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1.1 INTRODUCTION

1.1.1 Introduction to the functional area

Marketing is the wide range of activities involved in making sure that you're

continuing to meet the needs of your customers and are getting appropriate value in

return. It means different things to different kinds of business.

For business to consumer marketing, it is the process by which companies create

value for customers and build strong customer relationships, in order to capture value

from customers in return. For business-to-business marketing it is creating value,

solutions, and relationships either short term or long term with a company or brand. It

generates the strategy that underlies sales techniques, business communication, and

business developments. It is an integrated process through which companies build

strong customer relationships and create value for their customers and for themselves.

Marketing is used to identify the customer, satisfy the customer, and keep the

customer. With the customer as the focus of its activities, marketing management is

one of the major components of business management. Marketing evolved to meet the

stasis in developing new markets caused by mature markets and overcapacities in the

last 2-3 centuries. The adoption of marketing strategies requires businesses to shift

their focus from production to the perceived needs and wants of their customers as the

means of staying profitable.

The term marketing concept holds that achieving organizational goals depends on

knowing the needs and wants of target markets and delivering the desired

satisfactions. It proposes that in order to satisfy its organizational objectives, an

organization should anticipate the needs and wants of consumers and satisfy these

more effectively than competitors.

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The term developed from an original meaning which referred literally to going to a

market to buy or sell goods or services. Seen from a systems point of view, sales

process engineering marketing is "a set of processes that are interconnected and

interdependent with other functions, whose methods can be improved using a variety

of relatively new approaches."

Experienced organizations have learned that it is not their opinion that matters most

regarding whether their product is needed or not. The opinion that matters most is that

of the customers. These organizations have learned that they might not know what

they don't know about their customers. That precious knowledge about the customers

comes from "inbound" marketing through market research to clarify customers' needs

and what they are willing to do to get those needs met. If the inbound marketing is

done well, the outbound marketing is particularly easy and effective.

An important concept in marketing is the marketing mix and its elements.

The following are the 4P’s of marketing and the 4C’s of marketing by Lauterborn and

Shimizu.

The marketing mix is a business tool used in marketing and by marketing

professionals. The marketing mix is often crucial when determining a product or

brand's offering, and is often synonymous with the four Ps: price, product, promotion,

and place; in service marketing, the four Ps have been expanded to the eight Ps to

address the different nature of services.

In recent times, the concept of four Cs has been introduced as a more customer-driven

replacement of four Ps. And there are two four Cs theories today. One is Lauterborn's

four Cs (consumer, cost, communication, convenience), another is Shimizu's four Cs

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(commodity, cost, communication, channel).

Product - A product is seen as an item that satisfies what a consumer needs or wants.

It is a tangible good or an intangible service. Intangible products are service based

like the tourism industry, the hotel industry and the financial industry. Tangible

products are those that have an independent physical existence. Typical examples of

mass-produced, tangible objects are the motor car and the disposable razor. A less

obvious but ubiquitous mass produced service is a computer operating system.

Every product is subject to a life cycle including a growth phase followed by a

maturity phase and finally an eventual period of decline as sales falls. Marketers must

do careful research on how long the life cycle of the product they are marketing is

likely to be and focus their attention on different challenges that arise as the product

moves through each stage.

The marketer must also consider the product mix. Marketers can expand the current

product mix by increasing a certain product line's depth or by increasing the number

of product lines. Marketers should consider how to position the product, how to

exploit the brand, how to exploit the company's resources and how to configure the

product mix so that each product complements the other. The marketer must also

consider product development strategies.

Price - The price is the amount a customer pays for the product. The price is very

important as it determines the company's profit and hence, survival. Adjusting the

price has a profound impact on the marketing strategy, and depending on the price

elasticity of the product, often it will affect the demand and sales as well. The

marketer should set a price that complements the other elements of the marketing

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mix.

When setting a price, the marketer must be aware of the customer perceived value for

the product. Three basic pricing strategies are: market skimming pricing, market

penetration pricing and neutral pricing. The 'reference value' (where the consumer

refers to the prices of competing products) and the 'differential value' (the consumer's

view of this product's attributes versus the attributes of other products) must be taken

into account.

Promotion - represents all of the methods of communication that a marketer may use

to provide information to different parties about the product. Promotion comprises

elements such as: advertising, public relations, personal selling and sales promotion.

Advertising covers any communication that is paid for, from cinema commercials,

radio and Internet advertisements through print media and billboards. Public relations

is where the communication is not directly paid for and includes press releases,

sponsorship deals, exhibitions, conferences, seminars or trade fairs and events. Word-

of-mouth is any apparently informal communication about the product by ordinary

individuals, satisfied customers or people specifically engaged to create word of

mouth momentum. Sales staff often plays an important role in word of mouth and

public relations (see 'product' above).

Place - refers to providing the product at a place which is convenient for consumers to

access. Place is synonymous with distribution. Various strategies such as intensive

distribution, selective distribution, exclusive distribution and franchising can be used

by the marketer to complement the other aspects of the marketing mix.

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Lately three more P’s have been added to the marketing mix. They are as follows:

People - The individuals involved in the sale and purchase of products or services

come under people.���

Process - Process includes the various mechanisms and procedures which help the

product to finally reach its target market���

Physical Evidence - With the help of physical evidence, a marketer tries to

communicate the USP’s and benefits of a product to the end users.

Lauterborn’s 4 C’s are as follows:

Robert F. Lauterborn proposed a four Cs classification in 1993 which is a more

consumer-oriented version of the four Ps that attempts to better fit the movement

from mass marketing to niche marketing:

 

Product part of the four Ps model is replaced by "Consumer", shifting the focus to

satisfying the consumer needs. By defining offerings as individual capabilities that

are combined and focused to a specific industry, the result is a custom solution rather

than the pigeon-holing of a customer into a product.

 

Price is replaced by "Cost", reflecting the total cost of ownership. Many factors affect

Cost, including but not limited to the customer's cost to change or implement the new

product or service and the customer's cost for not selecting a competitor's product or

service.

 

Promotion is replaced by "Communication", which represents a broader focus.

Communications can include advertising, public relations, personal selling, viral

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advertising, and any form of communication between the organization and the

consumer.

Place is replaced by "convenience". With the rise of Internet and hybrid models of

purchasing, Place is becoming less relevant. Convenience takes into account the ease

of buying the product, finding the product, finding information about the product, and

several other factors

Now days, organizations treat their customers like kings. In the current scenario, the

four C’s has thus replaced the four P’s of marketing making it a more customer-

oriented model. Koichi Shimizu in the year 1973 proposed a four C’s classification.

1. Commodity - (Replaces Products)���

2. Cost - (Replaces Price) involves manufacturing cost, buying cost and selling cost���

3. Channel - The various channels which help the product reach the target market.���

4. Communication - (Replaces Promotion)

Strategy is a word that generates much confusion because different people use it in

different ways. And of course, there are different levels of strategy. For example:

Corporate Strategy, Marketing Strategy, Advertising Strategy, Creative Strategy, and

Media Strategy. Regardless of level, strategy can be defined as the overall direction,

which summarizes how all the detailed tactics achieve a specific objective.

You can of course have more than one strategy. Here's Microsoft's European

Marketing Director.

"If our goal is to achieve a certain level of market share within a product category we

could decide that, let's say we needed to achieve 50% market share. We could

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determine that our strategy would be to get 25% of that market share by encouraging

new people to buy spreadsheets. So we would grow the overall market and

consequently achieve 25% market share. To secure the other 25% market share our

strategy could be to progressively attack one of our competitor’s customer bases and

encourage them to move from their product to our own. So, you can build up

therefore two different strategies. One of market expansion and creation of demand

and the other of a competitive stand point encouraging brands which are within a

competitors' base." ���John Leftwich, European Marketing Director, Microsoft

There is one important question that influences the choice of strategies: 'Does it

develop and exploit our sustainable competitive advantage?

Which strategy exploits our competitive strengths, or our competitive advantage? Is

this advantage sustainable in the future or will competition eat away at this temporary

advantage. The key term here is sustainable competitive advantage. Do we know

what it is and do we know the strategies to exploit it?

A typical competitive advantage might be better-designed products, or perhaps more

cost efficient production, or better customer service, or brand imagery.

Perhaps the easiest way of understanding strategy is: it's a summary of how you are

going to achieve the objectives; it drives and summarizes the tactics. It's 'the big

picture'. It often pans over a longer period of time than shorter-term tactical activities

The choice of strategy is influenced firstly by objectives, and secondly by the

resources available. For example: developing superior products depends on having

excellent research and development facilities and people - or at least it depends on

having the money to buy the facilitates and also the time to recruit and build a

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Research and Development team.

So the dimensions of marketing strategy can include: objectives and resources, the

scale of operation, a summary of marketing mixes, positioning, target markets and

timing - do we want to be 'first to market' or come in later with a 'Me Too' product?

Finally, strategies, and tactics, have military meanings. It's no coincidence that there

are several books written on marketing warfare. The ultimate, for me at least, is

Tsung Szu's ancient Chinese 'Art of War'. Although it was written in 500BC it

provides a rich source of reading for any budding marketing strategists - and maybe

some very successful global companies have used it extensively already.

1.1.2 RELATIONSHIP BETWEEN MARKETING AND HR

Marketing and human resources aren't as separate. A company needs to attract

profitable customers to achieve decent sales numbers, but getting top talent interested

in your company is also critical to long-term success. Whenever you're trying to

convince people to help , whether you're after their money or their working hours,

you need to position and market your proposition so it looks attractive.

Marketing and HR are similar or inter-related in the following way

Employer Branding

The word "branding" conjures up visions of market research reports, company logos

and product positioning meetings. Your products and services aren't the only part of

your company in need of promotion, though, especially if you want to attract and

retain top talent. People want to work with a company that boasts a good reputation

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that has a strong mission and vision. Showing people your company's personality is

important, especially in the current economic climate. Lara Moroko and Mark D.

Uncles, writers for The Wall Street Journal, point out that budget squeezes make

hiring the right people more important than ever, since you don't have the funds to

employ workers who don't pull their weight.

Attracting the Right Talent

Since small businesses almost always have tight budgets, even when times are good,

it's even more critical for you to get your staffing decisions right the first time. The

secret to attracting the people you want and need: align your HR strategy with your

business plan. If you want to be a top application developer for smartphones, you

need creative and educated talent. Start blogging about trends in the smartphone

industry. Attend developer conferences. Hold information sessions at local colleges,

and advertise HR policies that cater to young professionals, like flex time and the

chance to brainstorm new ideas on company time.

Keeping People Happy

One rule of marketing is that you should only promise what you can deliver. If your

product fails to live up to customer standards, loyalty and trust wane and your brand

collapses. Similarly, if you promise a work environment that you can't offer, you'll

hurt employee morale. While creating an image to attract top talent is important, you

also need to sustain it. If your business can't afford to promise tuition reimbursements,

but you do want to attract employees committed to learning, work lower-cost

education opportunities into your company culture. Have weekly lunch-and-learn

sessions where employees take turns presenting to the group. Promise education

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funding on a smaller scale, agreeing to pay for one relevant conference each year.

Keeping Up With Change

Markets change, and so do employee expectations. Just like brands have to evolve to

stay competitive, your employer brand has to change with employee expectations.

