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International Journal of Marketing and OF MARKETING AND (IJMHRM), INTERNATIONAL JOURNAL Human Resource Management HUMAN ISSN 0976

6421 (Print), ISSN 0976 643X (Online), Volume 4, Issue 1, January - April (2013)

RESOURCE MANAGEMENT (IJMHRM)

ISSN 0976 6421 (Print) ISSN 0976 643X (Online) Volume 4, Issue 1, January- April (2013), pp. 21-27 IAEME: www.iaeme.com/ijmhrm.asp Journal Impact Factor (2012): 1.5321 (Calculated by GISI) www.jifactor.com

IJMHRM
IAEME

VALUE ADDED SERVICES CHALLENGES AND OPPORTUNITIES IN INDIA


Dr. Vinit Dani Associate Professor Symbiosis Institute of Management Studies (SIMS) Range Hills Road, Kirkee, Pune-411020 Mrs. Vanishree Pabalkar Assistant Professor Symbiosis Institute of Management Studies (SIMS) Range Hills Road, Kirkee, Pune-411020 ABSTRACT Value Added Services (VAS) is non-core telecommunication service for which suppliers add value to the customer's information by enhancing its form or content by providing for its storage and retrieval. VAS has evolved in the long way and has tremendous potential in the emerging market and can alter the scenario of Telecom industry by creating more of opportunities to drive average revenue per unit (ARPU) by way of Innovation in the VAS. Organizations are emphasizing on Global markets for revenue generation, since Indian telecom operators continue to keep bulk of VAS revenues from their subscribers. The subscribers, when avail VAS services, like on-line data processing, on-line data base storage and retrieval, electronic data interchange, voicemail etc. the subscribers pay the telecom operator for the services used. The operator, in turn, keeps 60-70% revenues and the remaining goes to VAS companies. The exploratory research paper explores the role played by stakeholders in creating value and challenges faced by them. It further talks about benefits derived by offering VAS to Indian consumers. Key words: VAS, Telecom, Innovation, Market, Storage, Service

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International Journal of Marketing and Human Resource Management (IJMHRM), ISSN 0976 6421 (Print), ISSN 0976 643X (Online), Volume 4, Issue 1, January - April (2013)

1.

INTRODUCTION

The impact technology has had on India cannot be denied. It is observed that in the last two decades, there have been many technological advancements happening all over the World. With the entry of World Wide Web (www) in the early 1990s, the huge potential of growth was foreseen by the experts. Such advances in the technology have enabled the Organizations not only to serve the customers in a better way with increased customer services, and streamlines processes but also pave way to foster new collaborative partnerships with other Organizations. Introducing products and services to the consumer has come a long way since Montgomery Ward carried his catalogue of products from door-to-door in 1872 (Schneider, 2009). Service providers have evolved in their service promotions channels with multiple advancements in the technical devices that they are infinite to count on. In 2005, Information today reported that cell phone use in India already surpassed cell usage in the United States (159 million). Service providers have realized that it is beyond customer expectation he has to reach, to ensure the customer does not deflect, thereby controlling the churn ratio. VAS like the SMS, MMS, Voice-calling, Mobile Banking etc to name a few, are the key elements in the VAS, which the customer looks out for today. Hence conveying about this VAS to the customers is equally important. The global VAS industry is growing at about 40-50 per cent, but the Indian VAS market has seen growth rates of 60 percent in recent years. It is estimated to touch 251 billion rupees ($5.5 billion) in 2009/10, on the back of a pool of more than 500 million mobile customers. 1.1 Department of Telecommunications (DOT) categorizes different VAS as under Electronic mail: The Electronic mail is the email service that the subscriber can avail. Using this service the user can automatically receive his emails on his mobile phone, as a normal SMS and does not require any GPRS connectivity. Voice mail: Voice mail facilitates the customers to connect to their contacts through Voice. This can be for a temporary phase or permanently, unreachable via SMS, such as on landline phones and mobile phones on networks without SMS messaging. Audiotex service: Audiotex services are, as a rule, provided at nine-digit numbers in the following format: 90X AB CD ZZ, where: X defines the type of the provided service and can be any number between 0 and 9 in accordance with the numbering plan. AB determines the per-minute rate charged to the end user including VAT, the rate may also be charged per call.CD ZZ these numbers are allocated by the Czech Telecommunications Office. Direct Access Code Dialing: With Direct access Code dialing, the access is provided for the subscriber to prefix the required code to follow by the number, to call from one country to the other. Bulletin Board Service: A bulletin board system is software which enables the customers to connect and login to the system that uses the terminal program. After successfully logging onto this softwares, the user can download content, read news and bulletins, send and receive e mails, through live chat.
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International Journal of Marketing and Human Resource Management (IJMHRM), ISSN 0976 6421 (Print), ISSN 0976 643X (Online), Volume 4, Issue 1, January - April (2013)

