TABLE OF CONTENTS

TITLE
ABSTRACT
OBJECTIVES OF STUDY
SCOPE OF THE STUDY
COMPANY PROFILE
INTRODUCTION OF TELECOMMUNICATION SECTOR
METHODOLOGY
LIMITATIONS OF STUDY
ANALYSIS
FINDINGS
CONCLUSIONS
RECOMMENDATIONS
BIBLIOGRAPHY
QUESTIONNAIRE

ABSTRACT
A prime task of a marketer is to understand the market, his customer and the needs
of the customer and finally look for the best possible way to satisfy the needs
of the customer.
The project undertaken is A COMPARATIVE ANALYSIS OF PRICING
DECISION POLICIES OF VODAFONE AND AIRTEL. The telecom services
have been recognized the world-over as an important tool for

socio-economic

development for a nation and hence telecom infrastructure is treated as a crucial

factor to realize the socio-economic objectives in India. Accordingly, the
Department of Telecom has been formulating developmental policies for the
accelerated growth of the telecommunication services. The Department is also
responsible for frequency management in the field of radio communication in close
coordination with the international bodies. It also enforces wireless regulatory
measures by monitoring wireless transmission of all users in the country.
The leverage of this project lies in understanding the customers knowledge,
awareness and perception about the telecomm Companies, Vodafone and Airtel
in the telecommunication sector as accompany to subscribe the service. This would
be done, by adopting a research based approach. It deals with customers
awareness and involves direct interviews with questionnaire method for market
research.This study will help to report the scope of both the companies in the
market. It also enables the use of various marketing research instruments such as
questionnaires and methodologies like prototyping and articulate interviewing and
also understanding the market condition by taking hypothesis.

This project will help me to evaluate the perception of customer about pricing
strategy of Vodafone and Airtel. Also this project will give me an opportunity to
gather knowledge about telecommunication sector and customer knowledge.
The project also involves making recommendations, after comprehensive SWOT
analysis that would help both the companies to provide better service to its existing
customers and improve its reach to potential customers. Overall the project would
be a win-win situation for both, the companies Vodafone and Airtel.
1.

OBJECTIVES OF STUDY

Understanding the customers knowledge, awareness and perception about

Vodafone and Airtel as a major company in telecommunication sector.

To find out the share of Vodafone and Airtel in the market at Delhi.

Understand the target customer of Vodafone and Airtel in context to their

pricing strategy.

To understand & know the requirements of the clients

The project will help, know and understand the target customer better and to
know the efforts of both the companies to attract more and more customers.
It deals with customers awareness and involves direct interviews with
questionnaire method and check out through hypothesis method. This study
will help to report the scope of Vodafone and Airtel at Gurgaon as a choice
for

communication

purpose.

The

project

also

involves

making

recommendations, after comprehensive SWOT analysis that would help both

the companies to provide better service to its existing customers and
improve its reach to potential customers.

SCOPE OF STUDY
The leverage of this project lies in understanding the customers knowledge,
awareness and perception about Vodafone and Airtel separately as an option in
mobile communication services. It will help, know and understand the target
customer better and how to lure them to subscribe more. This would be done, by
adopting a research based approach. It deals with customers awareness and

involves direct interviews with questionnaire method for market research followed
by putting hypothesis to understand better. This study will help to report the scope
of the given companies in the market of Delhi as a good company for mobile
services. The project gives an opportunity to understand the changing and varied
customer needs and the pricing strategies that should be adopted by both Vodafone
and Airtel to fulfill them. It also enables the use of various marketing research
instruments such as questionnaires and methodologies like articulate interviewing
and hypothesis testing.

COMPANY PROFILE
Airtel
Telecom giant Bharti Airtel is the flagship company of Bharti Enterprises.
The Bharti Group, has a diverse business portfolio and has created global
brands in the telecommunication sector. Bharti has recently forayed into retail
business as Bharti Retail Pvt. Ltd. under a MoU with Wal-Mart for the cash
& carry business. It has successfully launched an international venture with
EL Rothschild Group to export fresh agri products exclusively to markets in
Europe and USA and has launched Bharti AXA Life Insurance Company Ltd
under a joint venture with AXA, world leader in financial protection and
wealth management.
Airtel comes to you from Bharti Airtel Limited, Indias largest integrated and
the first private telecom services provider with a footprint in all the 23
telecom circles. Bharti Airtel since its inception has been at the forefront of
technology and has steered the course of the telecom sector in the country
with its world class products and services. The businesses at Bharti Airtel
have been structured into three individual strategic business units (SBUs) Mobile Services, Airtel Telemedia Services & Enterprise Services. The
mobile business provides mobile & fixed wireless services using GSM
technology across 23 telecom circles while the Airtel Telemedia Services
business offers broadband & telephone services in 94 cities. The Enterprise
services provide end-to-end telecom solutions to corporate customers and

national & international long distance services to carriers. All these services
are provided under the Airtel brand.

Vodafone
Vodafone Group is a mobile network operator headquartered in Newbury,
Berkshire, England, UK. It is the largest mobile telecommunications network
company in the world by turnover and has a market value of about 100
billion (December 2007). Vodafone currently has equity interests in 25
countries and Partner Networks (networks in which it has no equity stake) in
a further 39 countries. The name Vodafone comes from Voice data fone,
chosen by the company to "reflect the provision of voice and data services
over mobile phones.