You need to stay on top of basic trends, like salary data, but you also need to know

what benefits your competitors are providing. Keep on top of news about the top

places to work in your field. You may be too small to provide a gym in-house like a

major corporate competitor, but maybe you could afford to offer fitness allowances.

1.1.3 RELATIONSHIP BETWEEN MARKETING AND FINANCE

Global competition, commoditization, market fragmentation, have all converged to

create an environment requiring companies to create better processes, address

controls, and assess risk. In addition, zero-based budgeting has become the norm.

This convergence marks a new age for marketing in the 21st century; The Age of

Accountability.

This new age forces marketers to change focus from awareness and image to business

outcomes such as increasing revenue, customer acquisition and value, cash flow and

shareholder value. Marketers are sitting squarely inside the trigger hairs of the finance

organization. In order to dodge the bullet, they need new skills, tools and perspective

and finance’s help.

While marketing and finance have tended to have an adversarial relationship, with

some work it’s possible to transform finance into an ally, and turn marketing into a

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performance-driven unit at the same time.

Marketing and finance are related in the following ways:

Talk the Language of Business: Cash Flow ���To change the relationship, marketing

needs to understand the finance mindset. Basically, finance people are risk averse.

They need marketing to show them why what it wants to do is the right thing to do --

not by saying it’s strategic, but by being able to communicate how much money will

come back, and when.

Finance is focused on revenue, expenses, profit and shareholder value. For most

companies, the old adage “cash is king,” still reigns. It’s not that financial people

aren’t interested in the brand, it’s that they want the ability to link brand image and

loyalty to cash flow. It isn’t a coincidence that there is a strong correlation between

cash flow and marketing's responsibilities.

Marketing is responsible for helping the organization acquire and keep profitable

customers and therefore relate its functions directly to cash flow. The more

marketing's initiatives address customer lifetime value, improve the rate of product

adoption, reduce customer churn and lower acquisition costs, the better the

company’s cash flow.

When marketing talks in these terms, it is talking in the language of business and the

language of the CFO. If marketing understands the CFOs expectations and learns to

speak their language, it will be well on its way to creating an ally. If marketers don’t

understand the CFOs language, it’s time to learn.

There are four key concepts important to most CFOs. We’ve already talked about

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cash. The other three are: EPS (earnings per share), Net Contribution, and Payback

(the time frame for when the investment pays off).

When the leadership team asks about marketing ROI, it is really asking about

payback. Leaders want to understand how and when the investment marketing is

making on behalf of the company will pay off. It’s not that they don’t want to give

marketing the money; it’s that they want to be able to analyze the tradeoffs between

one investment and another. The company has only so many resources and therefore

can only make only so many investments.

Treat Marketing Like A Small Business Unit ���Hopefully the CMO and the marketing

team understand that finance executives expect marketers to manage risk, improve

efficiencies and be financially accountable. What they’re really asking is for

marketing to act like a strategic business unit (SBU) owner. They want marketers to

know their numbers, to show they have a plan, and to demonstrate they care about the

company’s success, not just marketing's own piece.

If marketers accept this role, then just like any SBU owner they need to demonstrate

due diligence and accountability by focusing on incremental sales and gross margin

contribution. SBU owners know their business and the key operational indicators. The

CFO wants to know that marketing knows its business, too.

What kind of operational indicators communicate to this to the CFO? For marketing,

the key operational indicators are the average purchase per customer, the

upgrade/cross-sell conversion ratio, the customer lifetime value, the average customer

acquisition cost, the average customer retention rate and cost, the share the brand has

in each segment and geography, and the rate of new product acceptance.

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Jeremy Adamson, Global Controller for Consumer Products and Services at

Symantec, once said that he expects marketing executives to keep the following

numbers in their head, “headcount, the revenue target for the quarter, the cost per

revenue dollar, the cost per booking dollar, and your program-to-people ratio.” If you

don’t know what numbers your CFO expects you to know at the drop of a hat, ask

him or her.

If you are part of the marketing leadership team and you aren’t acting like an SBU

owner, it’s time to change. In most companies, the SBU owner collaborates with

finance to develop performance metrics for their business. For marketing this means

they need to engage finance in the marketing planning and measurement process just

like any other SBU owner.

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1.1.4 DOMINANT ECONOMIC INDICATORS

Market Size:

The cell phone industry is one of the fastest growths besides the Internet. Cell phones

have gone through a huge change and its market has expanded globally. Since 1994,

the cell phone industry has increased from 24 million to about 182 million in wireless

phone and related devices operating in the United States with some 162-million

mobile-phone users in the United States alone.

The cell phone market is increasing very fast with today’s ever-emerging technology

and innovation in improving cell phones. Today, society is living with advance

technology and everyone wants to keep pace with the new technologies. Cell phone

industry is growing larger because it has become a necessity. Parents are getting

mobile phones for their teens because they want to communicate in case of an

emergency and the wireless carriers have made it easy to add users to their existing

plans. And carriers are becoming successful in getting parents to expand their plans

to include their teens. This increases buyers and increases market size worldwide.

Scope of Competitive Rivalry:

The cell phone industry has become increasingly larger within the last three years as a

result of more affordable cellular phones as well as lower service costs. Companies

are competing in an advance technology and communication sector in which success

attracts customers to buy their products and services. The market is very competitive

because they offer the same products and services, but has different physical

attributes to the phones and different costs, which buyers have choices to choose

from. Companies want to provide the best products and services to attract buyers by

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lowering cost and improving products, which makes the cell phone industry very

competitive.

Here are the main factors of competitive rivalry:

• Cell phone cost: Customers wants better services and products at a lower

cost.

• Bundle functions into just one cell phone: For example E-mail, text

messaging, internet

• New technology improvement: For example camera phones

• Better landline services

Stage in Life Cycle:

The cell phone industry is in the Mature Life Cycle Stage, where nearly all-potential

customers are already users of the industry’s product. The cell phone industry’s

growth and profitability depends entirely on its ability to attract new customers. By

increasing and improving the cell phones and services, it will attract more potential

buyers, because technology alone will not attract buyers, instead companies want

value-added services for mobile-phone securities.

Cell Phone companies attract buyers in two ways during the Mature Life Cycle

State:

• Service: Making cell phone more affordable will attract buyers to buy more

cell phones and increase competition between companies to lower service fee.

• Innovative Phone Style: The new designs and improvement in the physical

appearance of the cell phones, and more add-on features attracts customers to

buy it at a higher rate.

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Numbers of Companies in the Industry:

There are over 50 companies with only five top companies in the cell phone

industry that controls 80 percent of the market. Even though there are emerging new

companies into the market, they are relatively small. The five top companies are rank

as follow as the largest to the smallest cell phone company:

1. Nokia

2. Samsung

3. Micromax

4. Blackberry

5. Karbonn

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1.2 LITERATURE REVIEW

Earnst. C, (2001) says that ITSMA is a trusted advisor on services marketing,

branding and sales practices in the information technology industry. ITSMA is

dedicated to helping its members achieve measurable results in terms of growth,

profitability and customer loyalty. ITSMA research, events, custom education and

advisory services help client organizations improve the impact of their marketing and

sales functions and provide opportunities for professional development of their

services personnel. Founded in 1994, ITSMA clients include both well-established

companies such as Accenture, Cisco Systems, EMC, IBM, Oracle and SAP as well as

emerging firms such as Diamond Cluster International, Evolve and Juniper Networks.

Cebrzynski. G (2004) says that Portillo's Hot Dogs launched its first-ever image

campaign in response to lower-than-expected brand awareness when the chain opened

a unit in a new market. The campaign includes 30- and 10-second television spots and

eight radio spots that take a humorous approach in telling the history of Portillo's. The

television spots Chicken in a Mug and Liver on a stick are designed to show how

some harebrained marketing schemes failed while Portillo's marketing innovation

succeeded.

 

 

 

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Andersen,   A.   (2000,   Sept   26)   says   that   IBM continues to increase its level of

awareness as an E-Business solutions provider among decision makers at Fortune

1000 companies, reports leading brand researcher ITSMA in its third Professional

Services and E- Business Solutions Brand Awareness Study. The study also shows

Andersen Consulting making the most significant improvement by more than

doubling its awareness over the last six months. Nevertheless, the market remains

fragmented, with many E-Business professional services firms receiving surprisingly

low awareness levels.

Lindqvist,  J.  (1994)  says  that  the results are presented of a study conducted by the

SIFO opinion survey organization for Supermarket magazine, following a poll of the

attitudes of 1,000 Swedish consumers toward some 60 groups of fast-moving

consumer products. The only product group in which brand name criteria increased

more than price in importance was that of dish-washing detergent. For toothpaste,

there was a dead heat between price and brand name, while for tobacco, 13% of the

respondents said price had increased in importance but none specified brand . The

research shows that, in broad terms, consumers now make more conscious choices

than they did earlier. In most cases, they are trying to save money by paying attention

to prices. But brand names can increase in importance, even in tough economic times.

 

 

 

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Yaseen,  N.,  Tahira,  M.,  Gulzar,  A.,  &  Anwar,  A.   (2011)  say  that  the study is to

investigate resellers' point of view about the impact of brand awareness , perceived

quality and customer loyalty on brand profitability and purchase intention. Further the

study is also focused on finding out the mediating role of purchase intension on the

relationship of brand awareness and profitability, perceived quality and profitability

and brand loyalty and profitability. The study was causal in nature and data was

collected from 200 resellers. The results showed insignificant impact of brand

awareness and loyalty whereas significant impact of perceived quality on

profitability. Further the results revealed significant impact of brand awareness ,

perceived quality and loyalty on purchase intention. Sobel test for mediation showed

that purchase intension mediates the relationship of the perceived quality and

profitability only.

Zakaria,   Z.,   Jusoff,   K.,   Halim,   M.   A.,   &   Aziz,   W.   A.   (2009)   say   that   the state

government of Terengganu, Malaysia is encouraging small scale entrepreneurs to get

involve in the promotion, packaging, labeling and branding of their products.

However, the number of entrepreneurs in the state who are presently involved in

branding is still small. A survey was conducted using questionnaire in order to

discover the influence of the entrepreneurs' business profiles on their knowledge,

awareness and involvement towards brand equity. Six elements of business profiles

have been identified which include Size of Business, Type of Ownership, Types of

Products Sold, Source of Funding, Business Zone and Market Size. These

entrepreneurs are registered under Yayasan Pembangunan Usahawan Terengganu

(YPUT) and involved in the production or selling of food products in the state.

Statistical analysis such as the Chi Square and Cramer's V were used to determine the

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relationship between the entrepreneurs' level of brand equity awareness with their

business profile. Result shows that the entrepreneurs' business profiles were found to

have significant and moderately strong relationships with their level of brand equity

awareness. Future researchers would benefit from this study and use it as a platform

to further investigate other factors such as organizational culture, government support

and style of management in influencing the entrepreneurs' knowledge, awareness and

involvement in branding.

Slavens,  R.  (2007)  say  that  one of the biggest hot buttons for IT departments these

days is network security -- the ability to both safeguard corporate and customer

information from prying eyes and maintain computer system operability against

malicious virus attacks. Arbor Networks wanted to deepen its brand awareness and

stature with corporate enterprises and Web service providers -- its two-core target

markets -- as well as demonstrates its unique vision for warding off security threats

with its Peakflow X technology platform. By integrating social networks and

traditional media such as print, events, e-mail, search engine marketing and

sponsorships, the "Once They have Found Your Network, You have Lost" campaign

helped Arbor create a connected conversation community well ahead of its

competitors, said Tina Stewart, VP-marketing at Arbor.

