Assignment on Service marketing and Customer Relationship Management

Submitted by: Hardik Rajgor (70) Submitted to: Prof. Gincy Mathew

S. K. Patel Institute of Management and Computer Studies Gandhinagar, India

VODAFONE
INTRODUCTION- VODAFONE ESSAR Vodafone Essar in India is a subsidiary of Vodafone Group Plc and commenced operations in 1994 when its predecessor Hutchison Telecom acquired the cellular license for Mumbai. Vodafone Essar now has operations in 23 circles with over with over 85.82 million customers**. Vodafone has partnered with the Essar Group as its principal joint venture partner for the Indian market. Vodafone Essar is owned by Vodafone 67% and Essar Group 33%. The company used to be named Hutchison Essar, reflecting the name of its previous owner, Hutchison. However, the brand was marketed as Hutch. After getting the necessary government approvals with regards to the acquisition of a majority by the Vodafone Group, the company was rebranded as Vodafone Essar. The marketing brand was officially changed to Vodafone on 20 September 2007. On September 20, 2007 Hutch became Vodafone in one of the biggest brand transition exercises in recent times Despite the official name being Vodafone Essar, its products are simply branded Vodafone. Over the years, Vodafone Essar, under the Hutch brand, has been named the Most Respected Telecom Company', the Best Mobile Service in the country' and the Most Creative and Most Effective Advertiser of the Year'. It offers both prepaid and postpaid GSM cellular phone coverage throughout India with good presence in the metros. Vodafone Essar provides 2.75G services based on 900 MHz and 1800 MHz digital GSM technology, offering voice and data services in 23 of the country's 23 licence areas. It is among the top three GSM mobile operators of India. Vodafone Essar is the 1st Indian Telecom operator to receive the Payment Card Industry Security Standard (PCI DSS) certification for its Mumbai operation in 2009. Also it is the first time that Vodafone has launched Recharge Online. **Figures from Cellular Operators Association of India, October 31, 2009 PRODUCT AND SERVICES OFFERED BY VODAFONE The products offered by Vodafone are prepaid phone services, Vodafone Postpaid, World Calling Cards, Gulf Calling Card, Magic Box handsets, iPhone 3G, Vodafone Handyphone and Vodafone PCO. The services offered by Vodafone are Tunes & downloads, Entertainment, Devotional, sports, News & Updates, Call Management Services, Astrology, Finance, Travel, Internet Bonus Card, Mail, Messaging & more, Dial in Services , Bill Info, Vodafone Business Solutions and Vodafone Tuesdays

COMPETITORS OF VODAFONE The competitors of Vodafone in India are: Bharti Airtel Reliance Communications Idea cellular Limited, Virgin Mobile TATA (DOCOMO) TATA Indicom Aircel Spice communications Limited State owned MTNL and BSNL POLITICAL, ECONOMIC, SOCIAL, TECHNOLOGICAL ANALYSIS Political: - Governmental and legal issues affect how the company operates. Regulation Infrastructure Banning of phone use in certain circumstances and areas. Health issues Economic: - Factors influencing the purchasing power of customers and the company's cost of capital. Cost of 3G licenses Cost of calls being driven down Worldwide recession Third world countries

Social: - Demographic and cultural aspects of the environment which influence customer needs and market size. Health Issues Demographics Social Trends Picture phones Mobile Etiquette Saturation Point Technological: - The technological advancements that are coming in the telecom industry. 3G UMTS (2.5G) GPRS/WAP SMS / MMS MARKETING OBJECTIVE OF VODAFONE Vodafone endeavors to ensure that customer needs are at the centre of all of the Group's actions. The Group seeks to use its understanding to deliver relevance and value to each customer and communicate to them on an individual, household, community or business level, with the ultimate aim of encouraging customers to stay with Vodafone for longer and use and promote the Group's services more. Vodafone is a customer knowledge driven organization which aims to make the most of its deep customer understanding by approaching customers with the most appropriate product through a channel they enjoy at a time that is best for them. This approach firmly places Vodafone as an organization that listens to its customers, delivers value and enhances their experience. The marketing objective of Vodafone is to be the top mobile service provider of India by the end of the year 2010. Their strategy for the same includes innovating and deliver on customers' total communications needs, educating customer about various products and cellular telephony, creating brand awareness and enhancing attitudes thereby influencing purchases.

