (internet) Airtel was a late entrant into the market due to which it is facing realtough competition from Tata, Vodafone, idea and local players like Beam. Yet Airtel has been successful

enough in doing good number of sales despite a late start, as statistics report that the highest number of

dongles (data cards) are being sold by Airtel. Mobile internet market is almost the same for Airtel,

Vodafone and Idea with three of them sharing the top spot.

Sl. No.Name ofCompany

Total SubFigures

Additionsin Dec

% MarketShare

1 Bharti Airtel 171,846,824 1,150,298 28.09%

2VodafoneEssar

144,144,031 1,133,024 23.56%

3 IDEA 98,441,714 2,330,239 16.09%4 BSNL 90,622,219 388,057 14.81%5 Aircel 59,191,661 602,312 9.68%6 Uninor 27,738,154 349,488 4.53%7 Videocon 6,382,493 -652,383 1.04%8 MTNL 5,298,081 32,932 0.87%

9 Loop Mobile 3,181,967 19,035 0.52%10 Stel 3,433,988 -67,259 0.56%11 Etisalat 1,477,495 52,941 0.24%12 All India 611,758,627 5,338,684 100.00%


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Airtel takes a sharp edge over all its competitors with the launch of Airtel money which is an exclusive

product of Airtel and is the first product of its kind in India. Airtel is doing fairly well in tele service

market with Airtel TV DTH doing decent number of sales in Indian market.

3.6 Promotional Practices:

There was an intense competition in Telecom arena, so Bharti Airtel took few initiatives to woo

customers.Prominent among these were celebrity endorsements , loyalty rewards, discount coupons,

business solutions and talk time schemes. Airtel has used most number of celebrities for its

advertisements. The list includes Sachin tendulkar, Shahrukh, A.r.Rahman, Saif ali khan, Kareena kapoor,

Zaheer khan etc. The most important consumer segments in the cellular industry were the youth segment

and business class segment. The youth segment was the largest and fastest growing segment and therefore

targeted most heavily by cellular service provider.

Bharti tele ventures adopted celebrity endorsement as its chief promotional strategy. By 2004 it emerged

unprecedented leader commanding the largest market share in the cellular service market. Airtel hardly

does any promotional activities in retail (B2C) segment as it has a very strong brand image in Indian

market. But in B2B segment Airtel keeps bringing in new offers, plans and discounts to beat competition

and capture as many customers as possible. They have special CUG (closed user group) plans exclusively

for corporates working in particular organisations or firms. These plans and schemes vary from one client

to another based on their usage and employee base.


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3.7 Branding Practice:

To promote, Airtel has been dependent on tactical advertising However, it has restrained from using

comparative advertising Hoardings has been a very popular medium for carrying the advertisements

Airtel has also been advertising on television using the Bharti Telecom name. Starting from the name,logo, slogan the Airtel has created intense brand image by adopting various marketing acting activities. It

truly captured the market and maintaining its brand as a best brand in the market.

Though there are spaces for improvement, by developing effective marketing program those gaps can be

filled up. Airtel has always branded itself as the best telecom provider of the country. It comes up with

catchy taglines, tunes and advertisement concepts. Its signature tune composed by Mr.A.R. Rahman has

added a lot to its brand image. Sponsorships in sports events, award functions and tie ups strengthened

Airtels brand image. Airtel had an Attractive logo which recently underwent a makeover symbolising a

hug, to go little casual, was much appreciated by the Indian audiences. Airtel doesnt work very hard onits branding but works quite smartly at the right time in the right fashion to move parallel and hand in

hand with the generation.