 

 

 

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Friedmann,   S.   A.   (2002,   Dec)   say   that   three important points to consider when

planning to integrate brand awareness into a trade-show program are: 1. Consistency

and repetition are vital in creating brand awareness . 2. Ensure that all marketing and

promotions are consistent and that they have brand logo, colors, typeface, slogans,

and characters. 3. Peoples' perceptions about a company, products, and services is a

major factor in their choice of brand preferences and their buying behavior. A 10-

point checklist of questions to help plan brand integration into an exhibit program is

offered.

Greenbaum,  M.   (2006,   Feb)   say   that   franchising was built upon the premise of

branding and its effectiveness in driving consumer demand. Creating a national brand

takes years and for most franchise brands , it often takes decades. To build that world-

class franchise brand , there are three primary tasks essential to effective brand

building: 1. Create a unique character or personality for the brand . 2. Build a

relationship with the target market. 3. Create visual impact through a well-conceived

logo and brand identity. Building upon a primary principle of marketing, it is a given

that a brand should remain consistent. With the right tools and franchise support,

franchisees can become highly effective in promoting the brand . A brand 's Web site

should first and foremost be a consumer marketing tool for franchisees, but also offer

information about franchise opportunity. When it comes to branding, public relations

is an extremely vital component of a successful branding campaign.

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Howard,  L.  S.  (2000,  Jan  10)  say  that  insurers have failed to build brand awareness

, which may hurt them competitively as new non-traditional entrants with better-

known brands enter the financial services arena, warned Andy Homer, CEO of Axa

Insurance in London. He said that financial service brands do not feature strongly in

the top global brands in terms of awareness because in a business where companies

are trying to build trust, customers mistrust them. In addition, Homer said, the

industry is largely perceived as antiquated and bureaucratic. And, there is a

proliferation of choices, which is very confusing to consumers.

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2.1 INTRODUCTION

―A lot of people think that the new economy is all about the internet. I think that it's

being fuelled by the Internet - as well as by cell phones, digital assistants, and the like

- but that it's really about customers.

– Patricia Seybold

Today mobile phones have moved beyond their primary role of voice

communications and have graduated to become an essential entertaining device for

mobile users. We are in an era where users buy mobile phones not just to be in touch,

today‘s youth use it to express their thoughts, for social networking, to show their

interests, play games, read news, surf on the internet, listen to music, chat instantly

with friends & families and even check their bank balances. There are various phone

manufacturers providing handsets.

The Indian mobile industry is the fastest growing in the world and India continues to

add more mobile connections every month than any other country in the world. The

telecom boom in the country provides great opportunity to handset manufacturers and

the hottest segment for these manufacturers is the entry-level segment. Among the

fastest growing sectors in the country, telecom has been zooming up the growth curve

at a fiery pace. The last few years saw India adding many firsts to its list of

achievements. Some of these are-the world's lowest call rates (1 paisa/sec), fastest

growth in the number of subscribers (15-20 million per month), fastest sale of a

million mobile phones (1 week), the world's cheapest mobile handset (777), and the

world's most affordable 3G phone (4,999).

The market in India is dominated by mobile. For mobile we have 840 million-plus

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users, unlike many other markets, mobile is becoming the dominant device for voice,

for value-added services, and increasingly for mobile Internet also. It‘s somewhat

similar to what we saw in Japan in 1999 where, because of the limitation of

broadband and computing. There‘s a whole host of services being created around

mobile. An effective management of mobile services requires an understanding of the

factors that underlie the evolution of the market. Factors such as market potential and

timing and speed of adoption are of great importance for telecom operators for

capacity planning. Understanding the evolution of mobile phone market and its likely

future trend is equally important for policy makers.

India is currently facing the onslaught of cheap sub-standard Chinese phones, which

occupy as much as 25 per cent of the market, thanks to the liberal import policies of

India. The boost to exports to mobile phones and their parts will encourage local

manufacturing, which is the best answer to compete with the cheap sub-standard

Chinese phones imports. Mobile phone exports from India could double as a result of

Commerce Ministry granting 2 per cent Focus Product Scheme (FPS) on mobile

phone exports in the Foreign Trade President of Indian Cellular Association said that

the special incentive accorded to mobile phone exports could result in the doubling of

exports in the next 3-5 years from the annual level of 13,000 crore to 14,000 crore if

other enabling policies are put in place. India is already a base for worldwide quality

manufacturing of mobile phones.

The sale of mobile handset have increased from a minor 17.5 million in 2003-04 to

223 millions in 2010-11. Major increase being in the year 2010-11 followed by 2009-

10 with the sale of about 55 million handset.

The major amount of FDI (Foreign Direct Investment) being in telecom industry in

25

years from 2007-09 of about $5000 millions, which provided the major opportunities

for different companies to come in Indian market. The results of which can be seen in

the following years with the increase in number of sale of mobile handset. The FDI

limit being increased from 49% to 74% being the major reason for the increase in

FDI.

• This inflow of FDI provided in roads for many companies which started their

production in India.

• Only 5 local manufacturers in 2008 and the number stands at 28 now!

• Fall in the market share of Nokia, L.G., and Motorola.

• Samsung Electronics Co. Ltd‘s share rose marginally to 9.7% from 9.5%.

• LG‘s share dropped from 7.2% to 6.4%,

• Of the local manufacturers, Micromax leads the race.

• There are many mobile players like Nokia, Motorola, Samsung, Sony

Erission, L.G, HTC, ���Apple.

2.1.1 MOBILE TELE-DENSITY

Tele-density

According to TRAI‘s Telecom Subscription Data for the month ending May 2011, the

Total Telephone Subscribers in India reached 874.68 Million, thereby making the

overall Tele-density in India 73.11 at the end of May, 2011.

26

Total Wireless subscriber base (GSM, CDMA & FWP) increased from 826.93

Million in April 2011 to 840.28 Million at the end of May 2011, registering a growth

of 1.61%.

The main objective of the graph is the diffusion of mobile phones in India to inform

the larger discussion of managing the communication services as well as to assist

analysts concerned about assessing the impact of public policies in the evolution of

telecom sector.

There has been 25-fold increase in mobile subscriber base in a span of just five years

from 2000-01 to 2005-06. During the same period, mobile-density has increased more

than 23-fold from 0.35 in 2000-01 to 8.12 in 2005-06.

An effective management of mobile services requires an understanding of the factors

that underlie the evolution of the market. Factors such as market potential and timing

and speed of adoption are of great importance for telecom operators for capacity

planning. Understanding the evolution of mobile phone market and its likely future

trend is equally important for policy makers.

The saturation level of mobile-density for a country is likely to depend on whether it

is an early adopter or a late adopter of telephones. Early adopters (developed

countries) are expected to have lesser reliance on mobile phones (due to high

switching cost) whereas late adopters (developing countries) are expected to have

lesser reliance on main line telephones (due to high infrastructure cost).

27

Rate of growth of mobile-density

The analysis reveals that the inflection point (the maximum growth rate point) of the

curve will occur between 2011-12 and 2012-13 (when mobile-density is around 70).

During the year 2015-16, there will be 90 mobile phones for 100 people in the

country. Analysis shows that the numbers of mobile phones will exceed the number

of people in the country by 2019-20

In this study, the growth of the mobile phone and mobile-density in India has been

analyzed using S- shaped growth curve models. The analysis shows that the high

growth phase of the diffusion of mobile phones will continue till 2015-16. It is

estimated that there will be 90 mobile phones per 100 inhabitants in India at the end

of year 2015-16. The number of mobile phones will exceed the number of people in

the country by 2019-20. Total mobile phone demand is projected to increase from 800

million in 2010-11 to 1 billion by 2012-13. Growth, which is not expected to slow

down anytime, soon is now moving to the rural areas.

2.1.2 PRODUCTION AND EXPORTS

Mobile phone production in India increased to 512 million from a mere 144 million in

2002-03 at a compound annual growth rate (CAGR) of 28.3 percent. Mobile phone

production revenue reaches $13.6 billion by 2011 from $4.9 billion in 2006, a CAGR

of 26.6 percent. Mainly the expanding mobile subscriber base in India and favorable

local government policies promoting local electronics manufacturing in India drives

the growth in production.

India is the world's second-largest telecom market after China, with the total wireless

28

subscriber base crossing 850 million at the end of June, 2011. By 2020, the handset

demand is projected to reach 350 million a year. At present, Indian mobile handset

market is estimated to be in around 130 million handsets per annum. It added that 510

million handsets are estimated to be manufactured in India, during the same year.

In India, handsets are categorised as high, medium, low, and ultra low cost ASP

devices. The medium ASP segment is likely to be the fastest growing segment in

terms of volume, affordability of feature-rich handsets is also expected to be a key

enabler of handset adoption. The government should create a sizeable export

promotion fund for the telecom equipment and services export and handset exports

from India may be included in bilateral trade agreements with emerging markets in

regions such as South Asia, Africa, Latin America, Russia and Eastern Europe.

2.1.3 DRIVERS AND TRENDS

Drivers

The mobile phone phenomenon is unique in the histories of both the

telecommunication and consumer electronics markets. In less than a decade, people

have adopted mobile phones on a massive scale. This is about three times the size of

the television or PC markets. Growth has been fuelled by the spectacular evolution of

mobile phone technologies, both in terms of performance and miniaturization. As a

result, unlike many other appliances, users change their mobile phones on average

every two years. Consequently, replacement handsets today represent about 80% of

all mobile phone purchase.

This rapid growth has been possible due to various proactive and positive decisions of

29

the Government and contribution of both by the public and the private sector. The

rapid strides in the telecom sector have been facilitated by liberal policies of the

Government that provide easy market access for telecom equipment and a fair

regulatory framework for offering telecom services to the Indian consumers at

affordable prices.

Policy and Initiatives

1.Regulatory Framework: The Telecom Regulatory Authority of India (TRAI) was set

up in March 1997 as a regulator for Telecom sector. The TRAI‘s functions are

recommendatory, regulatory and tariff setting in telecom sector. Telecom Disputes

Settlement and Appellate Tribunal (TDSAT) came into existence in May, 2000.

TDSAT has been empowered to adjudicate any dispute –

• Between a licensor and a licensee���• Between two or more service providers ���• Between

a service provider and a group of consumers ���• hear and dispose of appeal against any

direction, decision or order of TRAI

Tariffs for telecommunication services have evolved from a regime where tariffs were

determined by Telecom Regulatory Authority of India to a regime where tariffs are

largely under forbearance. TRAI intervenes by regulating the tariffs for only those

services, the markets of which are not competitive.

Universal Service Obligation Fund (USOF) exclusively for meeting the Universal

Service Obligation was established in April, 2002. The Universal Service Levy is

presently 5 per cent of the Adjusted Gross Revenue (AGR) of all telecom service

providers except the pure value added service providers like Internet, Voice Mail, E-

Mail service providers etc. Indian Telegraph Act has been amended in October‘2006

30

to provide support for all telegraph services including mobile and broadband to bridge

the digital divide.

