Internet Marketing: Indian Telecom Sector 2009-2010 Internet Marketing Indian Telecom Sector An Initial Project report submitted to the University of Manchester For the Degree of Master of Science in The Faculty of Engineering and Physical Science Year 2009-2010 Mahwash Goni School of Computer Science UNIT COMP60990 Research Methods and Professional Skills STUDENT ID 75296660 SUPERVISOR Prof. Christopher Holland
27
Embed
Internet Marketing Indian Telecom Sectorstudentnet.cs.manchester.ac.uk/resources/library/... · The significance of Internet Marketing in context of the overall marketing strategy
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Internet Marketing: Indian Telecom Sector 2009-2010
Internet Marketing
Indian Telecom Sector
An Initial Project report submitted to the University of Manchester
For the Degree of Master of Science in
The Faculty of Engineering and Physical Science
Year 2009-2010
Mahwash Goni
School of Computer Science
UNIT COMP60990 Research Methods and Professional Skills
STUDENT ID 75296660
SUPERVISOR Prof. Christopher Holland
mgax3rmw
Text Box
Internet Marketing: Indian Telecom Sector 2009-2010
ABSTRACT
A research is being conducted towards the completion of a dissertation on the topic “INTERNET
MARKETING: INDIAN TELECOM SECTOR”. The aim of this research is to carry out an in-depth analysis
of the online market for mobile phone services in India. This involves application of the Internet marketing
framework to two major competitors for the assessment of the contribution of Internet Marketing towards the
organization’s Business effectiveness, Marketing effectiveness and Internet effectiveness. Following this a
competitor analysis will be done to monitor the use of e-commerce in order to acquire and retain customers.
The significance of Internet Marketing in context of the overall marketing strategy of the companies will also
be assessed to understand the importance of the Internet as a marketing channel. The research will also
include a global comparison of the Indian scenario with that of the UK and USA telecom sector.
This research requires the analysis of both qualitative and quantitative data which will be a combination of
secondary data, independent research and interview data.
The Deliverables of this research will be a report covering the analysis of the growth and development of the
online market, general market trends, a profile of each company’s performance and Internet Marketing
Strategy and a forecast of the future likely developments including new technology innovations.
Internet Marketing: Indian Telecom Sector 2009-2010
Declaration
No portion of the work referred to in this report has been submitted in support of an application for
another degree or qualification of this or any other university or other institute of leaning.
Copyright
i. Copyright in the text of this report rests with the author. Copies (by any process) either in full, or of
extracts, may be made only in accordance with the instructions given by the author. Details may be
obtained from the appropriate Graduate Office. This page must form part of any such copies made.
Further copies (by any process) of copies made in accordance with such instructions may not be made
without the permission (in writing) of the author.
ii. The ownership of any intellectual property rights which may be described in this report is vested in the
University of Manchester, subject to any prior agreement to the contrary, and may not be made available
for use by third parties without the written permission of the University, which will prescribe the terms
and conditions of any such agreement.
iii. Further information on the conditions under which disclosures and exploitation may take place is
available from the Head of the School of Computer Science.
Internet Marketing: Indian Telecom Sector 2009-2010
Table of Contents
1. Introduction and Overview...............................................................................................................1
1.1. Research Focus..........................................................................................................................2
2. Literature Review.............................................................................................................................3
2.1. Internet Marketing.....................................................................................................................3
trading networks and other online resources to reach new business customers, serve current customers
more efficiently and obtain buying efficiencies and better prices” (Kotler and Armstrong, 2008). In this
domain apart from selling their products companies also develop relationships with the business
customers and in some cases they even customize their websites for individual clients. C2C online
marketing is “the online exchange of goods and information between final consumers” (Kotler and
Armstrong, 2008). The classic example of this domain is EBay. Its success in the C2C market is now
pulling in businesses who find it the perfect platform for liquidating their excess inventory. Apart from
this the C2C market also consists of information sharing. The consumers communicate with each other
by means of the web 2.0 suite. The most commonly used means being the blogs and forums which can
be either commercial or non-commercial. Many companies use these blogs to research about their
target customers because often they indicate the consumer’s preferences, likes and dislikes. Some even
set up their own blogs and use them to reach the fragmented audiences. Finally, the C2B domain
includes “Online exchanges in which consumers search out sellers, learn about their offers, and
initiate purchases, sometimes even driving transaction terms.” (Kotler and Armstrong, 2008). This
domain involves the communication that is initiated by the customers. The consumer uses the company
website to search for an item, initiate the transactions, ask questions, give suggestions and get
feedback.
