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Let’s continue the discussion from the previous post. The continued rapid growth of the mobile subscriber base in India presents a variety of management challenges, and as an observer, it is sometimes visible which company’s management is performing better.

So far, Airtel and Vodafone have been engaged in a battle of Call Rates, Lifetime validity schemes, Recharge Coupons, everything to do with a financial benefit to the consumer. Here are a few interesting facts, from the International Data Corp(IDC) survey conducted on the ‘Mobile Service Usage and Satisfaction’:

• The average waiting time to speak to a customer support agent is a little below three minutes.
• When probed on billing, nearly one in every six (18 per cent) mobile users was dissatisfied with the billing system of his/her service provider. This is way off the TRAI guideline that billing errors should be less than 0.1 per cent.
• More than half the users with a billing related problem perceive ‘wrong amount being charged by the operator’ as the prime reason for dissatisfaction.

All these refer to Customer Service problems.

Let’s draw an analogy here: Mobil Oil was in a price war for long at its US Refueling Stations. Mobil’s management always considered price as the single most important criterion for a customer to walk into a station. In a market survey conducted in the 90’s they realized that 80% of its customers had customer service as top priority, and only 20% wanted price to be a factor. Mobil then went into a major program to reorganize a Refueling Station into a more customer-friendly place.

They contacted a Formula 1 team for speed in refueling, and to understand how the team in a Pit Stop worked so well together. They visited Ritz Carlton Hotels to get more know how on how to treat a customer better, and lastly visited Home Depot- a specialty US retailer, to understand how to build long term relations with customers.

On the face of it, an oil company has nothing to do with any of the 3 companies just mentioned, but within a year of making changes, customer satisfaction rating went above 95%. Just imagine!

Now even the Indian mobile carriers want the same high levels of customer loyalty – but don’t seem to be taking specific steps to make it happen. If some action is already being taken, then it’s weak and not visible. After all, given the pending number portability policy that will be implemented it seems logical for the companies to make every effort to hold on to existing customers.

And for these reasons, the biggest opportunity for any Mobile Wireless Carrier in India today is in building a better Customer Service Infrastructure. As surveys worldwide have shown, it’s 5 to 10 times more expensive to get a new customer than to keep an existing one - Business Management 101!

About the Author: Ishan Sethi is a Sales & Marketing professional with keen interest in emerging sectors and India business opportunities. He is an alumnus of Indraprastha University and IIM Lucknow. He can be reached via the Contact page.

5.5 million new customers are subscribing to a mobile connection each month in India. At the end of December 2006, the number had reached 150 million subscribers. According to a research agency iSuppli Corp, the subscriber base will triple by 2010 and reach close to 480 million, thanks to rural penetration of the mobile carriers.

With such a huge market to capture, the pie seems big enough for all wireless carriers. This leaves little incentive for any mobile carrier to try and distinguish themselves from the others, since with increasing consumer base; the revenues are bound to come.

But from a marketers’ perspective, here’s the big challenge: “Should we allow the market to grow in their natural course? Or should we do something to develop the market and pull ahead from the rest of the pack?”

In the International Data Corp(IDC) survey conducted on the ‘Mobile Service Usage and Satisfaction’ only 3 among the 11 mobile service providers emerged as the most preferred operators – Airtel, Vodafone and BPL Cellular. While Airtel and Vodafone are two national brands, their marketing strategies are quite different. 

While Vodafone (or Hutch) has maintained a classy positioning, beginning with the “Hi! We’re Hutch” ad campaign, to the cute puppy following you around, Airtel has forever been the Indian brand appealing to the masses, with bollywood icons like SRK and AR Rahman.

But today, it doesn’t matter. As per the survey results as many as 28 per cent of users shift services, even if they were satisfied with their present provider — lured by an even better service or (more likely) by special offers! So this is looks like one example of where all the brand positioning effort is not helping out.

About the Author: Ishan Sethi is a Sales & Marketing professional with keen interest in emerging sectors and India business opportunities. He is an alumnus of Indraprastha University and IIM Lucknow. He can be reached via the Contact page.

Innovation remains a key business growth driver and companies worldwide are pouring in millions of dollars each year to stay ahead of the global competition. There is growing evidence to show that the more a company spends on R&D, the better they tend to perform on sales and profit growth. The UK Department of Trade and Industry started a project for making an R&D scoreboard in 1991, with the belief that British Companies were suffering from under-investment in Science and Technology. Today they give scores to a Global top 1250 companies (referred to as G1250).