At 31 January 2007 Vodafone had 200 million proportionate customers in 25

markets across 5 continents. "Proportionate customers" means, for example,
that if Vodafone has a 30% stake in a business with a million customers, that
is counted as 300,000). On this measure it is the second largest mobile
telecom group in the world behind China Mobile. The eight markets where it
has more than ten million proportionate customers are the United Kingdom,
Germany, India, Italy, Spain, Turkey, Egypt and the United States. In the
U.S., these customers come via its minority stake in Version Wireless, and in
the other seven markets Vodafone has majority-controlled subsidiaries.
On 30 May 2006, the company announced a loss before tax of 14.9 billion
for 2005, the biggest loss in British corporate history. The loss for the year

from continuing operations was 17.2 billion and the bottom line loss for the
financial year was 21.8 billion. The company was pushed into loss by
impairment charges of 23.5 billion, which related to the acquisition of
Mannesmann several years earlier, and losses of 4.6 billion in relation to its
discontinued business in Japan. At an operating level it remained highly
profitable, with an operating profit on continuing operations of 9.4 billion
before impairment costs.

Current report in relation to Vodafone & Airtel

Vodafone to invest approximately Rs. 6,700 crores (approx. USD 1.5

bn.) to acquire around 10% in Bharti Tele-Ventures Ltd.

Bharti Enterprises, SingTel and Vodafone to take Bharti Tele-Ventures

Ltd. to unassailable leadership position in India

Introduction of Telecommunication sector

Telecommunications of late has become the backbone of a modern economy. In
fact, the concept of a Global Village is attributable mainly to the rapid advances in
telecommunications. Today, a large country like India with its social, cultural and
geographic diversity can seek to address developmental problems previously
considered

intractable,

thanks

to

telecommunications.

Largest Network
India operates one of the largest telecom networks in Asia comprising of over
23,406 telephone exchanges, with a total equipped capacity of 21.26 million lines
and 17.8 million working telephones as on March 31 this year. The long distance
transmission network has about 72,592 route kilometers of microwave systems and
about 76,261 route kilometers of optical fiber systems. Fully automatic
International Subscriber Dialing (ISD) service is available to almost all the
countries. In all 11,157 stations are connected to National Subscriber Dialing
(NSD). Maintaining and upgrading this vast network while keeping pace with
every changing technology could be a challenge for any organization.
Earlier, the National Telecom Policy was constituted in 1994 which stipulated for
providing world class telecom services on demand at affordable prices, universal
services covering all villages, a PCO for every 500 persons in urban areas,
protecting India's strategic interests and ensuring that India emerges as a
manufacturing base and a major exporter of telecom equipment.

Perhaps the most significant aspect of the 1994 telecom policy was the recognition
that telecom was a vital infrastructure, and resources required to meet the
objectives and targets set out were beyond the capacity of government funding and
international generation of resources. Private investment and association of the
private sector was needed in a big way to bridge the resource gap. This was the
beginning of the telecom liberalization in the country.

Speed and Efficiency

That the government will not leave any stone unturned in making India the hub of
telecommunications was once again made clear by the Prime Minister, Shri Atal
Bihari Vajpayee. He has repeatedly advocated to bring speed and efficiency in
resolving the pending issues pertaining to telecommunication.
In the last six months, some major decisions were taken to hasten the growth of the
telecom industry. The Government extended the license period for the cellular
operators to 15 years as India was the only country with a 10 year duration for the
license period. This decision made the cellular projects more bankable. Short
Distance Charging Area (SDCA) was declared as local area from August 15 this
year enabling calls to the adjacent SDCAs, which were being made on STD rates
to be charged as the local calls, at three minutes per call unit.

New Telecom Policy

There are some other factors, which necessitate the need for review of the telecom
policy. In 1997, India joined 67 countries in signing a WTO agreement whereby

the Government of India formalised its commitment to review VSNL's monopoly

over international telecom services in 2004 and review DoT's monopoly over long
distance services in 1999. The Government has decided to disinvest part of its
equity in VSNL and to increase the plan outlay for Communications by 35% as
compared to 1997-98.

Internet Policy
In the recently announced Internet policy, the monopoly of the the Videsh Sanchar
Nigam Limited ( VSNL ) as the country's sole internet provider came to an end.
Two private companies and the Mahanagar Telephone Nigam Limited (MTNL)
have got licences to provide this service.The new policy has incorporated all the
recommendations of the National Task Force on Information Technology . It
allows private ISPs ( Internet Service Providers) to set up their own gateways,
virtually does away with the licence fee and extends the term of the licence to 15
years.The ban on internet telephony, however, continues. At present, 47 companies
have applied to the DOT who will shortly get the licence.
Another landmark: GMPCS
Another landmark event in the history of telecommunications was the launching of
the Iridium system in India on November 1, by linking it to the world's first
satellite telephony system. This event was marked at Iridium India's South Asian
Gateway with three satellite tracking earth stations erected at the VSNL premises
at Dighi near Pune. This gateway is one of 12 such gateways worldwide and will
manage satellite telephony traffic in the South Asian region. Under the Global