2.3. INTERNET MARKETING BENEFITS FOR MARKETERS
Internet is a marketing channel that provides an additional source of revenue for the marketer. Chaffey
et al. (2003) shows the marketing opportunities provided by the Internet by applying the strategic
marketing grid (Ansoff, 1957) which shows four strategic directions.
New
Market
Existing
Existing New
Product
Figure 2. Market and Product Strategy grid
(Source: Chaffey et al., 2003)
Market Development
Diversification
Market Penetration
Product Development
Internet Marketing: Indian Telecom Sector 2009-2010
Page | 5
The Market development and the Market Penetration provide a more conservation approach to the use
of Internet whereas; Diversification and Product Development are innovative in nature.
The Market penetration strategy represents a conservative use of the internet where it is used to sell
the existing products into the existing markets. This can be done by online advertisements by using the
various online promotion techniques which include banner advertisements, pop ups e.t.c. this strategy
mainly focuses on increasing the awareness of the product and the company among the customers. In
the Market Development strategy, the internet is used to develop a new market for an existing
product. This strategy takes the advantage of the low advertising cost and the global reach of Internet.
The Product Development strategy aims at developing new products and services for the existing
market and using the Internet for their delivery.
2.4. 6 C’s OF INTERNET MARKETING
According to Bocij et al. (2003) in Chaffey et al. (2003) the following benefits of the presence of
Internet have been given:
1. Cost Reduction: Internet reduces the need for sales and marketing enquires and also for
printing and distributing the marketing communication material. All this can be published on
the website. It therefore significantly reduces the advertising costs for a company.
2. Capability: Internet provides opportunities for exploiting new markets.
3. Competitive Advantage: A company can achieve a competitive advantage by introducing a
new tool before its competitor and can retain that advantage until its competitor has the same
capability.
4. Communications Improvement: Internet is an excellent medium to improve the
communications with the customers, staff, suppliers and distributors.
5. Control: Better marketing research can be done with the help of the internet by tracking the
customer behaviour and the staff response to the customer queries and problems.
6. Customer Service Improvement: provided by interactive queries of the data base containing
customer information. Personalization of the websites for the individual users also helps in
achieving high customer satisfaction.
Internet Marketing: Indian Telecom Sector 2009-2010
Page | 6
2.5. INTERNET MARKETING STRATEGY FRAMEWORK
Chaffey et al. (2003) defines the Internet marketing strategy as “the definition of approach by which
the internet marketing will support the marketing and business objectives of the organizations.” Many
marketing researchers believe that the companies do not require a separate Internet marketing strategy.
They argue that the Internet marketing plan should be incorporated within the overall marketing
strategy of the organisations. Chaffey et al. (2003), however, argues that the significance of a separate
internet marketing strategy depends on the relevance of the internet to the particular organisation. It
warrants a separate strategy where the Internet generates huge revenues by contributing significantly to
the sales and by reducing the cost. It further states that since the internet is a relatively new medium of
marketing, it should be given special attention, though the Internet strategy should be a part of the
marketing plans and should be governed directly by the marketing strategy.
The following figure gives a framework for the Internet Marketing strategy development:
Figure 3. Internet Marketing Strategy Development Framework
Source: Chaffey et al. 2003
This framework shows that the Internet marketing strategy is developed with the help of inputs from
the environment analysis and the overall marketing plan. This strategy should consist of clearly defined
goals. Once the strategy is in place the next step is to define the Internet marketing plan which consists
of the details of creating and executing the online presence. After the creation of the site and the online
promotions, it is important to monitor it continuously to make sure that the strategic objectives are
being achieved. The strategy analysis can be used as a feedback to influence future strategies.
