PT. Excelcomindo Pratama, Tbk.

Marketing Assignment

By:

Susanna S. R (3094002)

Eka Darmadi (3094802)

Levina Rolanda (3094804)

Gerry Geraldo (3094806)

Christopher Tongku (3094809)

May Eka (3094814)

Didi S. (3094816)

Faculty of Business and Economics

University of Surabaya

2010

INTRODUCTION AND HISTORY OF THE COMPANY

PT. XL. Axiata Tbk. (XL) was established in 1989 with its name PT. Grahametropolitan

Lestari. Telecommunication was not the main business at that time as its business was in

trading and general services. This company is owned by Axiata Group Berhad (86.5%), one

of the largest cellular players in the Asia Pacific region, Emirates Telecommunications

Corporation Ltd. International Indonesia (13.3%), Middle East and Africa largest cellular

provider, and the public (0.2%). Starting commercial operations in 1996, XL is currently one

of the leading and highest-growing mobile and cellular services providers in Indonesia,

serving 31.4 million subscribers across the country by the end of 2009. XL has continuously

proved itself to be a pioneer in delivering cutting-edge technologies to the

telecommunications market in the country, launching the first and highest speed 3G-HSDPA

(High Speed Downlink Packet Access) and more recently, through its various ground-

breaking BlackBerry packages and applications. To better serve the international market, XL

has also developed strong partnerships with more than 357 international providers in over

140 countries. Through its corporate values : Integrity, Teamwork and Service Excellence,

XL is committed to continuously enhance its capabilities, in efforts to be the preferred

telecommunications provider in Indonesia, providing extensive coverage and quality, anytime

and anywhere.

1996 Obtained GSM 900 operating license and commercially launched its GSM

services with focus on Jakarta, Bandung and Surabaya.

1997 Established an integrated microcell network in Jakartaʼs Golden Triangle area.

1998 Launched proXL, its prepaid cellular service brand.

1999 Entered Sumatera and Batam markets.

2001 Received a DCS 1800 spectrum allocation and finalized its fiber optic

backbone. Launched M-banking and M-fun services.

2002 Expanded its network coverage to Kalimantan and Sulawesi. Launched leased

line and IP (Internet Protocol) services.

2004 Revitalized the XL logo and individually marketed its prepaid and postpaid

brands: jempol (prepaid), bebas(prepaid) and Xplor (postpaid).

2005 Became TM Group subsidiary company and enlisted in Indonesia Stock

Exchange (previously known as JSE) under EXCL stock code.

2006 Launching XL's "The First Broadest & Fastest" 3G services.

2007

Introduced its Rp1/minute tariff. ETISALAT became a shareholder.

ETISALAT is the second largest telecommunications company in the Middle

East. Started to consolidate brands under XL prepaid and XL postpaid.

2008

TM Group completed its demerger of TM International Berhad (TMI),

whereby Indocel Holding Sdn. Bhd, a subsidiary of TMI, acquired all XL

shares owned by Khazanah Nasional Berhad, increasing Indocel Holding Sdn.

Bhd.ʼs stake in XL to 83.8%.

OVERALL INDUSTRIAL AND MARKET FORM AND STRUCTURE CONDITION

Overall Industrial

XL has now taken the lead in the industry as the cellular telecommunications provider with

extensive coverage throughout Indonesia. It provides services for retail customers and offers

business solutions for corporate customers, including voice, data and other value-added

mobile telecommunications services. XL operates its network with GSM 900/DCS 1800 and

IMT-2000/3G technologies. XL also holds a Closed Regular Network License, Internet

Service Provider (ISP) License, Voice over Internet Protocol (VoIP) License and Internet

Interconnection Services License (NAP).

Market Form

Xl has enter the oligopoly market form which many company also selling the same product

and it is generally such a branded product. To enter this market, we have to face many

barriers and also we have to make the promotion and the marketing of our product stronger

than before. This market form creates such interdependence with your company and your

competitor. Somehow you cannot just rely with your own pricing and investment decision but

the firm has to adjust their pricing and output to other firm which will create a likely reaction

in order to take consumer attention.

Structure Condition

As we all know that the market structure which is usually seen from the increasing number of

participants and market share will determine the company’s market conduct or behavior,

which can ultimately affect firm performance. Usually it started with the increasing number

of sellers then the competition will increase, so that profits will decline. Meanwhile, the

degree of product differentiation, knowledge sellers and buyers about its products and the

existence of barriers to market entry also affect the strength of the seller in the market. XL as

one of the telecommunication service providers has faced into a competitive

telecommunication market which it has to struggle to face every action that the competitors

took. And as one of the GSM service provider, it knows the competitors which provide the

same type of product and give fierce move against us.

The structure condition of the market according with the same type of product to offered.

