P ROJ ECT R EPORT On

A COMPARATIVE ANALYSIS OF

PRICING POLICIES VODAFONE AND AIRTEL

BACHELOR OF BUSINESS ADMINISTRATION (CAM)

Under Guidance Of:

Submitted By:

Mr. ABHAYA NAND

(HOD) 0171431907

HIMANSHU GAUTAM

Roll No. :

JSS Academy of Technical Education

Noida

ACKNOWLEDGEMENT
I dedicate this page to convey my deepest and heart-felt appreciation for all those people who purposefully and inadvertently assisted me in this project. Without their thoughtfulness, the satisfactory completion of this project would not have been possible Firstly, I would like to thank my faculty guide, Mr. Abhaya Nand, who had supported throughout the entire project. Secondly, I take the privilege to express my sincere feeling of gratitude to my other faculties who has always given patient hearing to all my doubts and has been there to guide me and support me whenever I require his help at any point of time during the course of my project and who always spared his time and attention for discussing the problems. I further want to convey thanks to Ms. Meenakshi Chopra (Floor Manager) to give me opportunity to get experience. And my colleagues for their continuous encouragement and support. Last but not the least I thank the entire people of Delhi who have been a pillar of support for me and have given me a free hand in choosing my course of life. A special thanks to all of them.

HIMANSHU GAUTAM

DECLARATION

I the undersigned, hereby state that the report titled

A COMPARATIVE ANALYSIS OF PRICING POLICIES VODAFONE AND AIRTEL

Is a genuine and bonafied work under the guidance of Mr. Abhaya Nand (HOD). All findings are based on data collected from primary & secondary sources and matter presented has not been copied from anyone else.

HIMANSHU GAUTAM

TABLE OF CONTENTS
TITLE ABSTRACT OBJECTIVES OF STUDY SCOPE OF THE STUDY COMPANY PROFILE INTRODUCTION OF TELECOMMUNICATION SECTOR METHODOLOGY LIMITATIONS OF STUDY ANALYSIS FINDINGS CONCLUSIONS RECOMMENDATIONS

 BIBLIOGRAPHY

ABSTRACT
A prime task of a marketer is to understand the market, his customer and the needs of the customer and finally look for the best possible way to satisfy the needs of the customer. The project undertaken is A COMPARATIVE ANALYSIS OF PRICING POLICIES OF VODAFONE AND AIRTEL. The telecom services have been recognized the world-over as an important tool for socio-economic development for a nation and hence telecom infrastructure is treated as a crucial factor to realize the socio-economic objectives in India. Accordingly, the Department of Telecom has been formulating developmental policies for the accelerated growth of the telecommunication services. The Department is also responsible for frequency management in the field of radio communication in close coordination with the international bodies. It also enforces wireless regulatory measures by monitoring wireless transmission of all users in the country. The leverage of this project lies in understanding the customers knowledge, awareness and perception about the telecomm Companies, Vodafone and Airtel in the telecommunication sector as accompany to subscribe the service. This would be done, by adopting a research based approach. It deals with customers awareness and involves direct interviews with questionnaire method for market research.This study will help to report the scope of both the companies in the market. It also enables the use of various marketing research instruments such as

questionnaires and methodologies like prototyping and articulate interviewing and also understanding the market condition by taking hypothesis. This project will help me to evaluate the perception of customer about pricing strategy of Vodafone and Airtel. Also this project will give me an opportunity to gather knowledge about telecommunication sector and customer knowledge. The project also involves making recommendations, after comprehensive SWOT analysis that would help both the companies to provide better service to its existing customers and improve its reach to potential customers. Overall the project would be a win-win situation for both, the companies Vodafone and Airtel. 1.

OBJECTIVES OF STUDY

Understanding the customers knowledge, awareness and perception about Vodafone and Airtel as a major company in telecommunication sector. To find out the share of Vodafone and Airtel in the market at Delhi. Understand the target customer of Vodafone and Airtel in context to their pricing strategy. To understand & know the requirements of the clients

The project will help, know and understand the target customer better and to know the efforts of both the companies to attract more and more customers. It deals with customers awareness and involves direct interviews with questionnaire method and check out through hypothesis method. This study will help to report the scope of Vodafone and Airtel at Gurgaon as a choice for communication purpose. The project also involves making recommendations, after comprehensive SWOT analysis that would help both the companies to provide better service to its existing customers and improve its reach to potential customers.

