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7/30/2019 Ssm Project
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ROLE OF SERVICE SECTOR IN ECONOMY
The Indian economy witnessed GDP growth rate of 6.9% on top of a high
8.5% growth achieved in the preceding year. The spirit that the economy has achievedwas demonstrated by the fact that this growth of 6.9% took place in the face of
deficient monsoons, steeps hike globally in oil and steel prices and a change in the
government in the center.
While the industrial sector registered a growth of 8.3% reflecting good
spirits in manufacturing activities, service sector maintained its earlier momentum and
grew by 8.6%. However the agricultural sector, growth increased by only 1.1% due to
erratic monsoon. In spite of a deceleration in the overall growth rate, the continuing
momentum in the growth of industry and service sectors has kept business confidence
at high level.
The Indian economy has finally reaped the benefits of just over a decade of
reforms. Economists now expect the Indian and Chinese economies to be the world's
growth engines in the 21st Century.The economy has recorded a growth rate of 6%
per annum since 1990, reducing poverty by 10% points in the process. Industry is no
longer a State monopoly. Almost all sectors have been opened up to the private sector.
Import licensing has been abolished. Foreign exchange reserves have climbed rapidly
from USD 40 billion in March 2001 to USD 50 billion in March 2002 to 142 billion
in June of 2006.As with any growing economy the sectoral composition of GDP has
been changing with the services sectors showing an increased share and that of
agriculture declining to 20%. The fastest growing sector in the economy has been the
services sector, which now accounts 50% of GDP.
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To become an economic power, technology and economy need to be considered in an
integrated manner rather than as separate entities. With the opening up of economy,
Indian industry needs to be globally competitive. Hence, what is required is a clear
vision of what can be achieved and how best to achieve it". The Indian Industry will
have to support the nation in acquiring economic leadership and progress by 2020.
The foundation of this leadership will depend to a great extent on the technological
excellence of the firms.
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DEFINITION AND MEANING
A service is an act or performance offered by one party to another. They are economic
activities that create values and provide benefits for customers at specific time and
place as a result of bringing about a desired change in or on behalf of the recipient of
the service.
The term service is not limited to personal services like medical services, legal
services, professional services etc. according to marketing experts and management
thinkers the concept of service is a wider one. The term services are defined in
number of ways but not a single one is universally accepted.
Following are some important definitions:
According to DONALD COWELL,
Goods are produced, sold and consumed, where as services are sold and then
produced and consumed.
According to WIKIPEDIA,
In economics and marketing, a service is the non-material equivalent of a
good. Service provision has been defined as an economic activity that does not result
in ownership, and this is what differentiates it from providing physical goods. It isclaimed to be a process that creates benefits by facilitating either a change in
customers, a change in their physical possessions, or a change in their intangible
assets.
As per COMMUNICATION EXPERTS,
A type of task that is performed by a Service Element for a Service Consumer (client).
A Service is the actual product that a customer uses, such as a POTS line, cellular
line, Internet Protocol connection and so on.
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CHARACTERISTICS
The distinct characteristics of services are mentioned below.
(1) Intangibility: Services are intangible we cannot touch them They are not
physical objects. According to Carman and Uhl a consumer feels that he has the
right and opportunity to see, touch, hear, smell or taste the goods before they buy
them. This is not applicable to services. The buyer does not have any opportunity
to touch, smell, taste the services
(2) Perishability. Service has a high degree of perishability. Here the element of time
assumes a significant position. If we do not use it today, it is lost forever. If labour
stops working, it is a complete waste. It cannot be stored. Utilised or unutilised
services are an economic waste. An unoccupied building, an unemployed person,
credit unutilised, etc. are economic waste. Services have a high level of
perishability.
(3) Inseparability: Services are generally created or supplied simultaneously. They are
inseparable. For an e.g., the entertainment industry, health experts and other
professionals they create and offer their service at the same given time. Services
and their providers are associated closely and thus, not separable.Donald Cowell
states 'Goods are produced, sold and then consumed whereas the services are sold
and then produced and consumed'.
(4)Heterogeneity: This character of services makes it difficult to set a standard for
any service. The quality of services cannot be standardised. The price paid for a
service may either be too high or too low as is seen in the case of theentertainment industry and sports. The same type of services cannot be sold to all
the consumers even if they pay the same price. Consumers rate these services in
different ways. This is due to the difference in perception of individuals at the
level of providers and users. Heterogeneity makes it difficult t
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in the case of services, we do not find this. The users have only an access to
services. They cannot own the services. For e.g. a consumer can use personal care
services or medical services or can use a hotel room or swimming pool, however
the ownership remains with the providers.
