PT. Excelcomindo Pratama, Tbk.

Marketing Assignment

By: Susanna S. R (3094002) Eka Darmadi (3094802) Levina Rolanda (3094804) Gerry Geraldo (3094806) Christopher Tongku (3094809) May Eka (3094814) Didi S. (3094816)

Faculty of Business and Economics University of Surabaya 2010

INTRODUCTION AND HISTORY OF THE COMPANY

PT. XL. Axiata Tbk. (XL) was established in 1989 with its name PT. Grahametropolitan Lestari. Telecommunication was not the main business at that time as its business was in trading and general services. This company is owned by Axiata Group Berhad (86.5%), one of the largest cellular players in the Asia Pacific region, Emirates Telecommunications Corporation Ltd. International Indonesia (13.3%), Middle East and Africa largest cellular provider, and the public (0.2%). Starting commercial operations in 1996, XL is currently one of the leading and highest-growing mobile and cellular services providers in Indonesia, serving 31.4 million subscribers across the country by the end of 2009. XL has continuously proved itself to be a pioneer in delivering cutting-edge technologies to the telecommunications market in the country, launching the first and highest speed 3G-HSDPA (High Speed Downlink Packet Access) and more recently, through its various groundbreaking BlackBerry packages and applications. To better serve the international market, XL has also developed strong partnerships with more than 357 international providers in over 140 countries. Through its corporate values : Integrity, Teamwork and Service Excellence, XL is committed to continuously enhance its capabilities, in efforts to be the preferred telecommunications provider in Indonesia, providing extensive coverage and quality, anytime and anywhere. 1996 1997 1998 1999 2001 Obtained GSM 900 operating license and commercially launched its GSM services with focus on Jakarta, Bandung and Surabaya. Established an integrated microcell network in Jakartas Golden Triangle area. Launched proXL, its prepaid cellular service brand. Entered Sumatera and Batam markets. Received a DCS 1800 spectrum allocation and finalized its fiber optic backbone. Launched M-banking and M-fun services. Expanded its network coverage to Kalimantan and Sulawesi. Launched leased line and IP (Internet Protocol) services. Revitalized the XL logo and individually marketed its prepaid and postpaid brands: jempol (prepaid), bebas(prepaid) and Xplor (postpaid). Became TM Group subsidiary company and enlisted in Indonesia Stock Exchange (previously known as JSE) under EXCL stock code. Launching XL's "The First Broadest & Fastest" 3G services.

2002

2004

2005 2006

Introduced its Rp1/minute tariff. ETISALAT became a shareholder. 2007 ETISALAT is the second largest telecommunications company in the Middle East. Started to consolidate brands under XL prepaid and XL postpaid. TM Group completed its demerger of TM International Berhad (TMI), 2008 whereby Indocel Holding Sdn. Bhd, a subsidiary of TMI, acquired all XL shares owned by Khazanah Nasional Berhad, increasing Indocel Holding Sdn. Bhd.s stake in XL to 83.8%.

OVERALL INDUSTRIAL AND MARKET FORM AND STRUCTURE CONDITION Overall Industrial XL has now taken the lead in the industry as the cellular telecommunications provider with extensive coverage throughout Indonesia. It provides services for retail customers and offers business solutions for corporate customers, including voice, data and other value-added mobile telecommunications services. XL operates its network with GSM 900/DCS 1800 and IMT-2000/3G technologies. XL also holds a Closed Regular Network License, Internet Service Provider (ISP) License, Voice over Internet Protocol (VoIP) License and Internet Interconnection Services License (NAP).

Market Form Xl has enter the oligopoly market form which many company also selling the same product and it is generally such a branded product. To enter this market, we have to face many barriers and also we have to make the promotion and the marketing of our product stronger than before. This market form creates such interdependence with your company and your competitor. Somehow you cannot just rely with your own pricing and investment decision but the firm has to adjust their pricing and output to other firm which will create a likely reaction in order to take consumer attention.

Structure Condition As we all know that the market structure which is usually seen from the increasing number of participants and market share will determine the companys market conduct or behavior, which can ultimately affect firm performance. Usually it started with the increasing number of sellers then the competition will increase, so that profits will decline. Meanwhile, the

degree of product differentiation, knowledge sellers and buyers about its products and the existence of barriers to market entry also affect the strength of the seller in the market. XL as one of the telecommunication service providers has faced into a competitive telecommunication market which it has to struggle to face every action that the competitors took. And as one of the GSM service provider, it knows the competitors which provide the same type of product and give fierce move against us.

The structure condition of the market according with the same type of product to offered.

