Managing Marketing Programs Pricing Strategies- Mobile Phone Industry

Topics: Mobile phone, Smartphone, Nokia Pages: 19 (6120 words) Published: October 9, 2010
1 Managing Marketing Programs Pricing Strategies- Mobile Phone Industry By Parvez Rangwalla Welingkar Institute of Management Development & Research, Bangalore. 2 Topics Covered:Topic Page No 1. History and growth of mobile phone industry in India 3 2. Current scenario of Mobile phone industry 4 3. Marketing strategies of Major players- Nokia and Samsung 7 4. Pricing Strategies in Mobile Phone Industry 12 5. Current trend in mobile industry 17 6. Future of mobile industry (RURAL) 20 7. References 22 3 1. History and growth of mobile phone industry in India: The real transformation came in the scenario of Indian telecom industry after announcement of National telecom policy in 1994. The mobile services were commercially launched in India in August 1995. In the initial 5–6 years the average monthly subscribers additions were around 0.05 to 0.1 million only and the total mobile subscribers base in December 2002 stood at 10.5 millions. However, after the number of proactive initiatives taken by regulator and licensor, the monthly mobile subscriber additions increased to around 2 million per month in the year 2003-04 and 2004-05. In the last few years there has been a huge exponential growth with addition of about 10 to 15 million subscribers per month to customer base.

In the initial days of mobile phone in India in mid 1990‟s the grey market accounted for 80 per cent of the mobile phone sales due to a huge price differential between the legally imported and the grey market phones. Even as the government slashed the duties at the same time various mobile manufacturers reduced their rates to induce the customers to buy a phone from authorized phone shop. Today the grey market comprises very small share of market.

When mobile phones were introduced in India in the mid-90s, US based Motorola, Sweden's Ericsson and Finland's Nokia dominated the handset market in India. Over the years, the old order has changed today players like Samsung, LG, Apple, Virgin, HTC, Huawei, Haier are all competing for a place in the market. Apart from this there is also a competition from imported unbranded Chinese mobiles which are avaible with lot many features of a typically high end say Nokia mobile but, at a substantially lesser price.

After the initial dominance of Nokia from 1990‟s till 2002, a change occurred in Indian market hen CDMA technology was launched in the year 2003. At this point the Korean brands namely Samsung and LG established themselves after they tied up with CDMA operator Reliance Infocomm. This was a breakthrough in India‟s mobile phone industry since, people were able to get mobile phones with Reliance connection only for a initial cost of about Rs. 500/-. This opened up a mass market for mobile manufacturers in India.

Gradually all the major players like Nokia, Motorola came up with their CDMA models and have been able to regain their market share. 4 In the last few years India has witnessed a revolution in mobile phone market with about 8 to 10 million subscribers being added to the customer base each month. The major reasons for this boom have been:

1. Falling tariff rates of telecom service providers .
2. Fall in the prices of mobile handsets.
3. Increase in the reach of service providers covering ever nook and corner of

the country. 2. Current scenario of Mobile phone industry: Following are the highlights of mobile phone industry in India as on December, 2009: 1. The penetration of mobile phones stands at about 30%. 2. 81% of mobile users are in urban area.

3.India‟s rural teledensity stands at about 12.6%
4. India has about 517 million subscribers by December, 2009. 5. It is forecasted that sales of mobile handsets in rural India will grow at CAGR

of around 17% from 2009 to 2012 Above figures clearly indicate that although mobile phones might have made significant inroads into the urban market & urban market may start moving towards saturation but, still lot of...
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