With the introduction of the Unified Access Licensing Regime, operators can offer

telecom access services to consumers in a technology neutral manner, subject to

fulfilling certain conditions. Introduction of this regime has also broken the

legal/regulatory impasse between the cellular and basic service providers. Issuance of

Intra-Circle Merger and Acquisition. Guidelines provide investors an opportunity to

take stakes in existing telecom operations.

2.Government Initiatives : The Government has taken the following main initiatives

for the growth of the Telecom Sector;

• All telecom services have been opened up for free competition for unprecedented

growth

• 217 (Information Technology Agreement) ITA-I items are at zero Customs Duty.

Specified capital goods and all inputs required to manufacture ITA-I, items are at zero

Customs Duty

• Availability of low cost mobile handsets

• The international Long Distance Services (ILDS) opened with effect from April

2002. Calling Party Pays (CPP) regime was implemented with effect from 1st May

• Guidelines for Unified Access Service License regime were issued in November

2003, 27 licenses out of 31 Basic Service Licenses were converted to Unified Access

Service Licenses

• In April 2004, license fee for Unified Access Service Providers (UAS) was reduced

31

by 2 per cent

• License fee for infrastructure Provider-II reduced from 15 per cent to 6 per cent of

the Adjusted Gross Revenue and spectrum charges between 2 to 4 per cent in June

2004

• Entry fee for NLD licenses was reduced to 2.5 Crore from 100 Crore. Entry fee for

ILD reduced to 2.5 Crore from 25 Crore

• Lease line charges have been reduced to make the bandwidth available at

competitive prices to facilitate growth in IT enabled services

• One India plan i.e. single tariff of 1/-per minute to anywhere in India was

introduced from 1st March 2006 by the Public Sector Undertakings. This tariff was

emulated by most of the private service providers also. This scheme has led to death

of distance in telecommunication and is going to be instrumental in promoting

National Integration further.

• The robust telecom network has also facilitated the expansion of BPO industry that

is having 500,000 employees now and adding 400 employees per day.

• Annual license fee for National Long Distance (NLD), International Long Distance

(ILD), Infrastructure Provider-II, VSAT commercial and Internet Service Provider

(ISP) with internet telephony (restricted) licenses was reduced to 6 per cent of

Adjusted Gross Revenue (AGR) with effort from Jan 2006.

• The Government‘s policy is neutral on use of technology by telecom service

providers subject to availability of scarce resources such as spectrum etc.

• License Fees 6-10 per cent of Adjusted Gross Revenue (AGR)

32

3. Foreign Direct Investment Policy:

Foreign Direct Investment (FDI) was permitted in the telecom sector beginning with

the telecom-manufacturing segment in 1991 - when India embarked on economic

liberalization.

FDI is defined as investment made by non-residents in the equity capital of a

company. For the telecom sector, FDI includes investment made by Non-Resident

Indians (NRIs), Overseas Corporate Bodies (OCBs), foreign entities, Foreign

Institutional Investors (FIIs), American Depository Receipts (ADRs)/Global

Depository Receipts (GDRs) etc.

Present FDI Policy for the Telecom sector:���• In Basic, Cellular Mobile, National Long

Distance, International Long Distance, Value

Added Services and Global Mobile Personal Communications by Satellite, FDI is

limited to 49 per cent (under automatic route) subject to grant of licence from the

Department of Telecommunications and adherence by the companies (who are

investing and the companies in which investment is being made) to the licence

conditions for foreign equity cap and lock-in period for transfer and addition of equity

and other license provisions.

• Foreign Direct Investment up to 74 per cent permitted, subject to licensing and

security requirements for the following:

- Internet Service (with gateways)���- Infrastructure Providers (Category II)���- Radio

Paging Service���• FDI up to 100 per cent permitted in respect to the following telecom

services: - ISPs not providing gateways (Both for satellite and submarine cables)���-

Infrastructure Providers providing dark fibre (IP Category I)���- Electronic Mail���- Voice

33

Mail���The above is subject to the following conditions:

- FDI up to 100 per cent is allowed subject to the condition that such companies

would divest 26 per cent of their equity in favour of Indian public within 5 years, if

these companies are listed in other parts of the world.

- The above services would be subject to licensing and security requirements,

wherever required. - Proposals for FDI beyond 49 per cent shall be considered by

Foreign���Investment Promotion Board (FIPB) on a case-to-case basis.���• In the

manufacturing sector 100 per cent FDI is permitted under the automatic route.

• In Basic, Cellular Mobile, paging and Value Added service, and Global Mobile

Personal Communications by Satellite, FDI is permitted up to 49 per cent (under

automatic route) subject to grant of license from Department of Telecommunications

• Foreign direct investment up to 74 per cent permitted, subject to licensing and

security requirements for the Internet Service (with gateways), Infrastructure

Providers (category-II), and Radio Paging Service

• FDI up to 100 per cent permitted in respect of ���- ISPs not providing gateways (both

for satellite and submarine cables), - Infrastructure Providers providing dark fibre (IP

Category I);���- Electronic Mail; and���- Voice Mail

• FDI up to 49 per cent is also permitted in an investment company, set up for making

investment in the telecom companies licensed to operate telecom services. Investment

by these investment companies in a telecom service company is treated as part of

domestic equity and is not set of against the foreign equity cap.

• Manufacturing - 100 per cent FDI is permitted under automatic route.

34

FDI is subject to the following conditions:

• FDI up to 100 per cent is allowed subject to the conditions that such companies

would divest 26 per cent of their equity in favour of Indian public in 5 years, if these

companies are listed in other parts of the world.

• The above services would be subject to licensing and security requirements,

Wherever required. • Proposals for FDI beyond 49 per cent shall be considered by

FIPB on case to case basis.

2.1.4 DIFFERENT TIERS OF MOBILE PHONES

Different Tiers of Mobile Phone

1. Ultra Low-cost Mobile : Price range: Less than 1,500 Key features include: B&W

screen, messaging, phonebook

2. Low- to Medium-cost : Price range: Less than 1,500 to 2,500 Key features

include: coloured screen, FM radio, VGA camera

3. High-cost Mobile: Price range: Less than 2,500 to 4,000 ���Key features include:

extendible memory, digital camera, GPRS, MP3 player���4. Smart Phones Handset:

Greater than 4,000 ���Key features include: QWERTY keypad/touch screen, dual SIM,

Wi-Fi, and 3G

Switching propensity from lower level segment to the mid tier segment is expected to

increase with the increase of income level and technology development.

The India mobile handsets market has got even more crowded and fragmented in the

35

lower- and mid- market segments with the entry of new players offering innovative

models at attractive price points to lure buyers. There is huge demand for feature-rich,

low-cost handsets. Of the total handset sales, the majority of sales fall in the price

band of below $75. That is where the majority of the volume is and that is where you

will see the majority of the Indian and Chinese manufacturers playing. Going

forward, the market is going to grow at a rate of 15-20% year-on-year. Low-cost

devices will grab 60% of the market over the next three to four years. People are

looking for devices with greater value. That value could be in terms of features like

QWERTY keypad or touch screen etc. One can get a handset for Rs.2,000-3,000 with

features like good memory, touch screen, QWERTY, camera, dual-SIM, longer

battery life etc. The majority of Indian manufacturers are in the low-price band and

that is why market is looking quite competitive. However, if they move up the price

band, then they will face competition from global players. When the low-end segment

customers go for repeat purchases, they go for low cost mobile phones with extra

features. In fact, many of them are ready to pay higher prices for these new features

and vendors are taking advantage of the psyche of the customers by adding these

features.

Tapping a global opportunity and bridging the mobile gender gap

There are 300 Million Fewer Female than Male Subscribers who have mobile phone

coverage but don‘t have a handset in the world, which amounts to a US$13 Billion

Opportunity as well as social welfare. Cost and perception that it isn‘t necessary to

own a mobile phone and fear of being able to master the technology are the biggest

barriers to connecting more women in developing countries. By using mobile phones

women can unlock economic opportunities, save time and money, increase return on

36

investment and maximize household resources.

2.1.5 MARKET SHARE

Fall in India-specific revenues of mobile handset makers including Nokia, RIM and

LG, led by de-growth in feature phone sales and lower average selling values pulled

down industry-wide sales by five per cent to Rs. 31,215 crore in 2011-12, says a

Voice Data survey.

The survey said the mobile handset sales in India stood at Rs. 33,031 crore in the

previous fiscal. It also said the main stay of domestic handset makers like Micromax

and Spice (feature phones) saw negative growth, while the entry-level smartphones of

various companies saw a marginal rise.

The annual survey on Indian Telecom industry by Cyber Media group's journal Voice

Data attributes the total revenue drop to lower average selling values (ASVs) as well.

"Indian mobile phone brands that had hoped to make a mark by sourcing Chinese

handsets and selling them only on the price plank were in for a big surprise. These

players will have to quickly rethink their product, marketing and service strategy

afresh to put their house in order," Voice Data Group Editor Ibrahim Ahmad said.

India is one of the fastest growing telecom markets in the world. However, in the last

few months, the growth rate has slowed down from monthly additions of 12-15

million to 7.99 million in May 2012.

As per the survey, Nokia retained its leadership with 38.2 percent share. However, its

revenues have fallen 7.7 percent to Rs. 11,925 crore in 2011-12 from Rs. 12,929 crore

in 2010-11.

The Finnish company lost market share in smartphones and multi-media segment to

Samsung, HTC and Apple, among others, but made headway in the dual SIM phones

37

category, it said.

Table 2.1 Showing the top mobile handset companies.

Korean handset giant Samsung, on the other hand, saw its revenues growing 38

percent to Rs. 7,891 crore in 2011-12 from Rs. 5,720 crore in the previous fiscal. It

had a market share of 25.3 percent, thanks to its rich product portfolio based on

Windows, Android and Bada operating systems, as per Voice Data.

Samsung's Galaxy Note, a hybrid between smartphone and tablet was a trailblazer,

selling 40,000 units each month since the launch in late 2011, the survey said. "As

consumers look for applications beyond voice and SMS the market will see fight for

high end feature phones and smart phones intensify further. Consumers can also look

forward to steeper price drops and more features in the same price," Ahmad said.

38

Homegrown Handset Company Micromax ranked third on the list with revenues of

Rs. 1,978 crore with a market share of 6.3 percent. Its revenues dipped 13 percent

compared to the previous fiscal. BlackBerry maker Research in Motion's (RIM)

revenues dropped 25 percent to Rs. 1,460 crore. With a market share of 4.7 per cent,

it ranked fourth in the list.

The steepest fall was seen in the revenues of LG, which fell by 57 per cent to Rs. 780

crore in 2011-12 from Rs 1,834 crore in 2010-11.

Taiwanese handset maker HTC, on the other hand, saw its revenues more than

doubling to Rs. 923 crore in 2011-12 from Rs. 450 crore. Its market share stood at

three percent.

Other key players in the Top 10 list include Spice (Rs. 790 crore), Huawei (Rs 760

crore) and G'Five (Rs 670 crore). It surveyed over 30 mobile handset firms -- both

multi- national and Indian -- selling feature phones, multimedia phones, enterprise

phones and smartphones in India.

2.1.6 MARKET GROWTH

Matt Walker, senior analyst at research firm Ovum, said India's telecommunications

landscape saw rapid growth over the last few years, as the regulatory climate has

improved and private carriers have invested aggressively in nationwide network

deployments.