Mobile Personal Communication System ( GMPCS), telephone calls can be made

and received from virtually anywhere on earth.
One Million Subscribers
No doubt there is a lot to be achieved for moving up the present tele density of 1.8
to match the world average of 10. But then India is the first country to reach the
one million subscriber base within the first three years of paging. The USA took 27
years to achieve the same. In cellular also it took China six years to reach 9 lakh
subscribers base, something we did in two years.
According to the industry estimates over the next 15 years, the telecom services
industry is expected to generate around Rs.3,00,000 crore (Rs.3000 billion) and
about 50,000 new jobs. With this kind of framework and expectations, surely, a
new telecom policy will bring reprieve to the telecom industry and telecom will
indeed be the engine of growth in the Indian economy.
The telecom services have been recognized the world-over as an important tool
for socio-economic development for a nation and hence telecom infrastructure is
treated as a crucial factor to realize the socio-economic objectives in India.
Accordingly, the Department of Telecom has been formulating developmental
policies for the accelerated growth of the telecommunication services. The
Department is also responsible for grant of licenses for various telecom services
like Unified Access Service Internet and VSAT service. The Department is also
responsible for frequency management in the field of radio communication in
close coordination with the international bodies. It also enforces wireless
regulatory measures by monitoring wireless transmission of all users in the
country.

History of Cellular Telephony

1947

Bell Laboratories introduced the idea of cellular communications with the police

1947

car technology.
The basic concept of cellular phones began, when researchers looked at crude
mobile (car) phones and realized that by using small cells (range of service
area) with frequency reuse they could increase the traffic capacity of mobile
phones substantially. However at that time, the technology to do so was

1947

nonexistent.
AT&T proposed that the FCC allocate a large number of radio-spectrum
frequencies so that widespread mobile telephone service would become

1947

feasible.
The FCC decided to limit the amount of frequencies available, the limits made
only twenty-three phone conversations possible simultaneously in the same

1968

service area.
AT&T and Bell Labs proposed a cellular system to the FCC of many small, lowpowered, broadcast towers, each covering a 'cell' a few miles in radius and
collectively covering a larger area. Each tower would use only a few of the total
frequencies allocated to the system. As the phones traveled across the area,

1968

calls would be passed from tower to tower.

The FCC reconsidered its position by stating "if the technology to build a better
mobile service works, we will increase the frequencies allocation, freeing the

1973 (April)

airwaves for more mobile phones."

The first call on a portable cell phone is made by Dr Martin Cooper, a former
general manager for the systems division at Motorola, who is also considered

1977

the inventor of the first modern portable handset.

AT&T and Bell Labs had constructed a prototype cellular system. A year later,
public trials of the new system were started in Chicago with over 2000 trial
customers.

1979

The first commercial cellular telephone system began operation in Tokyo.

1980

Analog cellular telephone systems were experiencing rapid growth in Europe,

particularly in Scandinavia, United Kingdom, France and Germany. Each
country developed its own system, which was incompatible with everyone

1981

else's in equipment and operation

Motorola and American Radio telephone started a second U.S. cellular radiotelephone system test in the Washington/Baltimore area.

1982

FCC authorizes commercial cellular service for the USA.

The Conference of European Posts and Telegraphs (CEPT) formed a
study group called the Group Spcial Mobile (GSM) to study and
develop a pan-European public land mobile system. The proposed
system had to meet certain criteria:

Good subjective speech quality

Low terminal and service cost

Support for international roaming

Ability to support handheld terminals

Support for range of new services and facilities

Spectral efficiency

ISDN compatibility
The first American commercial analog cellular service or AMPS

1983

(Advanced Mobile Phone Service) was made available in Chicago by

Ameritech.
1987

Cellular telephone subscribers exceeded one million and the airways

were crowded.

1989

GSM responsibility was transferred to the European Telecommunication

Standards Institute (ETSI),

1990

Phase I of the GSM specifications were published.

1991

Commercial launch of cellular service based on GSM standard in

Finland.

History of Cellular Telephony History of

Te

Cellular Telephony History of Cellular

History of Cellular Telephony in India

Telecommunication sector in India liberalized to bridge the gap

1992

through government spending & to provide additional resources

for the nations telecom target. Private sector allowed participating
1993

The telecom industry gets an annual foreign investment Rs 20.6

1994

million
License for providing cellular mobile services granted by the
government of India for the Metropolitan cites of Delhi, Mumbai,
and Kolkata & Chennai. Cellular mobile service to be duopoly
(i.e. not more than two cellular mobile operators could be licensed
in each telecom circle), under a fixed license fee regime for 10

years.
1995
19 more telecom circles get mobile licenses
1995(August) Kolkata became the first metro to have a cellular network
1997
Telecom Regulatory Authority of India is set up
1998

Annual foreign investment in telecom stands at Rs 17,756.4

1999

million.
FDI inflow into telecom sector falls by almost 90% to Rs. 2126.7

million
1999
Tariff rebalancing exercise gets initiated
1999(March) National Telecom Policy is announced.
2000(June)
2000

FDI inflow drops further down to Rs 918 million coming

Amendment of TRAI Act.