Internet Marketing: Indian Telecom Sector 2009-2010
Page | 7
Chaffey et al. (2003) states that, the analysis can be done by measuring the contribution of Internet
marketing to the organisations:
Business effectiveness- This is determined by measuring the web site’s online revenue contribution
and profitability and comparing that to the cost of producing updating and promoting the site. A cost-
benefit analysis is done.
Marketing Effectiveness- these measures include
• Leads
• Sales
• Customer retention and loyalty
• Market share
• Brand enhancement
• Customer service
Internet Effectiveness- These measures access the success of the website and the characteristics of the
visitors. According to Smith and Chaffey (2001) in Chaffey et al. (2003) the Key Performance
Indicators (KPI’s) are:
• Unique visitors- the number of separate, individual visitors who visit the site.
• Total number of visits to the website.
• Repeat visits- average number of visits per individual.
• Duration- average length of time the visitor spends on the website.
• Subscription rates- number of visitors subscribing for the services such as the newsletters.
• Conversion rates- percentage of visitors converting to subscribers.
• Churn rate- percentage of the subscribers withdrawing
• Click-through-rate (CTR) from banner adds or web link on another site.
Internet Marketing: Indian Telecom Sector 2009-2010
Page | 8
3. RESEARCH METHODOLOGY
3.1. PROJECT PLAN
The following objectives have been identified for this research:
1. Understanding the Indian Telecom market structure and identifying the scope of internet
marketing for the same.
2. Applying the Internet Marketing framework to two major competitors.
3. Evaluation of the nature of online competition in context of the development of the overall
market by using competitor analysis.
4. International comparison.
To achieve the first objective of the research I had to do some literature review. Business articles and
academic papers were used to examine and understand the theories related to the topic being
investigated. Both primary and secondary data has been gathered. The introduction of empirical data at
the later stages of this research will also be required to effectively apply the Internet Marketing
framework to the chosen companies.
The project plan is developed to follow a systematic approach to achieve the objectives of this research
within the given time frame. So far the main focus of this research has been literature review. Initially
some general literature was consulted and this also included regular discussions with the supervisor.
Once the objectives of the research were identified more specific literature was consulted to further
understand the problem and the feasible domain of research. The Grey literature was used as the major
source of such information. The literature review will be followed by Data Collection. The data will
include the secondary data such as the industry intelligence data, and data regarding unique visitors
from website sources such as ComScore.com and wireless intelligence. Primary data will also be
collected by means of online surveys. The survey will intend to find the importance of online presence
of the telecom company to the Indian customer. The data collected so far will be understood and will
be used in formulating the interview questionnaire for the Telecom company representatives. The
Interviews will be conducted and their response will enable me to understand the importance of the
Internet Marketing strategies from the company’s perspective.
Once all the data from different sources has been collected, the data will be thoroughly analyzed and
the findings of the research will be summarized in the form of outcome and recommendations. The
research strategy will be the collection of primary and secondary data about the performance indicators
of the Internet Marketing in the Indian Telecom sector and comparing them to the UK and USA
statistics. The statistical data will be analysed using established frameworks and theories of Internet
Marketing.
Internet Marketing: Indian Telecom Sector 2009-2010
Page | 9
The following figure shows the Gantt chart for the project plan:
3.2. POTENTIAL PROBLEMS
The major limitation during this research will be the unavailability of accurate internet data. The
internet data includes the data about the websites unique visitors, its web visibility and search. The data
will be collected from the sources such as the Google ad planner, Google trends for websites and
ComScore.com. Although many efforts are put to ensure that the data on these websites is accurate as
far as possible still these figures are mainly estimates and may not be absolutely accurate.
3.3. IMPORTANCE OF RESEARCH
The findings of this research will enable us to understand the impact of internet as a marketing tool on
the Indian Telecom companies, and thus will enable us to sketch a global comparison. It will also
measure the importance of the internet in context of the overall marketing strategies of the companies.