SCOPE OF STUDY
The leverage of this project lies in understanding the customers knowledge, awareness and perception about Vodafone and Airtel separately as an option in mobile communication services. It will help, know and understand the target customer better and how to lure them to subscribe more. This would be done, by adopting a research based approach. It deals with customers awareness and involves direct interviews with questionnaire method for market research followed by putting hypothesis to understand better. This study will help to report the scope of the given companies in the market of Delhi as a good company for mobile services. The project gives an opportunity to understand the changing and varied customer needs and the pricing strategies that should be adopted by both Vodafone and Airtel to fulfill them. It also enables the use of various marketing research instruments such as questionnaires and methodologies like articulate interviewing and hypothesis testing.

COMPANY PROFILE
Airtel
Telecom giant Bharti Airtel is the flagship company of Bharti Enterprises. The Bharti Group, has a diverse business portfolio and has created global brands in the telecommunication sector. Bharti has recently forayed into retail business as Bharti Retail Pvt. Ltd. under a MoU with Wal-Mart for the cash & carry business. It has successfully launched an international venture with EL Rothschild Group to export fresh agri products exclusively to markets in Europe and USA and has launched Bharti AXA Life Insurance Company Ltd under a joint venture with AXA, world leader in financial protection and wealth management. Airtel comes to you from Bharti Airtel Limited, Indias largest integrated and the first private telecom services provider with a footprint in all the 23 telecom circles. Bharti Airtel since its inception has been at the forefront of technology and has steered the course of the telecom sector in the country with its world class products and services. The businesses at Bharti Airtel have been structured into three individual strategic business units (SBUs) Mobile Services, Airtel Telemedia Services & Enterprise Services. The mobile business provides mobile & fixed wireless services using GSM technology across 23 telecom circles while the Airtel Telemedia Services business offers broadband & telephone services in 94 cities. The Enterprise services provide end-to-end telecom solutions to corporate customers and

national & international long distance services to carriers. All these services are provided under the Airtel brand.

Vodafone
Vodafone Group is a mobile network operator headquartered in Newbury, Berkshire, England, UK. It is the largest mobile telecommunications network company in the world by turnover and has a market value of about 100 billion (December 2007). Vodafone currently has equity interests in 25 countries and Partner Networks (networks in which it has no equity stake) in a further 39 countries. The name Vodafone comes from Voice data fone, chosen by the company to "reflect the provision of voice and data services over mobile phones.

At 31 January 2007 Vodafone had 200 million proportionate customers in 25 markets across 5 continents. "Proportionate customers" means, for example, that if Vodafone has a 30% stake in a business with a million customers, that is counted as 300,000). On this measure it is the second largest mobile telecom group in the world behind China Mobile. The eight markets where it has more than ten million proportionate customers are the United Kingdom, Germany, India, Italy, Spain, Turkey, Egypt and the United States. In the U.S., these customers come via its minority stake in Version Wireless, and in the other seven markets Vodafone has majority-controlled subsidiaries. On 30 May 2006, the company announced a loss before tax of 14.9 billion for 2005, the biggest loss in British corporate history. The loss for the year

from continuing operations was 17.2 billion and the bottom line loss for the financial year was 21.8 billion. The company was pushed into loss by impairment charges of 23.5 billion, which related to the acquisition of Mannesmann several years earlier, and losses of 4.6 billion in relation to its discontinued business in Japan. At an operating level it remained highly profitable, with an operating profit on continuing operations of 9.4 billion before impairment costs.

Current report in relation to Vodafone & Airtel

Vodafone to invest approximately Rs. 6,700 crores (approx. USD 1.5 bn.) to acquire around 10% in Bharti Tele-Ventures Ltd. Bharti Enterprises, SingTel and Vodafone to take Bharti Tele-Ventures Ltd. to unassailable leadership position in India

Introduction of Telecommunication sector

Telecommunications of late has become the backbone of a modern economy. In fact, the concept of a Global Village is attributable mainly to the rapid advances in telecommunications. Today, a large country like India with its social, cultural and geographic diversity can seek to address developmental problems previously considered intractable, thanks to telecommunications.

Largest Network India operates one of the largest telecom networks in Asia comprising of over 23,406 telephone exchanges, with a total equipped capacity of 21.26 million lines and 17.8 million working telephones as on March 31 this year. The long distance transmission network has about 72,592 route kilometers of microwave systems and about 76,261 route kilometers of optical fiber systems. Fully automatic International Subscriber Dialing (ISD) service is available to almost all the countries. In all 11,157 stations are connected to National Subscriber Dialing (NSD). Maintaining and upgrading this vast network while keeping pace with every changing technology could be a challenge for any organization. Earlier, the National Telecom Policy was constituted in 1994 which stipulated for providing world class telecom services on demand at affordable prices, universal services covering all villages, a PCO for every 500 persons in urban areas, protecting India's strategic interests and ensuring that India emerges as a manufacturing base and a major exporter of telecom equipment.

