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Airtel And The Bottom Of The Pyramid

Airtel is undoubtedly the largest telephony provider in India. With a market share of over 28% (as of 2013) and connections all over the world, Airtel India has clinched a prime spot in the world of telecommunication and the information technology. But this undisputed position as India’s leading Telecommunications Company, one has to stop and consider how this empire is built? Given that, in spite of severe socio-economic inequalities, India still has a remarkably high penetration levels for telecommunication, it is clear that a very large part of Airtel’s customer base is not the affluent classes, but the lower and socio-economically backward classes.

More light can be shed on this fact by taking a look at Dr. Kammy Naidoo’s analysis of Bharti Airtel. In her paper titled Mobile Demand at the Bottom of the Pyramid in Africa – A Cases Study of Low-Income Mobile Users in South Africa and Nigeria, Dr. Naidoo studied the penetration levels of Bharti Airtel in comparison to MTN. She noted that Bharti Airtel’s success hinged on three factors – a low-price high-volume strategy, greater penetration by targeting lower income segments of the market, and low price leading to higher usage (she noted that Airtel had nearly three times the amount of usage as MTN).

One important point to bear in mind is that in both cases (in that of South Africa and Nigeria, and India) the largest segment of society is the lower income segment. In other words, greater penetration, be it in terms of demographic figures or geographic range, implies that it is through the lower income segment of society which penetration can be measured. In other words, the best model for studying Airtel in India is the ‘Bottom of the Pyramid’ concept. This concept is a relatively new one which had been conceived as model for studying companies like Airtel by C.K. Prahalad and Stuart L. Hart in their book The Fortune at the Bottom of the Pyramid. This book, which was originally an article published in Business journal Business+Strategy studied companies such as Project Shakti, Bank of Madura and Jaipur Rugs to understand how capitalism and profit-making need not necessarily imply the further disenfranchisement of the lower classes, but by making them the target of new technology and business innovation, one could not only turn a profit but also help alleviate poverty.

Given these facts, Airtel clearly employs the Bottom of the Pyramid paradigm. By focusing on vast numbers, instead of the privileged few, Airtel has carved out a niche for itself in India’s telecommunication and information economy which it does not seem to be in danger of losing any time soon.