An example of the benefits of R&D spending for share prices is the performance of the Scoreboard’s “R&D Portfolio”, comprised of companies in the FTSE100 on the London Stock Exchange that spend more than 4% on R&D. Since August 1997, the portfolio has increased in value by 73%, while the FTSE100 has risen only by 16%.

While global R&D spend by G1250 rose by 10% to £244 billion (or nearly $500 billion), it is dominated by companies from just five countries – USA, Japan, Germany, France and UK – which contributed 81% of R&D by the G1250. Firms from India and China have yet to establish themselves as significant players in the G1250, although both countries are increasingly important locations for R&D outsourcing. The pharmaceutical sector has replaced the technology hardware sector as the largest global R&D sector. Pfizer is the global leader in R&D spend, replacing Ford Motors as the highest spender on R&D from 2002. The top 10 list has 4 Automobile Companies (Ford, DaimlerChrysler, Toyota and GM) and 3 Pharmaceutical companies (Pfizer, J&J and GSK). Apart from interchanging positions, the top 10 spenders remained more or less the same.

Talking specifically about Indian business: in 2006, only 3 Indian companies made it to the Global top 1250 – Ranbaxy, Dr. Reddy’s and Tata Motors. Infosys, Wipro and Biocon had not even made it to the cut off limit ($33 million) for the G1250 in 2006. In 2007, 9 Indian companies made it to the list, with Tata Motors as the top Indian Company at 91^st place in the G1250 with a net R&D spend of £92 million ($180 million). Mahindra & Mahindra, Ranbaxy, Dr. Reddy’s, Sun Pharmaceuticals, KPIT Cummins Infosystems and Mindtree Consulting were the other Indian Companies to make it to the G1250. Tata Iron & Steel Co. with the acquisition of Corus, and Hindalco thanks to Novelis also appeared on the scoreboard.

The Indian list leader, Tata Motors, has increased its R&D expenditure both in volume and as a percentage of revenue and the profits have been growing at an excellent pace. And with Tata Motors devoting further R&D to the dream project of the Rs. 100k ($2.5k) car, both topline and bottomline should go up.

With an ever-growing middle-class consumer base, India is now in a position to create its own profitable innovations. But then innovation just doesn’t happen because you have a billion of cash in bank. Innovation needs executive level commitment to identify a profitable niche and go for it, and be willing to take the risk of failure at the first attempt. Just like Tata Motors is trying out a low cost car, what prevents Reliance Telecom/ Airtel from creating a very low cost mobile device with an Internet connection (agreed Reliance made a start with low cost handsets in 2002, but a lot more is possible today)? What prevents Wipro from creating the lowest cost laptop? Nothing really.

About the Author: Ishan Sethi is a Sales & Marketing professional with keen interest in emerging sectors and India business opportunities. He is an alumnus of Indraprastha University and IIM Lucknow. He can be reached via the Contact page.

India has more than 209 million mobile users as of September 2007. Mobile has become the medium of choice for a nation where the mobile can reach even the most remote of the areas without requirement of huge investment. Though mobile penetration in developed countries is more then in India, the medium has more importance in India due to lack of alternatives in large parts of the country. Hence my effort to list couple of new things that adds to the usage to mobile phones by users.

Though we will be focusing on some of the new services that can be offered by the mobile phones, it is important to remember that market for the basic services is still enormous in terms of absolute numbers. Telecom companies still need to have their primary focus on basic market to achieve the growth. Out of total population of more than 1.2 billion, still less than 250 million people have access to telephones. Considering that McKinsey Global Institute predicts that more then 500 million will be moving up the value chain in next 20 years, all of them are going to join the bandwagon.

Moving on to usage patterns of the mobile phones in India, we find that it is predominantly voice. The online survey “Anytime Anyplace” conducted by Lodestar universal predicts that currently only 10% of total revenue is from data while rest is from voice. From a report in Hindustan Times, “the mobile data earnings are estimated at INR 63 billion out of which entertainment segment accounts for INR 15 billion. Also, the report predicts that around 31 million mobile subscribers use internet over mobile. All the mobile companies are already focusing on increasing the number of users who use internet over mobile as well as entertainment services. For entertainment services, the focus is on enticing users to increasingly use mobile as a MP3 player and download songs from the web shop.