Perhaps the most significant aspect of the 1994 telecom policy was the recognition that telecom was a vital infrastructure, and resources required to meet the objectives and targets set out were beyond the capacity of government funding and international generation of resources. Private investment and association of the private sector was needed in a big way to bridge the resource gap. This was the beginning of the telecom liberalization in the country.

Speed and Efficiency That the government will not leave any stone unturned in making India the hub of telecommunications was once again made clear by the Prime Minister, Shri Atal Bihari Vajpayee. He has repeatedly advocated to bring speed and efficiency in resolving the pending issues pertaining to telecommunication. In the last six months, some major decisions were taken to hasten the growth of the telecom industry. The Government extended the license period for the cellular operators to 15 years as India was the only country with a 10 year duration for the license period. This decision made the cellular projects more bankable. Short Distance Charging Area (SDCA) was declared as local area from August 15 this year enabling calls to the adjacent SDCAs, which were being made on STD rates to be charged as the local calls, at three minutes per call unit.

New Telecom Policy There are some other factors, which necessitate the need for review of the telecom policy. In 1997, India joined 67 countries in signing a WTO agreement whereby

the Government of India formalised its commitment to review VSNL's monopoly over international telecom services in 2004 and review DoT's monopoly over long distance services in 1999. The Government has decided to disinvest part of its equity in VSNL and to increase the plan outlay for Communications by 35% as compared to 1997-98.

Internet Policy In the recently announced Internet policy, the monopoly of the the Videsh Sanchar Nigam Limited ( VSNL ) as the country's sole internet provider came to an end. Two private companies and the Mahanagar Telephone Nigam Limited (MTNL) have got licences to provide this service.The new policy has incorporated all the recommendations of the National Task Force on Information Technology . It allows private ISPs ( Internet Service Providers) to set up their own gateways, virtually does away with the licence fee and extends the term of the licence to 15 years.The ban on internet telephony, however, continues. At present, 47 companies have applied to the DOT who will shortly get the licence. Another landmark: GMPCS Another landmark event in the history of telecommunications was the launching of the Iridium system in India on November 1, by linking it to the world's first satellite telephony system. This event was marked at Iridium India's South Asian Gateway with three satellite tracking earth stations erected at the VSNL premises at Dighi near Pune. This gateway is one of 12 such gateways worldwide and will manage satellite telephony traffic in the South Asian region. Under the Global

Mobile Personal Communication System ( GMPCS), telephone calls can be made and received from virtually anywhere on earth. One Million Subscribers No doubt there is a lot to be achieved for moving up the present tele density of 1.8 to match the world average of 10. But then India is the first country to reach the one million subscriber base within the first three years of paging. The USA took 27 years to achieve the same. In cellular also it took China six years to reach 9 lakh subscribers base, something we did in two years. According to the industry estimates over the next 15 years, the telecom services industry is expected to generate around Rs.3,00,000 crore (Rs.3000 billion) and about 50,000 new jobs. With this kind of framework and expectations, surely, a new telecom policy will bring reprieve to the telecom industry and telecom will indeed be the engine of growth in the Indian economy. The telecom services have been recognized the world-over as an important tool for socio-economic development for a nation and hence telecom infrastructure is treated as a crucial factor to realize the socio-economic objectives in India. Accordingly, the Department of Telecom has been formulating developmental policies for the accelerated growth of the telecommunication services. The Department is also responsible for grant of licenses for various telecom services like Unified Access Service Internet and VSAT service. The Department is also responsible for frequency management in the field of radio communication in close coordination with the international bodies. It also enforces wireless regulatory measures by monitoring wireless transmission of all users in the country.

History of Cellular Telephony

1947 1947

Bell Laboratories introduced the idea of cellular communications with the police car technology. The basic concept of cellular phones began, when researchers looked at crude mobile (car) phones and realized that by using small cells (range of service area) with frequency reuse they could increase the traffic capacity of mobile phones substantially. However at that time, the technology to do so was nonexistent. AT&T proposed that the FCC allocate a large number of radio-spectrum frequencies so that widespread mobile telephone service would become feasible. The FCC decided to limit the amount of frequencies available, the limits made only twenty-three phone conversations possible simultaneously in the same service area. AT&T and Bell Labs proposed a cellular system to the FCC of many small, lowpowered, broadcast towers, each covering a 'cell' a few miles in radius and collectively covering a larger area. Each tower would use only a few of the total frequencies allocated to the system. As the phones traveled across the area, calls would be passed from tower to tower. The FCC reconsidered its position by stating "if the technology to build a better mobile service works, we will increase the frequencies allocation, freeing the airwaves for more mobile phones." The first call on a portable cell phone is made by Dr Martin Cooper, a former general manager for the systems division at Motorola, who is also considered the inventor of the first modern portable handset. AT&T and Bell Labs had constructed a prototype cellular system. A year later, public trials of the new system were started in Chicago with over 2000 trial customers.

