Airtel-Distribution & Supply Chain Management V1.0
Airtel-Distribution & Supply Chain Management V1.0
Airtel-Distribution & Supply Chain Management V1.0
8/30/2010
A REPORT
ON UNDERSTANDING DISTRIBUTION ISSUES
BHARTI WITH AIRTEL
AIRTEL
Executive Summary
Over the years back as we all know cable TV was everywhere, but a few years back a new
technological revolution happened and direct to home satellite television came into existence. As
time moves on, the Telecom and DTH sector in India has developed with the availability of more
brands, better quality products and better service.
The objective of this report is to assess the Distribution methods and its effectiveness of Bharti
Airtel Services.
The data collected for this report involves the use of both primary and secondary data sources.
Primary data is based on the findings from the company personnel by having met them personally,
along with some the retailers and distributors of Mumbai, India. This data is further substantiated
by the use of appropriate secondary sources like internet and books.
After all the research and analysis work done during the course time of this project we came to the
conclusion that Tata Sky sales is more effective than that of Airtel DTH, but even then there is a
great room for improvement available for them.
ACKNOWLEDGEMENT
I would like to express gratitude to all the dealers, distributors and the corporate officials of Bharti
Airtel for their kind support and assistance while furnishing the required information’s.
I would also like express gratitude and thanks to Prof. Bhattacharya for giving an opportunity
to work on this topic. The immense learning from this project will be indelible forever. It
gave a practical exposure to various topics related to Distribution methods and helped to
understand the subject in a better way.
1.0 Methodology
Objective:
The main objective of the study can be divided into following heads:
To understand the Company profile, its Product Portfolio pan India and globally.
To understanding of its position compared to its competitors.
To gain understanding of its Distribution methods.
To carry out a detailed study to know the logistics network, process flow, mode, costs,
monitoring systems, issues and problems.
To identify solutions to the same.
1.0 INTRODUCTION
Bharti Airtel formerly known as Bharti Tele-Ventures LTD (BTVL) is the largest cellular service
provider in India, with more than 124 million subscriptions as of February 2010. With this, Bharti
is now the world's third-largest, single-country mobile operator and sixth-largest integrated
telecom operator. As per the latest development, post acquiring of ZAIN, Bharti has become the
5th largest telecom operator globally in terms of subscriber base. It is the 3rd largest in-country
mobile operator by subscriber base, behind China Mobile and China Unicom. In India, the
company has a 24.6% share of the wireless services market. It has all 23 circles of the country and
covers 87% of the current population. It is the largest Telecom Company listed on Indian Stock
Exchange.
The company is structured into four strategic business units - Mobile, Tele-Media, Enterprise and
Digital TV. The mobile business offers services in 18 countries across the Indian
Subcontinent and Africa. The four strategic business units is as follows:
Mobile
Digital TV TeleMedia
Enterprise
Mobile: The mobile business offers services in India and Sri Lanka.
Tele media: The TeleMedia business provides broadband, IPTV and telephone services in 95
Indian cities.
Enterprise: The Enterprise business provides end-to-end telecom solutions to corporate customers
and national and international long-distance services to carriers.
Digital TV: The Digital TV business provides Direct-to-Home TV services across India.
All these services are provided under the Airtel brand. Airtel provides a host of voice and data
products and services, including high speed GPRS services. Airtel also offers a wide array of
‘postpaid’ and ‘prepaid’ mobile offers, with a range of tariff plans that target different segments.
A comprehensive range of value- added, customized services are part of the unique package from
Airtel. The company’s product reflects a desire to constantly innovate. Some of these are reflected
in the fact that Airtel was the first to develop a ‘single integrated billing system’. Airtel’s national
high-speed optic fiber network currently spans over 1,13,326 kilometers, covering all the major
cities in India. The company has two international landing stations in Chennai and Mumbai that
connect two submarine cable systems - i2i to Singapore and SEA-ME-WE-4 to Europe.
