A SHIFT FROM PRODUCT ORIENTATION TO CUSTOMER ORIENTATION
BSNL- BHARAT SANCHAR NIGAM LIMITED
Alexander Graham Bell invented Telephone and he patented Telephone instrument in 1876. Indian Posts and Telegraphs department (P&T) was controlling the communication industry. In 1985, Indian P&T bifurcated into Department of Postal Service and Department of Telecommunication. After the corporatization of DoT in 2000, BSNL was formed. The control of telephone system of Mumbai and Delhi came under MTNL- Mahanagar Telephone Nigam Limited and telephone system control of Calcutta along with other cities had been transferred to BSNL- Bharat Sanchar Nigam Limited. It had been enjoying monopoly during the socialist period of Indian economy because it was the only telecom service provider in the country. Due to this reason BSNL’s marketing strategy was product oriented. After the liberalization of Indian economy in 1991 the company faced competition for the first time. To be in the market, it had to become customer oriented.
WHAT IS PRODUCT ORIENTATION?
Product orientation is a management philosophy in which producers emphasize on production technique and unit cost reduction rather than customer needs and wants. In this technique producer believes that “Supply creates its own demand” i.e, “If somebody makes a product someone will want to buy it.”
WHAT IS CUSTOMER ORIENTATION?
Customer orientation is a belief wherein customer needs and wants are the primary focus of an organization. Customer orientation emphasizes on listening to customers and building long-term relationships with the consumer.
BSNL - PRODUCT ORIENTATION
Before liberalization, Government of India used to regulate telecommunication market and GOI restricted the involvement of foreign players. Though many technological developments took place in this regime, but due to heavy license fee for providing mobile services, the tariff rates were very high. A mobile handset was costing around Rs. 15000 and outgoing and incoming call rates were Rs. 16/minute and Rs. 8/minute respectively. Mobile services were confined to affluent. That’s why BSNL was enjoying a monopoly market and it had emerged as the 7th largest Telecom Operating Company in the world. But BSNL didn’t care about its customer retention. There were faults in network and complaints of poor quality services. The average number of faults per 100 main lines per year in BSNL’s landline network was more than 150 where as world average was only 25. The customer had to use BSNL’s services, as there was no other option for them.
ENTRY OF PRIVATE PLAYERS AND BSNL WAS LOSING CUSTOMERS
In 1994, Government of India introduced National telecommunication Policy (NTP) to release monopoly of state owned DoT and VSNL. Foreign investors were eligible to hold 49% stake of the telecom industry. In 1999, GOI introduced a new telecom policy (NTP99) and telecom industry migrated to a revenue sharing regime. The license fee of providing mobile service was reduced and there was reduction in call rates by 60%. GOI further liberalized local telecom services and assured foreign involvement in long distance. 20 telecommunication services for basic telephony and 18 circles for mobile telephony had been created. BSNL was at worse hit due to the emergence of foreign investor in Indian Telecom market. Indian mobile market was at a potential growth. Over 32 million handsets were sold in India. Reduced call rates had enabled every common middle class family to afford a cell phone. As BSNL was a product-oriented company, it didn’t focus to retain its customer base. As a result, BSNL’s customer base was shrinking at an alarming rate. Due to delay in deploying new connections, there was 20% decline in customer-based growth rate in 2002 as compared to previous year. Moreover, during 2002, customers surrendered around 2.5 million landline connections. This is because, before mobile services became popular, many people...
Please join StudyMode to read the full document