Documente Academic
Documente Profesional
Documente Cultură
August, 2010
Presented By Group 11
We would like to extend our sincerest thanks to Dr. Debasis Pradhan for providing us an opportunity
to carry out this research which has been an immensely enriching experience. His guidance on how
to go about this research has been immensely helpful.
Our thanks also to all the authors and researchers from whose writings and research we have taken
inputs. Our thanks to friends and colleagues too who have helped us with interviews and other
inputs.
The growth and reach of the internet worldwide over the years has been stupendous to say the
least, yet India finds itself as a laggard when it comes to accepting the language of the modern,
global, digitalized world.
Despite there being more than 100 Internet Service Providers (ISP) with class A license in India (see
Exhibit 1) the reach of the internet services is yet to mature and extensively capture most of the
households, small business enterprises, schools, educational institutes and other organizations. This
situation opens up a huge market potential for a player intent on dominating the broadband and
internet services market. More has been elaborated on the current market size in the Situation
Analysis section.
The following figure gives the market share of the major players in the Internet and Broadband
services.
Mission
TDN mission is to raise the benchmarks of customer experience in the country for all times to come.
TDN will endeavour to deliver enhanced customer experience through innovation, by use of cutting
edge technology and by extensive knowledge dissemination to members of its customer support
teams.1
Customer First
Our core business strategy is guided by customer value, customer sensitivity and customer
convenience.2
Integrity
We are accountable to all our stakeholders, regulators, government and customers and believe in
adopting a culture of ethical business practices, transparency and highest standards of corporate
governance.2
The Mission while being customer oriented fails to delineate what goal and how it wants to achieve
it for the customer.
TDN could have put forth that its vision is to see a seamlessly connected India and its mission is to
being the facilitator of communication in the new digital world. This way it defines a bigger paradigm
that defines its business model while precluding being stereotyped as just another Internet
company.
While the company does not provide any objectives, it does nonetheless define certain values that it
believes are important to its business. These values are customer oriented and stress on creating a
conscientious environment and focusing on the customer, respecting employees, being accountable
to the customer, stakeholders and regulators.
1. Wireless Broadband to Home (BTH) service with WPA2 and 802.1x security features.
TDN also offers a complimentary licensed anti-virus package with this service that
protects data on customer PC from spyware, viruses and any malware.
2. Wi-Bro service in Campuses and Buildings.
3. Direct To Office (DTO) Wireless Internet Service Internet Leased Lines over Secure
Wireless last mile, hence provides Media diversity and Service Provider Redundancy to
meet the Internet needs of the organizations.4
Market Size
The total subscriber base for internet users in India is 81 million as of 2009. Internet penetration in
India is one of the lowest in the world which is about 7.0% of the population, compared to other
nations like United States, Japan or South Korea where internet penetration is significantly higher
than in India.5
The current Internet market penetration in India is extremely low at 6.9% when compared to other
developing nations. India being the second largest populated nation offers huge market
opportunities for internet usage in today’s digital age. Figure B illustrates the size of the Indian
population vis-a-vis the population of the markets having better internet penetration than India,
while Figure C gives us an insight about the internet user distribution across the world. It can be
inferred quickly that the market for Internet services is in a very nascent stage in India, and the
growth potential in the coming years is very high.
Indian Market
The growth of Internet subscribers in India over the past 7 years is depicted in Figure D and Table 1
below. It can be observed that there has been a steady growth in the subscribers’ numbers over
these years. From March ’09 to Dec ’09, the subscribers population has increased from 13.5 million
to 15 .24 million showing a growth of 12.6% over the past 9 months6. When we compare this
subscribers figure with our population, it is evident that there is a huge market potential.
%
Users Population
Year Penetration
2004 39,200,000 1,094,870,677 3.58%
2005 50,600,000 1,112,225,812 4.55%
2006 40,000,000 1,112,225,812 3.60%
2007 42,000,000 1,129,667,528 3.72%
2009 81,000,000 1,156,897,766 7.00%
2010 81,000,000 1,173,108,018 6.90%
Table 2: Internet penetration in India over the years
Data Source: http://www.internetworldstats.com/
Tikona Digital Networks aims to connect India through Wireless Broadband service. Broadband
Internet access, often shortened to just broadband, is a high data rate Internet access—typically
contrasted with dial-up access using a 56k modem.8 TDN aims to enhance user experience by
offering Internet speed greater than or equal to 256k through broadband service.
