Marketing Management II : Vodafone Essar Ltd
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07-10-2010, 12:29 PM

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This article is presented by:
Amrita Aich
Anand Roy Chowdhury
Ashutosh Modi
Avinash Jhunjhunwala
Avnish Garg
Marketing Management II : Vodafone Essar Ltd

Analysis of the competitive market environment
With the first leg of growth in the metro circles (70% penetration) almost peaking out, the Indian mobile sector is on its second wave of growth from semi-urban and rural areas. The mobile subscriber base has increased by a 91% CAGR, over 2002-07 to 162mn and to 201mn in August 2007. In order to keep the growth engines at full throttle, mobile operators are now increasing their focus and coverage in the semi- urban and rural areas to sustain the growth momentum. Declining tariffs, lower entry costs, cheaper handsets and increasing network coverage are the factors that are likely to drive growth. The mobile subscriber base is expected to grow by a 35% CAGR to 400mn over FY07-10E. While lower tariffs are likely to ensure strong growth in subscriber base, they are expected to erode the ARPU (average revenue per user) as well as EBIDTA per minute (EPM) of the mobile operators. In a bid to sustain the growth momentum without taking a hit on the high returns, mobile operators have come up with a tower sharing strategy. Tower sharing reduces capital expenditure by 60-65% and also improves operating efficiency due to benefits occurring from sharing of infrastructure.

Competitive Behavior
The competition is very fierce among the national players as well as local players. As soon as any scheme or Promotions are introduced in the market by any of the players, it is copied by the competitors leaving almost no lead time for player. The Market leader Bharti Airtel and Reliance Mobile Services have presence in 23 and 20 circles resp. whereas Vodafone has only in 16 circles.
The Marketing Strategies of both the others players are more targeted towards converting non mobile user to mobile users whereas for Vodafone its been targeted more towards increasing ARPU. In fact it has more ARPU than any of its competitors. However, with subscriptions increasing @ 6 million per month and ARPU decreasing it needs to refocus its strategy. There is increased focus on Value Added Services (such as Caller Tunes, Live Search, Ringtones, Cricket and movies related services etc) in the communication strategy of all the players. The market is intense and every customer is valuable to its operator.


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