Telecommunication may well be India’s best told story and an apt indicator of its current economic potential. In around a decade, this booming industry has seen more growth and coverage in newspapers than any other sector. Aiding this superlative growth s of being one of the fastest growing markets in the world, is India’s rising incomes, dropping tariff’s, more options with newer entrants and more competition.
Also, external conditions like friendly government policies and a stable growing economy over the past decade has resulted in the Telecom sector becoming one of the key areas in India’s growth story. India’s wireless subscriber base as of December 2009 stood at ~ 525 million subscribers with new mobile connections for that month at ~ 19.1 mn which is a 8.5% growth M-o-M.(Edelweiss Monthly Telecom Tracker, 2010) With the markets saturating in most of the developed markets, the wide consumer base and potential in this market has attracted a number of new entrants with players such as Uninor that was launched in only 8 circles (out of the total of 23 Telecom circles present in the Indian market) adding an impressive 1.2 mn subscribers within the first month of its launch.
Rationale for this Study
There is steadily a paradigm shift that is happening in the way mobile devices are to be used in the future and it could well become the one-touch-point with the convergence of mobile and networking. Rural consumer base is a segment all providers are eyeing with the increasing saturation in the urban markets and growing competition.
Given the nature of this highly competitive sector and the rapidly changing needs of the Indian consumer it is highly relevant today for these service providing brands to look at means at targeting subscriber’s beyond just a pricing or a product strategy. Tariff war’s though common to this sector, would in silos prove to be unsustainable and a short term gain strategy.
Porter (1990) suggests that branding as a key means of ‘differentiation’ and one of the most important ‘positioning’ strategies. The significance of branding from the strategic perspective has been widely acknowledged across marketing literature (Kapferer, 1994, Keller 1999). Aaker (1989) argues that a brand provides a sustainable competitive advantage for firms. According to Farquhar (1989), brands with high equity show greater resilience towards competitor promotions as well as create high barriers to entry.
Although the literature identifies several dimensions of brand equity from other industries, specifically Consumer Products and Goods, existing literature on service firms and specifically with respect to the Telecom market is sparse. Despite the growing importance of this sector and its growing contribution to the Indian services market, the topic of how Telecom service providers build brand equity and their focus areas appears to be under researched
By applying the widely accepted Consumer based brand equity model for gauging the components, this study aims at empirically studying the inter relationships and impact of components to the overall equity within the context of the Indian Telecom market.
- The identification of components of brand equity from the consumer’s perspective in the context of the Indian Telecom Market
- Understanding the relationship between the dimensions of brand equity and the overall equity for the top 4 brands in the Indian Market (Source: TRAI, Nov 2009)
- Testing the relative importance of the dimensions of brand equity towards brand building for the 4 brands considered
A comparative framework in understanding the relative changes in perception and ideological differences between the four brands under consideration
Implication of Findings
Results would provide the relative significance of dimensions contributing to the overall brand equity and hence provide a direction for managers in their brand building in terms of the weight ages to be assigned to the indicators
The measurement of the brand equity would help in evaluation of the marketing mix elements. Gaining a knowledge of the relative importance of the dimensions would provide direction to the managers in terms of deciding the promotional support
The principal contribution of the present research is that it provides empirical evidence of building brand equity, supporting Aaker’s and Keller’s conceptualization of brand equity for the Indian Telecom market. Not only has the CBBE model not been widely adopted in India, the brand building of Telecom service providers has also not been widely explored. Also, it provides a comparative framework for understanding the dimensions across the four brands
To accomplish the above stated goals, this paper offers a brief introduction to India’s Telecom market, an overview of the top service providers, their offerings, strategies and technological advances in the field. This is followed by a review of relevant theoretical literature to arrive at the research gap and the research objectives. Next, it describes the methodology and rationale for measuring customer-based brand equity. Analysis, Interpretation, conclusions and managerial implications would be arrived at the end of the study.
Brand Building in the Indian Telecom Market
Strong brands provide a means of competing beyond just functionality and price. Strong brands that connect with the customers provide a better path to growth and the added value to the customers in this case is beyond just features and pricing strategies (Ehrenberg, Goodhardt, & Barwise, 1990)
Although in the current Indian Telecom market, the aggressive competition has resulted in a virtual price war, empirical analysis states that competitive strategies based on pricing provide only short term and less effective measures (Tayebeh, Farahani & Manjappa, 2008)
In this context, the identification of dimensions of brand equity and its significance in building brands becomes highly relevant.
Indian Telecom Market – Overview
- Market Potential: Enormous business potential for entrants given the low tele- density which is around 42% as per QPAC- Indian Telecom Industry report.