Figure E above compares the growth in Broadband subscription (>=256kbps) vis-à-vis other forms of
Internet subscriptions (<256kbps). The emerging trend is clearly towards Broadband subscription. By
December ’09, the number of Broadband subscribers has overtaken subscribers availing other
modes of internet. Figure F below gives a break-up of various modes of internet usage in India.
Broadband sevice is povided by various ISPs through different technologies as depicted in Figure G
below. TDN believes that wireless broadband is the way to go for India keeping in mind its
inadequate wireline base.
The figure shows that only 1% of Broadband users are availing wireless broadband technology. This
offers a huge scope for TDN, as it can target not only new internet users but can also seek to convert
non-wireless users to wireless form of broadband.
Internet
Penetration in
India
Low buyer volume - Given the low Internet penetration and lower broadband
penetration.
High buyer switching costs - For the broadband service, the customer would be required
to purchase/rent network devices, in addition to purchasing a computer.
Availability of existing substitute products/services – The GPRS enabled handsets,
presence of local Internet vendors.
Buyer price sensitivity
Routers
Switches
Wireless
Security
Physical Security and Building Systems
Optical Networking
Network Management
Interfaces and Modules
Given the low number of manufacturers and suppliers of IT equipment, it is difficult for Tikona to
drive a good bargain with them.
Buyer’s propensity to substitute – mobile phones being the most easily available
substitutes
Category Capacity
With setup of new broadband Internet service providers and low broadband penetration, there is
availability of excess category capacity to service current and short-term future needs of the market.
Environmental Factors
Technological Factors
With introduction of the digital age in India, the consumer has become more aware of technology
and takes into account many factors like after-sale service, customer support, satisfaction,
guarantee, company size, service plans etc before making a purchase decision. Some technological
factors that have contributed to this transition are:
Penetration of computer/internet
Rise in E-commerce
Change in lifestyle to a younger, upwardly mobile generation which values virtual presence,
social networking
Change in business pattern with increased dependence on technology like in the banking
sector
Political Factors
The government adopting a laissez-faire approach to business would have resulted in a free-for-all in
the market. To prevent this, the government takes certain step to prevent abuse of market power by
big business entities. The following factors contribute to politics affecting the business environment:
Monetary & fiscal policies – the recent increase in tax on computer and IT equipments
affects Tikona’s market by increasing prices of complementary products.
Government relationship with industries
- the interest taken by the government in industry
is related to the scope of employment, income enhancement, and support to other
important sectors like manufacturing that the industry provides. It is only the increased
importance of Internet in the economy as a support system that the Government is forced to
look into improving conditions for the broadband sector.
Political Controversies and there implications – the recent controversy regarding the
Ministry of Communications and Information Technology affected the business by hiking up
costs due to the auction of the Broadband Wireless Access spectrum.
Economic Factors
The recent economic crisis badly affected the economy, this translated into lower consumer
spending. Other than such economic cycles, factors such as the current high inflation rate, cost of
living, interest rates etc, affect the market by reducing consumer appetite for expenditure.
Change in consumption pattern – with increased dependence on internet, the demand for
broadband has increased as is visible from the increased penetration of broadband internet.
Difference in lifestyle – the current generation of consumer have had exposure to Internet
from an early age as a result, their conditioning to Internet is a given. The generation views
Internet as a necessity making it easier to convince the consumer of making a purchase
decision.
Two income families – This social trend of having both working parents improves the market
as disposable income increases while less interaction of the child with family members raises
scope of viewing broadband as a source of engaging the child.
Legal Factors
Legislation affects businesses around the world. Reacting to certain happenings, the legislation can
be passed such that it improves the scope of doing business or makes it difficult for the company to
market, provide services for its product.
