A Shift from Product Orientation to Customer Orientation Bsnl- Bharat Sanchar Nigam Limited

A SHIFT FROM PRODUCT ORIENTATION TO CUSTOMER ORIENTATION BSNL- BHARAT SANCHAR NIGAM LIMITED INTRODUCTION- Alexander Graham Bell invented Telephone and he patented Telephone instrument in 1876. Indian Posts and Telegraphs department (P&T) was controlling the communication industry. In 1985, Indian P&T bifurcated into Department of Postal Service and Department of Telecommunication. After the corporatization of DoT in 2000, BSNL was formed.

The control of telephone system of Mumbai and Delhi came under MTNL- Mahanagar Telephone Nigam Limited and telephone system control of Calcutta along with other cities had been transferred to BSNL- Bharat Sanchar Nigam Limited. It had been enjoying monopoly during the socialist period of Indian economy because it was the only telecom service provider in the country. Due to this reason BSNL’s marketing strategy was product oriented. After the liberalization of Indian economy in 1991 the company faced competition for the first time. To be in the market, it had to become customer oriented.

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WHAT IS PRODUCT ORIENTATION? Product orientation is a management philosophy in which producers emphasize on production technique and unit cost reduction rather than customer needs and wants. In this technique producer believes that “Supply creates its own demand” i. e, “If somebody makes a product someone will want to buy it. ” WHAT IS CUSTOMER ORIENTATION? Customer orientation is a belief wherein customer needs and wants are the primary focus of an organization. Customer orientation emphasizes on listening to customers and building long-term relationships with the consumer. BSNL – PRODUCT ORIENTATION

Before liberalization, Government of India used to regulate telecommunication market and GOI restricted the involvement of foreign players. Though many technological developments took place in this regime, but due to heavy license fee for providing mobile services, the tariff rates were very high. A mobile handset was costing around Rs. 15000 and outgoing and incoming call rates were Rs. 16/minute and Rs. 8/minute respectively. Mobile services were confined to affluent. That’s why BSNL was enjoying a monopoly market and it had emerged as the 7th largest Telecom Operating Company in the world.

But BSNL didn’t care about its customer retention. There were faults in network and complaints of poor quality services. The average number of faults per 100 main lines per year in BSNL’s landline network was more than 150 where as world average was only 25. The customer had to use BSNL’s services, as there was no other option for them. ENTRY OF PRIVATE PLAYERS AND BSNL WAS LOSING CUSTOMERS In 1994, Government of India introduced National telecommunication Policy (NTP) to release monopoly of state owned DoT and VSNL. Foreign investors were eligible to hold 49% stake of the telecom industry.

In 1999, GOI introduced a new telecom policy (NTP99) and telecom industry migrated to a revenue sharing regime. The license fee of providing mobile service was reduced and there was reduction in call rates by 60%. GOI further liberalized local telecom services and assured foreign involvement in long distance. 20 telecommunication services for basic telephony and 18 circles for mobile telephony had been created. BSNL was at worse hit due to the emergence of foreign investor in Indian Telecom market. Indian mobile market was at a potential growth. Over 32 million handsets were sold in India.

Reduced call rates had enabled every common middle class family to afford a cell phone. As BSNL was a product-oriented company, it didn’t focus to retain its customer base. As a result, BSNL’s customer base was shrinking at an alarming rate. Due to delay in deploying new connections, there was 20% decline in customer-based growth rate in 2002 as compared to previous year. Moreover, during 2002, customers surrendered around 2. 5 million landline connections. This is because, before mobile services became popular, many people used to take more than one landline connection for their communication convenience.

But mobile communication made the second landline option needless. In addition to this, one of the major reasons behind surrendering landline connection was 1×6 rule introduced by Income Tax Department. Under this rule, many subscribers who were exempt from tax, had to file income tax return if they owned a telephone. Not only from the mobile service providers, BSNL was also facing tough competition from new private landline operators. Many of BSNL’s customers who were under OYT (Own Your Telephone) scheme switched to private player to recover there deposit as there was significant difference charged by BSNL compared to the private players.

All these situations BSNL could have controlled but it didn’t. STEPS TOWARDS CUSTOMER ORIENTATION AND FORAY IN CELLULAR SERVICES In 2000, mobile service has seen phenomenal growth. BSNL had to take step towards survival. It decided to launch its cellular service by April, 2002. But the launched delayed for few months. This resulted in loss of many prospective customer. CellOne (Post-paid) and Excel (Pre-paid) were launched in October, 2002. It was launched in two-phases. Within December, 2002 they launched the service in metro-cities and town in all the states and remaining areas were covered by December, 2003.

It was the biggest cellular services till then in terms of networking and thus BSNL roped around 350,000 customers within the first 2 months of launch. BSNL’S CUSTOMAR ORIENTED APPROACH &REVISED MARKETING STRATEGY To strengthen its position in telecom industry, BSNL had to revamp its strategy and shift towards market orientation. “We are completely revamping the sales and distribution network,” Kuldeep Goyal,Chairman and MD,BSNL said. To have a competitive advantage, BSNL became more customer-focused. Acquiring customer is not sufficient but retention of customer is also equally important for company’s profitability and growth.