(6) Simultaneity: Services cannot move through channels of distribution and cannot
be delivered to the potential customers and users. Thus, either the users are
brought to the services or providers go to the users. It is right to say that services
have limited geographical area. According to Carman and Uhl, "Producers of
services generally have a small size area of operations than do the producers of
items, largely because the producer must travel to get the services or vice-versa.
When the producers approach the buyer time is taken away from the production of
services and the cost of those service is increased On the other hand it costs time
and money for the buyers to come to producers directly Here the economics of
time and travel provide incentives to locate more service centres closer to
prospective customers, resulting in emergence of smaller service centers.
(7) QualityMeasurement: A service sector inquires another tool for measurement We
can measure it in terms of service level It is very difficult to rate or quantify total
purchase. E g we can quantify the food served in a hotel but the way waiter serves
the customer or the behavior of the staff cannot be ignored while rating the total
process.
(8)Fluctuating Demand: Generally, the services are fluctuating in nature During the
peak tourist season there is an abnormal increase in the demand of services
Therefore, while identifying the salient features of services one cannot ignore the
nature of demand For e g tourists go to hill stations during summer season
wherein public transport utilities are used substantially. This indicates thatflexibility is the important feature of service
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COMMUNICATION SECTOR
Communication is the process of sending information to oneself or another entity,
usually via a language. Specialized fields focus on various aspects of communication,
and include Mass Communication, Communication Studies, Organizational
Communication, Sociolinguistics, Conversation Analysis, Cognitive Linguistics,Linguistics, Pragmatics, Semiotics, and Discourse Analysis.
The major chunk of communication sector is under mass communication which
includes TV, radio, telecom, entertainment sector and so on. In current scenario
telecom sector is contributing with IT sector on equal footing rather it can be said that
this sector is booming in INDIA
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TELECOMMUNICATION
INTRODUCTION
Telecommunication is one of the prime support services
needed for rapid growth and modernization of various sectors of the
economy, the sector has grown rapidly in recent years, its growth
needs to be accelerated further. It is also one of the fastest growing
sectors in India and has immense potential for growth. The
Telecommunication activity is commercial in nature and people are
willing to pay for it. Of all infrastructure sectors, it is perhaps best
suited for private sector participation which would help to create
competitive environment and improve quality of services to
consumers.
Private investment is expected to play a major role
supplementing the efforts of the public sector in expanding capacity
and also providing competition with the system. In the area of
value-added services, the private sector would continue to play a
dominant role. The quantum of investment by the private operatorswould basically be determined by the rate of return on such
investments both basic as well as value-added services.
The Telecom sector has witnessed some fundamental
structural and institutional reforms in past decades. Telecom
equipment manufacturing was completely deregulated in 1991.
Value-added services (including cellular services) were thrown open
to private sector participation in 1992. Basic were opened to private
participation in 1994 by dividing country into 21 Telecom Circlesand allowing one private operator per Circle to compete with DOT.
An Independent Telecom Regulatory Authority of India was setup in
1997. A new policy for Internet Service Providers (ISPs) was
announced in 1998 allowing independent services providers to enter
the sector ending the earlier monopoly of VSNL.
Telecommunication has emerged as an important
driving force in a modern economy. Considering it a vital
importance, the govt. adopted National Telecom Policy Declaration
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in 1994. The Telecom network in India is not small in absolute
terms. With over 12 million lines, it is the 14th largest in the world.
Yet it suffers from a terribly low penetration of 1.3 per 100
populations when the word average is over 10. More than 2.1 million
consumers are in queue waiting for Telephone line.
If the Telecom network in India is able to grow at even
the current annual growth rate of 20 % for the next five years, it
would rank among the six largest networks in the world. This is an
absolute terms would mean an addition of 30 million more basic
Telephone lines a number which is expected to be second only in
China. India has also expressed its first commitment to make large
investments in Value-added services by opening up this sector. All
this would place India among the leading countries in terms of
equipment purchases.
The Telecommunication sector has undergone a total
transformation throughout the world over the last 2 decades.
Technological advances have revolutionized the quality and range of
services available. Moreover, developments in sphere of information
technology, satellite-based Television broadcasting, new forms of
communication such as data communication through e-mail and
associated services through internet, are all blurring the definition of
what constitutes the Telephone services and transforming the way
people communicate and conduct business.
Clearly, a countrys ability to benefit from this revolution
depends heavily on the modernity of Telecommunications network.