Increased stress on Internet security – while the idea behind the legislation is to protect the society;
it makes it expensive for the company to provide for extra security without passing on the load to
the consumer.
One of the objectives of the Tikona Digital Networks (TDN) is to get enough number of building
permissions to make them Wi-Bro so that TDN can stabilize their network. TDN has got the
permission for the approximately 3000 building in the different areas of Mumbai and also makes
them Wi-Bro enabled, to starts services in that particular buildings plus the building adjoining to that
building. TDN has started a reverse process, earlier the process was like, TDN got the permission
from the authorized person to make the building WI-Bro enable and then starts selling in that
building, now the process is generate the sale in the building which is just adjoining to the WI-Bro
enable building and then try to get the permission from the authorized person to make that
buildings Wi-Bro enable.
Strategies
BSNL
Bharat Sanchar Nigam Limited has the highest number of customer in the country and also captures
a more than 50% of market share. Apart from broadband, it provides the services like Video
multicasting, Video-on-demand and Interactive gaming, Audio and Video conferencing, IP
Telephony, Distance learning etc. It also has very large customer base in rural part of India.
BSNL is playing a leadership role in developing the telecom infrastructure in rural areas. It has been
successful in increasing its cellular subscriber base by pioneering its services in the rural terrain. Its
services cover the whole of India, except Delhi and Mumbai, which are covered by MTNL, the other
state-owned player.
BSNL is a low-cost service provider of many services. This strategy has helped BSNL in penetrating
the market.
Airtel
Bharti Airtel is in second place in terms of market capturing of broadband. It acquires 13.65% of
market after BSNL which has captured 54.44% of market (TRAI). Airtel has recently launched its 16
mpbs broadband, and is advertising through several advertising mediums such as –Mobile &
Internet, Print, TV, Radio and Outdoor and Transit advertisements. Today, it is one of the fastest
growing telecom companies in the world with more than 40 million subscribers.
In order to improve cost and quality, the company outsources non-core activities through business
alliances. These alliances provide access to new technologies and allow the company to adopt the
best practices of enhancing customer experience. In fact, Airtel has established alliances with Sing
Tel, Ericsson, Nokia, Siemens, Nortel, Corning, IBM, Hinduja TMT, TeleTech and MphasiS.
Bharti has decided to use Airtel as the single brand name across all its categories such as cellular,
fixed and internet services. The company believes that an integrated approach such as One Airtel
will help it in better addressing customer needs through bundled service offerings. This initiative is
slated to increase Airtel’s ROI.
Tata Indicom
Tata Indicom is extensively advertising its new product Photon plus with a punch line Express
Wireless Broadband.
Marketing Mix
Product
Tikona’s product is by far the most innovative thing for broadband on paper. Making use of free
frequencies which reduce its cost significantly, gives it an advantage in cost terms. They intend to
provide broadband services completely via wireless networks which eliminate any need for digging
up of the premises where internet has to be used. Fears of security are allayed due to the use of 4th
Generation Technology (OFDM and MIMO). Add to these the standard features given by most of the
other ISP’s like anti-virus packages etc. and you have a strong product from Tikona on paper.
Price
It is imperative that Tikona comes up with different pricing strategies to meet the needs of different
customers. Also it needs to revise its pricing policy very frequently as in telecom sector the prices are
always fleeting with introduction of new plans.
The following are some of the examples of the new offers that Tikona has made on its website.
It has different plans for enterprise use and home use, the prices and the plans available vary
depending on the location. We compare one of the plans of Tikona in Bangalore circle with that of
Airtel in the same circle with the same broadband speed.
While Airtel’s Impatience 1299-Airtel/KT/FL/20 plan provides 2Mbps speed at Rs. 1299 only. This is a
plan which will require the user to have an Airtel landline and it might require the user to have the
Reference:
http://www.airtelbroadband.in/wps/wcm/connect/airtel.in/airtel.in/home/forme_newuser/broadband+and+fixed+Line/br
oadband/
Place
Tikona digital Networks has a direct reach in thirty two cities, where it is providing its services in the
form of broadband. Tikona plans to add around twenty more cities to its service circle. It is quite
clear that Tikona is looking to expand aggressively and improve its market penetration. The
following data gives the details of the cities where it is present.
