Wednesday, April 5, 2017

Competitor Analysis: from perspectives of Reliance Industries Limited.

Reliance Industries Limited (RIL) is India’s first private company to have made it into Fortune 500 (http://www.ril.com) . What started as a small trading company in 1957 has made a foray into sectors like petroleum refining, petrochemicals, gas exploration and Tele-communications in late 20th century. In this script, we shall discuss about the growth and strategy of Reliance Telecommunication Industry.

Market Entry and growth: Reliance Telecommunications(RTC) started in 2004 as a diversification unit to the already established & flourishing parent company (http://www.rcom.co.in/Rcom/business/home/index.html). As a new Entrée to the industry, RTC faced tough competitions from the existing players in the market under the likes of Vodafone, Airtel, TATA, BSNL and others. However, Reliance made careful competitor analysis [1] and concentrated their service development in the lowest section of the customer and provided a cheap solution to mobile technology. This strategic development of providing cheap solution to the lower segment of customers had given reliance a large volume of customer base. When other competitors were fighting for cloud spaces in the city, Reliance connection was dominating the rural market within 5 years of its existence. What Reliance showed is that, although telecommunication was a high-growth and high entry-barrier market in early 21st century in developing countries like India, a careful competitor Analysis and an intelligent choice of market segment could prove to be a success to a new entrée.

Technological Advancement and Vision: The vision for RTC was to provide cheap connectivity solutions to every Indian at affordable prices. This long term vision enabled them to develop and invest in their own technological framework (telecommunication towers, purchasing satellites, developing own data base), when other companies were running for short term profitability and only hired such frameworks. This self-dependency new technology framework is their biggest strength [1] for future expansion.

Recent Developments and strategies:  4G connection in India is costly affair and a relatively new concept in the market. The data packs and call packs are sold separately, unlike USA (where a single plan has both data packs and unlimited calls). The data packs’ customer base is growing at a fast pace in recent years and the market is profitable. So, there are a lot of threats from new entrants in this volatile market. After successfully positioning themselves in the rural areas, Reliance launched its new campaign under the name ‘Reliance JIO’ in late 2016. This campaign is focused to fight for a niche 4G communication market in Urban cities.
RTC obtained a new strategy to compete its rivals in Urban market where the entry barrier is high. It promoted its new campaign by offering free 4G network (both call and internet) connection for first 6 months for every new customer. However, the customer has to buy a 4G reliance handset to avail this offer. This ensured that a quick customer base is built upon and uses their product even after the offer is terminated (Since the cell phones shall not work for other connections). This aggressive [1] marketing idea is similar to Coke/Pepsi acquiring the fast-food joints to increase their customer base. One of the significant benefits for Reliance is, unlike other Indian Tele-companies they have their own technological framework support (optical fiber networks across the country), thus they can easily produce low-price services (or cut-prices) than any other existing companies to dominate and terminate threat of new entrants [1] to the market.


“Stake out a position that is less vulnerable to attack from head-to-head opponents, whether established or new, and less vulnerable to erosion from the direction of buyers and substitute goods” [2]. RTC has certainly followed the key to survival and with 72 million customers in six months ‘Jio’ has certainly won their first battle as a new entrée to the Urban market. Now it remains to be seen how effectively they give a fight and hold its newly created dominance over this ‘telecom-war’ in India! 



[1] Competitor Analysis: Understand Your Opponents; Marketer’s Toolkit: The 10 strategies You Need to Succeed

[2] Michael Porter, 2000, The Five Competitive Forces That Shape Strategy

[3] CIIM.IN,  Reliance Jios Marketing Strategy http://www.ciim.in/reliance-jios-marketing-strategy-case-study




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