Ringing in a Revolution
Bharti Airtel Limited is today one of Asia’s leading integrated telecom service providers, boasting of operations in close to 19 countries. It has recently expanded its reach to the African continent through its acquisition of Kuwait’s Zain Telecom’s African operations for 10.7 billion USD.1 This was one of the largest outbound acquisitions by Indian companies ever. An earlier acquisition in Bangladesh had helped the country gain a foothold in India’s eastern neighbour as well. The company states that right since its inception, it has been at the forefront of technology and has pioneered several innovations in the telecom sector.2
The ever-expanding company is today structured into four strategic business units:
- Digital TV
The mobile business today has reportedly close to 200 million subscribers in Asia and Africa. The telemedia business provides broadband, IPTV and telephone services in nearly 100 Indian cities. The digital TV business provides direct-to-home TV services across India. The enterprise business caters mainly to corporate clients and national and international long-distance services to telecom companies.3
Bharti Airtel is itself part of Bharti Enterprises, today one of India’s major business houses that operates in the following sectors:
- Financial services, where it has a tie-up with the insurance major AXA
- Retail, through its partnership with one of the world’s largest companies, WalMart
- Fresh and processed foods
- Real estate
The company states that all these businesses have a common underlying principle: ‘To create businesses that are transformational and have a deep impact on society’ (Source: http://www.airtel.in/).4 However, how did all this begin? Let us take a look back in time.
Like many other Indian firms, the brand Airtel had humble beginnings. While today the brand name is closely associated with the telecom sector and use of technology, the original business of the Bhartis was far removed from what it is today. The company started off as a small bicycle-parts business in the 1970s, owned by Sunil Bharti Mittal.
It would be several years before this bicycle-parts maker decided to venture into the nascent telecom market in 1985. Mittal took his company tentatively into the telecom business, establishing Bharti Telecom Limited (BTL), which manufactured equipment used in land-land telephones. The growth of the telecom sector, in part due to the thoughtful policies of technocrat Sam Pitroda, was one of the factors attributed to BTL’s growth. Early on itself, Sunil Mittal demonstrated his ability to move with the times and be in sync with the latest technological trends. Realizing that the old ‘round-dial’ telephones were on their way out, BTL entered into a technical collaboration with the well-known German engineering firm, Siemens, for manufacturing electronic push-button telephones. In addition, BTL also inked an agreement with a Japanese firm to manufacture telephone answering machines. Bharti, thus, demonstrated an ability to form the right kind of collaborations and the flexibility that is so necessary for any entrepreneur to be successful in changing times. In later years, these abilities would be crucial to Bharti’s success in the Indian market.
It was only a little later, however, that the company began its rapid expansion in the telecom sector. Bharti Tele-Ventures began to offer a suite of telecom services, including the conventional land-line telephones, the new-age cellular services, VSAT and even Internet services. The company was organized into four subsidiaries: Bharti Cellular Ltd (which, as the name suggests, provided cellular services), Bharti Telenet Ltd (access services), Bharti Telesonic Ltd (long-distance services) and Bharti Broadband Networks Ltd (broadband connectivity). The company established separate, distinct brands for its various services: Airtel in the cellular telephony market, Mantra for Internet services and Beetel for fixed-line telephone instruments.
The company relied on both organic and inorganic growth for its expansion. The cellular story began in Delhi, the first circle where the company launched its services in 1995. As and when new licenses were on offer, the company expanded into other telecom circles.5 Acquisitions were very much part of its strategy, and this was in part due to the stipulations then in force in the Indian market capping the number of mobile service providers in each circle. Accordingly, acquisitions were perhaps the easiest way of breaking new ground; and Bharti acquired companies such as SkyCell (Chennai), Spice Cell (Kolkata) and JT Mobile (Andhra Pradesh and Karnataka). Believing in the theory of ‘collaborate and compete’, Bharti entered into agreements with BPL to gain access in circles such as Mumbai, Maharashtra, Chennai, Delhi, Kerala, Tamil Nadu, Andhra Pradesh and Karnataka.