Currently TDN services are available in following cities (as on July, 2010).
Ahmedabad Bengaluru Bhopal Chennai Coimbatore Delhi
Vijayawada Vizag
Tikona is making smart moves by making itself available to “partner enrolment”. This concept means
that it is readily looking for partners who are willing to provide wireless broadband services of
Tikona to the end consumer. This is an effective way of vertical penetration in the cities where it
already exists. Similarly it invites people to enrol their buildings for Tikona Wi-Bro service,
anticipating future customers in the building and expanding its infrastructure.
Promotion
Tikona is projecting itself as the next generation broadband. Tikona is a novel concept and has a
superior technology at its disposal; hence it must leverage these advantages. Although it may not
Profits
The Indian telecom services industry witnessed a growth of 20 per cent in revenues earned through Broadband,
the fifth largest segment of the telecom services space (after Fixed-line, Cellular, NLD and ILD), at Rs 9,000
crore recorded for the year ending March 31, 2010, as against Rs 7,500 crore recorded a year ago. Two key
players BSNL and MTNL saw 57 per cent and 92 per cent growth in their broadband revenues respectively.
According to a report by Voice & Data, the Indian government’s target of 20 million broadband connections by
2010 is likely to fall short with the year ending with just 8.75 million subscribers. Here also, the top 30 cities
contributed nearly 60 per cent to all the broadband subscribers. The only saving grace appears to be the
addition of 149 million subscribers for wireless data services on smart hand held devices that recorded a jump
of 47 per cent in the 12-month period ended December 2009.
On the OPM front, Bharti’s operating profit margins works out to 35% while for RCom
the same works out to 21%. The difference exists because Bharti has the first mover
advantage in the industry and has also broken even much ahead of RCom. Again, RCom
operates on the Reliance group principle, namely ‘high volumes and lower margins’. This
allows the company to grab a higher market share at a much faster rate.
The profits of Reliance and Airtel for their broadband services has been calculated as
given below using the data in Exhibit 2.
Please refer to the Exhibit 2 for more details on the financial statements.
Although in general good profit margins exist in the industry but there are some cases
where companies are making losses as well. The below excerpt from a report on Sify
reveal that it is making huge losses, also its market share has eroded rapidly in the past
few years.
Sify Performance
During the quarter ended Sept. 30, 200 8 SIFY recorded significant growth in all three of
its businesses, consisting of Internet access, portal content and corporate services.
Revenue grew to Rs 435.16 million ($9.4 million) for the second quarter. This is over
three times the revenue of the corresponding quarter of the previous year and 35%
higher than the June quarter. Loss before interest expense, income taxes, depreciation
and amortization for the September 30 quarter was Rs 232.8 million ($5.1million).
During the quarter ended Sept. 30, 20007 SIFY recorded the following charges to the
Note: Financial data for TDN was not available and hence it is not possible to comment
on the profit margins of Tikona.
Reference: Winning strategies for making money in the Field Service Business, FieldSVC.Com
TDN has certainly showed that it is far ahead when it comes to designing new products by
introducing the novel concept of Wi-Bro services in India.
This means that no digging in the premises is needed for installation of TDN broadband.
For other companies the broadband services are generally provided through DSL technology (on the
same copper cable that is used for connecting telephone), a landline connection and a DSL router. If
the landline connection is not already available in the locality there is a need to dig up the ground to
lay wires for the same.
TDN does not have a very strong base for delivering services, and this is often the grouse of its
existing users. Also there are high number of complaints due to installation of the equipment (CPE)
in the areas which are not yet live. Below is one comprehensive complaint from a TDN user that was
posted on http://www.consumercomplaints.in/complaints/tikona-digital-networks-tdn-c414931.html
Since i got the connection i am not satisfied i am facing lots of problems slow connection not reaching
closer to the subscribe speed, frequent disconnection, no constant speed, frequent disconnection and
very poor response from the management. i subscribed for one year plan with 512mbps speed which i
paid in advance thru AXIS Bank Cheque No.: 091570 Amount Rs: 6,618. My user ID: 1101619186
If you have any queries or need any information please contact me on My Mobile No.: +91 9966
850858.
