Project Report

Project Report

TATA-DOCOMO

Prepared by:

1. Ajay Karanwal (eMEP-09-001)2. Krishnamurthy K Kallapur (eMEP-09-015)3. Mukesh Jain (eMEP-09-021)4. Parag Vaidya (eMEP-09-023)5. Santosh Kinikar (eMEP-09-028)6. Satyajeet Shah (eMEP-09-029)7. Vinay Lomate (eMEP-09-042)

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Table of Contents

Introduction..................................................................................................................................5Situation Analysis ......................................................................................................................6

CUSTOMERS/CONTEXT................................................................................................................6COMPETITORS..............................................................................................................................7COMPANY....................................................................................................................................8COLLABORATORS......................................................................................................................10

Objectives...................................................................................................................................11Strategy.......................................................................................................................................11

SEGMENTATION.........................................................................................................................11TARGETING................................................................................................................................13POSITIONING..............................................................................................................................14

Marketing Mix...........................................................................................................................15PRODUCT...................................................................................................................................15PLACE........................................................................................................................................16PROMOTION...............................................................................................................................16PRICE.........................................................................................................................................17

Implementation.........................................................................................................................18BUDGET.....................................................................................................................................18ACTIVITY SCHEDULE................................................................................................................19

REFERENCES ...............................................................................................................................20

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Abbreviations

CDMA Code Division Multiple AccessGSM Global System for Mobile CommunicationCAGR Compounded Annual Growth RateMn MillionVAS Value Added ServicesUSO Universal Service ObligationARPU Average Revenue Per User

Cr CroreIVR Interactive Voice Response

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IntroductionTATA DOCOMO, is TATA Teleservices Limited's (TTSL) telecom service on the GSM platform-arising out of the TATA Group's strategic alliance with Japanese telecom major NTT DOCOMO in November 2008. TATA Teleservices has received a pan-India license to operate GSM telecom services, under the brand TATA DOCOMO and has also been allotted spectrum in 18 telecom Circles.

India the second largest mobile market in the world, and is also among the fastest growing mobile markets globally. Though this presents very high growth potential and opportunities, TATA-DOCOMO by virtue of being a late entrant in this market also faces significant challenges to penetrate and establish a stable share in the Indian telecom market.

This is an overall marketing plan of TATA-DOCOMO for Oct 2009 -10.

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Situation Analysis

CUSTOMERS/CONTEXT

If we look at Indian share globally in this segment, India, a relatively late entrant into mobile services, has benefited from a significant decline in mobile network costs during the last three to four years. As compared with a capital cost of US$50-90/subscriber to provide mobile service, it costs as much as US$200-350/subscriber to provide fixed-line services. This and the added benefit of mobility have led to stagnation in the total fixed line subscriber base, which along with the significant growth in the mobile base has translated into India having one of the highest ratios globally of mobile subscribers to total telecom subscribers.

Exhibit 1: Mobile subscribers’ percentage

India the second largest mobile market in the world is also among the fastest growing mobile markets globally. The total number of mobile subscribers in India has increased from 6.4 Mn in March 2002 to around 350 Mn in December 2008 at a CAGR of 81% aided by a significant increase in network coverage and a continual decline in tariffs and handset prices.

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Exhibit 2: Growth in Indian Mobile Subscriber base

Considering the above factors supported by Exhibit 1 and 2, DOCOMO a global leader in the VAS (Value-Added Services) space wanted to grow more into Indian Geography.

COMPETITORS

Telecom Industry in India is dominated by major players like Bharti-Airtel, BSNL, Reliance, Vodafone, and IDEA with share market strength as per Exhibit 3, 4 and 5 given below. Competition is very intense due to low points of differentiation.