The company brand was soon recognized almost across the country and acquired the highest market share. What had made this possible? Sunil Mittal’s entrepreneurial abilities of being flexible, nimble and forging the right kind of alliances helped. When the company was in need of funds and technology, it obtained them through strategic stake sales. For example, in 1996, STET International Netherlands NV, a company promoted by Telecom Italia, acquired a 20 per cent equity interest in Bharti Tele-Ventures; in 1997, British Telecom was to acquire a 21.05 per cent equity interest in Bharti Cellular (Bharti Telecom and British Telecom later formed two 51:49 per cent joint ventures, Bharti BT and Bharti BT Internet, for providing VSAT services and Internet services, respectively); in 1999, Warburg Pincus acquired a 19.05 per cent equity interest in Bharti Tele-Ventures that it later sold at a substantial profit; in 2000, SingTel acquired then STET’s equity interest in Bharti Tele-Ventures.6
Such investments provided the impetus for both rapid expansions into new markets and the ability to undertake technological upgrades, whenever appropriate. Outsourcing of certain activities was another pillar of Bharti’s strategy.7
However, the major issue facing the company was reaching out to the customers. In the initial stages, the cost of cellular telephony was far too high to create a mass market. Per-minute call charges were far higher than the ordinary public could afford, given the general per capita income then prevalent in the country—call charges were an astronomical Rs. 16 a minute! Even a single 2- to 3-minute phone call per day would possibly hit the family budget. In addition, the consumers had to pay for both outgoing and incoming calls, meaning that consumers had less control than they would have liked over the recurring costs of owning a mobile phone.
It was soon clear that the company would need to be extremely marketing savvy. It would have to go the extra mile to attract consumers. Even if actual purchases of telecom services would still be low in the near term, it was necessary to create a buzz and even an aspirational need for cellular telephony. Sunil Bharti Mittal understood that the simple telephone could easily change the face of the country, as the market gradually evolved and costs decreased. After all, a mobile phone offered several benefits over the traditional fixed-line one.
Given the current stage of the market, the following questions arise:
- What should Bharti do given the current stage of the market? What should its strategy be?
- How could the company encourage the adoption of a relatively new technology?
- Which consumer segment could it target?
- How could the brand position itself?
CASE RESOLUTION: HOW BHARTI EXPANDED IN THE MARKET
The company realized the need to reach out to the consumers across different formats. Given that the cellular technology in the country was still nascent and many people had not had any prior experience of handling or using cellular phones, the company realized the need to allow the consumers to ‘touch-and-feel’ its product. Accordingly, despite the overhead costs involved, Bharti was possibly the first cellular operator to set up showrooms in cities across the country. For the Indian public, hitherto used to the staid services offered by the public sector undertakings—BSNL and MTNL (the latter in Mumbai and Delhi)—the presence of showrooms was an innovation, where people could ask questions about, better understand and virtually ‘sample’ the services offered. The showrooms were branded as ‘Airtel Connect’; the first one was opened in Delhi, in the mid-1990s.
Airtel Connect aimed at being a one-stop shop for the consumers as far as mobile telephony was concerned. Consumers could look at various handset models and purchase handsets, get new prepaid and postpaid connections, subscribe to various value-added services and pay their mobile bills.
Another initiative the company took was to provide bang for the customers’ buck. The company realized that it needed to provide an enhanced suite of offerings compared to what the customers were used to, in part due to substantially high costs associated with cellular telephony. One of the benefits offered by cellular telephony was that the customers could stay ‘always connected’. However, what when consumers were travelling outside their city of residence? Accordingly, Bharti became the first firm to offer roaming services, and in addition, other services such as call hold, call waiting and information services were provided.
The company also aimed at enhancing customers’ experience once they had made their initial purchase. This was needed to ensure positive word-of-mouth feedback. The company correctly understood that the successful dissemination of new technologies involves the ‘early adopters’ to convince others and become role models for others. Bharti launched an Internet-accessible e-commerce portal that enabled customers to make online payments. It also provided information regarding features of handsets manufactured by various companies and cellular services. Various surveys indicated that almost half of the new subscribers bought a mobile service brand after receiving recommendations from their friends, family, etc.
Bharti adopted a clever positioning strategy. Realizing that at the current cost levels, it was virtually impossible to reach out to the mass market, it decided to position its services so as to create an aspirational value. The thinking seemed that at the current stage, the relatively affluent and privileged class might be the primary market, but as the market evolved, more and more people would start using the services due to the aspirational value associated with cellular telephony.
This led to the launch of the ‘Leadership Series’ campaign. The campaign centred on featuring men and women who would portray an image of ‘having made it’ in life and serve as role models for others. Accordingly, people sitting in high-end cars, carrying laptops or other electronics were featured and depicted as using cellular phones. The company was clearly aiming at creating an aspirational brand value: not everyone could use cell phones presently, but the successful ones did.