Mr. Kareemullah Khan - Area Manager - 9052255345 He approach to me and has shown very
Mr. Raghu - Team Leader - 9160111777 or 8019621872 earlier he use to response my call but now
he is not answering my calls.
Mr. Srinath Rajula - Andhra Pradesh Nodal Officer - earlier he response to my couple of mails with
templates now no response from his side.
I have raised the following complaints since 10 July 2010 to 20 July 2010 with in 10 Day's none of
them have solved satisfactorily, they are just closing the service complaint without solving the problem
on their website.
Whereas the service support of its competitors is pretty strong, most have 24x7 customer support.
The first level of support will be resolution through the call centre technician over a phone
complaint, if the problem is not resolved in the next level a technician will visit the premises and
resolve the problem the very next day. Also if any change of equipment is needed it will be done
immediately.
Ability to Market
Airtel
Airtel’s reach is wide and extensive and the brand awareness is very high. Airtel has used novel ways
to market broad band by positioning itself as a value adder in the youth segment for stamping its
influence on B2C markets, in addition corporate plans have been floated to capture B2B market.
Larger than life celebrities like Shahrukh Khan, Sachin Tendulkar have been roped in to endorse its
products. A master stroke was played when A.R. Rehman was signed to develop Airtel’s signature
tune. In addition Airtel has the financial muscle to carry out print and video advertising.
Marketing vision of the BSNL has to be based on overall mission and vision of the organization. The
mission of BSNL is
Reference: http://www.alttc.bsnl.co.in/altzine/vol_29032006/marketing.htm
BSNL focuses on the Life Time Value of a customer and claims that they sell confidence.
Reliance
Reliance is very much price focused and believes in setting lower prices for the same set
of services offered by others. Reliance also uses most of the strategies used by Airtel apart from this.
Ability to Finance
Competitors like Reliance, Airtel, BSNL are behemoths when it comes to size, also they have a strong
reputation. These factors ensure that these companies are leaps and bounds ahead of Tikona in
terms of being able to obtain loans, credits and being able to finance new growth areas,
infrastructure, promotion costs et cetera.
Different products to lure customers will be used like broadband on mobile phones, data cards and
so on. Highly customized packages and offers specific to the needs and demands of the consumers
will be thrown in to the ring. Bandwidth on Demand concept will be used as this will facilitate
customer to change bandwidth as per his / her requirement. For example a customer with 256 kbps
can change to 1 Mbps during the video Conferencing session.
Expanding Reach
Infrastructure
In terms of infrastructure for broadband services NIB-II would put India at par with more advanced
nations. The services that would be supported includes always-on broadband access to the Internet
for residential and business customers, Content based services, Video multicasting, Video-on-
demand and Interactive gaming, Audio and Video conferencing, IP Telephony, Distance learning,
Messaging: plain and feature rich, Multi-site MPLS VPNs with Quality of Service (QoS) guarantees.
The subscribers will be able to access the above services through Subscriber Service Selection
System (SSSS) portal. Technical Capability of the BackboneThe Broadband Service will be given
through the state of the art Multi Protocol Label Switching (MPLS) based IP Infrastructure, which is
designed to provide reliable routes to cover all possible destinations within and outside the country.
Performance
Frills
To provide multicast video services, video-on-demand, etc. through the Broadband Remote
Access Server (BRAS).
Video and Audio Conferencing:
Content based Services: Like Video on Demand, Interactive Gaming, Live and time shifted TV
To provide a means to bill for the aforesaid services by either time-based or volume- based
billing. It shall provide the customer with the option to select the services through web
server.
To provide both pre-paid and post paid broadband services.
Online speed select will allow users to choose online, how fast they want to surf. Bandwidth
and speed on demand functions will be used.
Bonus bandwidth to improve your surfing experience.
Per-minute charges, improved pulse rate gives flexibility in consumer spending.