(January)

Current Status of the Telecom Sector

Introduction
The development of world class telecommunication infrastructure
is the key to rapid economic growth and to bring social change of
the country. Indian telecommunication sector has undergone a
major

process

of

transformation

through

significant

policy

reforms, particularly beginning with the announcement of NTP

1994 and was subsequently re-emphasized and carried
Forward under NTP 1999. Driven by various policy initiatives, the
Indian telecom sector witnessed a complete transformation in the
last decade. It has achieved a phenomenal growth during the last
few years and is poised to take a big leap in the future also. Such
rapid growth in the communication sector has become necessary
for further modernization of Indian economy through rapid
development in IT.
Plan Outlays on Communications
Keeping in view the importance of the sector, an increasing
provision of outlays has been made in the successive Plans.
During the Ninth Plan and Tenth Plan, an outlay of Rs.47280 crore
and Rs.98968 crore were allocated for the communication sector.
As seen in the subsequent paras, plan allocations have helped
develop and expand the telecom infrastructure, improving the
teledensity in the country over the period.

Thus, the number of telephones has increased from 54.63 million

as on 31.03.03 to 142.09 million as on 31.03.06, exhibiting a
CAGR of 37%. Wireless subscribers increased from 13.3 million as
on 31.03.03 to 101.86 as on 31.03.06, exhibiting a CAGR of 97%.
During 2005-06, the wireless connections grew at 78%, whereas
landlines registered a negative growth. The number of Internet

subscribers grew at 25%, while the broadband subscribers grew

from a merger 0.18 million to 1.32 million during the year 200506.

Present status of Telephone network

Indias 164 million robust telephone network, including mobile
phones, is one of the largest in the world and 2nd largest among
emerging economies (after China) with a wide range of services
like basic, cellular, internet, paging, V-SAT etc. The status of the
network is as shown below:

Further, National Internet Exchange of India (NIXI) has been set up

by DIT to ensure that Internet traffic, originating and destined for
India is routed within India. This will substantially bring down the
cost of Internet usage. It is expected that NIXI will take
appropriate steps for increasing the utilization of such facilities.

Change in composition of sector

Public vs. Private:
Government has taken several steps to encourage participation of
private players to create a competitive environment in the sector.
Consequently, the private sector is now playing an important role
in expansion of telecom sector. This is also confirmed by the
number

of

licensees

from

telecommunications as shown below:

the

private

sector

in

With the opening of telecom sector to the private operators, their

share in the number of subscribers has been steadily increasing
which is evident from the following table:

The share of private sector in the number of telephones has

increased from 15.12% (6.80 million telephones) in March 2002 to
57.01% (81.01 million telephones) in March 2006.

Mobile vs. Fixed

The preference for use of wireless phones has also been
predominant in the sector. This is confirmed from the rising share
of wireless phones, which increased from 14.85% (6.68 million

telephones) in March 2002 to 76.18% (129.52 million telephones)

in September 2006.

Trend in teledensity
Tele density in the country is steadily increasing from 5.11% as on
31.3.03 to 12.74% as on 31.3.06 and currently stand at 15.12%
as on 30-09-2006. However, there is a wide gap between urban
teledensity (47.58%) and rural teledensity (1.84%). The rural
telephony has not kept pace with the impressive growth in urban
connectivity.

Rural Telephony
Apart from the 14.79 million fixed and WLL connections provided
in the rural areas, 551064 VPTs1 have been provided. Thus, 90%
of the villages in India have been covered by the VPTs. More than
2 lakh PCOs2 are also providing community access in the rural
areas. Further, Mobile Gramin Sanchar Sewak Scheme (GSS) a
mobile Public Call Office (PCO) service is provided at the doorstep
of villagers. At present, 2772 GSSs are covering 12043 villages.
Also, to provide Internet service, Sanchar Dhabas (Internet Kiosks)

have been provided in more than 3500 Block Headquarters out of

the total 6337 Blocks in the country.

FINDINGS AND ANALYSIS

Age Group Graph

As we can see from the above graph, the people who are in the age group of 21-28 years are the
ones who are the maximum users of mobile phones. This segment is the one which gives
maximum business to the mobile operators. This segment constitutes the young executives and
other office going people. They are 65% of the total people who were interviewed. The next age
group are the

people who are 28-35 years old. They are 20% of the total. They are those who are at home or
have small business units etc. And the next age group is the youngest generation who are 15-21
years old. They are school and college going students and carry mobile phones to flaunt. They
are 15% of the total interviewed people.

Occupation Graph

OCCUPATION
10%

15%

20%

55%
STUDENTS

EXECUTIVES

HOUSEHOLDS

OTHERS

As the above graph shows that 55% of the total people interviewed are working. So, these people
are the ones who are the maximum users of mobile phones. They are the young executives,
managers, Tele - callers etc. who require mobile for their official purposes. The next category is
the households, who are either housewife, small units which operate from their homes etc. They
are 20% of the whole. The next segment is the students. They are 15% of the whole. And 10% of
the whole is categories who are the professionals.

Service Provider Graph

These are the total market share of mobile user or people captured by the mobile provider
company. There two major company in mobile phone service sector Vodafone and Airtel who
respectively hold the market share with other company as 17% and 20% of total market user
segment of mobile customer.

Customer Service At Airtel Graph

CUSTOMER SATISFACTION LEVEL

10%

20%

10%
60%
FULLY

PARTIALLY

DISSATISFIED

FULLY DISSATISFIED

As the above graph clearly shows that customer services at Airtel seems poor. 60% of the people
are dissatisfied with the customer services provided by Airtel. They are the ones who have the
maximum share in the market but they are lagging behind in the customer services. 10% of the
people were fully dissatisfied with the customer services of Airtel. This could leave an impact on
the mind of the consumer. He can even switch over his brand. 20% of the people seemed
partially satisfied with the customer services and only 10% seem to be fully satisfied with
Airtels customer services, which is a very small amount.