STRENGTHS, WEAKNESS, THREATS AND OPPORTUNITIES ANALYSIS Strengths Amongst Top Three Mobile operators in India Globally Renowned Name Strong infrastructure Strong advertising campaigns Weakness Not able to tap rural areas Brand image of catering only to urban and sub urban areas Opportunities Rural Areas still needs to be tapped Mobile Number portability Threats Mobile Number Portability Entry of new Licenses like Virgin Mobile Lower Tariffs announced by Rival Players MOBILE NUMBER PORTABILITY (MNP) MNP allows subscribers to retain their existing mobile telephone numbers when switching from one access service provider (telecom operator) to another, irrespective of mobile technology or from one technology to another, or the same or any other access service provider. In other words, it enables the subscriber to retain his/her phone number, when switching subscription from one mobile service provider to another.

Benefits to phone subscriber Free mobility from one service provider to another, without changing the mobile number Price competition it the market is competitive Competition will force service providers to improve quality of service and product innovation, in order to retain and expand the customer base Many value-added services may be offered by service providers to attract customers, either free or at low costs Costs for phone subscribers Telecom operator charges porting tees in many countries. These charges comprise of administrative tees and recurring monthly fees for number porting services Often, there is a waiting period for mobile subscribers to get their number successfully ported. This waiting period ranges from 1-2 working days in Hong Kong, to 4-7 working days in Taiwan and Singapore, resulting in too much inconvenience for subscribers Benefits to telecom operators It increases competition by allowing consumers to switch service providers, yet retaining their old mobile phone number, which help telecom operator to improve its product line and services It provides a fair chance to all the service providers. Player with better quality of service and innovative products can sustain in the long term It can be one of the major reasons for the industry to consolidate Costs for telecom operators Increase in churn rate directly affects the revenues of the service provider Increases price competition It may put pressure on margins, as product innovation costs and marketing costs may increase Increased investments in back-end services

MNP - GLOBAL EXPERIENCE MNP has often been considered as a tool utilized by the Government to effect increased competition and improve quality of service, since the subscriber has the liberty to switch from one service provider to another. The subscriber will benefit, as he/she gets better and innovative service at a fair price. MNP works well in the backdrop of sound telecom system and infrastructure, highly penetrated market and in an environment of cut-throat competition. Service providers are mostly apprehensive about MNP due to the fear of high churn rates. However, as per the global experience, churn rates have not necessarily moved up, after the implementation of MNP, due to issues such as porting charges, time taken to port and homogeneity of services offered by various operators. Intensity of competition, its impact on pricing and quality of service are the major drivers of MNP. In most markets when MNP was introduced, the Wireless penetration was between 60% to 80%. Post introduction of MNP the churn rate in most of the markets have clearly shown an increase, but only for 6 to12 months. Majority of countries have seen large operators losing subscriber market share to competition. NTt DoCoMO lost its share from 54% to 50% in Japan, France Telecom lost 2% from 50% share to 48%, SK Telecom in South Korea lost 3% from 53% to 50% and Chungwa in Taiwan lost 2% from 39% to 37%. Globally, Singapore was the first country to implement MNP in 1997, followed by Hong Kong in 1999 and Australia in 2001. Off late, many countries have adopted the MNP model to prevent market doldrums and putting pressure on service providers to furnish more services at a competitive price level. However, it has not been able to produce any significant results in these markets. Around the world, MNP has been a mixed bag of success and failure. While it has worked in markets like Hong Kong and Australia, it failed to bear fruit in the UK, France, Germany, Pakistan, Ireland, Malta, among others. MNP worked in Hong Kong due to the speedy porting process and the availability of already implemented solution (for fixed-line services). In Australia, the regulator effectively promoted number portability and was able to maintain the maximum porting time of just under three hours. While it has worked in markets like Hong Kong and Australia, it failed to bear fruit in the UK, France, Germany, Pakistan, Ireland, Malta, among others. The major obstacles that can limit growth of MNP are porting charges and time taken for porting. Porting charges and porting time are critical as the two are inversely proportional to the use of MNP. Operators in Germany and UK charge high porting charges, in the range of $25.5 $43, and take 4-5 days for porting. The Netherlands takes up to 60 days for porting. The quicker and seamless the porting process of MNP implementation, the higher is the likelihood of churn. Consumers would feel it to be too much of a pain if porting process takes weeks and hence, may not opt for MNP.