Exhibit 1: Competition portfolio

Bharti Air-tel Ltd; 24.40%

HFCL ; 0.10%

Reliance Communications Ltd.; 18.30%

Shyam Telecom ; 0.10%Vodafone Essar Ltd.; 17.50%BPL Mumbai ; 0.60%

BSNL; 13.10%

MTNL; 1.20%

Idea Cellular + Spice; 11.10%

Aircel + Dishnet; 4.60%

Tata Teleservices (Maharashtra) Ltd.; 9.10%

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Exhibit 2: Competition region wise

Exhibit 3: Wireless subscriber Indian market shareIndia Wireless Connections (September 2009)  Sep-09 Aug-09 Additions Market ShareBharti Airtel 110511416 107996533 2514883 23.43%RCOM 86117663 84112632 2005031 18.26%Vodafone 82846046 80874460 1971586 17.56%BSVL 58756598 57304404 1452194 12.46%Idea Cellular 51454402 50058471 1395931 10.91%TATA Teleservices 46796033 42789210 4006823 9.92%Aircel 25728633 24415514 1313119 5.45%MTNL 4680141 4662833 17308 0.99%Loop Telecom 2495087 2417446 77641 0.53%Sistema Shyam 1960532 1732125 228407 0.42%HFCL 379654 380288 -634 0.08%All Operators 471726205 456743916 14982289 100.00%

COMPANY

TATA DOCOMO, is TATA Teleservices Limited's (TTSL) telecom service on the GSM platform-arising out of the TATA Group's strategic alliance with Japanese telecom major NTT DOCOMO in November 2008. TATA Teleservices has received a pan-India license to operate GSM telecom services, under the brand TATA DOCOMO and has also been allotted spectrum in 18 telecom Circles. TTSL has already rolled out its services in various circles.

It offers both prepaid and postpaid GSM cellular phone with presence in 11 circles including Madhya Pradesh & Chhattisgarh, Orissa, Maharashtra & Goa, Karnataka, Kerala, Tamil Nadu and West Bengal. It has become very popular with its one second pulse especially in semi-urban and rural areas. They are launching their service from the south of India to central, east and north.

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The launch of the TATA DOCOMO brand marks a significant milestone in the Indian telecom landscape, as it stands to redefine the very face of telecoms in India.

SWOT Analysis:Strengths WeaknessEarly Mover - Pioneer in India on one second billing concept.

Signal Strength

Innovative pricing models for almost everything be it voice calls, VAS services, and IVR interactions.

Customer Service

Global leader in value added services.

USP : Value Added Services like - Timed SMS- Diet SMS - Comix-on-the-go- Interactive GPRS application, - TATA i-Channel

Low Price – Low Quality trap (due to excessive focus on only price based selling)

Strong Alliance: Trusted TATA brand combined with proven technological edge of NTT DOCOMO.Plans affordable by common peopleActive in social media sites like Twitter, Facebook, StumbleUpon, Technorati etc, one of their strategies for marketing their products and creating an online presenceOpportunities ThreatsScope to expand the coverage across the growing Indian market :VAS services market to grow to 450 billion rupees by 2010

Cut-throat competition from other major service providers

Introduce new plans targeted to internet users No strong POD other than priceIntroduce 3G compliant services since DOCOMO has the expertise in 3G

Late entrant in Indian market

Introduce new combined plans like SMS, Internet, calling integrated offers

TRAI’s plan to introduce Mobile Number portability in early 2010

Association with Microsoft to launch the new generation Windows Mobile 6.5 smart phones TRAI’s plan to introduce Mobile Number portability in early 2010VAS for rural segment like integration with e-choupal, mandi prices, weather information, fish shoal movement etc.

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COLLABORATORS

TATA Teleservices is the pioneer of CDMA 1X technology platform in India with market share of around 8.2% by 2008. TATA DOCOMO arises out of the TATA Group’s strategic alliance with Japanese telecom major NTT DOCOMO in November 2008. TATA DOCOMO has received a pan-India license to operate GSM telecom services—and has also been allotted spectrum in 18 telecom Circles.

TATA DOCOMO has leveraged TATA’s brand image in India to form alliances with leading players in the respective segments: Samsung has exclusively partnered with TATA DOCOMO to launch Galaxy i7500 in India. The new stylish Blackberry Curve 8250 smart phone is being launched in collaboration with

TATA DOCOMO offerings, is now on its way to appeal to a broad spectrum of retail and business customers who want an exceptional mobile experience with the ease of mobile access to every facility

Leverage TATA Indicom’s presence across India for distribution channel partnership. Association with Microsoft to launch the new generation Windows Mobile 6.5 smart phones

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ObjectivesIncrease TATA DOCOMO’s GSM consumer base to 45 million by October 2010.