Videotex Service: Videotex service is a system that enables users to have interactive content and displays it on a television, typically using modems to send data in both directions. Videotex can be used to refer to services, including the Internet, bulletin boards, online service providers, and even the arrival/departure displays at an airport. Video Conferencing: Videoconferencing is the system which allows communication between two or more locations simultaneously. Morning Alarm Service: Morning Alarm service allows the users to download their favorite ring tones and set them for morning alarm. 2. OBJECTIVES a. To understand role played by handset manufacturers and mobile phone operators in value chain b. To understand challenges faced for providing VAS c. To determine the benefits derived from VAS by consumers in India. 3. LITERATURE REVIEW

Turel et al. (2007) found that customers adoption decision of the service provider depends on the quality offered and the price of the service provided. Researchers and experts have different reports regarding the relationship between dimensions of Value added Services and customers satisfaction. Kim et al. (2004) discovered that core quality, value added services and customer support had a definite impact on the level of satisfaction of customers in cellular service companies which finally brings loyal customers to the company. Since it is the overall Service quality that determines the customer satisfaction, it is only through Value added Services which act as a rationale of differences between expectation and competence along the important quality dimensions. Parasuraman, Zeithaml and Berry, identified ten requirements useful for customers evaluation of the quality of services: reliability, responsiveness, tangibles, communication, credibility, security, competence, courtesy, understanding the customers and service accessibility. Liberalization has paved ways to the Indian economy. The process of liberalization in the country began in the right earnest with the announcement of the New Economic Policy in July 1991. Telecom equipment manufacturing was de-licensed in 1991 and value added services were declared open to the private sector in 1992, following which radio paging, cellular mobile and other value added services were opened gradually to the private sector. This has resulted in large number of manufacturing units been set up in the country. As a result most of the equipment used in telecom area is being manufactured within the country. Basically, the Cellular Mobile, Paging and Value Added Service, and Global Mobile Personal Communications by Satellite, Composite FDI permitted is 74% (49% under automatic route) subject to grant of license from Department of Telecommunications subject to security and license conditions, as per FDI Policy circular 1/2010 of DIPP.

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International Journal of Marketing and Human Resource Management (IJMHRM), ISSN 0976 6421 (Print), ISSN 0976 643X (Online), Volume 4, Issue 1, January - April (2013)

FDI up to 100% permitted in respect of the following telecom services: Infrastructure Providers providing dark fibre (IP Category I): Electronic Mail; and Voice Mail

Subject to the conditions that such companies would divest 26% of their equity in favor of Indian public in 5 years, if these companies were listed in other parts of the world. Telecom Sector has witnessed significant growth in the last two decades. The increase in the subscriber base from 22.8 million in the year 1999, it has grown today to 926.53 million in December 2011, which is 78.86% of Tele-density, according FICCI report on Content Technology. With Low tariffs, Low ARPU and with advancement in Technology, subscribers are motivated to upgrade the VAS from the service providers. Adding to this is the significant proof of the value of technological advancement it the growth in world economies. In 2005, India had one of the lowest per-capita annual income ratings in the national rankings; however, as access to technology increased annual incomes increased as well. Economists are now viewing India not as a developing country but as an "emerging economic superpower. In spite of growth observed in the telecom sector through VAS, its application and opportunities that prevail a challenge to identify the impact that VAS has on customer satisfaction. This fact can further be substantiated by referring to Haque et al. (2010), who in their research have concluded that service quality directly affects the customers' perceptions in selecting mobile telecom operators. Further, it has been frequently pointed out that once customer has been acquired and connected to the network of a particular operator, their long term relations with the operator are of greater importance for the success of the company, considering that this industry has a lot of competition. (Grepott et. al, 2001). This is mainly due to the fact that cellular service providers do not differentiate from each other. Therefore in such a competitive scenario, the marketers do understand that in order to have the market sustenance, one has to enhance the quality of the services provided. 4. RESEARCH METHODOLOGY

The research paper presented here is an exploratory paper the data for which is collected from various secondary resources like research papers, journals, magazines, articles from other databases. In addition to this, various other data sources from DOT, FICCI, Indian economic overview, TRAI are used. 5. DATA ANALYSIS