"Most of the effort has been on mobile networks because these roll out faster, fill a

39

gap in connectivity left by poor fixed-line networks, and allow for very low-priced

entry points for end users," Walker told ZDNet Asia in an e-mail interview.

Long-haul fiber transport networks have also spread in the country, he said, adding

that this market has become more competitive.

Figure 2.1 Showing rise in mobile handset users.

Kamlesh Kalwar, a Frost & Sullivan industry analyst, said the expansion of India's

telecom industry has led to an "all-inclusive growth" of the Indian economy in terms

of GDP (gross domestic product) growth, employment and government revenues,

among others.

He added that telecommunications, together with the IT sector, have created jobs for

India's knowledge professionals and skilled workforce. High growth in the IT and

ITES (IT-enabled services) sectors is dependent on the sound connectivity

infrastructure in India's metro areas, Kalwar told ZDNet Asia in an e-mail interview.

During the fiscal years of 2003/2004 and 2006/2007, the Indian economy enjoyed an

40

average growth rate of 8.8 percent. In the 2006/07 period, the analyst said, the

country saw the growth rate hit 9.6 percent--India's highest economic expansion in 18

years.

The advent of the digital age, coupled with India's large number of young and

educated people who are fluent in English, are transforming India into an important

global outsourcing destination for customer services and technical support.

"This would not have been possible without the growth of the telecom sector,"

Kalwar said.

Walker agreed: "Clearly, India's business process outsourcing (BPO), software,

design and financial industry segments rely heavily on the good network connectivity,

especially international [connectivity]."

This year, he said, Ovum estimates that fixed line and mobile revenues in India will

hit US$10.5 billion and US$23.4 billion, respectively. Fixed line capital expenditure

(capex) is estimated at US$2.2 billion, while mobile capex will ring in at US$6.5

billion.

By 2012, fixed line revenues will reach US$12.2 billion and mobile revenues will hit

US$39.8 billion. Fixed line capex is expected to be US$3.2 billion, while mobile

capex will be US$9.4 billion.

Kalwar noted that India's mobile sector continued its growth momentum throughout

2007, achieving net additions of over 84 million users, ending the year with a total

mobile subscriber base of 233.6 million.

41

Between 2006 and 2007, mobile telephony grew at an annual rate of over 90 percent.

On average, the market saw over 8 million new subscribers every month.

Kalwar said: "Apart from the basic telephone services, there is an enormous potential

for various value-added services (VAS). In fact, the real potential for growth in

telecom services is still largely untapped."

India's mobile subscriber base is expected to grow at a compound annual growth rate

(CAGR) of 18.3 percent, from 2007 to 2013, reaching a penetration rate of 53.4

percent by end-2013.

"While subscriber growth would gradually slow down as the market saturates, we

expect a combination of factors such as acceleration of fixed-to-mobile substitution,

expansion of rural market coverage, increasing competition resulting in the

introduction of innovative cellular service packages, and the cheaper entry-level

handsets to stimulate future growth," Kalwar said.

Achieving over 500 million telephone connections by 2011 appears very attainable,

he added, with total investments in the sector projected at a whopping US$76.6

billion throughout the period of India's Eleventh Five Year Plan, stretching from 2007

to 2012.

Reaching all of India: ���Under its Bharat Nirman Program, the government has also

set a target to connect all villages with a village public telephone (VPT) by 2008.

Connectivity with remote and far-flung villages, which number over 14,000 in the

country, will be provided through digital satellite phone terminals.

The government will also invest US$2 billion, from 2008 to 2009, to set up some

42

100,000 community service centers in rural India to provide broadband connectivity.

Kalwar believes India's rural market is going to be the next big thing for wireless

service providers.

"With the tele-density in rural areas at less than 10 percent against the national

average of about 21 percent, there seems to be huge untapped potential for mobile

phone penetration in rural India," he said.

In India, GSM and CDMA are currently the key mobile technologies. According to

the Telecom Regulatory Authority of India (TRAI), there were 68.4 million CDMA

subscribers--26.2 percent of overall market--and 192.7 million GSM subscribers (73.8

percent) as of end-March 2008.

Kalwar said xDSL and ISDN are the most common means of Internet access in the

country. "New technologies like WiMax for the Internet, and 3G for mobile and the

Internet are on the anvil," he added.

In the realm of broadband wireless access, companies such as Tata, Reliance and

Bharti, have committed huge investments on WiMax and are conducting trials. By

mid-2009, this would help connect rural areas, thus providing connectivity to the

masses and fueling further economic growth, Kalwar said.

Regulator TRAI, recently also made policy recommendations on VoIP (voice over

Internet Protocol) and mobile number portability (MNP), and will be holding the 3G

spectrum auction due later this year.

Ovum analyst Charice Wang, wrote in a recent research note that these policies will

43

encourage the development of India's telecoms industry and strengthen competition in

the fixed and mobile markets.

Table 2.2 Showing revenue in the mobile industry.

Helped by market reforms: ���The TRAI also lifted a ban that prevented Internet

service providers (ISPs) to provide VoIP services to and from telephones connected

to voice-oriented public switched telephone networks (PSTN). Removal of these

restrictions means IP calls can now be connected to traditional PSTN phones, and not

just to PCs, Wang explained.

"We expect the new measures to encourage VoIP take-up," she wrote. "In fact, we

think VoIP will experience strong growth over the next few years, with the combined

effects of deregulation and growing broadband penetration.

44

There are currently 4.4 million broadband subscribers in India, she added, noting that

the government is targeting to increase this base to 20 million broadband users by

2010.

The TRAI also announced that MNP will be available in four metropolitan areas

within the next two months, and will be implemented countrywide by June 2009.

Kalwar said MNP, which lets customers switch telcos without changing their

numbers, will also help consumers achieve significant savings through operators'

bundled offerings including VAS at lower charges and cheaper voice and broadband

services.

"MNP also attracts business users as it helps them retain contact numbers and change

service providers with no extra time, effort and cost required to communicate these

changes," he noted.

According to Wang, India's government will finalize a 3G spectrum auction process

by the end of this month. "Depending on the spectrum available, the number of

licenses could grow to 12," she said.

Kalwar said, 3G would increase the availability and affordability of VAS on offer and

is also expected to significantly improve the call quality in India.

"Newer business models for voice and data are expected," he said. "Industries like

mobile content and advertising will flourish over the next five to six years."

45

2.2 COMPANY PROFILE

2.2.1 History Of Micromax

Micromax is one of the leading Indian Telecom Companies with 23 domestic offices

across the country and international offices in Hong Kong, USA, Dubai and now in

Nepal. With a futuristic vision and an exhaustive R&D at its helm, Micromax has

successfully generated innovative technologies that have revolutionized the telecom

consumer space.

Micromax is on a mission to successfully overcome the technological barriers and

constantly engender “life enhancing solutions”.

The company’s vision is to develop path-breaking technologies and efficient

processes that incubate newer markets, enliven customer aspirations and continue to

make Micromax a trusted market leader amongst people. The Micromax ideology

stems from its rooted belief in ‘Innovation’ and delivering “nothing short of the best”.

Micromax has a lot of “firsts” to its credit on their versatile product portfolio. It was

the first to introduce: Handsets with 30 days battery backup, Handsets with Dual SIM

/ Dual Standby, Handsets Switching Networks (GSM - CDMA), Aspirational Qwerty

Keypad Handsets, Operator Branded 3G Handsets, OMH CDMA Handsets, etc.

With a 360 degree advertising and marketing strategy sketched out, the company has

an optimistic outlook for the telecom consumer space. Currently present in more than

46

40,000 stores across the country, the company plans to have an aggressive market

incursion to reach out to its customers through 70,000 operational stores in the

coming year.

One of the major aspects that contribute towards the substantial monthly growth of

Micromax is its 80% sales in the rural areas.

After building a strong presence in the rural market, where the prominence of both

subscribers and operators is rapidly increasing

Micromax’ is now progressively moving towards establishing its foothold in the

competitive urban towns as well.

With young enthusiasts as its anchor, Micromax Informatics Limited created a niche

for itself in the telecommunication industry. Micromax ventured into the

telecommunication industry with an end-to-end solution of Fixed Wireless Devices

and Wireless Data Cards.

In the year 2008, after delivering upon the technology of fixed wireless-powering

desired products, the company forayed into one of the most predominant genres of

telecommunication – Mobile handsets. Since then Micromax has received

commendable response for its unique and interesting handsets.

Innovation, Cost-Effective, Credible and an Insightful R&D, have now become

synonymous to Micromax in the telecom vertical.

Today Micromax has become a brand which people relate and look up to for realizing

47

their individual device preferences and other out-of-the-box solutions.

2.2.2 INFORMATION ABOUT THE COMPANY

Micromax is an Indian consumer electronics manufacturer located at Gurgaon,

Haryana, India. It focuses on the manufacturing of mobile telephones and LED

Televisions. It has 23 domestic offices across the country and international offices in

Hong Kong, USA and Dubai. Presently, the company has about 1400 employees.

Micromax Informatics Limited has announced its foray into Maldivian telecom space

through an exclusive partnership with Sense Wood Maldives (Pvt) Ltd.

Micromax is the 3rd largest manufacturer in India and 12th largest handset

manufacturer in the world. According to industry analysts, as of 2012, micromax

leads the Indian tablet market with a share of 18.4%, ahead of Samsung and Apple,

and is the third largest mobile phone vendor in terms of volume. The company's rapid

market share growth since it entered the Indian mobile devices market in 2008 is

primarily attributed to its strategy of aggressive low pricing in the entry-level

segments of its products and its wide distribution setup. The company includes 14

locations: Hong Kong, Bangladesh, Nepal, Sri-Lanka, Maldives, UAE, Kingdom of

Saudi Arabia, Kuwait, Qatar, Oman, Afghanistan and Brazil.

48

Table 2.3 Showing a brief profile of micromax.

Type Private

Industry Consumer electronics

Founded 1991[1]

Founder(s) Rajesh Agarwal, Sumeet Arora, Rahul Sharma, Vikas

Jain

Headquarters Gurgaon,India[2]

Area served India

Key people Deepak Mehrotra (CEO)

Rahul Sharma (Co-Founder)

Products Mobile phone, smartphone, tablet computers,

datacards, televisions

Revenue US$ 368 million (2012)[3]

Employees ~1,400 (2012)

Website Micromaxinfo.com

49

2.2.3 CURRENT POSITION

Four years after it was first recommended, mobile number portability still remains a

paper concept. Yet for over nine months, Saurabh Raina, a 43-year-old employee with

a switchgear manufacturer from Bhopal, is choosing the best monthly plans on offer

across six different GSM operators while he can be reached on the same number he

has had for over seven years.

The key lies inside his mobile phone — a full-keyboard (QWERTY) model called the

“Q3” that supports two active GSM SIM cards at the same time. One of these he

keeps constant as his “incoming number” to receive calls, while the other, he changes

at will depending on which operator offers him the best tariffs.

This “dual-SIM” feature is today present in 20 to 30 percent of all mobile handsets

sold in India, estimate experts. Yet market leader Nokia does not have a single dual-

SIM handset in its vast repertoire of phone models for India. And the company that

made Raina’s Q3 — Micromax Mobiles — offers this feature on 22 out of the 26

phone models it sells in India. The Q3 itself, though fancy looking, costs only Rs.

3,700.