INDIAN TELECOM INDUSTRY SCENARIO India is the 2nd largest telecom market in the world after China. The industry comprises of 429 million subscribers, which include 392 million wireless subscribers and rest wireline subscribers. Wireless segment is growing at a CAGR of 62% over last 5 years. It grew by 50% in FY09. Target of 500 million subscribers by 2010, which industry has drawn out seems easily achievable. Subscriber growth of over 50% y-o-y over last 5 years (Source: TRAI data, Keynote Capitals Research) VARIOUS KEY ISSUES RELATING TO MNP IMPLEMENTATION IN INDIA Major dynamics of the Indian telecom industry include geographical structure, demographic profiles, revenue patterns, competition and quality of service. The impact of MNP on the telecom industry can only be understood by analyzing these dynamics. GEOGRAPHICAL STRUCTURE OF THE INDIAN TELECOM INDUSTRY India's geographical structure is not very conducive for maintaining ARPUs. India comprises of 4 telecom circles, which consist of the high income Metro circle and lower income , and circles. Metro circle first adopted mobile services, while the other three circles viz., , and circles took time to catch up. Initially, Metro circle witnessed exponential growth, which has since stagnated, as teledensity has already crossed 90%. However, the remaining three circles are growing faster, as teledensity is much lower. In addition to the consistent tariff cuts, shift in the focus of telecom operators from Metro to lower income and Circles is one of the major reasons for deterioration of ARPUs. , and circles offer easy entry to entrants, compared to Metro circle, due to the low teledensity of the former. Entrants will have to lure the subscribers of other operators by offering better quality and / or lower tariffs. UNDERPERFORMANCE OF METRO CIRCLE VIS-A-VIS REST Circle wise subscriber numbers and growth in India (Million nos.) (Source: TRAI data, Keynote Capitals Research) Subscriber growth quarter-on-quarter (Source: TRAI data and Keynote Capitals Research) Mobile Tele-density vis-a-vis Subscriber growth

(Source: TRAI data and Keynote Capitals Research) High per capita income of Metros vis-a-vis rest (Source: TRAI data and Keynote Capitals Research) Higher average spend on Mobile calls in Metros (Source: TRAI data and Keynote Capitals Research) MPN'S EFFECT ON THE TELECOM INDUSTRY BASED ON GEOGRAPHIC STRUCTURE MNP is more attractive for entrants and existing operators in Metro circle than in other circles. Metro circle offers limited growth potential for new subscriber addition; entrants and existing operators will both compete for the existing customer base of the latter. MNP is a good tool for these operators. Since Vodafone has a strong customer base in metro circles, MNP can act as a tool for it to further increase it by capitalizing on strong customer base to lure away customers from its competitors. However, pricing and quality of service will play a major role in customer retention. In other circles, existing operators will target both, new subscribers, as well as existing subscribers of other operators. MNP IMPLEMENTATION IN INDIA AND ARPU'S Falling call tariffs has been the major driving factor for the Indian telecom industry since year 2000. Fall in call tariffs negated the rapid growth in subscriber numbers, helping operators adjust to the reducing ARPUs. Major reasons for the fall in ARPUs are competition and TRAI's consistent efforts towards reducing various duties helped reduce call tariffs. ARPU and Minutes of Usages show inverse trend (Source: TRAI, industry data and Keynote Capitals Research) However, ARPU deceleration is faster than MOU growth (Source: TRAI, industry data and Keynote Capitals Research) Revenue per user per minute decelerated from Rs2 to Re0.4 (Source: TRAI, industry data and Keynote Capitals Research)