5.1 Role of Handset Manufacturers Depending on their position and interest in a given market mobile manufacturers play a variety of roles across the mobile VAS value-chain. The roles hand set manufacturers play would depend on their ability to provide functionalities that are inherently integrated into the mobile handset. For instance, Nokia Life is an application that is integrated into certain types of Nokia handsets. Thus handset manufacturers play crucial role in driving the distribution and
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International Journal of Marketing and Human Resource Management (IJMHRM), ISSN 0976 6421 (Print), ISSN 0976 643X (Online), Volume 4, Issue 1, January - April (2013)

uptake of mobile applications. Handset manufacturers can embed applications and native content into a handset. Through partnerships with mobile network operators, handsets are sold in markets according to different subsidy and pricing models. Impact on market positioning and sales would depend on supply-side partnerships with handset manufacturers. On other hand, applications can help drive product differentiation from a demand-side. Value is derived in three principal ways. a. Application uptake and usage can help in capturing end-user revenue. b. Data analytics can be leveraged for informed marketing and advertising. c. Increased sales and brand visibility in the market can help realize indirect value. 5.2 Role of Mobile Network Operators Mobile network operators impact the value chain by creating, collecting and delivering relevant content to mobile phone users in more than one area. Mobile network operators can tailor and deliver content that is easy to use as it is integrated with the device. They also control how their products are marketed to different consumer groups, a key point in the chain. Mobile network operators can drive uptake of its services and differentiate from peer competitors by integrating a particular product, like a toolbar on a phone that displays weather or exchange rates. Usage is increased when mobile network operators develop mobile VAS to increase the ways in which users can interact with their phones. Brand differentiation is brought by reinforcing services. This is done either through mobile VAS products that are focused on universal products that are available to the overall subscriber base or by concentrating on specific subscriber segments. The products can be developed by mobile phone operators either by partnering with other segments of the value chain or developing own products. Improved customer segment acquisition and reduction in churn can be achieved by differentiation in the market or from direct service revenue (e.g. ringtones) and marketing. 5.3 Business Challenges As each market is unique sizing and assessment of specific business challenges in each market is based on the potential impact achieved if a mobile VAS solution were to be implemented to address the business challenge. Based on unique features of each individual market, sizing and ranking has been categorized as follows: a. Reliability: Basically means accessibility of entrepreneurs in each market to relevant resources. An example would be the reliability of the market data made available to an entrepreneur based on the frequency the data is updated. b. Quality: Availability of quality of resources to an entrepreneur in each market. An example of this would be if market data were available to an entrepreneur, the quality and detail would need to be of a specific standard to facilitate in making an informed business decision. c. Availability: Level of resources available to an entrepreneur in each market. An example of availability would be the amount of market data available to an entrepreneur in a specific market data in order to make an informed decision on the pricing of their product/service.
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International Journal of Marketing and Human Resource Management (IJMHRM), ISSN 0976 6421 (Print), ISSN 0976 643X (Online), Volume 4, Issue 1, January - April (2013) d. Affordability: Cost involved in accessing/acquiring specific resources from each market. An example would be the cost associated with acquiring market data in order for an entrepreneur to make an informed business decision. e. Social Stigma: Constraint associated with socio-cultural stigmas. An example of this would be the social stigma attached to a woman entrepreneur negotiating prices with a male counterpart. f. Latency: Accessing relevant resources in each market within a given time and with ease by the entrepreneurs. An example of this would be the abundant availability of market data but a high level of difficulty associated with accessing this data. 5.4 The role played by VAS Technology Impact on consumer offers and experience in India In the global marketplace advancing technologies are providing companies with new customers every day by developing more affordable gadgets. With advancements in the technology, the customers expectations also keep varying. Service providers have to therefore continuously strive for excellence in the services. Information processing systems make sharing information faster, easier, and increasingly more widespread. According to research firm Gartner mobile applications with money transfer via short message service lead the list of top 10 most used mobile applications, followed by mobile search to drive sales and marketing opportunities on the phone, mobile browsing, mobile advertising and mobile music. Most kids in rural India do not have access to formal education and often end up working on the farms during the day. So to help reach out to these children, an inspiring project, Millee, is under consideration, which uses mobile gaming technology to enhance access to literacy among children of school-going age in the developing world. Another very interesting project is farmers using a phone to water their farmland in Gujarat. In December 2009, Infosys announced the launch of Flypp, an application platform that has delighted digital consumers with a host of ready-to-use experiential applications across a universe of devices. Mapmyindia, in partnership with Sygic, has launched mobile apps that give the user street level directions, and lets them search across points-of-interests (PoI) on their mobiles without the need for a data plan. Thats not all mobile trading will soon be a reality, and Indias markets regulator SEBI is currently working on the final guidelines. Already, Nokia has partnered with ITC e-Choupal to offer personalized agri-services on the Nokia Life Tools to e-Choupal network. And, information giant Thomson Reuters latest offering for farmers, Reuters MarketLite, is already all the rage among the village folks who use information on seeds, weather and other farm inputs regularly. Recently, IMImobile, the global service creation partner for operators, media providers and enterprises launched DaVinci Social, a white-labeled service that enables people to easily manage their mobile digital social life. It is apparently the first Bollywood streaming application ready on Nokia s60 5th edition devices and streams Bollywood songs, movie tailors, directors cuts etc. 6. CONCLUSION