1947

1947

1968

1968

1973 (April)

1977

1979 1980

The first commercial cellular telephone system began operation in Tokyo. Analog cellular telephone systems were experiencing rapid growth in Europe, particularly in Scandinavia, United Kingdom, France and Germany. Each country developed its own system, which was incompatible with everyone else's in equipment and operation Motorola and American Radio telephone started a second U.S. cellular radiotelephone system test in the Washington/Baltimore area.

1981

1982

FCC authorizes commercial cellular service for the USA. The Conference of European Posts and Telegraphs (CEPT) formed a study group called the Group Spcial Mobile (GSM) to study and develop a pan-European public land mobile system. The proposed system had to meet certain criteria:

Good subjective speech quality Low terminal and service cost Support for international roaming Ability to support handheld terminals Support for range of new services and facilities Spectral efficiency

1983

ISDN compatibility The first American commercial analog cellular service or AMPS (Advanced Mobile Phone Service) was made available in Chicago by Ameritech.

1987

Cellular telephone subscribers exceeded one million and the airways were crowded.

1989

GSM responsibility was transferred to the European Telecommunication Standards Institute (ETSI),

1990 1991

Phase I of the GSM specifications were published. Commercial launch of cellular service based on GSM standard in Finland.

History of Cellular Telephony History of

Cellular Telephony History of Cellular

Te

1111111111112231111 History of Cellular Telephony in India Telecommunication sector in India liberalized to bridge the gap through government spending & to provide additional resources for the nations telecom target. Private sector allowed participating 1993 1994 The telecom industry gets an annual foreign investment Rs 20.6 million License for providing cellular mobile services granted by the government of India for the Metropolitan cites of Delhi, Mumbai, and Kolkata & Chennai. Cellular mobile service to be duopoly (i.e. not more than two cellular mobile operators could be licensed in each telecom circle), under a fixed license fee regime for 10 years. 1995 19 more telecom circles get mobile licenses 1995(August) Kolkata became the first metro to have a cellular network 1997 Telecom Regulatory Authority of India is set up 1998 1999 Annual foreign investment in telecom stands at Rs 17,756.4 million. FDI inflow into telecom sector falls by almost 90% to Rs. 2126.7

1992

million 1999 Tariff rebalancing exercise gets initiated 1999(March) National Telecom Policy is announced. 2000(June) 2000 (January) FDI inflow drops further down to Rs 918 million coming Amendment of TRAI Act.

Current Status of the Telecom Sector

Introduction The development of world class telecommunication infrastructure is the key to rapid economic growth and to bring social change of the country. Indian telecommunication sector has undergone a major process of transformation through significant policy reforms, particularly beginning with the announcement of NTP 1994 and was subsequently re-emphasized and carried Forward under NTP 1999. Driven by various policy initiatives, the Indian telecom sector witnessed a complete transformation in the last decade. It has achieved a phenomenal growth during the last few years and is poised to take a big leap in the future also. Such rapid growth in the communication sector has become necessary for further modernization of Indian economy through rapid development in IT. Plan Outlays on Communications Keeping in view the importance of the sector, an increasing provision of outlays has been made in the successive Plans. During the Ninth Plan and Tenth Plan, an outlay of Rs.47280 crore and Rs.98968 crore were allocated for the communication sector. As seen in the subsequent paras, plan allocations have helped develop and expand the telecom infrastructure, improving the teledensity in the country over the period.

Plan can be seen from the following chart:

Expansion of the network The telecom sector has shown robust growth during the past few years. It has also undergone a substantial change in terms of

mobile

versus

fixed

phones

and

public

versus

private

participation. The following table will shows the growth of telecom sector since 2003:

Thus, the number of telephones has increased from 54.63 million as on 31.03.03 to 142.09 million as on 31.03.06, exhibiting a CAGR of 37%. Wireless subscribers increased from 13.3 million as on 31.03.03 to 101.86 as on 31.03.06, exhibiting a CAGR of 97%. During 2005-06, the wireless connections grew at 78%, whereas landlines registered a negative growth. The number of Internet

subscribers grew at 25%, while the broadband subscribers grew from a merger 0.18 million to 1.32 million during the year 200506.

Present status of Telephone network Indias 164 million robust telephone network, including mobile phones, is one of the largest in the world and 2nd largest among emerging economies (after China) with a wide range of services like basic, cellular, internet, paging, V-SAT etc. The status of the network is as shown below:

Further, National Internet Exchange of India (NIXI) has been set up by DIT to ensure that Internet traffic, originating and destined for India is routed within India. This will substantially bring down the cost of Internet usage. It is expected that NIXI will take appropriate steps for increasing the utilization of such facilities.