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4. PROJECT SPECIFIC ANALYSIS

( CHANNEL MANAGEMENT )

4.1 Background

Channel members maximize short-term profit by allocating the resources so that marginal contribution by

each of the suppliers is equal to the channel members marginal cost. Higher commission rates have

diminishing returns in terms of motivating agents to devote more time to a principal. Agencies appear to

spend more time than economically optimal (in short term) on principals with whom they have a

trusting relationship and good communication .Personal contacts in the form of visits by the principal

have a significant positive effect on time allocation . Resellers often complain that their suppliers dontprovide enough training and support. Resellers often complain that their suppliers dont provide enough

training and support . Delegation has no impact on channel profit. Selection criteria and recruitment tools

such as thoroughness and performance may be improved by according greater importance to managing

distribution activities. Manufacturer support programs are related positively, though weakly to

distribution intensity. When a manufacturer provides many support programs, retailers may have some

incentive to join and remain in the channel system. Manufacturer co-ordination efforts are related

inversely through weakly to distribution intensity, when close co-ordination is needed manufacturers are

likely to limit distribution to reduce potential difficulties in channel operations and foster a supportiveatmosphere in their exchange relationships. Retailer investment significantly weakens the inverse

relationship between manufacturer co-ordination efforts and distribution intensity. Retailers making

heavy investments are signaling to the manufacturers their willingness to sell and service it effectively.

Manufacturers in heterogeneous market must ensure that retailer interests are properly aligned. In markets

with price and service competition there can be channel conflict over the nature of retail competition

itself. Quantity discounts provide an improvement over simple contracts which include fixed conditions.

By linking the contract to performance such as quantity ordered for promotional spending the incentive to

achieve coordination can be created without the rigidity of fixed requirements. Manufacturer profits are

constant and total profit variations are equal to retailer profit variations. Relationship between asset

specificity and channel mode is significant. The probability of using an integrated channel or an

intermediate mode increases relative to the independent channel.


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Marketing channels are frequently organized on the basis of negotiated transaction.

Marketers must carefully characteristics of middlemans marketing behavior in order to avoid the risk of

linking up incapable distributors.

Usually the first transaction between the supplier and retailer encompasses only small quantities of

goods, if these first exchanges are performed to mutual satisfaction, the number of decision variables in

the internal role relations increase. The room for bargaining about the suppliers sales price will increase

when the retailers and suppliers transaction cost is reduced. Sales personnel most frequently named the

manufacturer, owner/manager, chain management, and sales promotion as channel influencers.

Sales managers are entrenched in managing their firms distribution channels. Sales managers are more

likely than their industrial counterparts to perform the following channel management tasks : formulating

channel strategies, designing marketing channels, motivating channel members and managing conflict .However the type of project manufactured does not appear to influence the extent to which sales

managers are involved in selecting channel members, co-ordinating channel strategy or evaluating

channel member performance. In examining the importance of firm size, sales managers in large firms

report a higher level of involvement in co-ordinating channel strategy and evaluating channel member

performance than their counterparts in small firms .

Strategic alliances are co-operative arrangement than transcend organizational boundaries to achieve

channel goals. Central to such alliances is an understanding by all channel members of channel goals ,roles of particular players, sharing of information, cross-organization functional shifting and a long term

commitment to the alliance. Managers at all levels in the channel have a wealth of information. This

diffusion of information technology into channels is having a profound effect on how managers look at

the problem of managing the channels and the resultant channel relations.

The following constructs were then deduced as :

Role of company executive in developing channel relations

The variables were setting distribution objectives, channel design, logistics, image building, inventory

management, channel management, payment & credit, promotional assistance, setting targets, coverage

frequency and motivating channel members to perform.


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Strategies for sustainable channel relations

In consultation with various companies the dimensions considered in the study were motivating channel

members, positive attitude towards channel, providing the channel members with market knowledge,

conductive credit facility, constant and effective communication and also being aggressive.