Bharti did make a mark with its marketing campaign. Surveys revealed that the brand Airtel came to be associated with positive attributes such as dynamism, performance and success.
However, it was not too long before another side of the campaign came to the fore. As some professionals often say, the success of any advertising campaign should be measured not just by the buzz or ‘noise’ it creates but by the actual increase in sales and customer acquisition. Unfortunately, although many people did notice the advertising campaign, the latter did not seem to be happening.
This phase was also marked by a change in market dynamics. The level of competition in the sector gradually intensified, particularly after the government facilitated a reduction in the costs involved in providing cellular telephony and a consequent decrease in tariff rates. Essar emerged as a major competitor of Airtel and began offering tariff plans, schemes and services that were identical to that of Airtel. Airtel soon noticed that Essar was eating into its market share and revenues. What was happening?
Bharti decided that it was time to get into the mind of the consumers. After all, it was Bharti that had played such a major role in the evolution of the market, having so many ‘firsts’ to its credit. Did not the customer identify with the brand? Why were consumers drifting towards competition? Perhaps the change in market dynamics meant that cellular telephony was now in the reach of a larger set of people, not just a privileged few. Was Bharti adapting itself to this trend?
A number of surveys were conducted. The marketing research initiatives revealed that while the ‘leadership’ theme had indeed been noticed, but people did not seem to ‘connect’ with it. The brand had acquired a feeling of being efficient and superior, yet perhaps cold and distant. An executive of a well-known advertising agency associated with several successful campaigns made a telling comment: ‘The brand had become something like Lufthansa—cold and efficient’. People in India wanted something more down-to-earth, warm and personal.
It was time to undergo a course correction. The brand values had to be ‘emotionalized’ and ‘humanized’. At the same time, Bharti understood the need to maintain some continuity and consistency; not doing so would confuse the consumers as to what the brand really stood for. After considerable thought, a new brand campaign was launched: the ‘Touch Tomorrow’ campaign.
The very wording of the new campaign seemed to bring together the two facets that Bharti wished to communicate. The word ‘touch’ lent it a feeling of closeness, being personal, and providing an emotional connect, whereas the word ‘tomorrow’ communicated a futuristic brand, technologically ahead of its competitors. The overall communication stressed the fact that people could experience the future, but it was now up close and more personal.
The new advertisements then featured more ordinary people—people using a cellular phone were not in an isolated car or office cabin but around friends and family members. Cellular phones could be used not only for business discussions but also for keeping in touch with the near and dear. New features that mobile telephony had brought in facilitated SMS, roaming when on travel and staying in touch with your family even while travelling. Thus, the ‘bonding and relationship angle’ was highlighted, making the brand appear more sensitive.
Along with the advertising campaign, changes in the design of the logo were also done, in line with the new brand message. The tagline ‘touch tomorrow’ was placed below the brand name to convey a warm and an informal style.
Airtel concurrently made a shift in its positioning. In line with the fact that its services were now available in an ever-increasing number of circles, it aimed at reaching out to people in the socioeconomic classification (SEC) B category as well.
The Airtel Connect centres underwent a major revamp. Bharti focused on the ‘tomorrow’ concept as a guideline for this revamp, aiming at giving a modern and contemporary look to the centres, using e-kiosks, attractive facades and collateral material. At the same time, the ‘touch’ theme was addressed through the colour scheme—the coordination of red, black and white provided a soft yet classy look.
Not wanting to lose its focus on some of the other brands in its portfolio, the company opted for a three-tier brand architecture—each service would be given its own brand name, while remaining under the ‘umbrella’ brand.
The fixed-line telephony service was brought under the Touchtel brand, whereas the national longdistance service was under the ‘IndiaOne’ brand. This highlighted that one could call anyone in the country at affordable rates—the whole country was unified through telecom services. For cellular services, the Airtel brand and Magic (for prepaid services) were used. The company seemed to have taken the view that regional sub-brands would better reflect customer needs in various parts of the country and people would identify more closely with them.
Bharti aimed at reaching out to specific targeted customer segments. It realized that given the prevalent attitudes towards cellular telephony in the country, the aspirational aims of certain classes, and the fact that certain customer segments might better appreciate some of the services that the brand offered, the company decided to target the youth specifically. This was done using tariff plans with features that particularly targeted the younger-age population. Cell phones had now become accessible to teenagers; indeed, in terms of talk time, teenagers were one of the largest segments of users and provided a large potential user base. Besides, as the old adage goes, companies must aim to ‘catch them young’. A satisfied user might remain a brand-loyal customer for life. Also, there was an added advantage that the youth often recommended such services to their friends, and peer pressure played a role in influencing the choice that Airtel’s young customers made.
