Overview : The case examines the emergence of BSNL as the leading company in the Indian telecom industry in early 21st century. It explores in detail the changes taking place in the industry through the early 1990s – primarily the entry of private players and the emergence of cellular telephony. It focuses on the various products and strategies adopted by BSNL for its growth and the future course of action. Analysis : We will look at the case through the 4C framework: Context, Company, Consumers and the Competition. The critical issues in each of these aspects and the future course of action
Context( Background): There was tremendous growth in the telecom sector. The key stakeholders involved are the Operators and the customers. The market was divided into postpaid and prepaid users. The key issues here were • High growth in prepaid users • ARPU declining at the rate of more than 5% • High Churn rate • Less usage of Value Added service in the prepaid segment Company: Bharat Sanchar Nigam Limited (BSNL) was formed on October 1, 2000. It is the largest telecom service provider of India offering the full range of communication services.
It intends to make available affordable and effective communication for citizens. The Value proposition is as follows • Availability of affordable communication to all citizens • Improve the quality of telecom services Consumer: Firstly let us look at the position in Value Network and the Segmentation of the Customers Content Providers Equipment Manufacture Key takeaway is that BSNL needs to have the right kind of infrastructure. In this aspect we will look at the 7Ps framework and analyze it from that point of view.
Product( Services): Basic Telephony, mobile ( CDMA, GSM) technologies, Dedicated leased circuits, Voice over IP, Internet services) . Scope in Intelligent Network Services Price : The pricing was based on usage as per the tariff, apart from the installation. The revenues were collected prior( for the prepaid users) or post usage. Place: The place INTRODUCTION: The BSNL – Bharat Sanchar Nigam Ltd. , is the largest telecom service provider of India offering the full range of communication services – basic land line, wireless mobile(CDMA), Leased line circuits, Internet telephony, etc. atering to various segments SOHO ( Small office Home office), Corporate, Individuals, Business groups. In terms of the revenue yield it is found that 15% of the subscriber yields more than 85% of the revenue and this group when distilled further who result in a 5 % of the customer population yielding 50 – 60% of the billing. In a competitive environment it is this group of customers who are most vulnerable to be lured away by the private operators (competitors). The following information has made an attempts to define the various relationship markets present in the segment.
DEFINING THE MARKETING MIX – 7 Ps The product is provision of communication service( Basic Telephony, mobile ( CDMA, GSM) technologies, Dedicated leased circuits, Voice over IP, Internet services) The price is based on the usage charges as per tariff apart from the installation cost. Discounts are offered to heavy callers. The place of delivery is the customer premises/location. The promotion very limited till recently. However now logos, brands names for different services, slogans (Connecting India) etc have been coined.
Very recently advertisement in the print media as well as television commercials has been released. (www. bsnl. co. in) The people have a key role to play since it is a service sector. However this is the weakest link in the marketing mix since the monopoly attitudes have hardly changed at the ground level. The process is another one of the neglected Ps. A lot of corrective processes have being provided for after the complaints by line up of escalations, meeting the senior officials etc. Yet the preventive/ proactive processes are not sufficient/ (work –in – progress).
The physical evidence (being a service sector) depends on the maintenance of front end staff dealing with customer care, the office premises and facilities available there, toll free numbers, call centers. The main problem is faced by the company is that it cannot handle its existing customers in an right manner like partly customers are satisfied with the service and partly are still need to be satisfy, this can be done only through taking customer care as main area while segmentation. CUSTOMER CARE & SEGMENTATION:
Apart from the marketing mix described above the steps taken towards customer care can be taken through dividing them in different groups These may be grouped into preventive processes, empowering the grass root level, work in progress which are very critical in customer service/ improving service availability level, Bill payments made easy and some measures quite frivolous as application form being made free. ( A typical example of the monopoly hangover). The Company has identified the high callers or those who make calls worth more than Rs. , 000/- per month as the high calling segment. This kind of segmentation purely based on the revenue yield alone results in a heterogeneous group of high calling individuals, companies, corporate with inter city presence. Neither has this group been refined further for preferential differentiation nor are any of the measures specified in the customer care specifically targeted towards this groups. Of course the system corrections undertaken would benefit the high callers as well.
Hence apart from providing certain billing discounts or special meeting time the issues cannot be very clearly addressed. Classification of customers (Jones and Sasser Model (1995) ) If one were to use this model for classifying this segment further it would be seen that about 10% would be in the Hostage category. They are vocal, corner the available resources for servicing and are complaining in nature. And the experience of the BSNL managers is that this category normally contributes less to the revenue pool and hence would not be attractive to the competition.
A majority about 60%of the segment would be in the Mercenary category, ready to make a shift, about 20% would be in the defector and terrorist segment (this would include the media and think tank users of the communications) would be make use of every opportunity to spread the negative image and a loyal group of about 10% who are satisfied and stay with the company through the problems. BSNL should reward the loyal group by giving strength to their voice, try to neutralize the impact of the defector terrorist group using pressure strategy and try to move the Mercenary to the Loyal group.