Micromax is now India’s third-largest GSM mobile phone vendor with a market share

of 6 percent after Nokia (62 percent) and Samsung (8 percent), according to research

firm IDC. It sells anywhere from 700,000 to one million mobile phones every month.

And by its own estimates it is now selling nearly Rs.1,500 crore worth of phones

annually.

50

“We are not the poor cousins of Nokia,” says Vikas Jain, one of the four friends who

together started and grew Micromax to its present position. “Instead we will force

Nokia to launch newer products to compete with us.”

The guys at Micromax have two aces up their sleeve — a keen eye for what the

customer needs, and the ability to swing their supply chain.

Though the company started making mobile phones only in 2008, it was founded in

1991 by Rajesh Agarwal as a distributor of computer hardware for brands like Dell,

HP and Sony. In 1999 three of his friends — Sumeet Arora, Rahul Sharma and Vikas

Jain — joined him as equal partners in the company.������Agarwal, the eldest of the four,

keeps a handle on the company’s finances. The quieter Arora, a “class topper”, is the

company’s chief technology officer. Jain manages Micromax’s alliances and

partnerships with other companies. And the tall and fashionable Sharma is the risk

taker with the big ideas.

It was Sharma who convinced the others, after nine years of selling computers,

software courses and “fixed wireless” public phones (PCOs), to enter the crowded

mobile phone market. The company’s first phone, the X1i, was born from the

realisation that many Indian villages and towns didn’t get enough electricity to even

recharge a phone daily.

51

Catering to a Need: ���By increasing the size of the battery to 1800 mAh, Micromax

was able to tout a standby time of 30 days for the X1i. And at the rather affordable

price of Rs. 2,150, the phone was a big success in rural India.

The unexpected success of Micromax’s first mobile phone taught the four friends two

key lessons. One, “If you give people something that helps them in their day to day

lives, they will buy it,” says Sharma. Two, even though there were over 50 companies

selling mobile phones in India, with Nokia alone dominating over 60 percent of the

market, there were features, niches and categories that could be carved out by a new

entrant.

“We knew that competing on price along with Nokia, Samsung or LG would not get

us anywhere. Instead we wanted to create, and own, categories,” says Agarwal.

The friends realised that intense competition among mobile operators for subscribers

would inevitably lead to multiple connections per user. But carrying two phones

around in your pockets wasn’t something most people fancied.

2.2.4 Market Share

• Micromax is currently the third-largest GSM vendor in the Indian market,

• A share of 8.1%, perhaps just a few marks behind Samsung

• Samsung at the second position has 10.4% control, as per market reports.

• Nokia with 52.7% share is the number 1 vendor

• Source : Forbes India, 27 Feb. 2010

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2.2.5 4 P of Marketing

Table 2.4 Showing the 4P’s

Price variables Promotion variables

Allowances and deals Advertising

Distribution and retailer mark-ups Sales promotion

Discount structure Publicity

Product variables Place variables

Quality Channels of distribution

Models and sizes Outlet location

Packaging Sales territories

53

2.2.6 MICROMAX STRATEGY

Corporate Level strategies:

• Expansion strategy

• Resource allocation: heavy investment in R&D, lately heavy investment in

brand building.

• Wide portfolio catering to diverse segments.

Business Level strategies:

• Unique Fusion of Cost Leadership and Product Differentiation.

• Following a Frontal and Flanking attack strategy.

• Products are mostly in the embryonic and growth stages.

Pricing Strategy

Micromax specialized in entry-level and mid-segment handsets priced between

Rs1,800 and Rs2,400 when it started selling the devices in 2008, confining itself to

small towns and rural areas in the first 12-18 months. Encouraged by its success, the

firm expanded to larger cities and now has a distribution network of 55,000 retailers,

which it plans to scale up to 70,000 by the end of March as part of its strategy to raise

sales to 1.5 million handsets a month.

54

Table 2.5 Showing the price of micromax mobiles.

ñ H360 Rs. 5500/-

ñ Q1 Rs. 2400/-

ñ G4 Gamolution Rs. 4600/-

ñ C112 CDMA Rs. 1600/-

ñ C2i CDMA Rs. 2600/-

ñ GC255 Rs. 4500/-

ñ GC700 Rs. 11900/-

ñ Q2 Rs. 2900/-

ñ Q3 (Ezpad) Rs. 3600/-

ñ Q5 Rs. 4390/-

ñ Q55 bling Rs. 5500/-

ñ W900 Rs. 7900/-

ñ X113 Rs. 2399/-

ñ X1U Rs. 2598/-

ñ X211 Rs. 2750/-

ñ X215 Rs. 2900/-

ñ X220 Rs. 2300/

ñ X225 Rs. 3399/-

ñ X250 Rs. 3250/-

ñ X260 Rs. 3500/-

ñ X280 Rs. 3999/-

ñ X2i Rs. 2350/-

ñ X310 Rs. 4099/-

ñ X332 Rs. 3499/-

ñ X414 Rs. 5500/-

ñ X500 Rs. 5700/-

ñ X114 Rs. 1650/-

ñ X115 Rs. 1699/-

ñ X116 Rs. 2150/-

ñ X118 Rs. 2200/-

ñ X1i Rs. 2299/-

ñ X511 Rs. 6499/-

ñ X555 Rs. 7499/-

ñ X800 Rs. 15000/

ñ

55

Product Strategy

30-DAY BATTERY PHONES

April 2008: Rs 2,249; Now: Rs 1,999 The X1i, Micromax’s first phone, had a battery

that could give 17 hours of talk time and go 30 days on a single charge.

DUAL-SIM PHONES

July 2008: Rs 1,999-12,999 For those who want two numbers but one handset.

PHONE-CUM-STEREO

Feb 2010: Rs 4,999 With 3D surround sound, fed by Yamaha and Wolfson

BLING

Feb 2010: Rs 5,500 a big hit with women, comes with Swarovski embellishments.

PHONE-CUM-REMOTE

May 2010: Rs 2,999 A mobile that can switch TV channels and even change the AC

Temperature.

IN THE WORKS

A phone that can be used as a computer mouse

IN THE TOUCH

A touch screen phone with all Smartness & Economic price.

56

Micromax deliberately made an attempt to tap the Rural interiors of the country, since

this is THE segment, where the larger pie of the cake share is….and at an affordable

price.

The limited supply of electricity was a big roadblock to the growth. And there

evolved the Technology. This led to guarantee 30-day stand-by Battery (No other

handset to compete?)

To cater to the wants of the customers to carry two handsets (to make most of the

existing on-going tariff wars amongst service operators), Micromax started offering

Dual SIM phones. Infect, existing product line consists of 27 phones, out of which 23

are Dual SIM.

A clear differentiation was a significant factor that aided the significant growth of

Micromax brand in Indian market.

In the versatile product portfolio

• Handsets with Dual SIM / Dual Standby.

• Handsets Switching Networks (GSM - CDMA) using gravity sensors.

• Aspiration QWETRY Keypad Handsets.

• Operator Branded 3G Handsets.

• Changing the phase of entry level.

57

Many ideas poured in during the umpteen brainstorming sessions that the four

conducted amongst themselves. Finally, they decided to marry mobile handsets and

rural and price-sensitive India.

Thus, the company’s first phone (the X1i in the pic priced only @ ` 2150/-), was born

in an environment that would transform into what would be proudly called the

second-largest mobile market in the world, next only to US, with about 10-12 million

subscribers being added every month.

And now the Company has 23 Domestic Offices coupled with International Offices in

USA, Hongkong, Dubai etc with 40,000 Stores operational & is being aggressive to

reach 70,000 Stores.

To increase penetration in the Indian telecom market, Micromax is bundling with

telecom operators such as Aircel. "Soon, we will launch a project where SIM cards of

different telecom providers will be available with different Micromax handsets.

Unless a consumer has personal apathy towards a particular service provider, chances

are he will use the SIM provided to him with the handset. This will benefit both our

brand and the service provider we tie up with," explains Jain.

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Promotion Strategy

• The brand was one of the big spenders in the latest edition of IPL .

• Micromax has centered much of its brand building exercise around cricket.

• Micromax has taken up the title sponsorship for the entire Indian cricketing

season from May 2010.

• The ads are for individual products highlighting the product features and USPs

Audio Visual Strategies

We intend to highlight the existing need of the Cell - phone usage as a “need” & not

“Luxury” since this segment thrives with Parental involvement & lots of concerns &

wrinkled foreheads amongst them due to the high frequency of their Children being

traveling to-n-fro from college to tuition classes or for Competitive Exams. Hence, we

strongly feel the reality to be presented to the Segment. In-addition, its also plays a

significant role of communication with the rising unpredictable scenario’s on the rise.

With the Student Fraternity, we intend to boomerang the segment with customized

strategy of presenting your ID card to the ‘’Outlet listed near your college’ (no hassle

of running near your homes) and avail of the ‘’x % discount’’

And extended to the All levels of Faculty of the college/school).

59

Women Segment strategy

While there is no gender bias.. But Women at all ages are on the higher %age of

cellphone usage in the way of a Worried Daughter, Girlfriend, Wife, Parent. We

aren’t alien to Cosmopolitan Segment either. Hence there is Q55 Bling the limited

IIFA edition & also the Swaroskvi Elements launched by Twinkle khanna with line ‘it

Twinkles’.

With this, we intend to bring a wave of change amongst the Gen X with apps like

Twitter, Facebook and all social networking sites with extravagant features for the

Who-is-who in the Industry.

Tie-up with Service Provider’s is essentially to make a ‘one-stop shop’ to effect the

1st time users with Phone + Best Service Provider concept and with freebies &

discount in the offering.

Distribution Strategy

Micromax managed to make dealers pay in advance by offering them more margins.

It offered higher margins of 15 % margin, which is higher than the industry average

of 6-10%.

Micromax managed this hurdle through strategy of more margins for advance

payment.

60

It is not a new strategy to offer such kind of discounts for advance payments (cash

discounts), but to make a retailer accept such an offer is indeed a remarkable feat.

To increase penetration in the Indian telecom market, Micromax Is bundling with

telecom operators such as Aircel.

For better accessibly and prominence in the market, Micromax is coming up with 150

experience zones (exclusive stores) across the nation, in addition to ensuring bigger

presence at the multi branded stores.

Micromax now using three tier distribution channel as now it has no brand store yet it

uses this channel as distribution :

| Manufacture |-----To----| Wholsaler |-----To----| Retailor |-----To----| Customer |

61

2.2.7 STP ANALYSIS

The strategic marketing planning process flows from a mission and vision statement

to the selection of target markets, and the formulation of specific marketing mix and

positioning objective for each product or service the organization will offer. Leading

authors like Kotler

present the organization as a value creation and delivery sequence. In its first phase,

choosing the value, the strategist "proceeds to segment the market, select the

appropriate market target, and develop the offer's value positioning. The formula -

segmentation, targeting, positioning (STP) - is the essence of strategic marketing."

(Kotler, 1994, p. 93).

SEGMENTATION

Market segmentation is an adaptive strategy. It consists of the partition of the market

with the purpose of selecting one or more market segments which the organization

can target through the development of specific marketing mixes that adapt to

particular market needs.

Micromax segmented on itself geographically and demographically.

Geographic: Micromax immediate geographic target is Non Urban and rural segment

of India. With handsets with battery backup of thirty days and with the mobiles

having high features and low cost.

