Networking and Cellular Phone Service In India

Networking/Cellullar Phone Svc. In India

Pursuing developing countries

Targeting developing countries is simply a marketing strategy aimed at attracting more customers. Generally, the markets in developed countries are mature or next to reaching maturity, meaning that the companies activating in this area must constantly strive to improve the quality of their products and services in order to maintain a competitive position. Consequently, this then means that the market potential for attracting new customers is limited, basically because all customers have been addressed so far. On the other hand, in developing countries, the market is rather new, absorbing and encouraging numerous businesses to enter. And even if in the respective countries, providers do exist, they have been unable to properly address all market segments. Furthermore, in developing countries, the primary recipient of a new product or service is the wealthy population, a rather limited category. As such, the population masses, those registering medium and below medium incomes are left unsatisfied - this is where a new company intervenes. The Asian country perfectly fits this profile: a 1.1 billion population, out of which only recently the cellphone industry has managed to attract a total of 200 million subscribers (Bellman, 2007).

In addition, developing countries are easier for businesses to target and enter moreover when these countries do indeed desire to host new investors and businesses that would support the country's overall development. In this particular sense, the developing countries often reduce or even entirely eliminate the barriers to entering their markets. For instance, in 2002, the officials in India reduced the restrictions to entering the market, which then resulted in extensive growth and fierce competition on the cellphone industry (Bellman, 2007).

In short, companies enter the markets in developing countries mainly because these countries posses major growth potentials - about 80% of the new cellphone subscribers for the next five years are expected to come from developing countries (Bellman, 2007) - they are made up from a large palette of unsatisfied and unaddressed potential customers, and finally, the countries themselves increase their efforts to welcoming businesses by reducing to even eliminating the barriers to entry. And this strategy is likely to be extremely successful on the long-term, mostly because it allows companies to enter new territories and significantly increase their customer palette. Aside from India, numerous other developing countries could be targeted, including Indonesia, Thailand, Bangladesh, Nigeria or Sri Lanka. The primary requirements for these countries are a large population, unaddressed needs and demand for cellphone services.

2. Mr. Price's strategy

The strategy implemented by Mr. Price is highly suitable for developing countries with the characteristics of large masses of low wage individuals with unaddressed needs. The main features of the strategy developed and forwarded by the director of networks Don Price are those of addressing these underserved masses. In this particular sense, he tries to reduce costs as much as possible in order to cut the retail price to the final consumer. So far, his strategic approach has been characterized by the following measures:

Increasing efforts to replace the costly air condition on the radio towers with cold-gel packs

Increased efforts to use alternative and cheaper energy, such as solar or wind energy

He persuaded suppliers to manufacture smaller equipments which consumed less energy

Price also managed to develop better technological applications that supported the replacement of generators with large batteries that support the system through power blackouts

The cost of operating the radio tower has decreased by ten percent in 2002 and continues to increase in order to allow the organization to offer low fees and also maintain a profitable rate

Price advised in favor of attracting new customers, belonging to less developed regions of the country; for instance, Bihar is one of the poorest regions of India, but the among the fastest growing markets for Bharti (Bellman, 2007)

All the above measures have been implemented in order to best approach the target market, formed from those individuals located in rural areas, registering medium or below medium incomes and not currently possessing cellular telephones. In doing this however, the main purpose of Bharti Airtel Ltd. is to register profits. In other words, the approach forwarded by Don Price is that of making the cellphone services cheap enough as to be affordable by the rural poor, yet, expensive enough as to be profitable for the organization (Bellman, 2007). This approach is necessary as it perfectly adapts to the unique requirements of the Indian market. In other words, the reduction in retail price to attract the country's rural poor is vital for the overall success of the cellphone organization.

3. Challenges in India new entrepreneur entering the Indian cellphone market will be confronted with numerous impediments, arising both from the country's status of a developing country, as well as from its particular features. First of all, due to an extremely large population, the energy consumption exceeds the normal limits. Combined with the old and underdeveloped infrastructure, as well as the climacteric conditions, this results in numerous power blackouts. These not only affect and frustrate the common individual, but they also negatively impact organizations, causing them major losses. To cope with the energy shortages, companies often purchase generators that are aimed to aliment their machineries throughout the power blackout.

Then, another major challenge when entering the Indian industry is that of increased competition and still a relatively reduced number of cellphone users - about 20 in 100 in highly populated and central areas, the numbers being significantly smaller in rural areas (Central Intelligence Agency, 2008). This does not necessarily imply that the population cannot afford cellphones, (Indian service provider charge among the lowest fees on the world, with about 2 cents per minute), but that there isn't yet a well formed mobile phone culture within the Asian country. This then means that the new operator will have to develop and promote such a culture through the implementation of several marketing strategies, which are costly and time consuming. For instance, in July, Bharti "commissioned one of its newest towers in the sleepy village of Madilage, about 300 miles south of Mumbai. To let the villagers know cellular service had arrived, Bharti staged a traditional dance performance on the back of a truck parked under the new tower" (Bellman, 2007).

Other technical difficulties refer to large prices of petroleum, diesel and other necessary subsidies in the operational process. Major advancements have been made in the search for alternative solutions, but India still has a long way to go. Developments must be made with energy consumption, efficient equipments from suppliers and the performances of the power towers.

Yet another major technical aspect that could raise difficulties for the cellphone organization is the reduced usage of the internet. In civilized countries, the World Wide Web has become a powerful tool in launching and promoting any type of product. In India however, only as much as 42 million individuals were internet users (Internet World Statistics, 2000-2007), and these were mostly belonging to the wealthy population, already not a target of Bharti. This means that the company will have to solely implement traditional marketing strategies, which will be more expensive and will require more implementation time.

4. Recommendations upon entering developing countries

Entering developing countries is often more difficult than penetrating the market in a developed country. The consumer in a developed economy is a mature one, he knows what he wants and he will get it. In so, the company will identify his needs and serve them. On the other hand, in a developing country the customer does not have a formed opinion, he does not know what he wants - therefore the measures implemented by the company stand a 50-50 chance of winning. In other words, the newly developed product could either be embraced by the population for it satisfies an underserved need, or, it can be hated as it will be seen as useless and a waste of the already insufficient money. In this particular context, several recommendations must be made for the successful penetration of the markets in developing countries. These include:

Developing countries present numerous risks, therefore the company should first clearly analyze the market (potential customers and competition), alongside with the economic, legal, technological and social aspects of life within the host country; they should identify any barriers to entry and find ways to eliminate them it would also be advisable for the company to hire specialized consultancy from the country to help them best understand the general and particular framework