MNP'S IMPACT ON TELECOM INDUSTRY BASED ON REVENUE STRUCTURE Price competition may intensify post MNP implementation. Basic services and the quality of services in the telecom industry are quiet homogenous, making pricing and value added services (VAS) the key differentiator, and major tool to attract and retain subscribers. In a worst-case scenario, new players or small existing players may adopt cheap pricing strategies to attract and retain subscribers. MNP IMPLEMENTATION IN INDIA AND COMPETITIVE SCENARIO Competition is one of the major driving factors of the Indian telecom industry. Launch of CDMA services and entry of new players are the major events, which made the industry highly competitive over a period of time. Consistent rounds of tariff cuts and improvement in the quality of services only resulted from high competition. Players upgraded themselves by making huge investments to improve the infrastructure and thereby the quality of services offerings, in view of the size of the market and the opportunities it offered. Indian telecom industry is one of the most competitive telecom industries in the world with 12 players offering services to over 390 million subscribers. However, the top 5 players have captured significant market share of 85%, while the other 7 players account for just 15%. Considering the size of the market, the TRAI has allowed entry of new players, which would fuel competition further. Existing players (Source: TRAI data, Keynote Capitals Research) NEW ENTRANTS AND ENTRY OF EXISTING PLAYERS IN NEW CIRCLES TO FUEL COMPETITION CDMA launch and the entry of new players helped industry grow many-told since year 2000. The number of players increased from 2 per circle in 2000 to 5 in 2008. This number has since gone up to 12, as the TRAI has allowed entry of more players into the industry. The entry of new players would intensify competition in terms of pricing and services offerings. Existing competition scenario (Source: Industry, Keynote Capitals Research) Competitive scenario after addition of new players (Source: Industry, Keynote Capitals Research

NEW PLAYERS AND EXISTING PLAYERS IN NEW CIRCLES In January 2008, the TRAI granted telecom license to 5 new players while permitting entry of 4 existing players into new circles. MNP is a good tool for new players, who would like to establish their presence in the lowgrowth, highly penetrated Metro and A circles. Overall, MNP can be beneficial, as it may divert investments to better product offerings and differentiation of services. WHAT TO EXPECT IN INDIA? The introduction of Mobile Number Portability is considered good news for consumers, but presents a looming threat for mobile operators since it presents consumers with the choice of retaining their current mobile phone numbers even if they change their operator. According to a recently conducted Mobile Consumer Insights study conducted by The Nielsen Company to gauge consumer attitudes and behavior towards mobile operators in India, it seems that close to one in five (18%) Indian mobile phone subscribers would change their mobile operator if Mobile Number Portability is introduced into the market. Nielsen augments the study with objective measurement of network performance, with the Consumer Insights part of the study measuring metrics such as satisfaction, willingness to recommend, reasons for churn and reasons for operator selection. As per the survey 1 in four Reliance and Tata Indicom subscribers would be keen to change their operator if Mobile Number Portability is introduced, followed by close to one in five (19%) of BSNL subscribers. INTERESTING INSIGHTS High spenders, postpaid subscribers and business subscribers show a greater tendency to switch if Mobile Number Portability is introduced Prepaid, low and medium spend users are not motivated to switch Postpaid subscribers have almost double the minutes of usage compared to pre-paid subscribers and the incidence of data application usage is also higher among postpaid and high spenders More than half (55%) of all respondents were generally satisfied with their mobile operator and 48 percent were satisfied with the network quality 46 percent were satisfied with the network coverage area of their operator and 43 percent were satisfied with the price they paid for the mobile phone service by their operator

 Satisfaction scores on network quality dropped for almost all operators, with Airtel, BSNL and Reliance registering the greatest drops Vodafone has the highest postpaid subscriber base in India