Countries that can acquire and assess information on demand and
then integrate them usefully into there industrial structure through
modern telecommunications network is most likely to experiencehigh rates of growth. Large-scale use of information and
telecommunication technologies directly influences productivity,
cost effectiveness and competitiveness in industries with high levels
of product differentiations and low levels of unit prices.
An advanced telecommunications system is equally Imp
for services like banking, trading, retailing, transportation,
maintenance and insurance where information and real-time
communications are vital to the production process. A reduction in
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costs of these services will directly enhance international
competitiveness within the entire economic system, since lower
marketing costs for manufacturing firms exposed to international
trade.
Following table gives the brief idea of the teledensity in
some developed or developing countries of the world:-
COUNTRY TELEDENSIT
Y
UK
Australia
USA
Brazil
China
India
Sri Lanka
Indonesia
Pakistan
Nepal
Bangladesh
143.13
126.18
116.43
42.38
42.32
10.38
9.57
9.17
4.42
1.70
1.56
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KEY POINTS OF TELECOM SECTOR
Supply
Intense competition has resulted in prompt service to the subscribers.
However, smaller towns and villages continue to have waiting periods on
account of non-availability of adequate infrastructure.
Demand
Given the low penetration levels in the country and continuously falling
tariffs, demand will continue to remain higher in the foreseeable future
across all the segments.
Barriers to entry
High capital investments, older and well-established players who have a
nation wide network, license fee, continuously evolving technology and
falling tariffs.
Bargaining power of suppliers
Improved competitive scenario and commoditization of telecom services
has led to reduced bargaining power for services providers.
Bargaining power of customers
A wide variety of choices available to customers both in fixed as well as
mobile telephony has resulted in increased bargaining power for thecustomers.
Competition
The entry of fourth cellular player and commencement of WLL services
has resulted in intense competition in the bigger cities. Reducing tariffs
will hurt the new entrants, as they will be unable to recover their high
capital investments.
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MARKET LEADERS AND THEIR SHARE IN TELECOM
SECTOR
Mobile telephony services are rapidly expanding and have
contributed approximately 941% to new subscriber additions in January
2006. The segments subscriber base grew 5.16% mom to 80.61mn. Of
the total subscribers added, almost 75% subscribers belonged to the
GSM segment and the rest were CDMA segment. This strong growth is
largely attributed to the lifetime validity cards launched by all major
operators.
Further, telecom sector is divided in three segments they are as
follow:
1. Global system for mobile communication (GSM)
2. Code division multiple access (CDMA)
3. Fixed wireless terminals (FWT)
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DIVISION OF TELECOM LEADERS ACCORDING TO
SEGEMNTS
1. Global system for Mobile Communication (GSM)
GSM Market share GSM share of net additions
2. Code Division Multiple Access
Market share of CDMA operators CDMA share of net additions
3. Fixed wire Terminals (FWT)
Market share of private players in FWT Share of net additions of private players
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CASE STUDY- BSNL
INTRODUCTION:
The BSNL Bharat Sanchar Nigam Ltd., is the largest telecom service provider of
India offering the full range of communication services basic land line, wireless
mobile(CDMA), Leased line circuits, Internet telephony, etc. catering to various
segments SOHO ( Small office Home office), Corporate, Individuals, Business
groups. In terms of the revenue yield it is found that 15% of the subscriber yields
more than 85% of the revenue and this group when distilled further who result in a 5
% of the customer population yielding 50 60% of the billing. In a competitiveenvironment it is this group of customers who are most vulnerable to be lured away
by the private operators (competitors). The following information has made an
attempts to define the various relationship markets present in the segment.
DEFINING THE MARKETING MIX - 7 Ps
The product is provision of communication service( Basic Telephony, mobile
( CDMA, GSM) technologies, Dedicated leased circuits, Voice over IP, Internet
services)
The price is based on the usage charges as per tariff apart from the installation cost.
Discounts are offered to heavy callers.
The place of delivery is the customer premises/location.
The promotion very limited till recently. However now logos, brands names for
different services, slogans (Connecting India) etc have been coined. Very recently
advertisement in the print media as well as television commercials has been released.
(www.bsnl.co.in)
The people have a key role to play since it is a service sector. However this is the
weakest link in the marketing mix since the monopoly attitudes have hardly changed
at the ground level.
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The process is another one of the neglected Ps. A lot of corrective processes have
being provided for after the complaints by line up of escalations, meeting the senior
officials etc. Yet the preventive/ proactive processes are not sufficient/ (work in
progress).