They introduced 7 P’s of service marketing in their marketing strategy. These P’s are product, price, place, promotion, physical evidence, people and process. COMPARISON OF P’S- PRODUCT Vs CUSTOMER ORIENTATION PRODUCT ORIENTATIONCUSTOMER ORIENTATION PRODUCT-Narrow Only Fixed LandLine. PRODUCT-Diversified •Universal Telecom Services- Fixed wireline services called ‘bfone’ and WLL (Wireless in Local Loop) using CDMA technology called ‘Tarang’. •Cellular Mobile Telephone Services- GSM Cellular service provider as CellOne (Post-paid) and Excel (Pre-paid). To built brand equity, BSNL re-branded its cellular services as BSNL Mobile. Internet – Dial-up connection internet services provided as ‘Sancharnet’(pre-paid) and ‘NetOne’(Post-paid). It also provides ADSL Broadband service for internet. 2007 was “Year of Broadband” in India. BSNL has around 50% market share in broadband in India. •Intelligent Network (IN) – Televoting, toll-free calling, premium calling etc. •3G- 3rd Generation service that facilitate video calling etc. •IPTV – ‘Internet Protocol Television’ facility that enable subscriber to watch TV through internet. •FTTH- ‘Fibre To The Home’ facility. It provides higher bandwidth for data transfer. BSNL has also launched an Entertainment Portal named ‘BSNL Hungama Portal’. From this portal, customer can download music, music videos, and various online games for free. PRICE- Due to monopoly in market prices were high and unfair. PRICE- BSNL accepted PRICING TRIPOD MODEL- a)Cost b)Competition &c)Value to customers. •Slashed STD,ISD call-rates to the lowest rate in the market. •BSNL reduced its tariff rates of cellular services, reduced airtime charges. Call rate of CellOne to CellOne and CellOne to BSNL Landline was low compare to other networks. PLACE- •BSNL provided telecom network access to 5. lakh villages through VPT (Village Public Telephone). It also provided 13. 59 million rural DELs. •Non-optimization of network capabilities was its weakness. PLACE- •Broadened its distribution network to ensure PAN-India reach. •Many sub franchisees, more than 150 retailers & many end user level employees are present to distribute the SIM card. PROMOTION- •No investment in advertising and promotion of product because they do not feel any need to raise awareness of the existence of the product. PROMOTION- To strengthen its brand position and to create awareness in mass, BSNL took some innovative promotional strategies.

Advertising and promotion is an important component of market orientation. •BSNL attracted its customer by providing low cost schemes. •In 2009 BSNL launched India’s 1st integrated Mobile advertising service. This enabled BSNL subscribers to earn talktime by registering in this service. It is currently available in BSNL’s West Zone circle. •To attract the customer they are providing celebrity endorsement. Deepika Padukone is brand ambassador. •On 20th March, 2009 BSNL advertised the launch of BlackBerry services in India. •BSNL tied up with ‘Rajdhani’ to publicize its 3G Network.

As much as 25000 square feet of BSNL advertisement would be wrapped on to Rajdhani Express trains with a special quality vinyl. It is a massive ‘Peacock Media’ campaign in visual area launched as ‘BSNL 3G branded Rajdhani Trains’ targeted to attract 15 million eye-balls in 34 location across 11 states. •To lure more customers of 3G, BSNL is offering free 3G Broadband data card. It is a 90 days promotional offer. BSNL’S CUSTOMER CARE SERVICES TO CATER SUBSCRIBER- •Set up more than 3200 ‘customer service centre’ across the country to provide connection easily and to also provide fault repair system easily. 81 ‘quality assurance center’ were also set up across India and these centers was made for conducting market research from the customers’ points of view and for evaluating and comparing the quality of the services offered by BSNL and its competitors. •BSNL created ‘call centers’ across the country to provide information and to answer customer queries. •Customers can make payments 24X7 at their convenience. PRESENT MARKET POSITION OF BSNL Though BSNL was adding customer very fast but due to delayed expansion plan it lost its 1st position and emerged as 2nd largest player after Hutch-Essar in mid-2003.

In August 2008, BSNL lost its number one position combining fixed and mobile phones to Bharti Airtel. As of March 2010, BSNL has over 63. 45 million customer base. It is the largest landline telephone service provider in India. It is the 4th largest operator by subscriber base in the GSM mobile segment after Bharti Airtel, Vodaphone and Idea Cellular. Since 2006, BSNL has embarked upon a transformation exercise to remain competitive, but still it is lacking in sales and distribution and innovative advertising compare to its competitor. That’s why its market share has declined to 15. 75% as on Feb, 2010 from 31. 9% in 2006-07 and recently in 2010, it lost its 3rd position in GSM mobile service near IDEA Cellular. Moreover, BSNL’s profit has come down to only 178 crore in 2009-2010. FUTURE PROSPECT OF BSNL BSNL is constantly making effort to modernize its marketing strategy, to introduce new services in affordable price, to improve its landline network and to provide value added services. To increase its market share, it is leasing passive infrastructure to other service provider, improving customer care and after sales service and BSNL is also trying to explore opportunities in overseas market.

It has also planned to roll out its Wimax Network to provide wireless broadband services in rural blocks in 2010-11. Future plan of BSNL is to increase its customer base to 108 million customer by 2010 and BSNL being a rural pioneer, recently bagged 80% of $US 580 million “Rural Telephony project of Government of India” and thus the target appears achievable. BSNL is also planning to go for IPO to offload 10% to public in Rs. 300-400 range. It would also increase its attachment with public and it would let public understand the kind of value BSNL generate in the telecom industry. Submitted by- GROUP-2



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