Change in composition of sector Public vs. Private: Government has taken several steps to encourage participation of private players to create a competitive environment in the sector. Consequently, the private sector is now playing an important role in expansion of telecom sector. This is also confirmed by the number of licensees from the private sector in telecommunications as shown below:

With the opening of telecom sector to the private operators, their share in the number of subscribers has been steadily increasing which is evident from the following table:

The share of private sector in the number of telephones has increased from 15.12% (6.80 million telephones) in March 2002 to 57.01% (81.01 million telephones) in March 2006.

Mobile vs. Fixed The preference for use of wireless phones has also been predominant in the sector. This is confirmed from the rising share of wireless phones, which increased from 14.85% (6.68 million

telephones) in March 2002 to 76.18% (129.52 million telephones) in September 2006.

Trend in teledensity Tele density in the country is steadily increasing from 5.11% as on 31.3.03 to 12.74% as on 31.3.06 and currently stand at 15.12% as on 30-09-2006. However, there is a wide gap between urban teledensity (47.58%) and rural teledensity (1.84%). The rural telephony has not kept pace with the impressive growth in urban connectivity.

Rural Telephony Apart from the 14.79 million fixed and WLL connections provided in the rural areas, 551064 VPTs1 have been provided. Thus, 90% of the villages in India have been covered by the VPTs. More than 2 lakh PCOs2 are also providing community access in the rural areas. Further, Mobile Gramin Sanchar Sewak Scheme (GSS) a mobile Public Call Office (PCO) service is provided at the doorstep of villagers. At present, 2772 GSSs are covering 12043 villages. Also, to provide Internet service, Sanchar Dhabas (Internet

Kiosks)

have

been

provided

in

more

than

3500

Block

Headquarters out of the total 6337 Blocks in the country.

HOW TO DEVELOP A PRICING PLAN

Establish Pricing Objectives The first major step in the development of a pricing plan is to establish your pricing objective-whether you intend to implement a lower, higher, or parity pricing approach relative to the competition. All other objectives, such as increased sales, higher margins, etc., are overall goals of your business or marketing plan to which pricing contributes. Higher, Lower, or Parity Pricing How you price your product or service has a significant impact on many aspects of your overall marketing efforts. Used in conjunction with the other elements of your plan, a given price approach supports your products positioning, while contributing directly to consumer demand (thus sales volume) for your product and providing income to cover costs and contribute to the profitability of your firm. Following is an overview of each of the three approaches to pricing. Parity Pricing

Often referred to as a going rate strategy, this approach maintains pricing levels at or near those of the competition. This is appropriate where other means of differentiation are common or are considered more Important by the target. These other forms of differentiation often include specific product features and attributes as well as non product advantages such as service, guarantees, location for retailers, or additional distribution channels. Interestingly, it is also utilized when product differentiation is low and price is the basis of competition. In mature categories with few competitors and little differentiation, such as the airline industry, parity pricing is the norm. If one carrier were to raise prices, demand would shift to the competition with lower prices. If one airline lowers prices, the others would be forced to lower theirs in response, which would lower profits for all in the industry and create a price war. Often, in such industries, one major player, typically the market leader is considered the price leader. Others in the industry watch this leader for price activity. Lower Pricing This objective involves maintaining a price lower than the competition. One specific execution of this approach includes discount pricing, a direct result of a low-price positioning. This approach aims for a high volume of sales to offset typically low margins to achieve desired profit levels (low margin dollars but high volume). It also requires appropriate capacity and distribution channels to support the volume requirements. The reasons for a low price objective are usually: To expand the market, allowing new consumers who couldnt purchase at higher prices to become purchasers.

 To increase trial and/ or sales due to price incentives. To take advantage of a strong price-elastic product for which a low price generates increased demand. The result is lower margins but increased profits because of the increased volume. To preempt competitive strategies, helping to steal market share. This is often necessary in a mature market. To remain competitive with your competition. If a majority of the competitors have reduced their prices, oftentimes you will need to do so, especially if you are in a price-sensitive product category. If a strong competitor is also offering an attribute such as service with which you cannot compete, you may need to lower your price to counter the service offering. To keep competitors from entering the marketplace by having a price that is difficult for a new company with high initial investment costs to match. This - policy of expanded market pricing allows a company to develop a large, loyal consumer base while keeping competition to a minimum.