The physical evidence (being a service sector) depends on the maintenance of front
end staff dealing with customer care, the office premises and facilities available there,
toll free numbers, call centers.
The main problem is faced by the company is that it cannot handle its existing
customers in an right manner like partly customers are satisfied with the service and
partly are still need to be satisfy, this can be done only through taking customer care
as main area while segmentation.
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CUSTOMER CARE & SEGMENTATION:
Apart from the marketing mix described above the steps taken towards customer care
can be taken through dividing them in different groups
These may be grouped into preventive processes, empowering the grass root level,
work in progress which are very critical in customer service/ improving service
availability level, Bill payments made easy and some measures quite frivolous as
application form being made free.( A typical example of the monopoly hangover).
The Company has identified the high callers or those who make calls worth more than
Rs.5, 000/- per month as the high calling segment. This kind of segmentation purely
based on the revenue yield alone results in a heterogeneous group of high calling
individuals, companies, corporate with inter city presence. Neither has this group been
refined further for preferential differentiation nor are any of the measures specified in
the customer care specifically targeted towards this groups. Of course the system
corrections undertaken would benefit the high callers as well. Hence apart from
providing certain billing discounts or special meeting time the issues cannot be very
clearly addressed.
Classification of customers (Jones and Sasser Model (1995) )
If one were to use this model for classifying this segment further it would be seen that
about 10% would be in the Hostage category. They are vocal, corner the available
resources for servicing and are complaining in nature. And the experience of the
BSNL managers is that this category normally contributes less to the revenue pool
and hence would not be attractive to the competition. A majority about 60%of the
segment would be in the Mercenary category, ready to make a shift, about 20%
would be in the defector and terrorist segment (this would include the media and
think tank users of the communications) would be make use of every opportunity to
spread the negative image and a loyal group of about 10% who are satisfied and stay
with the company through the problems.
BSNL should reward the loyal group by giving strength to their voice, try to
neutralize the impact of the defector terrorist group using pressure strategy and try to
move the Mercenary to the Loyal group. It should also know how to shake off the
hostage group without explicitly stating so.
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RELATIONSHIP MARKETS APPLIED TO THE CASE
(Christopher models)
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INTERNAL MARKETS
Synergizing the employee s
commitment to the corporate mission/
goals/objectives is vital on account of
transition from monopoly to
competitive environment
CUSTOMER MARKETS
Key Market in the spectrum and remains
the primary focus. Efforts in Customer
retention and make them move up the
loyalty ladder
EMPLOYEE MARKETS
Key to providing high quality
staff oriented in customer care.
SUPPLIER
MARKETS
Have a role to play in
view of predictability trap
in technologies.
INFLUENCERMARKETS
Government policy makers,
regulators, consumer courts
impact external environment
REFERRAL MARKETS
Media mainstream/
communication related.,
Telecom user groups and
forums which influence
thinking.
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RECOMMENDATIONS FOR CHANGE
1) The High calling segment is distilled further on the basis of revenue yield and
country wide presence.
They should be given classified as Platinum, Gold, Silver, classic groups based on
their total countrywide billing and these member subscribers should be eligible for
country wide facilities. The senior officers, frontline and other staff should be
educated about the value of these groups and they should be provided with premium
service.
2) The requirements should be studied ( guaranteed uptime of service, fault
attendance within the stipulated time, 24x 7 service, integrated billing, single point
contact or Key Accounts Manager, etc) and addressed.
3) Being a public company major problem can be of over staff which need to be cut
off but instead of cutting the staff company can use its some employees in marketing
their product as they working in the company since many years they have more
knowledge about the company and the services which company offers.
4) The provision of total solutions still remain a myth as the customer has to still runbetween various wings ( Circuits, Basic phone, Mobile, Internet, Long distance) for
their communication needs. Nodal points for interacting should be provided. This
would actually help the company sell more as a corporate group having Leased
Circuits will also need land lines for office/ residences, mobile communication needs
for their officers and sales staff etc.
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INTERVIEW WITH A.K. SINHA, CHAIRMAN AND
MANAGING DIRECTOR.
A.K. SINHA, CMD of BSNL.
A.K. Sinha, who served as Senior Deputy Director-General (Switching) in Bharat
Sanchar Nigam Limited's (BSNL) corporate office before assuming charge as its
Chairman and Managing Director (CMD) in September 2004, has brought his
knowledge of various telecom switching systems and other important aspects of
telecommunications to India's largest telecom service provider.