Chart 1: Top 2 Box: Sum of definitely will switch operator' and probably will switch operator' LEAST LOYAL SUBSCRIBERS ARE IN THE FOLLOWING CIRCLES Mumbai and Delhi Metro, UP East and West, Gujarat, Rajasthan, Andhra Pradesh, Karnataka, Kerala, and Rest of West Bengal (does not include Kolkata Metro) HIGH RETENTION CIRCLES Loyalty to operators is seen to be higher among lower socio-economic groups, older age groups, and among females. Circles in which subscribers show higher retention levels are Chennai Metro, Haryana, Himachal Pradesh, Punjab, UP East, Rest of Maharashtra (does not include Mumbai Metro), Rest of Tamil Nadu (does not include Chennai Metro), Bihar, and Jharkhand. Chart 2: Top 2 Box: Sum of definitely will switch operator' and probably will switch operator' "Consumers and the market will decide who the predominant player will be, with the significant developments in the industry of Mobile Number Portability. As the market grows and hyper-competition takes effect, retention of the right type of customers will become critical," said Shankari Panchapakesan, Executive Director, Telecom Practice, The Nielsen Company, India. .Mobile Number Portability represents a powerful opportunity for operators to drive in-bound porting of high-value subscribers provided they have a good understanding of who is more likely to switch and why," said Panchapakesan. In India, Mobile Number Portability can be leveraged by operators through smart, targeted marketing and promotions to coincide with the introduction of the facility. Indian wireless market act advantageous to existing operators and may partially nullify the MNP impact, such as low penetration (~33%) might allow all players to grow. Lowest tariffs (US$0.02) provide limited scope for pricing war and 92% of subscribers use pre-paid services where churn rate is already high at 45-54%. High porting charge of say Rs 1,000 or high porting time of about 10-15 days will discourage subscribers from using MNP, affordable and faster service could encourage more use/ misuse of MNP. Wireless operators will try to serve loyal post-paid subscribers, who form ~8% of industry subscriber base but ~35% of industry revenues. In spite of accounting for a meagre 10% of the market, the post-paid segment has an average revenue per user, or Arpu, that's thrice as much as prepaid, bolstered no doubt by big spenders with corporate accounts. Marketing spending is expected to rise post-portability, as incumbents scramble to fence their subscribers in, and new

players announce competitive rates and less cluttered networks. But this time around, the communication will no longer be built on a one-size-fits-all, acquisition- driven approach. It will be targeted sharply on the high-end segment of post-paid consumers. Since Vodafone has the highest post paid customer base, it will act as a stimulus to retain them as well as attract new customers. Perhaps belatedly, customer retention and loyalty programmes will become far more critical. Pradeep Shrivastava, chief marketing officer, Idea Cellular Ltd, says: "Perhaps it is high time operators had a greater focus on customer service. Now your existing subscribers have a choice to move on the same number. The focus is going to be more in terms of ensuring you have fewer and fewer dissatisfied customers. It's not so much about publicizing who you are; it's delivering who you are which is going to be critical." VAS IS THE DIFFERENCE? In the mean time, with diminishing returns on calls and SMSes, cellular operators need to shift their focus to value added services (VAS), opine experts. In mature markets like Japan and Korea, 30 to 40 per cent of revenues come from VAS. In India, operators earn around 90 per cent from voice and only 10 per cent from VAS. Revenue per user doesn't normally increase on voice services and VAS can boost margins for the operator. An example for this is "With reality shows, an SMS to vote for your favorite contestant costs the user Rs6. The cost of providing that SMS might be less than 10ps to the operator. That's some margin, no doubt. However, person-to-person SMS is priced much lower. VAS will also help in retaining higher end customers. The higher end segment has remained untouched by the recent price wars because it is not so price sensitive. They also tend to be very loyal to their phone numbers. When mobile number portability comes into play, operators risk losing this higher-end customer base. This could also affect large bulk enterprise deals. So, one really needs to think about how to retain these consumers by offering compelling services. BEYOND CALLER TUNES Although there are several examples of VAS that are doing well, they are restricted to services such as caller tunes or on-demand music. High-spending customers, who typically also own smartphones, look for internet-based services, which are just not up to the mark in India. Today, ring tones account for a disproportionate share of the VAS pie and that is only because there isn't much else of value that has been marketed to the consumers. KPMG's Shetty agrees: "When telecom services get into the eco-system of the people -- and by that I mean the economic life-cycle of people, when they use it for business services... That's when the second revolution will take place." This is happening at a very smallscale today. Instances are company called Baba Jobs which has a mobile service to help rural migrants find jobs in cities. This is a very niche application. But people are willing to pay Rs30-40 per month for the service.