4.2 Literature Review

Distribution channels have become the most important component of marketing today and are receiving

increased attention. Channels not only add value to project and services, but also create customer and

shareholder value, brand equity and market presence for a company. For most service organizations,

consumer marketing and industrial marketing firms, the distribution channel, or inter organizational

network of institutions, comprising of agents, wholesalers, distributors and retailers play a significant role

in the flow of goods from producers to consumers. The channel member also called as an intermediary is

a member of the distribution channel excluding the manufacturer and the consumer. Intermediaries come

between these two and perform one or more of the above functions.The shifting of channel power from

manufacturer to retailers, wholesalers and distributors has had a great impact on distribution. When

competition increases , a few leading companies remain, who then become very competitive and offer

high quality products. This actually increases the distributors power because sales are then determined by

what is in stock and most often what is recommended by the distributor and not by what particular brand

offers.

4.2.1 Channel Relations

Channel relations look into developing long term positive interactions between the company and the

channel members. It involves more than just getting products or services from company to customer. Like

all elements of marketing and operations, it offers numerous chances to improve revenue and profitability.

Effective channels serve targeted customer , maximize sales, minimize cost and provide companies a

sustainable competitive advantage. Customers are in the drivers seats as they should be, when it comes to

the buying relationship. Powerful products and great brands no longer provide sustainable in delivering

superior value to customers. This focuses on the need for effective channel management. Channel

management includes key decisions such as (1) Designing marketing channels, (2) Selecting channel

members, (3) Motivating and communicating with channel members, (4) Evaluating channel

performance.


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4.2.2 Role of Channel Mangers in Channel Management

Channel management research and practice have now recognized the importance of managing

relationships between the channel managers and firms performing distribution functions, which makes

products and services available to customers at the right time and place at the right price. Channel

managers are company executives who are the conduits between the company and the distribution

channel. They are anyone in the firm or organization who is involved in distribution channel decision

making, though in practice few firms or organizations actually have a single designated executive position

called the channel manager, depending on the type of firm or organization, a variety of different

executives are involved in making channel decisions. Often, they are the sales managers who are in

constant touch with the channel partners.

Channel managers play a crucial role in improving relationship with channel partners for effective

functioning. They assess the channel partners need and align goals and objectives, they motivate these

resellers to attain the agreed-upon goals and provide appropriate support. Channel managers also evaluate

goal alignment and reseller performance so that corrective action can be taken if necessary.

4.3 Distribution Channel in Airtel

Airtel company

Direct selling Associates (DSA)

Corporate selling Associates (CSA)

Franchisee selling Associates (FSA)/

Airtel relationship centre (ARC)


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4.4 Physical Structure of the Channel in Bharti Airtel :

Below is the channel structure followed by the company as

- Mobile - B2B - Competitors- Dongle (3G) - (SME/Commercial/Corporates) - Bsnl/Tata/Ril/Voda/Idea- Toll free- Voice (analog)- Broadband (DSL)- Landlines (digital)- Video conferencing (BRI)- Internet lease port (ILP)

- Local loop (ILL)

Channel Management

Channel partners

Channel FSEs

Product Information

+ Training

Customer Information Market Information


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4.5 Conceptualisation :

The main part of the project is all about the analysis between management, channel partners and field

sales executives in developing a good working relationship at various levels. This can be acquired by

setting distribution objectives with a better channel design and factors like promotional assistance and

motivating channel members by building an adequate efficient workforce for the organization.

Airtel,Hyderabad consists of channels that include Direct selling associates, corporate selling associates

and franchisee selling associates or also Airtel relationship center and they are around 45 channels in

number located at various parts across the city.As per the requirement and suggestion from the company I

have visited 19 channels and collected all the basic information related to every channel and a proper

response from partners and sales executives based on the questionnaire I prepared. It consists of some

vital information about the channel performance, hygiene, growth and development in association with

the company like Bharti Airtel. Visiting the channels atleast two everyday and interaction with all the 19

channels clearly gave an outlook regarding the scope of its development in the market through which

both the company as well as the intermediaries would get benifitted by earning good profits and creating a

better customer value with the products and services offered to the consumers. Here the consumer is

mainly referred to the B2B market that again includes Airtel enterprises and all those small and medium

enterprises, system integrators and relationship centre as mentioned above.