Company Product type

Hutchison 3

Indosat IM3, MENTARI, MATRIX

Natrindo AXIS

Telkomsel SimPATI, KartuAS, KartuHALO

MARKETING STRATEGIC OVERVIEW

Target Market

Product Type Target Market

XL Prepaid Teenagers

XL Postpaid Business people

Segmentation

Excelcomindo position its brand into few segment. Such as its prepaid product which is

targeted to middle to lower economic as well as the teenagers. The latest offer for this prepaid

product such as just one minute call and you will get so many bonuses like a thousand sms, a

hundred minutes free call, a free 1 MB internet access obviously reflect its segmentation. And

for the postpaid product which offers not just the call activity but also internet banking and

information facilities such as price of gold, foreign currency, etc that reflects what the

businessmen and young professionals need is for nowadays.

S.W.O.T

XL

Strength

1. Cheaper Call also SMS rate than other

2. Have lot of content in “XL Life”

3. The Largest Blackberry user

4. Steady Growing Customer Base

5. 3G Coverage Area

Weakness

1. Signal issue that state XL can’t reach all region of Indonesia

2. The Internet bandwidth overload

3. Lack in system to backup the new process

4. Lack of skilled employee

5. Lack of network when they busy

Opportunity

1. Can be the first provider in all “Young” Heart

2. Expand the business for 4G technology

3. Increasing 3G network in Indonesia

4. Mobile Internet Expansion

5. Research and development for new technology

Thread

1. Other Provider can also give cheaper price for call and sms

2. Economic condition of Indonesia

3. Government regulation

4. Every phone will bundling with other provider

5. The wheatear broken the telecommunication line

S.W.O.T

TELKOMSEL

Strength

1. Strong financial performance

2. First provider to introduce 3.5G Internet speed up to 7,5Mbps

3. Have million of loyal customer in Indonesia

4. The signal can reach until the small town in Indonesia

5. Have lot of tender and bundling phone using Telkomsel

Weakness

1. The price is higher than usual

2. Customer Service is very busy and customer must wait for long time

3. Limit of the company product

4. Lack of skilled employee

5. Can’t reach bigger market in young and teenagers

Opportunity

1. Get partnership with apple (iPhone)

2. Future technology by 4G Network

3. R&D For the next market

4. Get partnership with Blackberry

Thread

1. The weather damage to antenna and transmission line

2. VoIP directly competes with other wireless business

3. Other competitor has partnership with big company like Apple

4. Economic condition in Indonesia

Positioning

Price (+) & Quality (-) Price (+) & Quality (+)

Price (-) & Quality (-) Price (-) & Quality (+)

Bundling Product (+) & Package (-) Bundling Product (+) & Package (+)

Bundling Product (-) & Package (-) Bundling Product (-) & Package (+)

Reliable Network (+) & Valuable Cust.Service (-) Reliable Network (+) & Valuable Cust.Service (-)

Reliable Network (-) & Valuable Cust.Service (-) Reliable Network (-) & Valuable Cust.Service (+)

Internet Service (+) & Blackberry Service (-) Internet Service (+) & Blackberry Service (+)

Internet Service (-) & Blackberry Service (-) Internet Service (+) & Blackberry Service (-)

Marketing Mix

Product

XL Prepaid is a telecommunication service paid based on direct payment system. The

benefit of XL Prepaid:

1. Text messaging more munificent.

2. Have variety promotional programs (call package, text messaging

package, Internet package and BlackBerry package adjusted with your

communication needs).

3. Communicate with relative in abroad more easy and affordable (3

minutes and you get 2 minutes free to 5 countries).

4. Can make and receive phone calls (voice roaming) while in the

countries that have cooperated in this service.

XL Postpaid is a telecommunication service paid based on XL billing payment

system. The benefit of XL Postpaid:

1. Pay 3 seconds for 3 seconds call.

2. LANGSUNG KRING registration – Fast Registration Process.

3. Credit Limit – You are able to arrange your credit limit in using XL

Post Paid (only valid for National Coverage and exclude monthly cost and

tax).

4. Free No Cantik – Based on customers’ desire.

5. Check Online Billing Anytime – Type *108 OK/YES.

6. E-Billing Facility – Post Paid Billing facility through email/web, more

updated and can be used anytime.

7. International Roaming Facility in more than 300 Roaming Partner

8. BlackBerry Facility – The first operator on Asia to apply daily

BlackBerry tariff.

9. Free National Roaming.

10. 3G/HSDPA data access without registration.

Place

XL has spread out its coverage around Indonesia except Maluku which is on the

process to create the network there.

Promotion

XL has done some promotion like advertising and public relation. XL always follow

the latest trend which happening in global trend such now on when the world is giving

its biggest attention to the World Cup 2010, XL advertisement adopt that trend to be

their theme for their promotion which is successfully reach public attention.

Price

XL always tries to offer the lower price than the other competitor. It offers a method

like you do a call activity for a few minutes than you will get a several minutes free

from charges. Also the latest promo from XL which if you are using a minute for a

phone call then you will get so many benefits, there are 1000 free sms, 100 minutes

free call, 10 MB free internet access. In the last press conference in February 19th

, the

Director President of XL, Hasnul Suhaemi said,” Three years ago with 40 thousand

rupiah per month people may did phone call activity for about 29 minutes but now

with only 36 thousand rupiah per month people may do phone call activity for about

279 minutes. Xl will keep developing its policies and its service quality to get

customer loyalty.