Sinha joined the Indian Telecommunication Service in 1969 and has held the posts of
General Manager (Development) in Mahanagar Telephone Nigam Limited's (MTNL)corporate office and in MTNL, Delhi, and Chief General Manager of Andaman and
Nicobar Islands and Jharkhand Telecom Circles.
He has experience in the installation and commissioning of various switching systems
in the networks of Calcutta and Delhi Telephones. As Divisional Engineer
(Installation), he was instrumental in commissioning the first C-400 type Japanese
telephone exchange in Calcutta Telephones and thereafter in MTNL, Delhi. He
worked for three years in the Telecom Department of Nigeria.
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How do you see BSNL's future as a leader in the telecommunications sector? In
terms of growth, what is the key factor behind the entity's fiscal result for the
previous year?
BSNL holds the top position in the telecom sector and will continue to do so. Wehave the unmatched footprints of our service spread across the country. Being one of
the largest public sector enterprises, BSNL has always delivered targets taking into
account the social and regional goals. Our last fiscal results give a clear picture of our
continuous growth despite fierce competition. We are proud of our impressive growth
of over 50 per cent. I believe over a period of time we have improved the delivery of
our services, which is the most functional factor in awarding us significant growth.
Can you detail the steps being planned by BSNL to expand its service from basic
to mobile telephony to broadband?
Despite the impressive strides [made in the sector] over the past few years, India has
low teledensity compared to many other countries. Hence, we see a large potential in
various States. The government has decided to double the teledensity from 10 per 100
people to 20 in the next three years. Public sector telecom units have been given the
mandate to double their own networks. So, we are in the process of doubling the
capacity and penetrating areas that have not yet been covered.
From covering all district headquarters, we plan to spread our footprints to all block
headquarters. A 60 million GSM [Global System for Mobile Communications]
equipment acquisition tender is already on as part of mobile telephony expansion
plans. BSNL is also expanding its base in broadband services and hopes to add a
million subscribers every year, changing the country's Internet usage. Also, BSNL's
network is expected to reach all villages by 2007.
What are BSNL's landmark achievements in the current year?
It has broken all its past records by registering an impressive growth of 55.6 per cent
in Direct Exchange Line. It registered a 9 per cent rise in its operative income. Apart
from this, BSNL has added a large number of consumers, much more than its target,
to its cellular and basic subscriber base and is doing remarkably well in broadband
and village telephony.
In the growing competition among service providers, how does BSNL plan to
stay in the top position?
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BSNL is the leader in all service areas that it operates. Whether it is basic telephony
or cellular or CDMA-based telephony or Internet. As I said earlier, we have an
expansion plan for 60 million lines in mobile telephony alone.
In another three years, when the country's teledensity reaches 20 per 100 people,BSNL will have a 50 per cent market share. The rest of the players together will share
the remaining market.
With our reach and footprint and expansion plans, we will still hold the leadership
role in all areas of telecom service despite fierce competition in the market.
There appears to be a fair reduction in last year's waitlist. What steps are
planned to clear the wait list?
In fiscal 2005-06, BSNL reduced the waitlist from 16.20 lakhs to 12.69 lakhs in both
the landline and mobile sectors. As per our expansion plan, we are qualitatively
improving our network with the introduction of state-of-the-art technology to meet the
requirements. The 60-million expansion plan is aimed at clearing the waiting list as
well as adding new areas and population to our network.
What is your expansion plan for the current fiscal?
Apart from the ongoing one, we plan to add 20 million GSM lines this year. Once the
roll-out of the 60-million GSM tender happens, we will be able to launch 3G mobile
phones. We hope to add a million broadband subscribers to our network. We are also
taking steps to arrest the surrender of phones in our network.
Although there is a net increase in subscribers, we are launching a series of measures
to make basic telephony more attractive. Above all, we plan to improve the quality of
our services and our profits.
This year we expect to emerge as the largest mobile telephony operator in the country
even in numbers, although we are not present in the two largest areas of operations -
Delhi and Mumbai
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BIBLIOGRAPHYwww.techtree.com
www.bsnl.co.in
www.indiainfoline.com
www.equitymaster.com
www.vedamsbooks.com
www.mouthshut.com
www.wikipedia.org
Books
Frontline India Magazine
http://www.techtree.com/http://www.bsnl.co.in/http://www.indiainfoline.com/http://www.equitymaster.com/http://www.vedamsbooks.com/http://www.mouthshut.com/http://www.wikipedia.org/http://www.techtree.com/http://www.bsnl.co.in/http://www.indiainfoline.com/http://www.equitymaster.com/http://www.vedamsbooks.com/http://www.mouthshut.com/http://www.wikipedia.org/