- Role of Foreign players: The increase in the FDI (Foreign Direct Investment) limit from 49% to 74% in 2005 has further aided in this increasing number of players in the market bettering their offering in terms of functionalities and price.(Telecom Pulse- Enam Securities, 2009)
– Competitive Landscape:
- The landscape is highly competitive with aggressive entry of new players in the GSM market. The price wars have forced even the incumbents to join in, in order to arrest the fall in their market share
- Newer players in the market such as Tata Docomo (TTSL) topped the industry in terms of subscriber adds of upto 3.3 mn in December 2009 while the new entrant Uninor garnered up to ~ 1.2 mn subscribers in the first month of launch as per Edelweiss Telecom Tracker, Dec 2009.
- Players like Telenor and Elsihat DB are also set to launch their operations in India by June 2010 (Sector Review- India Infoline, 2009)
All this indicates that the incumbents no longer can afford to rely on short term measures to hold on to market shares
Changing Market Scenario:
Attractive Rural Markets: As per government statistics, the mobile penetration in rural regions is only around 13% as opposed to 73% in urban areas (Telecom and Technology Report- Economic Intelligence Unit, 2009)
Challenges Faced: Despite the strong growth s, there are issues the market is facing in terms of
- Increase in fragmentation in the urban markets
- Competitive nd Aggressive Pricing Strategies
- Atleast 60 to 80 million mobile subscribers will be 3-G enabled by 2012 which changes the market scenario. (QPAC- Indian Telecom Industry Report, 2009)
- The growing acceptance of Value added services (VAS), 3G would allow company’s to increase their ARPU (Average Revenue per User) s by shifting from voice to non-voice segments
CUSTOMER BASED BRAND EQUITY (CBBE) CONSTRUCT
Given the context, companies have realized that investing in the right band building efforts will make brand equity one of their invaluable assets. Developing, maintaining and enhancing brand equity becomes the prerogative for brand building by any company
Brand equity theory as proposed by Aaker (1991) was further developed from the consumer’s perspective by Keller (1993). According to Keller (2008), “customer-based brand equity is the differential effect that the brand has on consumer response to the marketing of the brand” (p. 70).
The brand equity concept is measured broadly from two perspectives
- Financial based measure
- Consumer Based measure
Various researchers have worked on developing a good model and constructs for its measurement as this is the basis for managing brand equity. In our paper we consider brand equity from the consumer perspective in terms of the value if provides to the consumer.
Aaker (1996) defines brand equity as a multidimensional concept and the components he associates with it include:
- Brand Awareness
- Perceived Quality
- Brand Associations and
- Proprietary Assets
Consumer based brand equity has also been used as a measure has been previously by several researchers such as Yoo and Donthu (2002) and Washman and Plank (2002)
Every company and sector looks at building and managing its equity as a means of gaining long term competitive advantage.
In the model developed by Yoo and Donthu (2001) based on consumer based equity model, the authors have adopted the following four dimensions for the brand equity construct;
- Brand Loyalty
- Brand Awareness
- Perceived Quality
- Brand Associations
An interesting fact contended by researchers by Srinivasan, Park and Chang (2005) was that apart from product related benefits, ‘non attributes’ also form strong preferences in terms of building brand equity and associations and forming points of differentiation.
This is of high significance in our research given that we are working with service brands.
For the purpose of our study, we adopt four dimensions to measure brand equity
Generic brand Equity Dimensions Adopted
The understanding of these generic dimensions in the context of the Indian Telecom market is done through the Pilot Qualitative research. This is further applied and tested onto the four brands using the Quantitative research
The knowledge gaps identified are as follows:
- The existing literature points to the presence of various consumer based brand equity models and constructs, but there has been very few studies done in this field in terms of a particular sector but rather the focus is on development of a valid measurement model
- There are very few studies conducted in this field in the Indian context and specifically there are almost none that have been done from the perspective of identification of components for services
- There is hence paucity of literature about building service brands. Also, no previous research has examined the link dimensions of brand equity to the overall brand building for the Telecom market
- There is almost nil literature that is available that relates to branding and its impact on the Telecom market across the world. This would provide a whole scope of opportunities for future research in providing managers specific indicators and relative significance of factors that contribute to brand building. The research has further not been restricted to student samples only and is to be conducted on the actual consumers
This article focuses on the measurement and impact of the dimensions on overall rand building exercise which is of paramount importance to the managers specifically in the field of Telecom where there has been sparse research done to arrive at the sector specific factors that contribute to building a strong brand.