Higher Pricing As we have discussed many times, a premium price-a higher prices relative to the competition-supports a quality positioning and provides high margins to support

higher product and promotional expenditures. The reasons for a high price objective are usually: A need for a fast recovery of the firms investment. A need for faster accumulation of profits to cover research and development costs. The profits can then be used to improve the product and to sustain competitive marketing tactics once competitors enter the market. To substantiate a quality image positioning. The product is price inelastic-the demand or sales decrease only marginally with higher pricing. The product or service is in the introductory phase of its product life cycle and represents a substantial innovation within the product category. Also, the company may wish to skim profits while there are no substitute products to force competitive pricing. The company is stressing profits rather than sales; thus margins must remain high. The product has a short life span. An example would be fad products which last for a relatively short time. This necessitates a high price policy which will help recover the firms research and development costs in a short time period.

 The product is difficult to copy and reproduce or has patent protection.

Current report in relation to Vodafone & Airtel

Vodafone to invest approximately Rs. 6,700 crores (approx. USD 1.5 bn.) to acquire around 10% in Bharti Tele-Ventures Ltd. Bharti Enterprises, SingTel and Vodafone to take Bharti Tele-Ventures Ltd. to unassailable leadership position in India

Significant Highlights:

The largest single foreign investment ever in the history of India The largest investment in the Indian telecom sector Bharti establishes its supremacy in the Indian telecom market, having attracted Asias best SingTel, and now worlds best Vodafone. Bharti set to gain global leadership in the telecom sector. Bharti Enterprises continues to hold shareholding and management control in Bharti Tele-Ventures.

New Delhi, October 28, 2005: The worlds leading mobile telecommunications company, Vodafone Group Plc. (Vodafone) has secured around 10% interest in

Bharti Tele-Ventures Ltd. (BTVL), Indias largest private sector telecom company. Vodafone, through Vodafone Mauritius Ltd., has contracted to subscribe shares in Bharti Enterprises, giving it a beneficial stake in BTVL of 4.4%. In addition Vodafone, through Vodafone International Holdings BV, has also picked up 5.65% stake from Warburg Pincus, thereby taking the total beneficial interest in BTVL to around 10%. Vodafone has made a total investment of approximately Rs. 6,700/crores (approximately USD 1.5 bn) to acquire around 10% interest in BTVL, including the acquisition of shares held by Warburg Pincus. Bharti Enterprises maintains a controlling interest of 45.9% in BTVL through its subsidiary, Bharti Telecom Ltd. With the final sale of its stake, Warburg Pincus has now completely exited its position in BTVL.

Commenting on this historic development in the Indian telecom market, Mr. Sunil Bharti Mittal, Chairman & Group Managing Director of Bharti said We are delighted that Vodafone has made a call on the Indian telecom sector and has chosen BTVL to be the vehicle to develop its continued interest in the Asian region. Bharti has had the privilege of tying up with best in class, blue chip companies, from around the world who have come and joined hands with Bharti, at different stages, to develop the telecom sector in India. At the time when the western world started hanging up on India, it brought in Asias telecom powerhouse, SingTel, to replace Telecom Italia and British Telecom. SingTel helped Bharti with the capital and strategy to grow from a mid-size telecom operator into Indias largest telecom company. Warburg Pincus, making its second largest investment in the history of the firm, supported the company in developing the strategy and investor focus, in its public listing and in the process making Bharti one of the best investments ever undertaken by Warburg Pincus around the

world. Today, when Bharti stands on the threshold of being an Asian telecom powerhouse, it has tied up with Vodafone to take the company to the next level and to support Bharti in achieving its vision of making Airtel the most admired brand in India. Bharti is fortunate to have four strong pillars to achieve its vision. The entrepreneurial leadership of Bharti Enterprises, the Asian telecom powerhouse SingTel which will continue to be our leading partner, the worlds largest telecom operator Vodafone and, the most important one, a world-class management team.

Chief Executive Officer of Vodafone Group Plc., Mr. Arun Sarin, speaking on the occasion, said I am delighted to announce this strategic partnership with BTVL, the leading national mobile operator in India. Together we will take this venture to a new level as clear leader in this market. We are entering a relationship with a major company, which shares our vision and values and understands, as we do, the enormous potential of mobile telephony in society. This transaction is consistent with Vodafone's strategy of developing our global footprint in growth markets, where we can create value for shareholders.

Chief Executive Officer of SingTel, Mr. Lee Hsien Yang, speaking on the occasion, said We entered into India through a partnership with Bharti Enterprises at a time when many were skeptical about Indias telecom story. We are delighted that Bharti, with SingTels support, has successfully executed its growth strategy. Bhartis entrepreneurial spirit and innovative culture continue to drive the companys growth. Today we are pleased to welcome Vodafone as our partner to further develop the Indian telecom market and to take Bharti to greater success.