Company Hutchison Indosat Natrindo Telkomsel

Product type 3 IM3, MENTARI, MATRIX AXIS SimPATI, KartuAS, KartuHALO

MARKETING STRATEGIC OVERVIEW Target Market Product Type XL Prepaid XL Postpaid Target Market Teenagers Business people

Segmentation Excelcomindo position its brand into few segment. Such as its prepaid product which is targeted to middle to lower economic as well as the teenagers. The latest offer for this prepaid product such as just one minute call and you will get so many bonuses like a thousand sms, a hundred minutes free call, a free 1 MB internet access obviously reflect its segmentation. And for the postpaid product which offers not just the call activity but also internet banking and information facilities such as price of gold, foreign currency, etc that reflects what the businessmen and young professionals need is for nowadays.

S.W.O.T XL Strength 1. 2. 3. 4. 5. Weakness 1. 2. 3. 4. 5. Opportunity 1. 2. 3. 4. 5. Thread 1. 2. 3. 4. 5. Other Provider can also give cheaper price for call and sms Economic condition of Indonesia Government regulation Every phone will bundling with other provider The wheatear broken the telecommunication line Can be the first provider in all Young Heart Expand the business for 4G technology Increasing 3G network in Indonesia Mobile Internet Expansion Research and development for new technology Signal issue that state XL cant reach all region of Indonesia The Internet bandwidth overload Lack in system to backup the new process Lack of skilled employee Lack of network when they busy Cheaper Call also SMS rate than other Have lot of content in XL Life The Largest Blackberry user Steady Growing Customer Base 3G Coverage Area

S.W.O.T TELKOMSEL Strength 1. 2. 3. 4. 5. Weakness 1. 2. 3. 4. 5. Opportunity 1. 2. 3. 4. Thread 1. 2. 3. 4. The weather damage to antenna and transmission line VoIP directly competes with other wireless business Other competitor has partnership with big company like Apple Economic condition in Indonesia Get partnership with apple (iPhone) Future technology by 4G Network R&D For the next market Get partnership with Blackberry The price is higher than usual Customer Service is very busy and customer must wait for long time Limit of the company product Lack of skilled employee Cant reach bigger market in young and teenagers Strong financial performance First provider to introduce 3.5G Internet speed up to 7,5Mbps Have million of loyal customer in Indonesia The signal can reach until the small town in Indonesia Have lot of tender and bundling phone using Telkomsel

Positioning

Price (+) & Quality (-)

Price (+) & Quality (+)

Price (-) & Quality (-)

Price (-) & Quality (+)

Bundling Product (+) & Package (-)

Bundling Product (+) & Package (+)

Bundling Product (-) & Package (-)

Reliable Network (+) & Valuable Cust.Service (-)

Bundling Product (-) & Package (+)

Reliable Network (+) & Valuable Cust.Service (-)

Reliable Network (-) & Valuable Cust.Service (-)

Reliable Network (-) & Valuable Cust.Service (+)

Internet Service (+) & Blackberry Service (-)

Internet Service (+) & Blackberry Service (+)

Internet Service (-) & Blackberry Service (-)

Internet Service (+) & Blackberry Service (-)

Marketing Mix Product

XL Prepaid is a telecommunication service paid based on direct payment system. The benefit of XL Prepaid: 1. 2. Text messaging more munificent. Have variety promotional programs (call package, text messaging

package, Internet package and BlackBerry package adjusted with your communication needs). 3. Communicate with relative in abroad more easy and affordable (3

minutes and you get 2 minutes free to 5 countries). 4. Can make and receive phone calls (voice roaming) while in the

countries that have cooperated in this service. XL Postpaid is a telecommunication service paid based on XL billing payment system. The benefit of XL Postpaid: 1. 2. 3. Pay 3 seconds for 3 seconds call. LANGSUNG KRING registration Fast Registration Process. Credit Limit You are able to arrange your credit limit in using XL

Post Paid (only valid for National Coverage and exclude monthly cost and tax). 4. 5. 6. Free No Cantik Based on customers desire. Check Online Billing Anytime Type *108 OK/YES. E-Billing Facility Post Paid Billing facility through email/web, more

updated and can be used anytime. 7. 8. International Roaming Facility in more than 300 Roaming Partner BlackBerry Facility The first operator on Asia to apply daily

BlackBerry tariff. 9. 10. Free National Roaming. 3G/HSDPA data access without registration.

Place

XL has spread out its coverage around Indonesia except Maluku which is on the process to create the network there.

Promotion

XL has done some promotion like advertising and public relation. XL always follow the latest trend which happening in global trend such now on when the world is giving its biggest attention to the World Cup 2010, XL advertisement adopt that trend to be their theme for their promotion which is successfully reach public attention. Price

XL always tries to offer the lower price than the other competitor. It offers a method like you do a call activity for a few minutes than you will get a several minutes free from charges. Also the latest promo from XL which if you are using a minute for a phone call then you will get so many benefits, there are 1000 free sms, 100 minutes free call, 10 MB free internet access. In the last press conference in February 19th, the Director President of XL, Hasnul Suhaemi said, Three years ago with 40 thousand rupiah per month people may did phone call activity for about 29 minutes but now with only 36 thousand rupiah per month people may do phone call activity for about 279 minutes. Xl will keep developing its policies and its service quality to get customer loyalty.