Type Of Card Graph

Cash cards seemed quite popular among the people interviewed. 85% of the total mobile users
were having cash card connections. This means that the cash cards should be easily and readily
available in the local markets. Airtel should make sure that Magic is available in each and every
nook and corner of the market. 15% of the people were having sim connections which is the
regular bill.

Monthly expense graph

People on an average spend RS 500 per month as their mobile phone expense. 64% people spend
Monthly Expense

24%

12%

Rs 600
Rs 450
Rs 200

64%

this amount. 24% people spend RS 300 per month as their monthly mobile expense. And the
remaining 12% had an expense more than RS 1000, they could the ones having sim connections
or having cash cards and having a lot of business calls on their mobiles.

Awareness About WLL Graph

WLL seemed to be a new word for many of the people. 45% of the people were not at all aware
of such a technology. So, in order to get the answer for this question they were first explained the
concept. Only, 55% people knew what WLL is all about.

Awareness of WLL Players Graph

Vodafone was the brand which was popular amongst the interviewed people. As Vodafone had
done so much advertising and has it banners and hoarding spread all over Jaipur. So, this could
be one the reasons of its popularity. Tata was hardly a known brand in this new field. Possibly,
because of less promotions done by them as compared to Vodafone.
On the basis of analysis of the questionnaire I have found that the maximum no. of people who
use mobile phones is in the age group of 20 to 28. Who are the young executives and other office
goers?
They spend a maximum of RS 500 as their mobile expense.
There is more no. of prepared cards than post paid cards. The mobile users want to spend money
side by side than to spend money at the end of the month on a big bill.
Now when I compared Airtel with its competitor from the point of view of the consumer I
found that on the basis of Tariff plan, value added services and billing accuracy Airtel is at par or
ahead of its competitor but in the case of customer care and availability they lag behind there
competitors. As, Airtel has a hold in the market because it has the maximum no. of connections,
so it must improve upon it customer services.

As far as WLL is concerned people are aware

about it but not many people are aware about Tata. They only know more about Vodafone.
People at this point of time are not interested to switch over from GSM to WLL

HOW TO DEVELOP A PRICING PLAN

Establish Pricing Objectives
The first major step in the development of a pricing plan is to establish your
pricing objective-whether you intend to implement a lower, higher, or parity
pricing approach relative to the competition. All other objectives, such as increased
sales, higher margins, etc., are overall goals of your business or marketing plan to
which pricing contributes.
Higher, Lower, or Parity Pricing
How you price your product or service has a significant impact on many aspects
of your overall marketing efforts. Used in conjunction with the other elements
of your plan, a given price approach supports your products positioning, while
contributing directly to consumer demand (thus sales volume) for your product
and providing income to cover costs and contribute to the profitability of your
firm. Following is an overview of each of the three approaches to pricing.
Parity Pricing
Often referred to as a going rate strategy, this approach maintains pricing levels
at or near those of the competition. This is appropriate where other means of
differentiation are common or are considered more Important by the target. These
other forms of differentiation often include specific product features and attributes

as well as non product advantages such as service, guarantees, location for

retailers, or additional distribution channels. Interestingly, it is also utilized when
product differentiation is low and price is the basis of competition. In mature
categories with few competitors and little differentiation, such as the airline
industry, parity pricing is the norm. If one carrier were to raise prices, demand
would shift to the competition with lower prices. If one airline lowers prices, the
others would be forced to lower theirs in response, which would lower profits for
all in the industry and create a price war. Often, in such industries, one major
player, typically the market leader is considered the price leader. Others in the
industry watch this leader for price activity.
Lower Pricing
This objective involves maintaining a price lower than the competition. One
specific execution of this approach includes discount pricing, a direct result of a
low-price positioning. This approach aims for a high volume of sales to offset
typically low margins to achieve desired profit levels (low margin dollars but high
volume). It also requires appropriate capacity and distribution channels to support
the volume requirements. The reasons for a low price objective are usually:
To expand the market, allowing new consumers who couldnt
purchase at higher prices to become purchasers.
To increase trial and/ or sales due to price incentives.

 To take advantage of a strong price-elastic product for which a low

price generates increased demand. The result is lower margins but
increased profits because of the increased volume.
To preempt competitive strategies, helping to steal market share. This
is often necessary in a mature market.
To remain competitive with your competition. If a majority of the
competitors have reduced their prices, oftentimes you will need to do
so, especially if you are in a price-sensitive product category. If a
strong competitor is also offering an attribute such as service with
which you cannot compete, you may need to lower your price to
counter the service offering.
To keep competitors from entering the marketplace by having a price
that is difficult for a new company with high initial investment costs
to match. This - policy of expanded market pricing allows a company
to develop a large, loyal consumer base while keeping competition to
a minimum.

Higher Pricing
As we have discussed many times, a premium price-a higher prices relative to the
competition-supports a quality positioning and provides high margins to support

higher product and promotional expenditures. The reasons for a high price
objective are usually:
A need for a fast recovery of the firms investment.
A need for faster accumulation of profits to cover research and development
costs. The profits can then be used to improve the product and to sustain
competitive marketing tactics once competitors enter the market.
To substantiate a quality image positioning.
The product is price inelastic-the demand or sales decrease only marginally
with higher pricing.
The product or service is in the introductory phase of its product life cycle
and represents a substantial innovation within the product category. Also, the
company may wish to skim profits while there are no substitute products to
force competitive pricing.
The company is stressing profits rather than sales; thus margins must remain
high.
The product has a short life span. An example would be fad products which
last for a relatively short time. This necessitates a high price policy which
will help recover the firms research and development costs in a short time
period.

