Understanding and applying the customer equity model for Airtel

Abstract

The telecom industry in India has seen phenomenal growth over the past decade, especially with the liberalization wave. India has become one of the fastest-growing mobile markets in the world. The choice for telecom consumers is vast, ranging from the fixed landlines, to GSM mobiles, the CDMA mobiles right up to WLL lines. With the price of handsets and mobile tariffs dropping, the only country with more mobile phones than India with 246 million mobile phones is China. Currently, the competition amongst the mobile players is stiff, with Bharti Airtel ruling the roost in the GSM space, followed by Vodafone and BSNL. The service differentiation amongst these players is not high, the value added services are similar, and the tariffs are comparable. In such a scenario, each player needs to define a strategy which will not only help retain existing customers, but acquire new ones from its competitors as well. The CEO and the product managers of each of these companies would be trying to answer one or all of the following questions - How do I manage the brand? How will my customers react if we make changes in the product or service offering? Should I raise price? What is the best way to enhance the relationships with my current customers? Where should I focus my efforts? The answer to all these questions lies in focusing on customer equity the total of the discounted lifetime values of the firm s customers. Essentially, the think tank needs to describe the key drivers of firm growth: Value equity, Brand equity, and Relationship equity. Understanding these drivers will help increase customer equity and, ultimately, the value of the firm. This project attempts to study the conceptual frame work of Customer Equity in the telecom industry, particularly in the cellular space and the evolution of the approach towards marketing and sales by the big players in the industry. We would focus on how Airtel is able to stay at the top, and what aspects of customer equity they are focusing on as an organization, what steps they are taking towards maintaining it.