It should also know how to shake off the hostage group without explicitly stating so. RELATIONSHIP MARKETS APPLIED TO THE CASE (Christopher models) RECOMMENDATIONS FOR CHANGE 1) The High calling segment is distilled further on the basis of revenue yield and country wide presence. They should be given classified as Platinum, Gold, Silver, classic groups based on their total countrywide billing and these member subscribers should be eligible for country wide facilities. The senior officers, frontline and other staff should be educated about the value of these groups and they should be provided with premium service. ) The requirements should be studied ( guaranteed uptime of service, fault attendance within the stipulated time, 24x 7 service, integrated billing, single point contact or Key Accounts Manager, etc) and addressed. 3) Being a public company major problem can be of over staff which need to be cut off but instead of cutting the staff company can use its some employees in marketing their product as they working in the company since many years they have more knowledge about the company and the services which company offers. ) The provision of total solutions still remain a myth as the customer has to still run between various wings ( Circuits, Basic phone, Mobile, Internet, Long distance) for their communication needs. Nodal points for interacting should be provided. This would actually help the company sell more as a corporate group having Leased Circuits will also need land lines for office/ residences, mobile communication needs for their officers and sales staff etc. INTERVIEW WITH A. K. SINHA, CHAIRMAN AND MANAGING DIRECTOR. A. K. SINHA, CMD of BSNL. A. K.
Sinha, who served as Senior Deputy Director-General (Switching) in Bharat Sanchar Nigam Limited’s (BSNL) corporate office before assuming charge as its Chairman and Managing Director (CMD) in September 2004, has brought his knowledge of various telecom switching systems and other important aspects of telecommunications to India’s largest telecom service provider. Sinha joined the Indian Telecommunication Service in 1969 and has held the posts of General Manager (Development) in Mahanagar Telephone Nigam Limited’s (MTNL) corporate office and in MTNL, Delhi, and Chief General Manager of Andaman and Nicobar Islands and Jharkhand Telecom Circles.
He has experience in the installation and commissioning of various switching systems in the networks of Calcutta and Delhi Telephones. As Divisional Engineer (Installation), he was instrumental in commissioning the first C-400 type Japanese telephone exchange in Calcutta Telephones and thereafter in MTNL, Delhi. He worked for three years in the Telecom Department of Nigeria. How do you see BSNL’s future as a leader in the telecommunications sector? In terms of growth, what is the key factor behind the entity’s fiscal result for the previous year?
BSNL holds the top position in the telecom sector and will continue to do so. We have the unmatched footprints of our service spread across the country. Being one of the largest public sector enterprises, BSNL has always delivered targets taking into account the social and regional goals. Our last fiscal results give a clear picture of our continuous growth despite fierce competition. We are proud of our impressive growth of over 50 per cent. I believe over a period of time we have improved the delivery of our services, which is the most functional factor in awarding us significant growth.
Can you detail the steps being planned by BSNL to expand its service from basic to mobile telephony to broadband? Despite the impressive strides [made in the sector] over the past few years, India has low teledensity compared to many other countries. Hence, we see a large potential in various States. The government has decided to double the teledensity from 10 per 100 people to 20 in the next three years. Public sector telecom units have been given the mandate to double their own networks. So, we are in the process of doubling the capacity and penetrating areas that have not yet been covered.
From covering all district headquarters, we plan to spread our footprints to all block headquarters. A 60 million GSM [Global System for Mobile Communications] equipment acquisition tender is already on as part of mobile telephony expansion plans. BSNL is also expanding its base in broadband services and hopes to add a million subscribers every year, changing the country’s Internet usage. Also, BSNL’s network is expected to reach all villages by 2007. What are BSNL’s landmark achievements in the current year? It has broken all its past records by registering an impressive growth of 55. per cent in Direct Exchange Line. It registered a 9 per cent rise in its operative income. Apart from this, BSNL has added a large number of consumers, much more than its target, to its cellular and basic subscriber base and is doing remarkably well in broadband and village telephony. In the growing competition among service providers, how does BSNL plan to stay in the top position? BSNL is the leader in all service areas that it operates. Whether it is basic telephony or cellular or CDMA-based telephony or Internet.
As I said earlier, we have an expansion plan for 60 million lines in mobile telephony alone. In another three years, when the country’s teledensity reaches 20 per 100 people, BSNL will have a 50 per cent market share. The rest of the players together will share the remaining market. With our reach and footprint and expansion plans, we will still hold the leadership role in all areas of telecom service despite fierce competition in the market. There appears to be a fair reduction in last year’s waitlist. What steps are planned to clear the wait list? In fiscal 2005-06, BSNL reduced the waitlist from 16. 0 lakhs to 12. 69 lakhs in both the landline and mobile sectors. As per our expansion plan, we are qualitatively improving our network with the introduction of state-of-the-art technology to meet the requirements. The 60-million expansion plan is aimed at clearing the waiting list as well as adding new areas and population to our network. What is your expansion plan for the current fiscal? Apart from the ongoing one, we plan to add 20 million GSM lines this year. Once the roll-out of the 60-million GSM tender happens, we will be able to launch 3G mobile phones.
We hope to add a million broadband subscribers to our network. We are also taking steps to arrest the surrender of phones in our network. Although there is a net increase in subscribers, we are launching a series of measures to make basic telephony more attractive. Above all, we plan to improve the quality of our services and our profits. This year we expect to emerge as the largest mobile telephony operator in the country even in numbers, although we are not present in the two largest areas of operations – Delhi and Mumbai