Demographic: Under Demographic segmentation Micromax segmented itself on the

basis Gender by launching handsets like Q55(Bling) which had features like mirror

screen and again Micromax segmented on the basis of Age by focusing on age group

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of 18-25,who are the approx 80% users of the Micromax mobiles.

Women Segment: While there is no gender bias.. But Women at all ages are on the

higher %age of cellphone usage in the way of a Worried Daughter, Girlfriend, Wife,

Parent. We aren’t alien to Cosmopolitan Segment either. Hence there is Q55 Bling the

limited IIFA edition & also the Swaroskvi Elements launched by Twinkle khanna

with line ‘it Twinkles’.

TARGETING

A target market or target audience is a group of customers that the business has

decided to aim its marketing efforts and ultimately its merchandise. A well-defined

target market is the first element to a marketing strategy. The target market and the

marketing mix variables of product, place (distribution), promotion and price are the

two elements of a marketing mix strategy that determine the success of a product in

the marketplace.

Micromax targeted the non urban market and the age group of 18-25.

There are three segments of handsets that it works with:

For the premium category, which is solely comprised of QWERTY keypad handsets,

the focus will still remain 'easy chatting'. In fact, Micromax will tie up with social

networking sites such as Facebook to ensure better connectivity and continuous

communication for its QWERTY keypad model users.

In the multimedia segment, it will offer innovation and variety in its features such as

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radio, MP3 player and camera. Here, it plans to launch co branded phone along with

MTV as 'MTV Music Phones'. The purpose is to add an oomph factor and gel well

with the young consumers.

At the entry level, Micromax will play the 'variety' card. Today, at the entry level, not

much variety is available. Handsets of all companies, available at Rs 1,200-1,300,

look equally unimpressive. Micromax plan to change the face of the entry level

phones while keeping the price more or less same.

On basis of ‘Target Audience’ Micromax has divided its target audience into three

categories - the rural sector, the urban youth and the high profile users. Micromax is

solely targeting the rural segment right now - and why not? After all, it promises the

maximum number of consumers and all they demand from a handset is regular

features at an affordable price. The youth segment is the second most important

segment, whom the brand will appease with innovative features such as a memory

card with more capacity, better music and camera quality and a trendy face value. For

the third segment or the premium class 'technological innovation' will be the

catchword.

POSITIONING

Micromax, a leading mobile phone firm in India is going ahead to healthy

competition with other mobile manufactures. In this row, first name come of Nokia,

world popular mobile brand name and big market share holder of domestic mobile

market. Micromax is getting popularity as cheap, long battery backup and quality

mobile manufacture that was Nokia in India. Nokia that was popular in India for its

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stylish and durability mobile phones is loosing place from Indian market as well as

from Indian heart. This is done by Micromax, which understands real needs of Indian.

Micromax Company provides the best quality, equipped with latest technology

mobile phones at affordable prices with easy availability.

Micromax is on top position in Indian telecom space with 80% growth in rural areas

while Nokia market share is going down. Nokia share fell from 64% in fiscal year

2008 to 52 in 2009. Local mobile manufactures have 17.5% market share in which

Micromax Company has 4.1% and with time its ratio is increasing. The most

importance fact about Micromax rise is that micromax mobile phones are accepting as

the best alternative of Nokia phones available at the cheapest prices. Micromax,

located in Gurgoan launched 37 mobile handsets within one and half year that are

good competitor of Nokia CDMA, GSM and smart phones. Micromax Company sells

approximate one million handsets each month through 70,000 mobile stores and due

to this Nokia mobiles are down to earth.

Micromax, an Indian mobile production house is beating world Finnish mobile giant

in each and every field from mobile production, mobile outlets to advertising.

Micromax is marketing its smart phones and branded handset on TV commercials,

Sports event and games. Micromax was one of the top sponsors of IPL (Indian

Premier League). It sponsored Asia cup as well and on the way to promote its mobiles

through heavily endorsement. But Nokia is loosing pace in marketing manner as well.

Nokia, which is known for its strong marketing strategies, is not able to dominant

Micromax in domestic mobile market.

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Micromax is leading in the world second biggest mobile market while Nokia is

loosing its market share in India. Company QWERTY mobile handsets choose as the

best alternative of Nokia N-series models. Nokia revenue from Indian domestic

mobile market was Rs 14,100 crore in 2009-10 fiscal years, down from Rs 16,567.

Thus Micromax is new Finnish mobile giant in Indian domestic market now beating

Nokia.

2.2.8 OBJECTIVES

For 2012-2013:

• Focus on urban market at large: On capturing major share of urban youth

market, for next two years Micromax needs to focus on urban market at large

like seiner citizens, physically handicapped etc.

• Focus on smart phones as well as tablets:

• Micromax needs to continue focus on smart phones and launch

more products and also it needs to focus on tablet market.

For 2014:

• To start new plant and reach market share of 20% : To increase market share, it is

essential to increase production capacity. Micromax has plans to start a new

plant in Tamil Nadu. With the help of this new plant, it will be able to reach a

market share of 20%.

66

• Focus on international markets : On making strong focus on rural market and

urban market in India, Micromax needs to expand to international markets and

enter into neighbouring Indian countries, south African countries etc.

67

3.1 TITLE OF THE PROJECT

“A Study of Consumer Perception towards Micromax mobiles”

3.2 RESEARCH OBJECTIVES

OBJECTIVES

• To study the satisfaction level of cellular users in Bangalore.

• To study the buying behavior of the customers.

• To understand the price sensitivity of the market in respect to the telecom

services.

• To identify customers opinion about Micromax Handsets.

• To identify the key buying factors, which are used in hiring the telecom,

services.

• To understand the various sales promotional schemes being offered by

various mobile handsets providers.

• To see how micromax convinced customers to switch to their brand even

though there were companies like nokia, sansung, blackberry that had

completely earned the trust of the Indian market.

• What they did to penetrate the Indian market.

• To understand the over all perception of the customers regarding reliability

of the company

• To come out with conclusions and suggestions based on analysis and

interpretation of data.

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• The perceived quality of brands in the cell phone market.

• To know the sources of brand awareness in general.

• To know factors which influenced to purchase of cell phones?

• To know the opinion about the price of cell phones and the preferred brands.

• To analyze the satisfaction level of the customer with respect to selling

process.

• To know customer level of satisfaction with respect to service after sale.

3.3 SCOPE OF STUDY:

• Finding the awareness of brands in the cell phone market.

• Finding the position of the product among the competitors.

• Finding the customer satisfaction about micromax.

• Finding out the strength and weakness of attributed of micromax where it can

correct its faulty facts.

• Finding the number of future purchases of products of micromax.

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3.4 THE RESEARCH METHODOLOGY

Steps followed for this research was:

• Problem Formulation: This refers to transferring of the management

problem into a research problem. The management was “to gauge the behavior

of consumer in respect of micromax”

• Research Method: It involves choosing either experimental or non-

experimental research. This research was non-experimental.

• Research Design: It is the specification of the methods and procedures for

acquiring he information needed. It is overall operational pattern or framework

of the project that stimulates what information is to be collected, from which

source and by what procedure. The three types of design used are exploratory,

descriptive and causal for this research the descriptive design was used. This is

because it is marked by the prior formulation of specific research questions. It

has a preplanned and structure design. For descriptive study proposed data

analysis and project output are critical aspects. It was decided that the users of

various mobile companies would be used as the primary source of data.

• Selection of data collection techniques: For this research the data was to be

collected was of primary as well as secondary nature. The source of primary

data was the user of micromax. Thus the data collection was done through a

survey by using questionnaire technique. This consisted of an interview and

questionnaire. The questionnaire contained the questions relating hiring and

uses of different micromax customers. The questionnaire was first pre tested

and later making certain necessary changes in modified it.

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• Sample Design: A sample chosen has to be representative of the population.

For this survey cluster and stratified sampling was used. The sample size was

50 users.

• Data collection: At this stage the data is actually collected according to the

decided technique of data collection. The questionnaire is main source for the

collection of data.

• Analysis and interpretation: Data, which has been obtained, are seldom

useful to anyone, if it is not analyzed and interpreted in order, the breaking

down of constituent parts and the manipulating of the data and to obtain

answer to the research questions. Interpretations involve taking the result of

analysis, making inferences relevant to the research relationship studied and

drawing conclusions about these relationships.

• Research report: The culmination of the research process is research report.

Methodology, report and recommendations for course of action are presented.

The two critical attribute of report are completeness and conciseness.

Therefore these attributes are conflicting; a balance has to be stuck between

the two. On presenting the research report to the management. The

management should be able to take decision on recommendations and

conclusions of research.

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3.5 METHODS OF DATA COLLECTION

The task of the data collection begins after research problem has been defined and

research design/plan chalked out. While deciding about the method of the data

collection to be used for study, the researcher should keep in mind two types of data

primary and secondary.

1) Sources of Data:

a) Primary Data: We collect primary data during the course of experiments in

an experimental research but in case do research of the descriptive type and

perform surveys, then we can obtain primary data either through observation

or through direct communication with the respondents in one form or another

or through personal interview. Since the research is of descriptive type in

witch data is collected through direct communication with respondents.

Sample survey is carried out during this project. The survey was performed

through a structured questionnaire.

b) Secondary Data: secondary data means data that are already available i.e.

they refer to the data which have already been collected by someone else. The

sources of secondary data in this project were the websites of various mobile

providers, catalogues of various mobiles, newspapers, magazines etc.

1. Method adopted in research:

A general survey was conducted together the required data.

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2. Research tool used:

Questionnaire was used to collect the data from the users of various mobile handsets.

a) Method of population Selection:

The population for this survey was selected with the help of cluster and

stratified random techniques. In cluster, we divided the Bangalore regionl wise

then we applied stratified.

b) Method of Interaction with the population:

Personal visit method is used for this research project. The respondents were

the users of various mobiles. These respondents were approached and

requested to give their opinion on the mobile handsets providers by answering

in the questionnaire.

3.6 LIMITATIONS OF THE STUDY:

Though the present study aims to achieve the above-mentioned objectives in full

earnest and accuracy, it may be hampered due to certain limitations. Some of the

limitations of the study may be summarized as follows.

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• Difficulties faced during collection of data due to non-familiar of the

respondents.

• Getting correct information from the customers is very difficult due to

their inherent problems and busy schedule.

• Getting biased responses from the respondents.

• The selection of customers to cover the various strata of the society is

tedious and time consuming.

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4.1  ANALYSIS  AND  INTERPRETATION  OF  DATA  

Table  4.1  Showing  the  age  group  of  people.  

Particulars   Percentage  

18  to  25   34  

26  to  35   29  

36  to  50     21  

50+   16  

 

 

Figure  4.1  Showing  the  age  group  of  people.  

 

 

Inference:   Hence   inferred   that   34%   of   the   people   surveyed   belong   to   the   age  

group  of  18  to  25,  29%  belong  to  the  age  group  of  26  to  35,  21%  belong  to  the  

age  group  of  36  to  50  and  16%  belong  to  the  age  group  of  50+.  

 

 

34%  

29%  

21%  

16%  

a)        18  to  25  

b)      26  to  35  

c)        36  to  50  

d)      50+  

AGE GROUP

75

Table  4.2  Showing  the  work  status  of  the  people  surveyed.  