OBSTACLES AND PROBLEMS FACED DURING THE MARKETING STRATEGY

IMPLEMENTATION

Every company must face what it is called obstacles or problems which are create

barrier between what the company want to offer to the consumer. There are some problems

that ever occurred in PT. EXCELCOMINDO PRATAMA Tbk.

The last product which XL ever launched to the market, Jempol which is more

emphasizing in lower rate for short message service has left behind from another XL

prepaid product, Bebas. Then XL compiled it to be one product as XL prepaid that

has Bebas’s good factor that has a lower rate in voice conversation and also Jempol’s

good factor in lower rate of short message service.

The true challenge for XL internet service provider, cable-based internet

provider such as, First Media and Speedy from Telkomsel. But we definitely offer the

lower rate once again with unlimited quota to be offered to the consumer. With this

way, we may easily penetrate internet provider market.

To face CDMA operator that provide very low price in call activity, XL with

the full consideration also launch its CDMA product with 72 rupiah per minute while

the other competitor of CDMA set about 80 rupiah per minute.

HOW COMPANY FIGHTS ITS WAR ON MARKET COMPETITION AND ITS

RESULT

Here are some financial data which XL is going through from the last 5 years.

Financial Data

Financial Data 2005 2006 2007 2008 2009

Operating

Income1

4.302 6.466 8.365 12.156 13.880

Profit1 570 1.028 1.760 1.753 2.464

1In billion rupiahs

Operational Data

Operational Data 2005 2006 2007 2008 2009

Total Subscribers2 6.978 9.528 15.469 26.016 31.438

Prepaid 6.802 9.141 14.988 25.599 31.101

Postpaid 176 387 481 417 337

Total Employees 1.854 2.042 2.136 2.097 2.038

Ratio of Efficiency3 3.764 4.666 7.242 12.406 15.426

2 in thousands

3 Total Employees/Total Subscribers

As we can see from the data above that show the development of XL from 2005 to 2009, we

know that XL has done a great business strategy to keep struggling in the oligopoly market.

Actually, in the previous 5 years before year 2005 (2000-2004), XL also did a good

performance, but we will just emphasizing the latest development.

Eventhough XL has been known for the third biggest for leading mobile telecommunication

service provider in Indonesia, XL has always implementing such a good management in the

company to keep them move one step forward than before.

To explain the strategy in brief within period 2007-2009, we can see the picture below.

2007

Building Coverage

2008

Minute Factory

2009

Driving Value

The XL strategy in 2007 was building coverage, XL covered 90% of population. By knowing

what its best for their consumer and what they really need that they don’t need the low rate of

telecommunication service but super low rate, XL could drive their consumers by

encouraging them to use more minutes and increase traffic with XL’s super low rate offering.

These strategies were really effective and efficient, operating income, profit, and total

subscribers were increased a lot. The ratio of efficiency was also increased in 2006.

In 2008, XL’s operating income has increased a lot from 2007, but actually the profit was

barely constant because that was the time that XL was doing a very big business expansion,

which the implementation of the “minute factory” strategy in 2008 has made XL as a pioneer

in affordable rates. Therefore they had their operating income increased a lot but the profit is

still constant. It was very good investment by PT XL Aviata Tbk.

The “Minute factory” strategy was very successful and can generate a lot of advancement in

2009. In 2009 the XL’s strategy was “Driving Value” with the name of “Value Beyond

Price”, in order to make the consumer satisfied, XL is improving quality until now. XL

doesn’t want to only give the consumers with cheap price, but also giving high quality of

services. Therefore XL was having the larger profit, profit increased a lot, from 1.753 billions

rupiah in 2008 to 2.464 billions rupiah in 2009. With the Operating income increased from

12.156 billions rupiah in 2008 to 13.880 billions rupiah in 2009.

KEY SUCCESS

1. “The challenge for us is to remain innovative in order to grow our revenue and

subscriber base. There are opportunities in Indonesia, and we will continue to extend

our services through new businesses,” says Daniel Kristanto, manager of technical

services in XL’s ERP department.

2. Aggressive promotion campaigns and relentless effort to retain its customers.

It means making sure that they get consistently high quality of services.

3. Affordable price with a choice of products and services interesting and

provide more value for customers.

4. Improve the customer experience.

5. Ensure adequate management of the network load

and maximize the capacity and quality.

6. Maintain profitability by continuously improving market share in line with

efforts to keep maintain a lean organization and management in careful cost.

7. Using opportunities in data services and Value Added Services.

8. Improving efficiency in the distribution system for produce distributor

network with the performance tall, loyal, and productive.

9. Strengthen the brand attributes.

10. Know your costumer, know your competitor, know your company, and give

costumer what they want better than competitor.