Hierarchy of the Channel CEO

COO

Zonal Business Manager (ZBM)

Zonal Manager

Territorial or Channel Manager


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As mentioned in the early structure, every channel manager is related to one or more channels and its

partners. These channel partners have few sales executives under them depending on the size and

requirement the channel demands to reach the targets and goals on time.

The following is the list of 19 channels I visited that includes Airtel enterprises along with system

integrators and small & medium business where I have gathered some valuable information helps to

understand ,analyze and scope of improvement required in areas to be focused on channel growth with

respect sales and creating a long-term value to the consumers.

1. M/s Eco additive (SMB)

2. Efforts (SMB)

3. Genesa Enterprises(CBA)- (AES)

4. Shree Lalitha Enterprises (SMB)

5. Leo Marketing (SMB)

6. Net Ventures (SMB)

7. Rising Sun Solutions (SMB)

8. Sri Sai Solutions (SMB)

9. Startel-CBA (SMB)

10. Svap links (SMB)

11. Apex Corp (AES)

12. Tsr Netowrks (SMB)

13. Renascent Management services (SMB)

14. Elite Solutions (SMB)

15. JVR Infotech pvt ltd

16. Proventures (SI)

17. Compware Technologies (SI)

18. Gopal communications (SI)

19. Radiant Sales & service (SMB)

The questionnaire that consists of 15 questions all related to the channel is attached in the annexure at the

end but the presentation of all those channels mentioned above can be interpreted as follows :


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Page 35

Number of years the Channels been associated with Airtel

YEARS Less than 1yr 1 to 5yrs 5 to 10yrs More than 10yrs

Number of

channels6 5 6 2

Six channels are been associated with Airtel which are not more than 1year and also six of the channels

falling within a period of 5-10yrs association with the company that indicates a good number of channels

are consistently growing with the company for a considerable period. Two channels that are the

Enterprise systems were attached to the brand with almost a decade carrying a good relationship and

growth.

0

1

2

3

4

5

6

7

< 1 1 to 5 5 to 10 >10

Years

Years


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Page 36

Opinion on Airtel, its Products and Services

Opinion Bad Good Satisifed Very Good Excellent

Number of

channels0 10 5 3 1

More than half of the channels among 19 say that the products of Airtel are really good and have a great

demand in the market with the service and and the value they carry with the satisfaction of customers.

Few channels feel that the products are considerably doing good in the market but are left with minute

issues like the billing and installation delays which can be noticed and taken a further care to improve the

levels of customer satisfaction in the areas required. A tiny bottle neck issues claimed could also be

rectified soon. ON a positive side none of the channels had a negative response about the brand. All stood

better and also best in working inline with the market needs.

0%

53%

16%

5%

26%

Opinion on Airtel Pdts

Bad

Good

Very Good

Excellent

Satisfied


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Page 37

Number of Field Sales Executives (FSEs) and their Performance

Channels Number

of FSEs

Active

FSEsM/s Eco

additive4 3

Efforts 15 15

Genesa

Enterprises(CBA)

22 18

Shree lalitha

Enterprises8 3

Leo Marketing 14 14

Net Ventures 12 8

Rising sun

solutions5 3

Sri Sai

Solutions3 2

Startel-CBA 10 4

Svap links 11 8

Apex Corp 22 18

Tsr networks 3 2

Renascent

Management

services

3 2

Elite solutions 7 5

JVR infotech

pvt ltd15 14

Proventures 5 3

Compwaretechnologies

2 0

Gopal

communications3 3

Radiant sales &

service

8 5


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Page 38

FSEs achieving targets :

Targets More than 70% achieved Do not achieve

Number of channels 13 6

Reasons for FSEs lacking in achieving targets :