Hence this research can be useful to companies who want to exploit the potential of this indispensable
channel for their benefit. It will also be useful to practising managers in mobile communication firms,
marketing managers and strategy researchers interested in market intelligence. Today companies lay a
lot of emphasis on their online presence and their internet marketing strategies, so much so that the
overall marketing strategy sometimes revolves around it, this research can therefore be very helpful in
strategy development in a rapidly evolving high-tech market. Apart from this, this research can also be
used as a basis for further research by academic researchers and the research can be extended to
different markets.
Internet Marketing: Indian Telecom Sector 2009-2010
Page | 10
4. BACKGROUND AND INITIAL DATA RESULTS
Before venturing into the Internet marketing strategies of the telecom companies an understanding of the
Indian Telecom Sector and its market structure together with the regulatory framework surrounding it is
important. To understand the market structure a research was done into the academic and grey literature and
various topics were explored.
4.1. HISTORICAL BACKGROUND
Indian telecommunication sector has undergone a major process of transformation. The Govt. has
brought about significant policy reforms. As indicated on the official website of The Department of
Telecom, this revolution in the field of telecom began with the announcement of NTP 1994 (National
Telecom Policy) which was further emphasized and carried forward under NTP 1999 (New Telecom
Policy). There were three main occupants of the fixed service sector before the reforms started in 1994.
They were, DoT (Department of Telecom), MTNL (Mahanagar Telephone Nigam Limited) and VSNL
(Videsh Sanchar Nigam Limited). MTNL specifically operated in two metros Delhi and Mumbai,
VSNL provided international telephony and DoT had an all India presence except Delhi and Mumbai.
DoT enjoyed the policy making powers and therefore had a monopoly over the telecom sector. The
Telecom reforms of 1999 restructured DoT to separate its service providing sector from the policy-
maker. The service provider was initially called DTS (Department of Telecom Services) which was
later corporatized and renamed as BSNL (Bharat Sanchar Nigam Limited). The Govt. further
emphasized private participation in this sector. Although the coming in of the private players has
tremendously increased the competition, it has also significantly improved the quality of service
bringing it to international standards. Another initiative that requires special mention here is the
Government’s “Bharat Nirman” Program that aims at bringing the rural teledensity to 40% by 2014
and Broadband coverage of all 250,000 villages.(Source: www.dot.gov.in)
The Indian Telecom sector has achieved a phenomenal growth during the last few years and is primed
to take a big leap in the future also. The chart on the following page shows the major milestones in the
development of the Indian Telecom Sector over time.
Internet Marketing: Indian Telecom Sector
SOURCE: TRAI (TELECOM REGULATORY AUTHORITY OF INDIA)
1947
•All the foreign telecommunication companies were nationalized to form the Posts, Telephone and Telegraph (PTT), a monopoly run by the government's Ministry of Communications. Telecom sector was considered as a strategic service and the government considered it best to bring under state's control.
1980•The private sector was allowed in telecommunications equipment manufacturing.
1985
• Department of Telecommunications (DOT) was established. It was an exclusive provider of domestic and longdistance service that would be its own regulator (separate from the postal system).
1986
•Two wholly government-owned companies were created: the Videsh Sanchar Nigam Limited (VSNL) for international telecommunications and Mahanagar Telephone Nigam Limited (MTNL) for service in metropolitan areas.
1991 •Telecom equipment manufacturing was delicensed .
1992•value added services were declared open to the private sector.
1994
•A major breakthrough was the clear enunciation of the government’s intention of liberalizing the telecom sector in the National Telecom Policy resolution of 13th May 1994.
1997•Telecom Regulatory Authority of India (TRAI) was fromed.
1999
•New telecom Policy was formed.opening up of all the segments of the telecom sector for private sector participation.
2000
•The Government of India corporatized the operations wing of DoT on 01 October 2000 and named it as Bharat Sanchar Nigam Limited (BSNL).
2003•CDMA was launched.
2004•Calling Party Pays (CPP) inttroduced.
2009
•For three months in a row India beats China for the number of subscribers added every month.