 

Particulars   Percentage  

Students   37  

Employed     33  

Own  business   24  

Retired     6  

 

 

 

Figure  4.2  Showing  the  work  status  of  the  people  surveyed.    

 

 

Inference:   Hence   inferred   that   37%   of   the   people   were   students,   33%   of   the  

people  were  employed,  24%  of  the  people  had  their  own  business  and  6  percent  

were  retired.  

 

37%  

33%  

24%  

6%  

a)        Student  

b)      Employed  

c)        Own  business  

d)      Retired  

WORK STATUS

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Table  4.3  Showing  the  salary  of  the  people  surveyed.  

 

Particulars   Percentage  

20,000  or  below.   64  

20,000  to  50,000   31  

50,000  to  2,00,000   5  

Above  2,00,000   0  

 

 

Figure  4.3  Showing  the  salary  of  the  people  surveyed  

 

 

Inference:  Hence  inferred  that  37%  of  the  people  earn  upto  20,000,  30%  of  the  

people   earn   from   20,000   to   50,000,   24%   of   the   people   earn   from   50,000   to  

2,00,000  and  9%  of  the  people  earn  above  2,00,000.  

 

65%  

31%  

4%  

0%  

a)        Upto  20,000  

b)      20,000  to  50,000  

c)        50,000  to  2,00,000  

d)      above  2,00,000  

SALARY

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Table  4.4  Showing  which  part  of  the  city  people  belong  to.  

 

Particulars   Percentage  

Central  Bangalore     16  

Bangalore  north     30  

Bangalore  south   19  

Rural  Bangalore     35  

 

 

Figure  4.4  Showing  which  part  of  the  city  people  belong  to.  

 

Inference:  Hence   inferred   that   16%  of   the  people  belong   to  Central  Bangalore,  

30%   of   the   people   belong   to   Bangalore   North,   19%   of   the   people   belong   to  

Bangalore  South  and  35%  of  the  people  belong  to  Rural  Bangalore.  

 

 

 

 

16%  

30%  

19%  

35%   a)        Central  Bangalore  

b)      Bangalore  north  

c)        Bangalore  south  

d)      Rural  Bangalore  

LOCATION

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Table  4.5  Showing  where  they  herd  about  micromax.  

 

Particulars   Percentage  

Family  and  friends   26  

TV  and  paper  ands   54  

At  work   12  

Through  the  shows  we  sponsored   8  

 

 

Figure  4.5  Showing  where  they  herd  about  micromax.  

 

 

Inference:   Hence   inferred   that   26%   of   the   people   herd   about   micromax   from  

family  and  friends,  54%  herd  about  it  from  tv  and  paper  ads,  12%  herd  about  it  

at  work  and  8%  of  the  people  herd  about  it  from  shows  sponsored.    

 

 

26%  

54%  

12%  

8%  

a)        Family  and  friends  

b)      TV  and  paper  ands  

c)        At  work  

d)      Through  the  shows  we  sponsored  

HERD FROM

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Table  4.6  Showing  which  phone  they  used  earlier.  

 

Particulars     Percentage    

Samsung     24  

Nokia     42  

Sony  Ericsson     15  

Others     19  

 

 

Figure  4.6  Showing  which  phone  they  used  earlier.  

 

 

Inference:  Hence  inferred  that  24%  of  the  people  used  Samsung  before,  42%  of  

the  people  used  Nokia  before,  15  %  of  the  people  used  Sony  Ericsson  before  and  

19%  of  the  people  used  other  phones  before.  

 

 

24%  

42%  

15%  

19%  

a)        Sansung  

b)      Nokia  

c)        Sony  Ericsson  

d)      Others  

PREVIOUS PHONE

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Table  4.7  Showing  the  features  they  liked  the  most.  

 

Particulars     Percentage    

Price   35  

Looks     19  

Durability     22  

Performance     24  

 

 

Figure  4.7  Showing  the  features  they  liked  the  most.  

 

Inference:  Hence  inferred  that  35%  of  the  people  bought  it  because  of  the  price,  

19%  of  the  people  got  it  because  of  the  looks,  22%  of  the  people  got  it  because  of  

the  durability,  24%  got  it  because  performance.  

 

 

 

 

35%  

19%  

22%  

24%  a)        Price  

b)      Looks  

c)        Durability  

d)      Performance  

FEATURES

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Table  4.8  Showing  the  feature  in  the  handset  they  like  the  most.  

 

Particulars     Percentage    

Battery  back  up     34  

Camera     12  

Operating  system   28  

User  friendliness     26  

 

 

Figure  4.8.  Showing  the  feature  in  the  handset  they  liked  the  most.  

 

 

Inference:  Hence   inferred   that   34%  of   the   people   though   that   battery   back   up  

was  the  best  feature,  12%  though  that  camera  was  the  best  feature,  28%  though  

that  the  operating  system  was  the  best  feature  and  26%  though  it  was  the  user  

friendliness.  

 

 

34%  

12%  28%  

26%  a)        Battery  back  up  

b)      Camera  

c)        Operating  system  

d)      User  friendliness  

HANDSET FEATURES

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Table  4.9  Showing  their  main  purpose  of  the  phone.  

 

Particulars     Percentage    

Only  calling  and  texting     19  

Mail     12  

Social  networking   42  

Games  and  applications   27  

 

 

Figure  4.9  Showing  their  main  purpose  of  the  phone.  

 

 

Inference:  Hence   inferred   that  main   reason  people   used   the   handset  was   19%  

because  of  texting  and  calling,  12%  for  mailing,  42%  social  networking  and  27%  

for  games  and  applications.  

 

 

 

19%  

12%  

42%  

27%  a)        Only  calling  and  texting  

b)      Mail  

c)        Social  networking  

d)      Games  and  application  

USE OF THE HANDSET

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Table  4.10  Showing  how  long  they  have  been  using  the  phone.  

 

Particulars     Percentage    

Below  6  months   22  

6  months  to  1  year   31  

Above  1  year  and  less  than  2  years   33  

Above  2  years   14  

 

 

 

 

Figure  4.10  Showing  how  long  they  have  been  using  the  phone.  

 

Inference:  Hence   inferred   that  22%  have  been  using   it   for   a  period  of  below  6  

months,  31%  have  been  using   it   for  a  period  of  6  months   to  1  year,  33%  have  

been  using  it  for  a  period  of  1  to  2  years  and  14%  above  2  years.  

 

22%  

31%  

33%  

14%  a)        Below  6  months  

b)      6  months  to  1  year  

c)        Above  1  year  and  less  than  2  years  

d)      Above  2  years  

PERIOD OF USAGE

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Table  4.11  Showing  the  value  for  money  of  the  handset.  

 

Particulars   Percentage    

Yes     69  

No     31  

 

 

 

Figure  4.11  Showing  the  value  for  money  of  the  handset.  

 

 

Inference:  Hence  inferred  that  69%  of  the  people  though  it  was  worth  the  value  

and  31%  of  the  people  think  it  wasn’t  worth  the  value.  

 

 

 

 

69%  

31%  

a)        Yes  

b)      No  

VALUE FOR MONEY

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Table  4.12  Showing  if  they  would  buy  micomax  again.  

 

Particulars   Percentage    

Yes     84  

No     16  

 

 

 

Figure  4.12  Showing  if  they  would  buy  micromax  again.  

 

Inference:  Hence  inferred  that  84%  of  the  people  said  they  would  buy  micromax  

again  and  16%  said  no.  

 

 

 

 

 

84%  

16%  

a)        Yes  

b)      No  

REPURCHASE

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Table  4.13  Showing  if  they  had  problems  with  the  phone.  

 

Particulars   Percentage    

Yes     23  

No     77  

 

 

Figure  4.13  Showing  the  if  they  had  problems  with  the  phone.  

 

Inference:  Hence   inferred  that  23%  of   the  had  a  problem  with  the  handset  and  

77%  of  the  people  dint  have  a  problem  with  the  handset.  

 

 

 

 

 

 

23%  

77%  

a)        Yes  

b)      No  

PROBLEMS

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Table  4.14  Showing  the  customer  service  of  micromax.  

 

Particulars     Percentage    

Excellent     60  

Good     42  

Average     45  

Bad     7  

 

 

 

Figure  4.15  Showing  the  customer  service  of  micromax.  

 

 

Inference:   Hence inferred that 25% of the people surveyed thought that the customer

service was excellent, 42% though it was good, 26% of the people thought I was

average and 7% thought it was bad.  

25%  

42%  

26%  

7%  

a)        Excellent  

b)      Good  

c)        Average  

d)      Bad  

CUSTOMER SERVICE

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Table  4.15  Showing  the  features  other  companies  dint  have.  

 

Particulars     Percentage    

Battery  backup   36  

User  friendliness   6  

Durability     16  

Price     42  

 

 

Figure  4.15  Showing  the  features  other  companies  dint  have.  

 

Inference:  Hence   inferred   that   the   features   other   phones   dint   have  were,   36%  

though  it  was  the  battery  back  up,  6%  thought  I  was  the  user  friendliness,  16%  

though  it  was  durability  and  42%  though  it  was  price.  

36%  

6%  

16%  

42%  a)        Battery  backup  

b)      User  friendliness  

c)        Durability  

d)      Price  

OUTSTANDING  FEATURES

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5.1 FINDINGS FROM INTERPRETATION

• The main customers of micromax are the youth and young working people.

• The people who prefer micromax are students and people who are paid

salaries.

• Micromax has completely grabbed the lower and middle class. It hasn’t

showed much of its presence on the upper class.

• Most of the customers are from rural Bangalore and Bangalore north.

Bangalore north doesn’t cover very rich localities like Bangalore south and

central. So this shows the phone is popular among the middle class.

• The main way micromax reaches out to the customers is through tv ads and

since its penetrated the market so well its even through word of mouth.

• A lot of people shifted from nokia to micromax compared to any other brand.

• The main reason people bought micromax was because of the price.

• The battery backup and the operating system is one of the main reasons people

buy the phone.

• The reason people use the phone is mainly because of games, application and

social networking.

• People usually use the phone for a span of 6months to less than 2 years.

• Most of the people feel the phone is value for money.

• Most of the people wouldn’t mind buying phone from the same company.

• Most of the people have no problems with the phone at all.

• The customers are pretty satisfied with the customer service.

• The main feature where micromax beat other companies are price and battery

back up.

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• 5.2 SUGESSIONS AND RECOMMENDATIONS

• They should work on a business type phone. They should have features, which

can match up features of blackberry and the office uses of Samsung and apple

phones.

• They should come up with a few high-end phones and work on building a

brand image so they can get a grasp of upper class customers.

• They need more people shifting from Samsung, HTC and apple then they will

know that they are making progress.

• They should work on their looks. They should make sure the phone doesn’t

look like cheap plastic.

• They need good cameras. Recently Apple and HTC have come out with

brilliant cameras.

5.3 CONCLUSION

After going through the data collected from all the customers carefully, going through

the data collected we understood how micromax made a place for itself in the Indian

market. Even though there were companies that were well known and trusted brand it

still it manage to make a place for itself. They entered the market exactly when Nokia

was going down. So they had a big opening to reach out to the lower and middle

class. They provided really good features at a really low price. The features they

could give at their price no company could match that. They worked really well on

the basic features like battery, operating system and durability. So this basically sums

up the reason for their success.

91