Combo Plans
From TDN’s point of view, the internet users market in India (both Present and Potential) can be
effectively segmented in following ways:
Geographic
Population: Population is an extremely effective criterion for segmentation as is evident from
following graph10:
The above graph clearly indicates the growing penetration of Internet across cities with different
population profile. While in 2000 Metros contributed 77% compared to just 5% by small towns, the
scenario is drastically different in 2009.
Demographics
a) Income Level: Income classification is useful for TDN because although now even the poor
people (students particularly) make use of internet, they do it mainly through Cyber Cafes. They
can hardly be categorised as potential customers for TDN in the short run. So, broadly the
market according to income level can be divided into two parts:
i) Upper/middle income class: People who can afford an Internet connection at their
homes. Around 23% of internet usage happens from home10.
ii) Lower Middle/ Poor income class : People who cannot afford Internet Connections at
home and use Cyber Cafes etc. Around 37% Internet access happens from Cyber
Cafes10.
Consumer Behaviour
Buying behaviour varies significantly with different purchases. The following figure shows types of
buying behaviour based on degree of buyer involvement and the degree of differences among
brands13.
Getting an Internet Connection would typically fall under ‘Complex Buying Behaviour’, because
there are a number of ISPs with significant differences between their levels of service, network
coverage and tariff rates. Also, the customers usually get highly involved while taking an internet
connection because there are high costs (time and money) involved.
In order to win customers their behaviour and preferences have to be kept in mind and the service
has to be improved and adapted according to their needs & preferences.
So, how has been your experience? How would you rate it on a scale of 10?
It’s been a very satisfying experience so far. I am getting an excellent speed at very cheap rate (2
mbps @ Rs 800/month), which is far better than compared to other players. I would rate it 8 out of
10.
Have you faced any major problems with TDN’s service till now?
Well, a big disadvantage is that this service can be accessed only through PCs, it doesn’t connect to
Wi-Fi devices like mobiles or I-pod.
Did you try to contact their service persons about this? How has been their response?
Well, since it is a wireless service, so sometimes during bad weather I am unable to connect to
internet. However, this problem has been very rare. Besides this, no other issues.
So, based on your experience would you recommend TDN to other potential consumers?
In fact I have already recommended it to many of my acquaintances and one of my colleagues has
recently subscribed to it too.
The above interview helped us in understanding how an existing customer perceives TDN’s service.
The feedback as evident from this interview has been largely positive. When contrasted with some
of the consumer experiences we have described above in ‘Differential Advantages of Competitors’
section, it shows that TDN is working towards resolving its service related problems, which is a
positive sign.
Targeting
From the above segments TDN has to target the segments which offer the highest potential. TDN
has been rightly targeting following segments:
TDN highlights its following features to differentiate itself and carve a favourable position for itself in
consumers’ minds12:
1. Wire Free Solution: The connection reaches wirelessly to homes and offices. The wireless
solution simplifies the complex task of networking without spoiling the interiors.
2. Latest MIMO technology: Improves network coverage up to two times over conventional Wi-Fi.
3. Assured wireless security: Uses WPA2 and 802.1x security features. Also offers a complimentary
licensed anti-virus package which protects data on Computer PC from spyware, viruses and any
other malware.
“Our vision is to be a leading Broadband and IT services company, offering innovative products and
solutions to home, enterprise and other customers in India and globally. We believe that our next
generation services will change the way India lives, transacts, communicates and we believe that
we can make a significant contribution towards a powerful Broadband enabled India.”
Competitor Targets
The competitors, given their economic size, have targeted all possible Internet users. Starting right
from cell phone users of GPRS (General packet radio service) to small homes to corporate houses
(leased lines).
Service Features
a. Instant connection – same day installation and activation.
b. Flexible, simple and competitive tariff plans without any lock-in period.
c. “Full Home coverage” as an additional service from TDN. This eliminates hassle of
technology and security complexities associated with self-installed Wi-Fi routers, which
have become a nuisance in recent times.
d. Share Broadband from multiple PCs or laptops in the home/office all home can connect
even desktops wirelessly.
h. Cheque drop boxes within 250 meters of your building On-line bill payment to be
available.