Another such tool is Reuters Market Light, which provides farmers price information on various crops from nearby mandis. This service has, according to the company, been used by 1, 35,000 farmers in two years. Even farmers are willing to spend Rs60 per month, because they feel they can get a return on their investment. On the whole, it is hard to deny that cellular operators are under pressure on multiple fronts: the levelling off of new and high-usage customers, falling revenue per user, the spectrum squeeze, and a deadly price war that is bound to hurt revenues. Plus, the TRAI is getting into the picture to trim hitherto fat margins on SMSes. And there's also the risk of consumer disenchantment with poor quality of services which could, with number portability in the offing, result in the erosion of customer base. It is clear that the tough times ahead will be a call of opportunity that, if not answered swiftly, may prove to be a fatal missed call. STRATEGY FOLLOWED BY VODAFONE Vodafone in order plan for the future and in wake of mobile number portability decided to distinctly identify its value added services by launching the Zoozoos campaign during the Indian Premier League 2 (IPL-2). Cricket is considered to be a religion in India, and Zoozooz captured attention of nearly two billion people during the IPL. People eagerly waited for breaks between matches to see more stories about Zoozoo. Zoozoos have been successful in giving Vodafone a makeover and establishing maximum brand presence. It is an excellent example of a well-laid out marketing strategy. It was a fresh and innovative concept and Vodafone wonderfully promoted their services by creating different stories featuring Zoozoos. There were no celebrity endorsements. The charm of the Zoozoo was itself a great self-marketing strategy and they were instant success among masses. Within few days, Zoozooz created a huge audience for them, giving a boost to the Vodafone brand. People were already in awe of those cute and lovable characters, but the curiosity heightened when Vodafone disclosed that Zoozooz were not animated, rather humans were playing those characters. People were more hungrier to know about their favorite Zoozooz. In the second phase, after the release of these ads, Vodafone promoted these characters on social media sites, which was another wise decision. Zoozoo fan clubs are there on social networking sites like Facebook, YouTube, Orkut, Twitter, and many more, where they have a huge followings. Now Vodafone has announced to launch the Zoozoo goodies like zoozoo toys, zoozoo mugs, zoozoo keychains, zoozoo t-shirts, etc.

DEFINITION:
Customer relationship management is the process of utilizing detailed information about individual customers and carefully managing all the customers touch points with the aim of maximizing customer loyalty. The objective of crm process is to create a powerful new tool for customer retention, customer value, customer acquisition and customer profitability.

CRM ACTIVITIES IN BANKING INDUSTRY:

The bank handles the CRM in a technical way, by collecting the information about its customers from data warehouse and customer meetings, the information includes the market position of the customers, the management, what type of contracts the customers is signing in and how much, what type of credit customer wants. The bank uses the collected information for analysis, which finally helps to form a strategy and to induce new customer offers that will suit most of the customers. Through broad product offering the bank help companies release capital through efficient payment routines and create conditions for growth with the aid of a number of different financing solutions. The bank also offers the corporate customers a number of different investment options to create the best yield for excess liquidity. When it comes to customer offers, the bank offer all the services to all the customers but there are some unique offers which the bank provides to the selected customers according to their customer needs. Branch has a major role in this offer because bank feels that branch is sitting in front of the customer not the head office, so branch has better understanding about its customer. The bank uses branch, phone, email, direct mail and advertising channels to interact with its customers. Bank provides understandable information on the services provided. Their ambition is to always ensure that customer knows what he is deciding and understand the potential consequences. In different banks, different departments are made foe CRM process, in some banks a separate department coordinates the customer relationship management process which is responsible for marketing strategies and following it up and in some banks corporate sales department is responsible for CRM process.

CRM TOOLS:
The banks are using following tools to interact with its customers: call center automation, contact management, data warehousing, campaign management, knowledge management, field service

management, marketing automation, sales service automation, personalization and email management.

BENEFITS OF CRM:
Gaining sales momentum Increasing acquisition of new customers Improving retention of existing customers. Increasing the profitability of existing customers. Improving distribution and channel management. Maximizing the value of CRM investments.

CONCLUSION:
Customer Relationship Management is concerned with attracting, maintaining and enhancing customer relationship in multi service organizations. CRM goes beyond the transactional exchange and enables the marketer to estimate the customer's sentiments and buying intentions so that the customer can be provided with products and services before the starts demanding. Customers are the backbone of any kind of business activities, maintaining relationship with them yield better result.