More interesting perhaps are the new initiatives that are just beginning to take shape. First of them is the use of mobile for retail banking. One of the leading wireless telecom companies in India- Airtel has already established a partnership with State Bank of India SBI in India to pilot a project where mobiles can be used to send and receive money.

Due to the limited reach of banking channels, especially in rural parts of India, this can be a really interesting service. If the mobile companies are able to take this even further & develop a channel where people can pay their bills by using mobiles as well, I see no reason why mobiles cannot act as proxy debit cards in most of India.

Another interesting development is the announcement by Nokia that Ovi, their internet service will be available for Indian users. Part of this package is Nokia Maps. India does not have a good map system and this application will be an instant hit with the users. I remember using the cell info feature when in new locations to see where I was. Similarly people will use maps. If this service can be successfully coupled with advertisement, similar to what Google maps is on Internet, this can be a really powerful way of advertisement for local businesses. There is tremendous commercial potential for both advertisers and telecom companies. By the way, this is also the reason why Google is so interested to develop its own mobile operating system.

To sum it up, the mobiles are surely being transformed into an complete information source rather than just a phone for most Indians and there are solid business opportunities around it. Mobile payments and advertisement through maps are just two of them that can take off at a phenomenal pace.

The two giant Asian economies are competing on every front to be the biggest one in the world. One significant aspect of this race lies in E-Commerce. Both these economies are expected to have more Internet users than the U.S. by 2010.

While India got its first taste of Internet in 1986, establishing ERNET, China got Internet connectivity as late as 1993. But within one year it had 3.5 times as many Internet users as India. Despite the huge difference in numbers, the Economist Intelligence Unit (EIU) puts India in the group of “E-business followers” and China in the group of “E-business laggards”. The most apparent reasons for this difference are the government policies. China has only one guarded access to the World Wide Web. Internet users cannot access a range of foreign web sites. Domestic web sites are checked at the source through a registration process and content monitoring. This has hampered adoption of the Internet for a variety of commercial uses.

In India, on the other hand, while the government has been criticized for its late awakening to cyber laws, the initial un-monitored period proved a boon for E-Commerce. Though post 2000, India has taken measures to keep a check on the happenings on the Internet. A report by the Electronic Privacy Information Center (EPIC) discusses Indian government’s efforts to compel users to disclose keys or decrypted files to government agencies. Also, India’s IT Bill has a special section on offences dealing with the publication or transmission of “obscene material”.

Table 1: Relative advantages and disadvantages of China and India in Internet Development

Factors such as larger population, higher per capita GDP, indigenously produced IT products, well-developed data network, and higher international bandwidth make Chinese market more attractive for several e-commerce applications. The penetration rates of mobile and broadband technologies in China. In particular, China has a bigger market for applications such as stock trading and financial transactions. China’s recent entry in the WTO has further increased its telecom and Internet development potential. However, unlike India, China does not yet have formal laws to govern e-commerce transactions and companies have to rely on conventional laws in case of disputes.

On the other hand, availability of 50 million intelligent English speaking workforce at cheap rates, a large proportion of that being computer literate, make India an attractive place for outsourcing. Companies located in developed countries can significantly reduce their operating costs by employing Indian tele-workers in less critical steps of the value chain such as back-office services as well as in higher value-added services such as design and engineering and education. The upcoming bandwidth boom in India will further increase the tele-working potential by enhancing the quality of telecom services.

Since a large proportion of Chinese view information written in Chinese language, the best way to target Chinese Internet users is to provide content in Chinese language. Whereas about 50 million of Indians are fluent in English, remaining 950 million speak more than 500 different local dialects and the success of a company is a function of its ability to identify the linguistic segments that can be served profitably. But for any company looking to enter, it does put India at a severe disadvantage.

Unlike in western countries, most of the transactions in China and India are conducted on cash basis and thus e-commerce companies are required to provide alternatives such as cash on delivery, wire transfers and checks to facilitate e-commerce. This is quite different from the west, where plastic money has been in use for long, and online transactions have more or less been accepted as safe.

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• About

  Facts, trends, and insights on Indian business contributed by business executives of Indian origin working worldwide. In addition to India business environment, we will also cover India business opportunity. So whether you are an Indian company wanting to go global, or a foreign investor seeking India business opportunities, our insights will help you. You are welcome to contact us with your views and projects.