Core Strategy
Value Propositioning
i. Built on 4th Generation technologies: OFDM, MIMO and beam steering.
ii. MIMO and beam steering: 2 x coverage vis a vis conventional WiFi.
iv. No cabling in the society building or inside the home, except for specific cases.
vii. Local servicing partner in your locality for same day support.
viii. 16 x 7 call center for plan change, billing and general support.
xi. Innovative and customer friendly tariff schemes, No extra charge if usage exceeds above
limit – bandwidth reduced to lower speed till end of the bill cycle, original bandwidth
restored automatically on beginning of new bill cycle.
Offline Channels
Traditional Print (newspaper, magazine) – Given the wide spread reach of the print media and the
new relatively undeveloped markets of Gujarat, Uttar Pradesh East and West, Rajasthan and
Himachal Pradesh that Tikona will target in the near future, this form of marketing communication
offers cost-effectiveness and breadth.
Online Channels
Online advertisement – The increased penetration of Internet had meant that potential consumers
of the service being offered are already using the Internet and this provides a huge opportunity to
interact and inform potential customers of new products and establish online presence of the
company and the product. Moreover, given that the future interaction with the customer, once the
customer is enrolled, and the delivery channel will be online having an online presence right from
the start makes good sense.
Pricing Strategy
The company uses Market Penetration Pricing, a pricing technique of setting a relatively low initial
entry price, often lower than the eventual market price, to attract new customers.
Given the relative undeveloped and potentially price sensitive markets of Gujarat, Uttar Pradesh
East and West, Rajasthan and Himachal Pradesh and well as the need to build a large user case
quickly, this seems to be the right pricing strategy.
Channel Strategy
The Contractual Vertical Marketing Channel structure at Tikona has 3 channel partners as follows:
3. Customer Care
The current channel strategy is very unique to Tikona. The Channel Partner is responsible for the pre
sales, sales and customer acquisition, installation at customer premises, servicing and billing and
collection services. The Channel Partner owner is like a micro CEO and his organization is Tikona’s
exclusive representative for business in the allocated area.
While such a strategy helps in achieving economies or sales impact that individually would have
been difficult for Tikona, it also increases the level of supervision that Tikona has to undertake to
maintain quality. Such a channel gives an impression that Tikona has effectively outsourced its core
activities and it currently focusing on brand building.
Objectives
Corporate Objectives
We want to achieve our mission with the following objectives in mind for our customers.
The fast evolving business scenario has seen connectivity services gaining primacy; it is
essential that the company first understands the requirements of the customers and
develops a service network to deliver value to the customer’s operations.
Launching an extensive knowledge dissemination drive to raise awareness regarding the
competitive advantage accruing to the customer as a result of the recent technological
developments.
Helping the customer successfully transition to the digital communication world.
Innovating continuously, conceiving and implementing new ideas that enhance the
customer’s business process.
Marketing Objectives
India has a huge potential with a 15.24 million strong Internet subscribers at the end of Dec-09,
registering a quarterly growth of 4.21%. Apart from this, 149.03 million wireless subscribers have
subscribed to Data services, as reported by the wireless service providers.14
The above statistics are reinforced by statistics of 81 million Internet users, a market penetration of
only 7% and an Internet user growth of 1,520% over 2000-09.15
Increasing market reach from current 30 cities and 150,000 subscribers16 to 150 cities in
India, keeping in view the market opportunities available with a broadband penetration of
less than 1%.
Develop our proprietary technology and customize services to suit much larger spaces such
as residential neighborhoods and extend our reach beyond smaller spaces such as homes or
offices, while leveraging our cost advantage of using a 5.8 MHz spectrum to deliver quality
service.
Improve market penetration of our services by being the first movers in the states of
Gujarat, Uttar Pradesh, Rajasthan and Himachal Pradesh that are home to around 30% of
India’s urban population. Our newly acquired pan-India BWA (Broadband Wireless Access)
license is a step in the same direction.
Engage customers to help them transition to the broadband Internet platform for all
communication purposes.
Values
Customer Delight
We believe that customer satisfaction is the final measure of our success and so our business
process aims at understanding and catering to the customer.