Strategy

SEGMENTATION

Demographic Segmentation (Age)

The Wireless Industry crossed 452.91 million-subscribers mark as by end of May 2009. This total subscribers base of 452.91 million comprise of 298.15 million GSM and 105.51 million CDMA subscribers. During the financial year 2008-09 around 130.67million subscribers were added with a growth rate of 50.00% as compared to 58.12% growth during the year 2007-08.

Age Group Upto 30 (A) 30-50 (B) Above 50 (C)Total GSM Base 298.15 million Percentage 55% 30% 15%Users 160 Mn 90 Mn 4.5 Mn

Source: TRAI

100% of age group of A + 50% of age group B + 50% CAGR = 300 Mn

Geographic Segmentation

Exhibit 4: Rural and Urban subscription share

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Segmentation Details: With the rural India growth story unfolding, the telecom sector is likely to see tremendous

growth in India's rural and semi-urban areas in the years to come. By 2012, India is likely to have 200 million rural telecom connections at a penetration rate of 25 per cent. And according to a report jointly released by Confederation of Indian Industry (CII) and Ernst & Young, by 2012, rural users will account for over 60 per cent of the total telecom subscriber base.

India's rural majority today accounts for more than US$100 billion in consumer spending i.e. the largest buyers as a group in the country and contributing significantly to India's GDP. In 99-00, for every $100 earned by a person residing in a rural area, a person in an urban area earned approx. $182. Today, this gap has been reduced to $56.

Saturation in Urban Market Teledensity at 71%, Rural India teledensity is less than 10%, Scope of growth based on affordable tariffs

The regulator has put thrust on rural rollouts and will provide aid through USO fund.

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TARGETING

Targeting (by Age)Based on segmentation decided to go for Market segmentation as below,

Age Group Youth Middle Age Senior CitizenIncome High Medium Low

100% of age group of A+ 50% of age group B + 50% CAGR = 300 Mn

Considering 15% market capture in GSM market = 0.15*300 = 45 Mn

Target 34 million subscribers from the youth and middle age segment in urban segment, from the total target of 45 million.

Targeting (by geography)

The Target market for the Rural Area will be the R1, R2 and R3 segments in the villages having population of 2000 and above. This will allow DOCOMO to concentrate on the 50% of rural population without incurring a very high cost for expansion of services to remote interiors with low user densities.

Therefore target population for rural is 54% of 62 crores i.e. 33 crores (330 million) (as per Exhibit 6)

Target 11 million subscribers from the rural segment from the total target of 45 million.

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POSITIONING

For all GSM mobile users across India who need simplified, affordable and savings oriented cellular service, TATA DOCOMO is a 3G ready GSM telecom service provider that provides a range of innovative Value added Services with out of the box pricing plans. Unlike the other GSM service providers, TATA DOCOMO is a youthful and vibrant brand that is set to break the conventional thinking by introducing new features and services for all classes of people.

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Marketing Mix

PRODUCT

TATA DOCOMO having good range of services: TATA DOCOMO provides both postpaid and prepaid services.

TATA DOCOMO Quality network: TATA DOCOMO intends to have good quality network which provides clarity in voice.

Prepaid Plan Featureso 1p/ second - Anywhere In India o Savings Alert After every Outgoing call o ISD calls on 1 second charging o Best SMS rates from TATA DOCOMO o Pre activated STD, ISD and National Roaming without rental o Anywhere in India Recharge with TATA DOCOMO o Total Information control

For the rural population, voice alone cannot be incentive enough to subscribe for a telephone connection even with the availability of low cost handsets and all the recent tariff initiatives. The mobile handset has to become a multipurpose instrument providing entertainment, news, education, connectivity as well as a means to promote the financial and business interests. Value added services viz. education, entertainment, tele-medicine, banking, IPTV etc. Some of these services can be provided through text messaging. However, in order to make up for the slow pace of development in the past and offer range of usage/ application, it is necessary that both voice and broadband go and in hand as far as strategy for rural India are concerned.

Locally relevant applications in local languages– Alerts to farmers on Mandi prices Vital, real-time information is available to fishing communities (e.g. sea wave

heights, satellite scan data about fish shoals) which is processed to make it usable to non-technical users.

Integrated package consisting of text-messaging services, voice services and an Internet portal for rural areas. Farmers and fishermen can access the service to get weather forecasts, price information, and employment opportunities outside the agricultural industry.