Reasons Freshers & lack ofexperience

Incentives Other factors

Number of

channels

6 2 3

68%

32%

FSE Targets

>70%

Achieve

targets

Do not

achieve

Number of FSEs Less than

5

5 to 10 10 to 15 Above 15

Number of

channels8 5 4 2

42%

26%

21%

11%

No of FSE's

< 5

5 to 10

10 to 15

> 15


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Page 39

Basic Qualification of FSEs in all Channels

Qualification Intermediate Degree Degree with

work-ex

Mba

Number of

channels3 4 9 3

Most of the channels prefer selecting people with basic experience in field that can be an advantage so

that less training is required further to enter into field and communicate with the customer.Every channel

prefers minimum qualification as inter or graduation who can find themselves potential in interacting and

reaching targets on time. This can inturn help the channel to progress and achieve their objectives in a

better way with additional profits from the market as well as the company.

55%

18%

27%

Where are the FSE's

lacking in achieiving

targets?

Freshers & lack

Exp.

Incentives

16%

21%

47%

16%

Qual. of FSE's

Inter

Degree

Degree with work Ex.

MBA


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Page 40

Number of FSEs who are active and good at communication

The FSEs play the vital role in increasing the channel sales and earning some good profits to the channel

and to the company. These FSEs are given weekly or monthly targets and are boosted to perform

accordingly as per the channel objectives and process implemented as per the market demand and also to

face the competition that is strongly existing in the market.Every channel has FSEs starting from three in

number to more than twenty and they were being paid according to the experience and standard of

performance. Hence communication to the final consumer and expressing his channel view is highly

required. The role of the sales force is basically managing the major steps involved in it. Initially a proper

sales force structure must lead to a planned selling process that involves : Prospecting, Pre-approach,

Approach, Presentation, handling objectives, closing and finally following-up.

All these steps are followed by the sales force in a most assertive manner and convincing the opposite

consumer by making him/her know about the true value of the products and to what extent they would be

benifitted in making the sale. Communication and interaction however above all can be an appropriate

advantage for any sales person to get the everyday work done. These sales people must be offered with a

fair incentive and bonuses when required that can boost up and be a major influencing factor through

which he can be motivated and made to perform as per the targets. The performance at various channels

varies from place to place and person to person considering various environmental factors.

4

15

22

8

1412

5

10 11

22

3 3

7

15

5

2 3

8

3

10

22

4

14

8

5

10 11

15

2 35

12

5

2 35

0

5

10

15

20

25

No of Active FSE's

No of FSE's

No. Active


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Page 41

Fast moving & Slow moving Products through Channels

Products Post-paid Broadband Data cards OthersNumber of

channels opinion13 1 3 2

Products Broadband Data card DTH 3G OthersNumber ofchannels

9 2 2 3 3

Majority of the products that are fast moving are the mobility products and other side most of the tele-

media products are slow moving comparatively because of certain reasons like the plan cost, no

feasibility, impact of competitors aggressive and cheaper plans. Some of the reasons for the lukeworm

response of these tele-media products is also due to some connectivity issues and a fairly low customerservice with respect to products like broadband. Products that come under mobility carry out the

maximum revenue and profits for the company right from the time of inception. Few other products like

Dish TV and Data cards somehow need better promotions to equally or more than the competitors do. The

above mentioned slow going products are mostly unable to reach the customer point of satisfaction and

the required point is already targeted by other players in the market.

68%5%

16%

11%

Fast Moving Products

Post paid

Broad Band

Data Cards

Others

47%

10%

11%

16%

16%

Slow Moving Products

Broad Band

Data Cards

DTH

3G

Others


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Page 42

Channels Opinion on Competitor Products in the Market

Competition Competitors Better We are at par We are better

Number of channels

opinion11 4 4

Why are competitors Better ?

Reasons Aggressive in

market

Good plans Pricing others Others

Number ofchannels opinion

4 3 2 2

Most of the channel partners have an opinion on competitors that they come up with aggressive plans andvaried prices in market to attract the targetted customers on a large scale. In a way that some of thecompetitors have already captured the early demand in the market and also most of them instantly designspecial tariffs at the month end especially to capture the customer base offering with more cheaper plansand also there are few networks that issue voice services even without initial deposits. These reasons ledto say that competitors are also better visible in the market.