 The product is difficult to copy and reproduce or has patent protection.

Current report in relation to Vodafone & Airtel

Vodafone to invest approximately Rs. 6,700 crores (approx. USD 1.5 bn.) to
acquire around 10% in Bharti Tele-Ventures Ltd.

Bharti Enterprises, SingTel and Vodafone to take Bharti Tele-Ventures Ltd.

to unassailable leadership position in India

Significant Highlights:

The largest single foreign investment ever in the history of India

The largest investment in the Indian telecom sector

Bharti establishes its supremacy in the Indian telecom market, having

attracted Asias best SingTel, and now worlds best Vodafone.

Bharti set to gain global leadership in the telecom sector.

Bharti Enterprises continues to hold shareholding and management control

in Bharti Tele-Ventures.

New Delhi, October 28, 2005: The worlds leading mobile telecommunications
company, Vodafone Group Plc. (Vodafone) has secured around 10% interest in
Bharti Tele-Ventures Ltd. (BTVL), Indias largest private sector telecom company.

Vodafone, through Vodafone Mauritius Ltd., has contracted to subscribe shares in

Bharti Enterprises, giving it a beneficial stake in BTVL of 4.4%. In addition
Vodafone, through Vodafone International Holdings BV, has also picked up 5.65%
stake from Warburg Pincus, thereby taking the total beneficial interest in BTVL to
around 10%. Vodafone has made a total investment of approximately Rs. 6,700/crores (approximately USD 1.5 bn) to acquire around 10% interest in BTVL,
including the acquisition of shares held by Warburg Pincus. Bharti Enterprises
maintains a controlling interest of 45.9% in BTVL through its subsidiary, Bharti
Telecom Ltd. With the final sale of its stake, Warburg Pincus has now completely
exited its position in BTVL.

Commenting on this historic development in the Indian telecom market, Mr. Sunil
Bharti Mittal, Chairman & Group Managing Director of Bharti said We are
delighted that Vodafone has made a call on the Indian telecom sector and has
chosen BTVL to be the vehicle to develop its continued interest in the Asian
region. Bharti has had the privilege of tying up with best in class, blue chip
companies, from around the world who have come and joined hands with Bharti, at
different stages, to develop the telecom sector in India. At the time when the
western world started hanging up on India, it brought in Asias telecom
powerhouse, SingTel, to replace Telecom Italia and British Telecom. SingTel
helped Bharti with the capital and strategy to grow from a mid-size telecom
operator into Indias largest telecom company. Warburg Pincus, making its second
largest investment in the history of the firm, supported the company in developing
the strategy and investor focus, in its public listing and in the process making
Bharti one of the best investments ever undertaken by Warburg Pincus around the
world. Today, when Bharti stands on the threshold of being an Asian telecom

powerhouse, it has tied up with Vodafone to take the company to the next level and
to support Bharti in achieving its vision of making Airtel the most admired brand
in India. Bharti is fortunate to have four strong pillars to achieve its vision. The
entrepreneurial leadership of Bharti Enterprises, the Asian telecom powerhouse
SingTel which will continue to be our leading partner, the worlds largest telecom
operator Vodafone and, the most important one, a world-class management
team.

Chief Executive Officer of Vodafone Group Plc., Mr. Arun Sarin, speaking on
the occasion, said I am delighted to announce this strategic partnership with
BTVL, the leading national mobile operator in India. Together we will take this
venture to a new level as clear leader in this market. We are entering a relationship
with a major company, which shares our vision and values and understands, as we
do, the enormous potential of mobile telephony in society. This transaction is
consistent with Vodafone's strategy of developing our global footprint in growth
markets, where we can create value for shareholders.

Chief Executive Officer of SingTel, Mr. Lee Hsien Yang, speaking on the
occasion, said We entered into India through a partnership with Bharti Enterprises
at a time when many were skeptical about Indias telecom story. We are delighted
that Bharti, with SingTels support, has successfully executed its growth strategy.
Bhartis entrepreneurial spirit and innovative culture continue to drive the
companys growth. Today we are pleased to welcome Vodafone as our partner to
further develop the Indian telecom market and to take Bharti to greater success.

Commenting on the transaction, Warburg Pincus Co-President Chip Kaye said:

We are proud to have been part of one of the most compelling growth stories in
Indias history. Having invested in Bharti in 1999 and working closely along the
way with a world-class management team and a leader of the caliber of Sunil
Mittal, it is gratifying to see the company take this step toward its next phase of
growth. Dalip Pathak, the Warburg Pincus senior partner who oversees the firms
Indian investment portfolio, added: Bharti is now truly a world-class company
and as we depart, we wish the company well and are confident that it will continue
to attract interest from investors around the world.