This research aims to address this need gap in both geography and sector (Indian Telecom market) through this study
RESEARCH PROBLEM DEFINITION
To measure the components of brand equity and explore the impact of the different dimensions on the overall equity specifically for the top four service provider brands operating in the Indian Telecom Market. Also to find out which is the most important component of the branding that leads to success in the Indian Market by the application of Consumer based brand equity (CBBE) model.
Here, the category is a part of the design as we are specifically looking at how the components work in the case of service brands. Hence, the research findings would be applicable, if any, to other service categories than CPG or Durables.
- To gauge the indicators of different components of Consumer based Brand Equity specifically in the context of the Indian Telecom Market*
- To Investigate the causal relationship between the dimensions of brand equity and the overall equity for top four service provider brands operating in the Telecom market* in India
- To use the Customer based Brand Equity model to test the relative importance of the dimensions of Brand Equity towards brand building for the Indian Telecom market*
- To provide a comparative framework in understanding these dimensions from the perspective of the four brands under consideration.
* Here, the top 4 brands in the Indian Telecom Market (Airtel, Vodafone, Reliance and BSNL – as of November 2009) are considered as a part of the analysis
1.1 Research Design: In order to achieve the objective as explained by the previous section, the following stages are proposed as a part of the research design.
RESEARCH DESIGN AND ANALYSIS FRAMEWORK – Storyboard
PILOT QUALITATIVE RESEARCH
The imperative behind this pilot Qualitative Analysis is to identify various parameters that are specific to the Indian Telecom market as derived on the basis of the CBBE model. These parameters are further taken as input for the Quantitative stage in the questionnaire.
Data Collection Techniques
Depth Interviews was used as the primary means of obtaining the qualitative data. Given the generic nature of the attributes to start with, the depth interviews provide flexibility in data collection and insights on pattern of usage. The purpose of these exploratory and unstructured interviews was to uncover the underlying motivation behind a person’s behavior and actions.
A guideline/discussion guide (Please refer to Appendix
A total of 8 depth interviews were conducted to understand the nature of subscribers need satisfaction when it comes to communication. Also, it aims to understand the emotional and functional benefits that is derived
The discussion guide prepared broadly follows the below structure:
- Perspective on the Indian Telecom current market scenario
- The manner in which communication has changed over time
- Factors influencing choice of service provider
- Benefits sought in terms of functional and emotional attributes
- Brand Associations and Image associated with current players
- Association of Service Providers with instrumental and terminal values
- Drivers and restraints in choosing provider
The tools and techniques used in order to probe included Projective Techniques such as Word Association, probing on attitudes and behavior with respect to their usage patterns and the emotional and functional benefits sought. Also, Projective and Enabling techniques such as Personification and Bubble drawing was used. The respondents were required to enter their thoughts associated with the provided brands. Data Elicitation techniques such as Sentence Completion and Clustering were used for the identification of instrumental and terminal values with the service providers apart from Brand Mapping
The various parameters that have been identified from the pilot qualitative questionnaire are to be tested to apply the CBBE model to the 4 top brands. The questionnaire is used for this purpose in order to identify the brand preferences and test the veracity of the parameters identified from the qualitative research.
For this study, for the purpose of data accuracy and constraints, the top 4 brands in the Indian telecom market (as of Nov 2009) are considered – Airtel, Vodafone, Reliance Communication and BSNL. Also, this selection allows us to compare and analyze the differences between diverse brands such as Airtel and BSNL. Also, it allows us to analyze the change in perceptions in the market towards brands such as BSNL over the years despite its strong head start in the market.
The various parameters that have been identified from the pilot qualitative questionnaire as being variables leading to brand equity interact with each other as well. The independent variables identified are the 16 variables from the factors given below:
a) Brand Knowledge
b) Brand Associations
c) Social Image
d) Brand Loyalty
e) Product Benefits
f) Brand Usage
i. These 16 variables have been expressed in form of attitudinal statements for each of the 4 brands.
ii. The respondents are required to rate them on a 5 point scale between Strongly Disagree to Strongly Agree on the basis of their usage/perceptions.
iii. Apart from this, the personal profiles of the respondent including the fundamental demographic details are collected.
iv. Also, the usage habits in terms of their brands and the services utilized are also collected for further analysis.
The questionnaire that is used is present in Appendix <> for reference. Following the data collection, the analysis is done using SPSS 15. This is further elaborated in the Data analysis section.