•The turnover of the telecom sector in India increased by 4% to reach nearly USD 8 billion during last quarter (Q4) of 2009
•The sector is facing intensive price war among the various telecom companies operating in the country.
•The revenue generated in Q4 of 2009 is less than the revenue generated in Q1 of 2009, although 133 million new customers were added during this 9 month period.
Internet Marketing: Indian Telecom Sector
SOURCE: TRAI (TELECOM REGULATORY AUTHORITY OF INDIA)
www.trai.gov.in
All the foreign telecommunication companies were nationalized to form the Posts, Telephone and Telegraph (PTT), a monopoly run by the government's Ministry of Communications. Telecom sector was considered as a strategic service and the government considered it best to bring under state's control.
The private sector was allowed in telecommunications equipment manufacturing.
Department of Telecommunications (DOT) was established. It was an exclusive provider of domestic and longdistance service that would be its own regulator (separate from the postal system).
owned companies were created: the Videsh Sanchar Nigam Limited (VSNL) for international telecommunications and Mahanagar Telephone Nigam Limited (MTNL) for service in
Telecom equipment manufacturing was delicensed .
value added services were declared open to the private sector.
A major breakthrough was the clear enunciation of the government’s intention of liberalizing the telecom sector in the National Telecom Policy resolution of 13th May 1994.
Telecom Regulatory Authority of India (TRAI) was fromed.
New telecom Policy was formed.NTP-99 laid down a clear roadmap for future reforms, contemplating the opening up of all the segments of the telecom sector for private sector participation.
The Government of India corporatized the operations wing of DoT on 01 October 2000 and named it as Bharat Sanchar Nigam Limited (BSNL).
Calling Party Pays (CPP) inttroduced.
For three months in a row India beats China for the number of subscribers added every month.
The turnover of the telecom sector in India increased by 4% to reach nearly USD 8 billion during last quarter
The sector is facing intensive price war among the various telecom companies operating in the country.
The revenue generated in Q4 of 2009 is less than the revenue generated in Q1 of 2009, although 133 million new customers were added during this 9 month period.
2009-2010
Page | 11
SOURCE: TRAI (TELECOM REGULATORY AUTHORITY OF INDIA)
All the foreign telecommunication companies were nationalized to form the Posts, Telephone and Telegraph (PTT), a monopoly run by the government's Ministry of Communications. Telecom sector was considered as a strategic service and the government considered it best to bring under state's control.
Department of Telecommunications (DOT) was established. It was an exclusive provider of domestic and long-
owned companies were created: the Videsh Sanchar Nigam Limited (VSNL) for international telecommunications and Mahanagar Telephone Nigam Limited (MTNL) for service in
A major breakthrough was the clear enunciation of the government’s intention of liberalizing the telecom
99 laid down a clear roadmap for future reforms, contemplating the
The Government of India corporatized the operations wing of DoT on 01 October 2000 and named it as Bharat
For three months in a row India beats China for the number of subscribers added every month.
The turnover of the telecom sector in India increased by 4% to reach nearly USD 8 billion during last quarter
The sector is facing intensive price war among the various telecom companies operating in the country.
The revenue generated in Q4 of 2009 is less than the revenue generated in Q1 of 2009, although 133 million
Internet Marketing: Indian Telecom Sector 2009-2010
Page | 12
4.2. THE STORY OF GROWTH
The story of growth of the Telecom Sector over the past two decades can be divided into three phases.
(Arvind 2004 and Indian Telecom Sector: Brochure www.dot.gov.in )
The first phase of reforms began in the 1980’s. It is during this period that the private sector was
allowed in the telecommunications equipment manufacturing. Mahanagar Telephone Nigam (MTNL)
and Videsh Sanchar Nigam (VSNL) were created. A high-powered telecom commission was set up in
1989.
The second phase of reforms started in 1990’s. The Indian economy stared growing and this benefitted
the telecom sector as well. During this phase many countries of the world had started reforms in the
telecom sector which greatly influenced then Indian policy makers and the reforms that followed
opened up the telecom sector for the private sector. In 1991 telecom equipment manufacturing was