Commenting on the transaction, Warburg Pincus Co-President Chip Kaye said: We are proud to have been part of one of the most compelling growth stories in Indias history. Having invested in Bharti in 1999 and working closely along the way with a world-class management team and a leader of the caliber of Sunil Mittal, it is gratifying to see the company take this step toward its next phase of growth. Dalip Pathak, the Warburg Pincus senior partner who oversees the firms Indian investment portfolio, added: Bharti is now truly a world-class company and as we depart, we wish the company well and are confident that it will continue to attract interest from investors around the world.

About Bharti Televentures Bharti Tele-Ventures is one of India's leading private sector provider of telecommunications services with an aggregate of 15.13 million customers as of end of September '05, consisting of approximately 14.07 million mobile customers. The company is the only operator to provide mobile services in all the 23 circles in India. The company also provides telephone services and Internet access over DSL in 15 circles. The company complements its mobile, broadband & telephone services with national and international long distance services. The company also has a submarine cable landing station at Chennai, which connects the submarine cable connecting Chennai and Singapore. The company provides reliable end-toend data and enterprise services to the corporate customers by leveraging its nationwide fiber optic backbone, last mile connectivity in fixed-line and mobile circles, VSATs, ISP and international bandwidth access through the gateways and landing station.

Pricing Strategy of Vodafone and Airtel Various tariff plans of Vodafone (Prepaid):

Recharge cards MRP (Rs) e (Rs) 25 55 115 199 350 400 600 19.75 43.95 92.35 100 181.5 226 404 2.50 5 10 77.11 130 130 130 0 0 30 30 30 30 50 98 122 217 24 50 Talktim Access Fee Validity Equivalent mins.

(Rs) (Days)

Various tariff plans of Airtel

(Prepaid) ppp 10 25 55 99 125 200 345 390 590 1175 3500 102

5.90 19.25 40.95 0 96.25 103 177.05 217.10 395.10 895.75 2814.99

3 3 8 88.11 15 75 130 130 130 150 300

1.10 2.75 6.05 10.89 13.75 22 37.95 42.90 64.90 129.25 385.01 11.22

0 0 0 30 (Lifetime Validity Offer) 0 30 30 30 30 60 366 30(Tariff Validity)

90 90 90 90 90 90 90 90 90 90 90 90

4 11 24 0 54 52 90 111 202 457 1433 306

306(Local 90.78 A-A)

PRICING STRATEGY OF VODAFONE At Introduction Stage of their operation in India:They are setting price because they have a new product, and they are entering into a new market with an existing product.

How?
share. Need to decide what position they want their product to be in. Penetration pricing. Charging a low price when entering the market to capture market

Possible Pricing Objectives

Profit objectives e.g.

Targeted profit return: The main objective of every company is

to maximize profit from their investment in the business.

Volume objectives e.g.

Dollar or unit sales growth: One of the major objectives is to

concentrate towards the volume and sale of volume of the product at a constant rate.

Market share growth: Along with profit and sales maximization,

growth in market share is also a bigger part of the business for the company.

Other objectives e.g.

Match competitors price: One of the main objectives of

Vodafone at the recent time is to maintain parity price taking care of the pricing strategy of the competitor companies.

Non-price competition: being a new company in Indian telecom.

Sector it is basically necessary to improve their image and goodwill in the market with comparison to the image of the competitors and that comes in non- price competition.

Demand Analysis as a part of pricing strategy

Measure the impact of price change on total revenue:At the initial stage of the company in the Indian origin, it is important to find out that whether the pricing strategy of the company has any impact on the customers or not. It is very much important to analyze the demand of the product of the company by various levels of the customer. Predicts unit sales volume and total revenue for various price After setting the price, it became important for the company to forecast the sales volume and total revenue needed for future.

levels:-

Different customers have different price sensitivities and needs:It is important for the company to understand the fact that in India, various customers have their different tastes and priorities. So, the company is emphasizing on understanding the demand, taste and need of the customers to standardize the products of the company.

Impact of other factors over the pricing strategy of Vodafone

Customers ability & willingness to buy: The ability and willingness of the customers has a great impact over the demand of the product which in turn influence the pricing strategy of Vodafone. Customer lifestyle: Pricing strategy of Vodafone greatly varies as per the lifestyle as well as location of the services of the company. Benefits sought: Where there is benefit, customers run towards it. So Vodafone is trying to serve maximum benefits to the customers in the form of various schemes both postpaid and prepaid.

Characteristics of the product :To fight with the competitors, the

company is trying to add maximum characteristics to each product.30

PRICING STRATEGY OF AIRTEL

Skimming pricing
Charging a high price initially and reducing the price over time:Airtel has reduced the price of its starter pack in the prepaid segment in Chennai. It will offer a student prepaid starter pack at Rs 149 cost reduced from Rs 224. One time when Airtel was a leader in telecomm sector, it had high costs of its product but after the entrance of various other competitors in the market, it significantly reduced its price of the product which has major impact over the services of their product.