A recent study by consultancy Informate Mobile Intelligence revealed that mobile users spend 15-20 minutes on messaging activities daily, while 40-45 minutes are spent on entertainment where users listen to a minimum of 2-3 songs and click 15-18 photos in a month. The study also revealed that card and puzzle categories are the most favored among gamers in India. With its mobile subscriber base growing rapidly, advertisers in India are also adopting innovative ways of reaching out to the consumer on their mobiles. While basic promotional SMS alerts are used by everyone- from small businesses to national-level politicians, advertisers are focusing on more complex mediums such as embedding promotions within mobile games. 26

International Journal of Marketing and Human Resource Management (IJMHRM), ISSN 0976 6421 (Print), ISSN 0976 643X (Online), Volume 4, Issue 1, January - April (2013)

With intense competition driving down tariffs, mobile operators in India are increasingly focusing on VAS to generate revenues. VAS, which covers the entire gamut of services from downloads of movies and music, to SMS and MMS, ringtones, caller tunes and games, has been on a solid footing globally, but given the low base and the familiarity with information technology, it is witnessing exponential growth in India. Although most Indian consumers are not very comfortable with non-voice usage of their mobile phones, that trend is gradually reversing, helped by the entertainment sector, with music and film companies, game makers and television channels aggressively entering the mobile content market. Around 60 percent of all VAS revenue currently comes from music downloads and ringtones, and driven by a huge youth market, demand for gaming, mobile imagery and streaming audio and video is rising. Indian telecom firms currently draw only a small portion of their revenues from VAS, but this will likely grow in future. The ARPU from non-voice services, including data card access and SMS, is expected to rise from 9 percent now to about 25 percent. Data services should see a surge in adoption and usage. High-speed applications will open up a lot of possibilities of innovative VAS enabling diverse infotainment service opportunities in this film and cricket-focused country. BIBLIOGRAPHY 1. 2. 3. 4. 5. 6. (Online) www.DoT.gov, in 21st September 2012 (Online) ficci.com, 22 September 2012 (Online) ieo.org.in, 25th October 2012 (Online) www.indiabudget.ac.in, 25th December 2012 (Online) www.media.com/en/news-insights, 27th February 2013 (Online)www.gsma.com/mobilefordevelopment/.../Mobile-Value-AddedServices-digital-report.pdf, 27th February 2013 7. TRAI report 8. African Journal of Business Management Vol. 4(16), pp. 3457-3462,18 November, 2010 9. Booz&Co 10. IJBIT, Volume 3, Issue 2, April-September 2010 11. International Journal of Research in Finance & Marketing 12. V.A. Parasuraman, A. Zeithaml, L. Berry. A Conceptual Model of Service Quality and Its Implications for the Future Research. Journal of Marketing. 1985 13. V. A. Zeithaml, L.L. Berry and A. Parasuraman, The Behavioral Consequences of Service Quality, Journal of Marketing, 1996. 14. Dr. Vinit Dani and Mrs. Vanishree Pabalkar, Impact of FDI: Banana Republic or Miracle Growth International Journal of Management (IJM), Volume 4, Issue 1, 2013, pp. 157 - 162, ISSN Print: 0976-6502, ISSN Online: 0976-6510, Published by IAEME. 15. Nitin Panwar and Mahim Sagar, Can Value Added Services be a Point of Purchase Differentiator? International Journal of Management (IJM), Volume 1, Issue 1, 2010, pp. 88 - 103, ISSN Print: 0976-6502, ISSN Online: 0976-6510, Published by IAEME.

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