Airtel Magic - Selling a Pre-paid Cellphone Service

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Themes: Marketing Mix
Period : 2002
Organization : Bharti Cellular Limited, Spice Telecom
Pub Date : 2003
Countries : Switzerland
Industry : Cellular

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Case Code : MKTG040
Case Length : 12 Pages
Price: Rs. 300;

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Background Note Contd...

Through Magic, Bharti targeted the infrequent users of mobile phone. Acquiring Magic connection was very easy - all a customer needed to do was walk into an outlet (selling Magic) with a handset. Here the customer was provided with a pre-activated SIM card⁴ (which had to be loaded with the calling value) and a recharge card (which was required for loading the calling value into the SIM card). These cards were valid only for specific period (beyond which the services could not be availed), depending on the value of the recharge card loaded.

Whenever a customer utilized his Magic card, a specific amount was deducted as per the applicable tariff rates. Customers were required to recharge the card before the expiry of the validity period to avail the services (further). When the card was recharged, customers were provided with a new calling value possessing a new validity period. The company provided a grace period of 30-90 days based on the denomination of recharge card. However, no incoming or outgoing calls were allowed during this period.

The attractively designed Magic cards could be activated/recharged by using a 16-digit number. Bharti adopted the international 'scratch system' for Magic cards, that is, customers were required to scratch a marked area on the card to acquire this service recharge or activation number. To establish Magic as a brand and make it more accessible, Bharti focused on its distribution strategies. Apart from company outlets, Magic was made available at departmental stores, gift shops, retailing outlets, telephone booths and even 'Kirana' stores (small grocery shops).

Besides the absence of rental hassles and security deposits, Magic offered features such as instant connectivity, pre-activated STD/ISD facility (customers did not have to maintain a minimum balance in the pre-paid card for utilizing the STD/ISD services), voice mail and short messaging service (SMS).

To meet the requirements of varying customer groups Magic was made available in various denominations (ranging between Rs 300 to Rs 3,000). Due to its innovative and customer-friendly features, Magic came to be credited by industry observers for bringing about dynamic changes in the Indian cellular services market and expanding the cellular user base.

Thus, providing affordable and easily accessible services to all sections of the community and maintaining strong relationship with customers, Magic was able to differentiate itself from other pre-paid cellular services. Magic soon became the market leader and was the most visible pre-paid cellular brand in the country - aided by Bharti's (and Airtel's) strong presence in 16 states of the country (reaching around 400 million customers).

By 2002, it became the largest selling pre-paid cellular card in India. However, Bharti was not content with sitting back and savoring the short-term success of Magic. The company realized that the Indian cellular telephony market was undergoing a radical transformation. With the entry of a fourth players in various telecom circles in 2002 (until then only three players were operating in all circles), the future was expected to be rather uncertain.

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4] Subscriber Identification Module (SIM) card is a smart card that allows cellphone users to make and receive calls. The SIM card contains a microprocessor chip, which stores unique information about the user account, including his phone number and security numbers, thus helping the network to identify the user.