Temperature, humidity, wind speed & direction and rainfall information Tie up with initiatives like ITC e-choupal to provide real time information via

mobiles

Mobile Banking for Rural India:- Paying insurance premium and utility bills Sending and receive money (through agents/post offices etc)

Applications for the health and education areas Provide standard classroom content as part of broadband package

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Provide specialized e-classroom trainings Provide trainings for agriculture and livestock related areas – pay per use Provide technical (non agricultural sector) related trainings and certifications for

increasing employment opportunities – pay per use

Applications for Department of Posts Applications to send the letters, greetings, messages etc electronically, only

generating hard copies at point of destination for distribution. This will save a lot on logistics costs for department of posts. At the same time they can retain revenues.

Applications for sending money orders through e-Money

PLACE

It having good range of channels of distribution: As TATA already exist in this field of telecommunications as TATA Indicom. It has wide range of channels of distribution to sell TATA DOCOMO services

Use TATA’s existing electronic retail chains like Croma for sales, distribution, returns and customer service in urban areas.

Tie-up with Department of PostThe Postal department has the required infrastructure and reach and also the expertise to handle monetary transactions along with postal deliveries (money orders, stamps, savings schemes, other miscellaneous services)The Dept of Posts has a presence in every corner of the country. The Postman is a known and recognized entity in even the smallest villages. He knows the people well in every village and is well respected. He is also seen as a reliable and responsible Person since he works with the government. He can also influence the decisions of the village folks due to his unique position elaborated above. Postman can be used for credit verification, address verification, training and support and can be given incentives for the same by the telecom companies. TATA with its well respected brand and political clout can form this alliance.

Use Local Schools/Colleges etc for training in rural areasThe local schools will offer the presence of literate teachers who can be leveraged for training the rural people in the use of mobile services and handsets. The teachers can also serve as the voice through which the benefits can be communicated to the villagers.

Dive-in stores in small cities.

PROMOTION

Advertising: TATA DOCOMO following different style of advertising pattern in TV’s and newspapers.

Sales promotion: due to unique feature of TATA DOCOMO it helps the sales people to decrease burden.

Run promotions for mobile services and products during harvest season and festivals due to the presence of higher disposable income during that period.

Run promotions through the local post office, gram panchayats, banks and schools, buses. Allow one month free service for the value added services as trial offers.

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Can introduce night free offer depending on customer reactions. Dive-in Stores Innovative and cost effective billing plans Give away/ freebies wrt milestone billing Social networking websites Cross selling and promotions with TATA’s other outlets like CROMA, Tanishq, TITAN

PRICE

Background: TATA DOCOMO is entering a market where:

o Product demand is highly price elastic. o Substantial economies of scale are available. o The product is suitable for a mass market (i.e. enough demand). o The product will face stiff competition soon after introduction o Because of the cut throat competition, price skimming will not work.

Pricing: The pricing objective is market penetration and to reach as many consumers as possible,

setting a low initial entry price, lower than the eventual market price, to attract new customers. We expect that customers will switch to the new brand because of the lower price.

This will help in fast diffusion and adoption. This will take the competition by surprise, not giving them time to react.

This will also create goodwill among the early adopters segment. This can create more sales through word of mouth.

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Implementation

BUDGET

Considering 45 Mn market for next year, with ARPU of Rs. 165, the total revenue target will be 742 Cr.

Activity Budget Allocated Amount (in Cr)Sales and Marketing 15% 111Operating cost 22% 163Salary 8% 60Depreciation and Amortization

25% 185

Administration 15% 111Profit Expected 15% 111Total 100% 742

(Figures are based on recent balance sheet from DOCOMO)

The marketing budget of 111 Cr is used for the Activity Scheduling and Implementation till Oct 2010.

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ACTIVITY SCHEDULE

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REFERENCES Telecom Regulatory Authority of India (TRAI) Database and Reports Marketing Management by Philip Kotler, Kevin Lane Keller, Abraham Koshy, Mithileshwar

Jha. International Telecommunication Union Database BSE India website (http://www.bseindia.com) Telecommunication Services, Indian Industry: A Monthly Review, CMIE – November 2008 Telecommunication Sector Report – March 2008, CRISIL Indian Telecommunication Sector - August 2007, IBEF Report Census 2001 TATA DOCOMO and Competitors websites http://www.mplans.com http://www.knowthis.com

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