Intellectual Assets
We recognize the importance of employees as the most important assets a company can possess
and so taking care of this resource is important. We ensure an environment that is conducive to
attracting, retaining and nurturing the best minds and making work a joyful experience.
Hierarchy of Ideas
We believe in the ascendancy of ideas. A great idea is always worth the hard work and time. We are
constantly looking for a new paradigm in the digital world that captures the imagination of the
generation and delivers value to our customers.
Strategy – Product
Customer Targets
While many different bases can be used to find the right kind of customer some important factors
are:
1. Sales Potential - The more a target has the capacity to consume from the product
offering, the more valuable it is.
2. Growth Potential - The growth scope is an important criterion in determining the value
of the target group.
3. Lifetime Value - The more the consumption of the service the target is expected to make
over its lifetime, the more importance the target should be given.
4. Retention Potential - The more likely the target can be economically maintained, the
more attention the target should be paid.
5. Responsiveness - The more a target evinces interest in the company's marketing efforts,
the more easily the sale can be made to the target.
Based on the above, the company should increase its target range to include all possible Internet
users. It has to start acting as if its competitors are not only other Internet service provider but all
internet access providers, like Telecom sector which provide Blackberry, GPRS, 3G services.
The need of moving onto the an Integrated Marketing Communication Program is not only the
consistency and wide coverage that it offers but the exponential increase in the avenues available to
the consumer today to keep informed. This combined with the fragmentation of mass markets
implies that there is no singular strategy to pursue when it comes to reaching the consumer.
Knowing that the consumer is availing these varied forms of information dissemination, it is only
logical for a business to exploit all of these possible media and look for further options.
We now take a look at what all-different approaches can be used to project the product onto the
consumer.
Offline Channels
i. Traditional Print (newspaper, magazine) – Given the wide spread reach of the print media
and the new relatively undeveloped markets of Gujarat, Uttar Pradesh East and West,
Rajasthan and Himachal Pradesh that Tikona will target in the near future, this form of
marketing communication offers cost-effectiveness and breadth.
ii. Radio – The wide dissemination of product knowledge required is fulfilled by this medium in
a cost-effective manner. The broad range and easy availability of radio helps to cover a
larger target audience.
iii. Television – This media remains the staple of the marketing communication strategy cause
of the convincing, seemingly tangible experience it offers. The company would use television
as the main driver of the marketing communication program. With other medium
supporting it.
iv. Billboards – A conventional marketing medium, with high visibility potential, that can be
easily used by the company to generate awareness about the product.
v. Industry Relations – Given that a part of the company’s plans is to have businesses as
customers, it makes sense for the company to build relations with companies as it would
have dual advantage of:
vi. Public Relations – Improving upon public relations is a good way of increasing
company/brand visibility thereby increasing awareness about product and services offered.
Organizing events that fulfill corporate social responsibility are one way of establishing
positive public relations.
iii. Blogs, Micro-blogging – Advent of the current times, the micro-blogging concept has altered
the marketing landscape by making delivery of information easier for the marketer while at
the same time increasing the number of people to whom the message is delivered.
iv. Internet Radio and Internet TV – At a fraction of the cost of marketing through Television
and Radio, this way of marketing helps reserve some space in potential customers’ mind so
that the brand is always a part of the consideration set of the potential customer.
Channel Strategy
The current channel strategy is very difficult to manage for Tikona and might as well be the source of
increased customer complaints on equipment and after sales support. The heavy dependence on
Channel Partner needs to be reduced.
Such reduced dependence will improve the overall quality that Tikona provides but at the cost of
increased operational cost. Hence, the dependency could either be reduced over a longer period of
time or supervision of the Channel partners made more effective. In the absence of quality, the
overall brand image might be affected unfavorably.
Exhibit 1 List of ISP players in India with Class A license from TRAI
Date ISP of
Sl No Name of Company Category ISP Licence No.
license
70. AT&T Global Network Services India Private Limited A 820-985/07-LR 1/24/2008
Exhibit 2 Attached in soft copy of the document are the financial reports of Reliance and Airtel
Airtel_Published_res RCOM_4thConsoliate
ults_Q4.pdf d_09-10.pdf