OBSTACLES AND PROBLEMS FACED DURING THE MARKETING STRATEGY IMPLEMENTATION Every company must face what it is called obstacles or problems which are create barrier between what the company want to offer to the consumer. There are some problems that ever occurred in PT. EXCELCOMINDO PRATAMA Tbk. The last product which XL ever launched to the market, Jempol which is more

emphasizing in lower rate for short message service has left behind from another XL prepaid product, Bebas. Then XL compiled it to be one product as XL prepaid that has Bebass good factor that has a lower rate in voice conversation and also Jempols good factor in lower rate of short message service. The true challenge for XL internet service provider, cable-based internet

provider such as, First Media and Speedy from Telkomsel. But we definitely offer the lower rate once again with unlimited quota to be offered to the consumer. With this way, we may easily penetrate internet provider market. To face CDMA operator that provide very low price in call activity, XL with

the full consideration also launch its CDMA product with 72 rupiah per minute while the other competitor of CDMA set about 80 rupiah per minute.

HOW COMPANY FIGHTS ITS WAR ON MARKET COMPETITION AND ITS RESULT Here are some financial data which XL is going through from the last 5 years.

Financial Data
Financial Data Operating Income Profit1
1 1

2005 4.302

2006 6.466

2007 8.365

2008 12.156

2009 13.880

570

1.028

1.760

1.753

2.464

In billion rupiahs

Operational Data
Operational Data Total Subscribers
2

2005 6.978 6.802 176 1.854 3.764

2006 9.528 9.141 387 2.042 4.666

2007 15.469 14.988 481 2.136 7.242

2008 26.016 25.599 417 2.097 12.406

2009 31.438 31.101 337 2.038 15.426

Prepaid Postpaid

Total Employees Ratio of Efficiency3

2 3

in thousands Total Employees/Total Subscribers

As we can see from the data above that show the development of XL from 2005 to 2009, we know that XL has done a great business strategy to keep struggling in the oligopoly market. Actually, in the previous 5 years before year 2005 (2000-2004), XL also did a good performance, but we will just emphasizing the latest development. Eventhough XL has been known for the third biggest for leading mobile telecommunication service provider in Indonesia, XL has always implementing such a good management in the company to keep them move one step forward than before. To explain the strategy in brief within period 2007-2009, we can see the picture below.
2007 Building Coverage 2008 Minute Factory 2009 Driving Value

The XL strategy in 2007 was building coverage, XL covered 90% of population. By knowing what its best for their consumer and what they really need that they dont need the low rate of telecommunication service but super low rate, XL could drive their consumers by encouraging them to use more minutes and increase traffic with XLs super low rate offering. These strategies were really effective and efficient, operating income, profit, and total subscribers were increased a lot. The ratio of efficiency was also increased in 2006. In 2008, XLs operating income has increased a lot from 2007, but actually the profit was barely constant because that was the time that XL was doing a very big business expansion, which the implementation of the minute factory strategy in 2008 has made XL as a pioneer in affordable rates. Therefore they had their operating income increased a lot but the profit is still constant. It was very good investment by PT XL Aviata Tbk. The Minute factory strategy was very successful and can generate a lot of advancement in 2009. In 2009 the XLs strategy was Driving Value with the name of Value Beyond Price, in order to make the consumer satisfied, XL is improving quality until now. XL doesnt want to only give the consumers with cheap price, but also giving high quality of services. Therefore XL was having the larger profit, profit increased a lot, from 1.753 billions rupiah in 2008 to 2.464 billions rupiah in 2009. With the Operating income increased from 12.156 billions rupiah in 2008 to 13.880 billions rupiah in 2009.

KEY SUCCESS 1. The challenge for us is to remain innovative in order to grow our revenue and

subscriber base. There are opportunities in Indonesia, and we will continue to extend our services through new businesses, says Daniel Kristanto, manager of technical services in XLs ERP department. 2. Aggressive promotion campaigns and relentless effort to retain its customers.

It means making sure that they get consistently high quality of services. 3. Affordable price with a choice of products and services interesting and

provide more value for customers. 4. 5. Improve the customer experience. Ensure adequate management of the network load

and maximize the capacity and quality. 6. Maintain profitability by continuously improving market share in line with

efforts to keep maintain a lean organization and management in careful cost. 7. 8. Using opportunities in data services and Value Added Services. Improving efficiency in the distribution system for produce distributor

network with the performance tall, loyal, and productive. 9. 10. Strengthen the brand attributes. Know your costumer, know your competitor, know your company, and give

costumer what they want better than competitor.