The businesses at Bharti Airtel have been structured into three individual strategic business units.
All these services are provided under the Airtel brand. It includes:
1) Voice Services: Bharti Airtel became the first private fixed line service provider in India. It is
now promoted under the Airtel brand. Recently, the government opened the fixed line industry
to unlimited competition. Airtel has subsequently started providing fixed line services in the
four circles of Delhi, Haryana, M.P., Karnataka, Tamil Nadu & UP (West). Airtel Enterprise
services believe that, these circles have high telecommunications potential, especially for
carrying Voice & Data Traffic. These circles are strategically selected so as to provide synergies
with Airtel’s long-distance network and Airtel’s extensive mobile network.
2) Voice - Product Profile: Airtel Enterprise Services’ telephone services go beyond basic
telephony to offer users a whole host of value added services as well as premium add-ons. Few
of the value-added services offered are calling line identification, three party conferencing,
dynamic lock, hunting numbers, parallel ringing, etc. Airtel Enterprise Services and voice
services provide free dial –up internet access that is bundled along with telephone connection
from Airtel. It’s fast, reliable and gives unlimited internet access.
3) Mobile Service: In India, the company's mobile service is branded as Airtel. It has nationwide
presence and is the market leader with a market share of 30.07% (as of May 2010). Airtel’s
mobile foot print extends across the country in 21 telecom circles. Its service standards compare
with the very best in the world. It is one of the top 5 operators in the world, in terms of service
and subscriber base. The company has several firsts to its credit.
The first to launch full roaming service on pre-paid in the country.
The first one to launch 32K SIM card.
The first in Asia to deploy the multi brand feature in a wireless network for efficient usage
of spectrum.
The first to receive the ISO 9001:2000 certification from British Standards Institute.
4) Enterprise Services: Enterprise Services provide a broad portfolio of services to large
Enterprise and Carrier customers. This division comprises of the Carrier and Corporate business
unit. Enterprise Services is regarded as the trusted communications partner to India's leading
organizations, helping them to meet the challenges of growth.
Passive
Mobile TeleMedia Digital TV Enterprise
Infrastructure
Services ServicesS A L E S &Services Services
DISTRIBUTION PROJECT
Services
Page 8
THE AIRTEL DTH - DISTRIBUTION SYSTEM
Headquarters: Mumbai
Website: www.airtel.in/digitaltv
First
launched in 42% of Indian
India- homes
October, expected to
2003 by Dish be on DTH by
TV 2020
Indian DTH
market
expected to
42% of Indian
cross $5
homes
billion
expected to
revenues by
be on DTH by
2020, from
2020
$1.2 billion
in 2012
Poor Good
Packaging of Packaging
Channels of Channels
• Foreign technology
• Standard product
• Language option
• Bargaining prices
• Advertising strategies
• Pricing
• Promotional activities
Distribution Channel
DSA
(Direct Selling Associates) CSA
(Corporate Selling Associates)
FSA
(Franchisee Selling Associates)/
ARC
(AIRTEL Relationship Centre)
The above figure illustrates the channel structure at a regional level. This has been generally scaled
down for better understanding of the structure.
TERRITOTY MANAGER
1) Provisioning
2) Documents
3) Operation back up
Airtel follows a strict policy in selection of the dealers, and therefore it is necessary to fulfill the
following pre- requisites to be eligible to become a dealer.
1) The dealers should have a sound financial background. The financial capability of a dealer is
solely dependent on the discretion of the company officials.
2) The dealers should have a good market reputation, since the dealers help the customers in
forming the first impression a customer has about the company.
3) The dealer should have a good previous track record, i.e. of timely payments, no criminal
background, etc.
4) The dealer should have good market penetration. The company’s ability to gain maximum
customers in this era of competition solely depends on the penetration the dealers have in the
market.
5) The last criterion of dealer’s selection for Airtel is the area the dealers cover. This would include
different geographical areas which are covered by a dealer.