About Bharti Televentures

Bharti Tele-Ventures is one of India's leading private sector provider of
telecommunications services with an aggregate of 15.13 million customers as of
end of September '05, consisting of approximately 14.07 million mobile customers.
The company is the only operator to provide mobile services in all the 23 circles in
India. The company also provides telephone services and Internet access over DSL
in 15 circles. The company complements its mobile, broadband & telephone
services with national and international long distance services. The company also
has a submarine cable landing station at Chennai, which connects the submarine
cable connecting Chennai and Singapore. The company provides reliable end-toend data and enterprise services to the corporate customers by leveraging its
nationwide fiber optic backbone, last mile connectivity in fixed-line and mobile
circles, VSATs, ISP and international bandwidth access through the gateways and
landing station.

Pricing Strategy of Vodafone and Airtel

Various tariff plans of Vodafone
(Prepaid):

Recharge cards
MRP
(Rs)

Access
Talktime Fee

Validity

Equivalent mins.

(Rs) (Days)

(Rs)
25

19.75

2.50

55

43.95

24

115

92.35

10

50

199

100

77.11

30

350

181.5

130

30

98

400

226

130

30

122

600

404

130

30

217

Various tariff plans of Airtel

50

(Prepaid)
Ppp
10

5.90

1.10

90

25

19.25

2.75

90

11

55

40.95

6.05

90

24

99

88.11

10.89

30 (Lifetime

90

90

54

125

96.25

15

13.75

Validity Offer)
0

200

103

75

22

30

90

52

345

177.05

130

37.95

30

90

90

390

217.10

130

42.90

30

90

111

590

395.10

130

64.90

30

90

202

1175

895.75

150

129.25

60

90

457

3500

2814.99

300

385.01

366

90

1433

11.22

30(Tariff Validity)

90

306

102

306(Local 90.78
A-A)

PRICING STRATEGY OF VODAFONE

At Introduction Stage of their operation in India:They are setting price because they have a new product, and they are
entering into a new market with an existing product.

How?
Penetration pricing.
Charging a low price when entering the market to capture market share.
Need to decide what position they want their product to be in.

Possible Pricing Objectives

Profit objectives e.g.
Targeted profit return: The main objective of every company is to
maximize profit from their investment in the business.
Volume objectives e.g.
Dollar or unit sales growth: One of the major objectives is to
concentrate towards the volume and sale of volume of the
product at a constant rate.

 Market share growth: Along with profit and sales maximization,

growth in market share is also a bigger part of the business for
the company.
Other objectives e.g.
Match competitors price:

One of the main objectives of

Vodafone at the recent time is to maintain parity price taking

care of the pricing strategy of the competitor companies.
Non-price competition: being a new company in Indian telecom.
Sector it is basically necessary to improve their image and
goodwill in the market with comparison to the image of the
competitors and that comes in non- price competition.

Demand Analysis as a part of pricing strategy

Measure the impact of price change on total revenue:At the initial stage of the company in the Indian origin, it is important
to find out that whether the pricing strategy of the company has any
impact on the customers or not. It is very much important to analyze
the demand of the product of the company by various levels of the
customer.
Predicts unit sales volume and total revenue for various price
levels:After setting the price, it became important for the company to forecast
the sales volume and total revenue needed for future.

Different customers have different price sensitivities and needs:It is important for the company to understand the fact that in India,
various customers have their different tastes and priorities. So, the
company is emphasizing on understanding the demand, taste and need
of the customers to standardize the products of the company .

Impact of other factors over the pricing strategy of

Vodafone
Customers ability & willingness to buy:
The ability and willingness of the customers has a great impact over
the demand of the product which in turn influence the pricing strategy
of Vodafone.
Customer lifestyle:
Pricing strategy of Vodafone greatly varies as per the lifestyle as well
as location of the services of the company.
Benefits sought:
Where there is benefit, customers run towards it. So Vodafone is trying
to serve maximum benefits to the customers in the form of various
schemes both postpaid and prepaid.
Characteristics of the product :To fight with the competitors, the
company is trying to add maximum characteristics to each product.30

PRICING STRATEGY OF AIRTEL

Skimming pricing
Charging a high price initially and reducing the price over time:Airtel has reduced the price of its starter pack in the prepaid segment
in Chennai. It will offer a student prepaid starter pack at Rs 149 cost
reduced from Rs 224.
One time when Airtel was a leader in telecomm sector, it had high costs
of its product but after the entrance of various other competitors in the
market, it significantly reduced its price of the product which has major
impact over the services of their product.

Maintaining Quality
By maintaining quality of their products and services they became able
to maintain their introducing price over a long time.

Positioning Airtel as an aspiration and lifestyle brand

The target customer was clearly defined: elite, up market professionals
and entrepreneurs. They became able to position Airtel as an
aspiration and lifestyle brand, in a way that trivialized the price in the
mind of the consumer. It was pitched not merely as a mobile service,
but as something that gave him a badge value. In a service industry like
telecom, people live a brand 24X7. It's all about experience; and for
Airtel 'brand=customer experience.

Price-Flexibility Strategy
Flexible-price policysetting different prices in different markets
based on:
Geographic Location:- Airtel is trying to put price flexibility as per
Location.
Time of delivery:- Delivery of services matters a lot to improve image
of the company, so Airtel believes in providing correct product at
correct time.
The complexity of the product:- Pricing of Airtel also depends on the
complexibility of its product and span of availability.