Maintaining Quality
By maintaining quality of their products and services they became able to maintain their introducing price over a long time.

Positioning Airtel as an aspiration and lifestyle brand

The target customer was clearly defined: elite, up market professionals and entrepreneurs. They became able to position Airtel as an aspiration and lifestyle brand, in a way that trivialized the price in the mind of the consumer. It was pitched not merely as a mobile service, but as something that gave him a badge value. In a service industry like telecom, people live a brand 24X7. It's all about experience; and for Airtel 'brand=customer experience.

Price-Flexibility Strategy
Flexible-price policysetting different prices in different markets based on: Geographic Location:- Airtel is trying to put price flexibility as per Location. Time of delivery:- Delivery of services matters a lot to improve image of the company, so Airtel believes in providing correct product at correct time. The complexity of the product:- Pricing of Airtel also depends on the complexibility of its product and span of availability.

METHODOLOGY

Target population Type of sampling Sample size

People subscribing services of Vodafone/ Airtel Convenient Sampling and Hypothesis testing 100

Due to time and accessibility constraints sampling was adopted and the sample size was limited to 100. 1) Interacting with people who use to subscribe the mobile services of Vodafone and Airtel, to have their view. 2) Prepare a questionnaire and getting it approved by faculty guide and get it filled by visiting customers and with whom the meeting takes place. 3) The analysis of the data collected through questionnaire has been done with the help of the results derived from MS-Excel. 4) Reference to secondary sources of information which include study of relevant books, magazines etc., and use of literature from Internet (articles, surveys etc.)

5) Discussion with faculty guide and professionals has been undertaken. Based

on the interactions, secondary and primary research, the analysis and recommendations has been made. 6) Putting hypothesis on the basis of views of customers and to perceive the realty about the assumption taken in context to study the comparative analysis of pricing strategy of both the companies.

LIMITATIONS OF STUDY
The report does not take into consideration extraneous factors such as time given by different interviewees for the interview and the attitude towards answering specific questions such as categorizing of commission rate into poor, good, average etc.

The report does not also include any provision for the change in attitude of the respondents in future.

The report does not give a single full proof recommendation for improving the product offering and advisory services to each and every potential as well as existing customers.

Personality differences between respondents.

The persons surveyed may not give correct information as the data is generally related with the financial gains of the person concerned.

ANALYSIS
Customers are more sensitive to price changes if the products cost a

lot and/or are bought frequently Competitors may see each of price change as a fresh challenge and

react according to its self-interest at the time. Need to estimate each close competitors likely reaction. Both the companies trying to measure the impact of price change on

total revenue. The Vodafone has an idea is to maximize the profits of the entire

organization rather than that of a single product or a single line

FINDINGS
Majority of the people has been subscribed to Airtel due to its various

value added features. Vodafone is a new company in India, so it needs span of time to stand in that level. Vodafone is trying its best to increase its market share through parity

pricing and penetration strategy. Its offering reduced price for the products through various schemes to attract various levels of customers. On the other hand Airtel which had fixed and high strategy of pricing, also trying to reduce its cost to expand the level of customers. Vodafone is trying to expand its span through efficient promotion and

stimulated reduce pricing where as Airtel is trying to standardized its services through flexible rating at various locations of India.

CONCLUSIONS

Airtel seems to have consciously decided to go for the belly of the market and aggressive market expansion, while Vodafone seems to be pursuing a relatively more sophisticated consumer. There isn't a great deal of differentiation in terms of pricing, services, schemes and so on, but there are differences in approach. Overall, AirTel is focused on functionality and efficiency, while Vodafone has veered towards warmth and emotions.

RECOMMENDATIONS
As majority of people were aware of Hutch, but after acquisition by Vodafone, Vodafone needs to evolve through its balanced pricing strategy.

It should try to attract customers by offering flexible pricing. On the other hand Airtel is already a established company with a big expansion. But to stand the competitions from the companies, it needs to reduce its price to come more close to the customers.

Electronic media/Hoardings are the major medium which attract majority of people towards the company. So company should focus on these two medium to attract more and more people towards the company.

People of young age attract more towards the new offers provided by the company. So the companies should focus more on youths segments.

 Company should also concentrate more on quality of services to grab major segments.

To understand the customers and their requirements, they should go for market research after every duration of time.

BIBLIOGRAPHY
Websites:

www.bharti.com www.vodafone.com www.google.com www.Wikipedia.com

Magazines:-

Business world
Books:-

Marketing Strategies (Sudhir Chawla) Research Methodology (C.R Kothari) Marketing Management (Philip Kotler)