COMPANY COMPANY
WHOLESALER /
CNF
DISTRIBUTOR
WHOLESALER /
RETAILER
DISTRIBUTOR
RETAILER CONSUMER
CONSUMER
Since Airtel has an intensive distribution network, proper channel management becomes an
indispensable part of the system. One of the major issues encountered in the channel management
is channel conflict. Channel conflict is behavior by a channel member that is in opposition to its
channel counterparts. It is opponent centered and direct, in which, the goal or object sought is
controlled by the counterpart.
Channel conflicts, that mainly result from competing goals of the channel members, different
perceptions of reality, clashes over domains i.e. intra and multi-channel competition, role
unclarity, expectations divergence, relationship disharmony, etc. To avoid these conflicts, Airtel
has adopted a Second and Third-Degree Distribution network.
Dealer Territories
There are differences between the offers that are offered to retailers in different areas. They
vary based on the territory. Allocation of a rural distributors or urban distributors is perplexing.
• Distributor – 4.25%
• Wholesaler – 3%
• Retailer – No Discount
Payment terms – CNF Agent – advance, all other any mode – 1 week.
Short term and long-term evaluation with Parameters Used – both. Depending on past sales for
occasional schemes YOY data and 3 months average for next month.
E.g. For new subscription of HD Set top box company offers price at normal price, i.e.
1550 HD box to be available at Rs 650.
For yearly subscription of 156 channels, 3 HD channels are free for entire year.
Dealer development activities – providing knowledge to sales reps, improve store facilities.
Dealer motivation techniques – POP, Sign boards, training to Sales persons, Distributor
Conferences – Last conference took place in Malaysia.
Airtel believes in “Customer Loyalty” and thus, Airtel expects that their dealers apart from selling
paint products should perform the following functions for better customer relations’ management.
1) Sales promotion through regular promotional schemes, road shows, campaigns, etc. The
expenses incurred by the dealers is shared by the company only if these activities are for promotion
of the company and not of the dealer.
The dealer should be in regular touch with the customer, keep taking his feedback and ensure
maximum customer satisfaction. The dealer should also try and convince the customer to try newer
products of the company.
• Target setting to be done on monthly basis as there are new schemes for every month according
to current conditions.
• Develop Dealer Evaluation Methods – It is to be done Daily. Weekly basis is done in depth to
understand and to fill in the gaps.
• Both short term and long-term evaluation are done to make sure sales are achieved regularly.
• The projection for every month is done depending on past sales of 3 months average sales and
in terms of occasions, it is done YOY.
WHOLESALER
CNF Agent RETAILER
/ DISTRIBUTOR
Transportation – CNF has their own vehicles for distribution of the Kits.
CNF Processing.
Allotted to distributors
• Packaging – It plays a major role to avoid damage to the kits. Generally, 1 Carton box has 25
nos. of kits.
• Use of IT systems in Logistics – Oracle based software is used by Airtel for order processing
as well as for service calls.
1. Problem Of Service Gap: Cases have been found where the retailer has run out of its
recharging balance and the balance has not been refilled by the distributor timely. This may be
caused because of the time lag or because of the no credit policy of the distributor. This however
leads to some loss to the company as the customer has to return back without recharging. This
also weakens the company’s image in the eyes of the customer as retailer here acts as the face
of the company.
2. Competition: Due to large number of players, now the retailer has to keep competitor products
as well. However, they are unwilling to make extra investment and reduce the share of each
existing company to accommodate the competitor products.
3. Non-Availability Of Particular Offers: There have been instances where the company has
announced new offers. However, those are not available at the retailer’s outlet. This may happen
due to lag in information passage from the company to the retailer. This situation is seen
especially in the rural areas where number of retailers is less compared to urban areas. This may
lead to loss of potential customers and ultimately unrest among the retailers.