METHODOLOGY

Target population

People subscribing services of Vodafone/ Airtel

Type of sampling

Convenient Sampling and Hypothesis testing

Sample size

100

Due to time and accessibility constraints sampling was adopted and the sample size
was limited to 100.
1) Interacting with people who use to subscribe the mobile services of
Vodafone and Airtel, to have their view.
2) Prepare a questionnaire and getting it approved by faculty guide and get it
filled by visiting customers and with whom the meeting takes place.
3) The analysis of the data collected through questionnaire has been done with
the help of the results derived from MS-Excel.
4) Reference to secondary sources of information which include study of
relevant books, magazines etc., and use of literature from Internet (articles,
surveys etc.)

5) Discussion with faculty guide and professionals has been undertaken. Based
on the interactions, secondary and primary research, the analysis and
recommendations has been made.
6) Putting hypothesis on the basis of views of customers and to perceive the
realty about the assumption taken in context to study the comparative
analysis of pricing strategy of both the companies.

LIMITATIONS OF STUDY

The report does not take into consideration extraneous factors such as time
given by different interviewees for the interview and the attitude towards
answering specific questions such as categorizing of commission rate into
poor, good, average etc.
The report does not also include any provision for the change in attitude of
the respondents in future.
The report does not give a single full proof recommendation for improving
the product offering and advisory services to each and every potential as
well as existing customers.
Personality differences between respondents.
The persons surveyed may not give correct information as the data is

generally related with the financial gains of the person concerned.

ANALYSIS
Customers are more sensitive to price changes if the products cost a
lot and/or are bought frequently
Competitors may see each of price change as a fresh challenge and
react according to its self-interest at the time. Need to estimate each
close competitors likely reaction.
Both the companies trying to measure the impact of price change on
total revenue.
The Vodafone has an idea is to maximize the profits of the entire
organization rather than that of a single product or a single line

FINDINGS
Majority of the people has been subscribed to Airtel due to its various
value added features. Vodafone is a new company in India, so it needs
span of time to stand in that level.
Vodafone is trying its best to increase its market share through parity
pricing and penetration strategy. Its offering reduced price for the
products through various schemes to attract various levels of
customers. On the other hand Airtel which had fixed and high strategy
of pricing, also trying to reduce its cost to expand the level of
customers.
Vodafone is trying to expand its span through efficient promotion and
stimulated reduce pricing where as Airtel is trying to standardized its
services through flexible rating at various locations of India.

CONCLUSIONS

Airtel seems to have consciously decided to go for the belly of the

market and aggressive market expansion, while Vodafone seems to be
pursuing a relatively more sophisticated consumer. There isn't a great
deal of differentiation in terms of pricing, services, schemes and so on,
but there are differences in approach. Overall, AirTel is focused on
functionality and efficiency, while Vodafone has veered towards
warmth and emotions.

RECOMMENDATIONS
As majority of people were aware of Hutch, but after acquisition by
Vodafone, Vodafone needs to evolve through its balanced pricing
strategy.

It should try to attract customers by offering flexible pricing. On the

other hand Airtel is already a established company with a big
expansion. But to stand the competitions from the companies, it
needs to reduce its price to come more close to the customers.

Electronic media/Hoardings are the major medium which attract

majority of people towards the company. So company should focus
on these two medium to attract more and more people towards the
company.

People of young age attract more towards the new offers provided
by the company. So the companies should focus more on youths
segments.

 Company should also concentrate more on quality of services to

grab major segments.

To understand the customers and their requirements, they should go

for market research after every duration of time.

BIBLIOGRAPHY
Websites: www.bharti.com
www.vodafone.com
www.google.com
www.Wikipedia.com
Magazines:-

Business world
Books:-

Marketing Strategies (Sudhir Chawla)

Research Methodology (C.R Kothari)
Marketing Management (Philip Kotler)

QUESTIONNAIRE
Dear Sir/Madam,
I Amit kumar gupta student of BMS of CLARAS COLLEGE OF
COMMERCE I am doing my project on Comparative analysis of pricing
decision -policies of Vodafone and Airtel. Please give your precious time for
filling these details.
Q.1 Name those companies which provide telecom services now a days?

Airtel

Vodafone

Reliance

TATA

INTERPRETATION : AIRTEL 25%

:VODAFONE 35%
:RELIANCE 20%
:TATA 20%

Q.2 Which mobile company services you using now a days

Q. 3 Among them, which Brand you, prefer most?

Airtel

Vodafone

Reliance

TATA

Idea

Q.4 How long you have been using this Product?

0-2 Years

2-5 Years

5-10 Years

More than 10

Q.5Are you using other product instead of Airtel?

Yes

No

Q.6 Do you collect any information search before making purchase?

Yes

No

Q.7

What are the features you look for in a product before making purchase

decision? Give preferences (1-Highest, 6- least)

Brand credibility

Price and Discount

After sales services and parts, network

Value for money

Vehicle performance

Add on features or ergonomics of design

Q.8

If you have to purchase a new connection or product in near future, which

Brand will you go for and why?

_________________________________________________
_________________________________________________
_________________________________________________

Q.9

Are you aware of various promotional activities being run by Airtel,

then how? Are you satisfied with these promotional activities?

Very Satisfied

Satisfied

Somewhat Satisfied

Customer Care

By Ad Films

By Camp

24 hrs call center services

Not satisfied

if yes

Q.10 How would you rate Airtel performance as your expectation on 5 points
scale (5 Highest?)
1

After Sale service

Maintenance

Product as per expectation

Q.11 What are you suggestions for improving the product quality, service
availability and parts availability?
__________________________________________________________________
__________________________________________________________________
________________________________________________________________