The new marketing plans marked a deviation from Airtel’s earlier positioning as a brand for older, successful people, who were associated with power. Recognizing the fact that the youth loved to chat to their friends at odd hours of the day, the new tariff plans offered considerably lower rates for night-time usage, when traffic on the network was lower.
Other features to entice the youth were very much part of the new plans. A special portal, in which the young could buy or bid for goods, was made available. Music download facilities, ringtones and SMS (such as cricket updates) were now available at lower rates. Bharti was soon the obvious market leader across the country as well as in most of the circles it operated in. The Touch Tomorrow campaign had done its job, most agreed.
STAYING AHEAD: A NEW ADVERTISING CAMPAIGN
Surprisingly, therefore, the company decided to come up with a new campaign, in spite of its seeming success. What prompted this? Perhaps the need to remain ‘ahead of the curve’ and be proactive, rather than merely responding to feedback as before. After all, the company did not wish to be caught napping as the market continued to evolve!
Bharti decided to launch a new campaign. This was accompanied by a change in the logo as well, aimed at giving the brand a younger look. The new design and colours now symbolized energy, dynamism and friendliness.
A new brand architecture, centering on just two heads this time, was also initiated. These heads would be simple: the wire-line service and the wireless (cellular telephony) one. All the wireless products would be under the Airtel brand.
The new brand campaign this time was around celebrity endorsement and music. The company decided to use A. R. Rahman, the famous music composer, to promote the brand. Done at the time before Rahman attained the fame that he later did, the move was slightly unusual, as it chose not to use the services of more conventional celebrity endorsers such as cricketers or film stars. In addition, the company seemed to have tapped correctly into the psyche of the Indian consumers, whose love for music is well known. Several market research into successful advertisements in the Indian market have revealed that the Indian consumers love the use of music and jingles in advertisements.
The campaign attracted considerable praise. A. R. Rahman was not known for doing television commercials before this. The other point was the carrot that Bharti had reportedly offered, as much as Rs.10 million for the campaign, a massive sum in those days for an advertisement. Bharti also offered five exclusive symphonies that could be downloaded as ring tones by consumers of the brand. Highlighting the message that the brand was targeting the youth, the brand’s tagline was amended to ‘Live Every Moment’—clearly a youth-centric message.
FURTHER EXERCISE: WHAT SHOULD BE BHARTI’s STRATEGY TODAY?
Now, the company is structured into four strategic business units: (1) mobile, (2) telemedia, (3) enterprise and (4) digital TV. The mobile business offers services in India, Sri Lanka and Bangladesh.8 The telemedia business provides broadband, IPTV and telephone services in about 90 Indian cities. The digital TV business provides direct-to-home TV services across the country. The enterprise business provides end-to-end telecom solutions to corporate customers and national and international long-distance services to telcos.
Bharti Airtel today offers GSM mobile services in all 23 telecom circles of India and has the highest customer base in the country. It also claims to be the world’s third-largest single-country mobile operator and sixth-largest integrated telecom operator. The company Web site reflects the brand’s current positioning with the words, ‘[T]he brand Airtel was born free, a force unleashed into the market with a relentless and unwavering determination to succeed. A spirit charged with energy, creativity and a team driven “to seize the day” with an ambition to become the most globally admired telecom service’ (Source: http://www.airtel.in/).9
The Indian cellular telephony market today offers a new set of challenges. Although the country continues to see large additions in its subscriber base, the market now is hypercompetitive. Several new players, including many international ones with deep pockets, have entered the market. Bharti is expected to gradually lose market share to the new incumbents and face new challenges to its position. In such a situation, some questions could be asked:
- Should Bharti again go in for a brand re-launch and re-position itself?
- Bharti has been active in international markets, making acquisitions in Bangladesh, Africa etc. Should the company adopt a common theme and branding for all the markets in which it is present or root its marketing and brand positioning in more local themes?
- Do you think that the targeting and positioning adopted by Bharti in India that resulted in its success can be replicated in other markets?
Table A2 Data on the Indian Telecom Market
|Telephone subscribers (wireless and landline)||∼706 million|
|Land lines||35.77 million|
|Cell phones||670.6 million|