4. Retailers Selling SIM Cards at A Cost Lesser Than The MRP: Big retailers who purchase
the SIM Cards in bulk sell the SIM Cards at a cost lower than the MRP. They use the economy
of scale achieved through bulk purchase, reduce money from their commission and pass on the
difference to the end customer. Thus, they are able to sell the SIM Cards at a lower cost than
the competing retailer. This leads to unequal sale by various retailers.
5. Old SIM Cards Not Replaced in Time: Once some offer is over, the SIM Cards which hold
that offer has to be taken back by the distributor and replaced by new SIM Cards. However,
there have been instances where the distributor is late on completing this activity. This leads to
inventory accumulation at the retailer’s shop which the retailer cannot sell.
Problem of service Cases have been found where the retailer has run out To maintain proper
gap of its recharging balance and the balance has not balance to avoid
been refilled by the distributor timely such issue.
Competition: Due to large number of players, now the retailer has Provide better
to keep competitor products as well. service to retailers
and schemes to sell
our range of
products
Non - availability of There have been instances where the company has The offer has to be
particular offers announced new offers. However those are not communicated to
available at the retailer’s outlet. This may happen everyone by proper
due to lag in information passage from the company system and
to the retailer. Mostly in rural areas especially in rural
areas.
Retailers selling SIM Big retailers purchase the SIM Cards in bulk & sell There has to be
Cards less than MRP the SIM Cards at a cost lower than the MRP. capping on selling
price to avoid such
inter competition
between retailers.
Old SIM Cards not Once some offer is over, the SIM Cards which hold Such issue has to be
replaced in time that offer has to be taken back by the distributor and immediately
replaced by new SIM Cards addressed and
proper follow up
should take place to
provide service.
• Use of Innovative / Emerging Channel Systems D.O.S.T. (door to door selling remote
location).
• Fixed salary.
• Incentives.
• IT systems in Channel Management – oracle, dealer portal, Online recharge and bookings.
• There are 4 channel partners like- TMS, Mobile Bazaar, ARC & Airtel Exclusive Showrooms.
• ARC & AE - Comes under Retail’s own head which are employees of Airtel.
• For all information & every activity there are some FOS (Follow on Support) who maintains
gap between Retail’s own head & channel partners.
Airtel
M.T.
Mobile AE
TMS ARC
Bazar Office
One Airtel-
customers SALES & DISTRIBUTION PROJECT Page 32
using Airtel
THE AIRTEL DTH - DISTRIBUTION SYSTEM
Attitudinal
Attachment-
customers feel
that Airtel always
provides the best
service and they
do not want to
use any other
brand Creating an
Airtel family to
build a sense of
community-
through online
groups and
offline exercises
where Airtel users
are brought
together
Rural expansion has not been margining dilutive so far despite aggressive rural network
Rollouts but maintaining operating margins would require a continued focus on managing
costs. While network costs are higher in rural areas, rural channels (marketing &
distribution costs, dealer commissions) are not expensive. This has helped in keeping costs
low and maintenance of margins for now.
Management does not expect the incremental capex for 3G to be substantial, given that it
will be an overlay on the existing 2G infrastructure. 3G rollout is expected to be phased;
metro/tier 1 locations are likely to be the initial potential markets for 3G. The introduction
of 3G technology will cause a major change in the dynamics of the telecom industry and
might become a reason for channel conflicts unless cautious measures are taken to avoid
the same.
1.0 REFERENCES
Marketing Channel Management by Russell W. Mccalley
Marketing Channels by Annie T. Couglan
www.airtel.com
www.tmcnet.com
www.gtms-inc.com
http://www.ossnewsreview.com/telecom-oss/advanced-sales-and-distribution-channel-
management-stimulates-growth/
Distributors in Hyderabad and Chennai
Ms. Shikha Solanki, Assistant Marketing Manager, Services Department, Airtel Office,
Okhla, New Delhi- 20
Special Thanks To
Mr. Madhubabu Jhammi, Regional Manager
Mr. Vipul Dhorajiwala, Area Manager, Mumbai
Raj Communication, Distributor, Mumbai