1.2 UNIVERSE SELECTION
In the first Qualitative Stage where we are looking at having Depth interviews to identify and assess the parameters specific to the Indian context, it is important to have a representation of the top 4 brands that is to be analysed. Hence the universe selection is as follows for the Qualitative Stage:
Current Service Provider
In the next stage of Quantitative analysis, we are looking at seeking responses and assessing the parameters identified to apply the CBBE model for the 4 brands. Hence, this should broadly meet the following criteria:
- Born and Currently residing in India
- Male or Female
- Age group between 20 – 60
- Must be a user/have used at least one of the following four brands – Airtel, Vodafone, Reliance or BSNL
As the questionnaire was to be primarily administered online, it also necessitated the presence of a internet connection and was geographically dispersed across Metros and Tier I cities pan India
The Pilot qualitative research required Depth interviews from the perspective of the 4 different brand users. A total of 8 depth interviews was conducted for this purpose across genders and SEC’s. the sampling technique was stratified random with stratification on the basis of he brand
a. The questionnaire for the Quantitative stage was administered online. The targeted size was 130 to 150. This was arrived at considering the constraints given that each respondent was to provide responses for all the four brands thus providing rich data per response.
b. The current offerings offered by the service providers are not segment-specific. Covering the difference in attitudes depending on changes in age, gender or geographic dispersion is not within the scope of this study and is not statistically analyzed from the point of future research. Hence there is to be no age or gender restriction in the sample selection.
c. The cities chosen for sample selection include the metropolitans across the country and Tier I cities which would give a snapshot into the various geographic circles where the service is present within the constraints of administering the questionnaire online.
Out of the total of 172 respondents, the number of complete valid responses obtained was 121. The demographics of this set are as follows:
The completed responses have been filtered as per the following criteria:
a. Location Constraint
b. Usage Constraint: User/have used at least one of the top four brands – Airtel, Vodafone, Reliance and BSNL
Stage 2: DATA ANALYSIS – Pilot Qualitative Study
The broad parameters arrived at from the in- depth interviews are as follows:
Performance of the Brand
With the evolution of the Indian Telecom Industry and the emergence of multiple players with competitive offerings, the Indian subscribers are at a stage where the minimum expectation from any new entrant is the presence of a good working model with uninterrupted service quality, responsive customer service and flexible tariff options.
“…. Having a clear connection cannot be a factor in choosing….everyone provides that….”
“ I would expect the provider to have good and responsive customer service to cater to complaints and resolve issues immediately”
“ …Apart from the basic services, I would also be interested in new offerings such as music and game downloads..”
“ …. I prefer lower recharge coupons and flexibility in payment plans..”
Loyalty towards the providers
Certain subscribers usually tend to stick with the current players unless there is a shift in either their needs or environment. Changes in provider are usually done when there is a shift in location geographically or a personal need. Also, there is the segment of consumers who do not really face an issue of number portability and are willing to switch to a different provider for want of a better offer or tariff
“ ..When I went to college, I found my friends with ‘X’ connection and hence got one as well…”
“…This second connection was bought when I shifted from Hyderabad to Bangalore for my job..”
“I like the friends circle plan that is offered by brand ‘Y’ and it suits my usage habits…..”
Presence of a brand for a long duration in the market or with long term usage, subscribers develops a sense of attachment towards the brand that leads to the feeling of trust.
“… I think this brand is good and trust in subscribing to their offerings….”
“ I think they are the best in the market, being the leaders in this region..”
Most urban subscribers are conscious about the fit of the brand with their personalities. The youthfulness of the brand or the positioning also dictates their preference towards it.
“ …I would like it to be a bit classy and not for everyone….”
“.. Trendy, with offers for the students is something I would look out for in my brand..”
“ ..The corporate connections are available only with these providers..which says a lot about these brands..”
Hence narrowing down from the Pilot qualitative research, the factors that are taken into consideration for Quantitative analysis are as follows:
Questionnaire – Data Collection- Parameters for Assessment
1) Personal Profile
b. SEC (Data regarding Education and Occupation of the Chief Wage earner is collected and then coded to extract the SEC of the respondent)
c. Place of Residence
2) Brand Awareness
a. Brand Recall
b. Identification of Brand Elements
i. Color of Brand Logo
ii. Associated celebrity
iii. Associated Tag Line
3) Brand Knowledge
a. Brand Visibility across media
4) Brand Equity (Dependent variable)
a. Rating of brand as the ‘Most Preferred Service Provider’
5) Brand Associations
6) Social Image
a. I believe the brand is good and would subscribe to its offerings
7) Brand Loyalty
a. I believe this brand is worth the money I pay for its offerings
b. Recommend ability of the brand
c. Switching Likelihood to competitor’s brand given better offerings
8) Product Benefits
b. Good Connectivity
c. Clarity of Voice
d. Responsive Customer Service
e. Broad Set of Services and features
9) Brand Usage
a. Number of Providers used thus far
b. Current Service provider
c. Name of brands used so far
d. Choose type of services availed from the service provider
Stage 3: DATA ANALYSIS – Brand Awareness and Usage pattern study
a. Age Dispersion: 20-60 years
b. Locations considered: Metros, Tier I Cities pan India.