58%21%

21%

Competitors

Better

At Par

V r Better

37%

27%

18%

18%

Why are Competitor's Better ?

Aggressive

Good Plans

Pricing

Others


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Page 43

Areas in which Airtel Products can be Improved

Room forimprovement

Tariffs Billing &Service

issues

Dongles Promotions Productknowledge

Others

Number ofchannels

opinion

6 5 2 1 2 3

Looking at the pie chart above , we find that majority of channels consider Tariff plan as the essential

factor that requires a greater scope of improvement and more focus in the current scenario existing in the

market with few good competitors who are proving to be equally strong with the market leader of telecom

service in the state. There are also some billing and service issues where the customer might lose the

patience and interest to prefer the brand repeatedly. The ultimate effort is always for the customer

satisfaction who shows a greater brand loyalty and also his influencial marketing caused by word of

mouth . It further increases brand reputation with wide-spread awareness of the companys products and

service.Products like dongles are expected to have more aggressive promotions to compete with already

existing leaders who had initially earned the reputation and trust of the customers by serving them better

and offering good plans depending on the usage and different customer requirements. All the channel

members must have the basic knowledge and awareness of products launched by airtel and the way they

are brought into light with other players in the market. The product knowledge to manager, partners and

all FSEs is however necessary to pull out the sales and increase the number in cross product selling

thereby paving a path to growth in channel sales and retaining the position of being a market leader for

long term profits and comfortable existence in the field .

32%

26%

10%

5%

11%

16%

Room for Improvement

Tariff

Billing & Service Issues

Dongles

Promotion

Product Knowledge

Others


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Page 44

Expectations from Channel Managers

Factors Timelycommision

Customer

data

Product

knowledge

Better

incentives

Satisfaction Good

support

Number of

channels

opinion

1 1 1 1 11 4

More than half percentage of channel partners convey that they are satisfied with the all channel managers

that they are associated. They opine saying , managers are standing up for support whenever required and

giving them a good scope of business maintained with a healthy relation acting as a bridge between the

partners and the company as well. Most of the channel partners often communicate with their respective

managers and sit in discussions and frequent meetings for all the analysis and strategies required to build

upon the healthy growth of the channel putting up an appreciative performance that again carries interest

to carry forward the business for long period reaping out some benefits on a whole.

Few partners of the channel look for the readily available customer data in the market that are newly

established or unnoticed enterprises in readily capturing their need and expected benefits. All channels

partners are mainly satisfied with support and increment in incentives periodically along with the timely

commission from the company and smooth payments ensuring the importance of channels progress.

6% 5%5%

5%

58%

21%

What more do they expect from Channel

Managers

Timely Commission

Customer Data

Better Product Knowledge

Better Incentives

Satisfied

Good Support


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Page 45

Satisfaction levels of Profits earned in Various Channels

Level of satisfaction Satisfied Unsatisfied Yet to reach BEP

Number of channels 10 6 3

Among those 19 channels visited, more than 10 channels feel that they just satisfied with constant

benefits and are growing with Airtel maintaining good relationship with the company and customers as

well. Of them , nearly 6 channels are not much satisfied with the way the business is going. They need to

adopt certain factors and conditions to pull up the sales and achieving timely targets. Initially any channel

doenst earn good profits as it is non-existent in this stage because of the heavy expenses involved for the

sales force and building of channel. Once the channel efforts are recognized and accepted within the

company and enterprise segment by meeting the targets effectively leads to further growth and maturity

of the channel.

Three of the channels are newly started and they are yet to reach the Break-even but are consistently

performing upto the mark and have some managed to establish at the initial stages.

53%31%

16

UNDERSTANDING THE CUSTOMER VALUE DELIVERY SYSTEM THROUGH VARIOUS MARKETING CHANNELS IN BHARTI...

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