Ahmedabad, Bangalore, Chennai, Mumbai, Delhi and Hyderabad
c. By Gender:
d. By SEC Classification
From fig <>, it is seen that amongst the total valid respondent s, there is favorability towards SEC A. Given that most of the survey has been online in nature and that locations considered being metros and Tier I cities of India , this is justifiable.
Further fig <> , provides the split across the 4 brands on the basis of SEC. It is clearly seen that both Airtel and Vodafone are mostly similar in terms of their positioning and having a higher incidence towards SEC A1 and A2
It is interesting to note from fig <> that apart from Airtel that enjoys almost 95% unaided recall, the other brands are comparable in terms of their recall quotient. Specifically, BSNL as a brand has a higher recall on consumer’s minds over Vodafone and Reliance.
In fig <>, when aided recall is considered, the disparity amongst brands reduces to a large extent and almost all brands fall between the 93 to 95% range except for new brands such as MTS which currently have a presence only across 11 out of 23 circles.
An interesting fact to note from fig <> above is that in spite of the time elapsed, the ‘Hutch pug’ still holds a strong bond with the brand and subscribers compensate for the absence of celebrity’s through these brand symbols
From the fig <> it can be seen that most of the respondents on an average cluster around the possession of 2 service providers till date. Also, the average period of usage for respondents is around 24 months as is seen from fig <>
STAGE 3: DATA ANALYSIS – QUANTITATIVE
Step 1: Identifying the important components of Brand Equity – brand wise – Using Exploratory Factor Analysis (EFA)
The various parameters that have been identified from the pilot qualitative questionnaire as being variables leading to brand equity interact with each other as well. These 16 variables have been expressed in form of attitudinal statements for each of the 4 brands and the subscribers are to rate them on a 5 point scale between Strongly Disagree to Strongly Agree on the basis of their usage/perceptions.
Exploratory factor analysis (EFA) is used to get this inter relationship or pattern between these variables and to reduce the number of variables. The resulting independent variables are termed ‘factors’.
The resulting factors and their variable groupings are observed to explain the nature of the factors and the resulting factors or components would be used in further analysis.
Further, this is performed for each of the four brands. As a heuristic, factors with close loading on two or more components are rejected as they are not explained uniquely by one component. Further Eigen values are used to identify the number of factors. Principal Component Analysis is the extraction method that is used.
Step2: Extracting the Scores of the components of Brand Equity – brand wise
The score of each of the resulting components of Brand Equity such as Perceived Quality, Brand Worthiness, Brand Loyalty, Brand Knowledge and Brand Personality have been computed using the mean of the weighted average of all the variables that are included within each component of the brand equity. This is calculated for each brand. For example: The component Airtel – Brand Worthiness consists of 7 variables. The score of the 7 variables is multiplied by their respective factor loadings. The mean of the ‘weighted’ score of all the 7 variables is the score of the component Airtel-Brand Worthiness for Brand Airtel. These computed score of the factors and the scores of the dependent variable for Brand Equity are used to calculate the impact of components on the overall brand equity in the next stage
Step3: Impact of Components of Brand Equity on the overall Brand Equity – brand wise – Using Multiple Regression Model
On aggregating the variables on to different components brand wise, the next stage is to analyze the impact of these various components on the overall brand equity – brand wise.
Score on overall equity – The dependent variable has the following attitudinal statement to get a brand wise score on the following statement that is measured on a 5 point scale
“Your preference/liking levels for each of the 4 brands as the ‘Most Preferred Service Provider’”
It is seen that the variables that load onto the components vary brand wise. It is important to find the impact of these components on the overall brand equity for each brand in order to understand the significance each component plays on brand preference for each of the 4 brands. Hence, the weighted scores of the components are used as dependent variables to find their impact on the overall brand equity (as measured by the above rating) using Multiple regression analysis. This is calculated for each of the four brands.
The regression model is given as follows:
Y = a + b1X1 + b2X2 + b3X3 + b4X4 + …..bnXn + e
Y = Score on the overall brand equity as given by the dependent variable for each of the brands
X1 = Score on Component1 for each of the 4 brands
X2 = Score on Component2 for each of the 4 brands
X3 = Score on Component3 for each of the 4 brands
Xn = Score
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