Economics Overview of BRICS- Market Analysis-India

Posted: September 9th, 2013

Economics Overview of BRICS- Market Analysis-India

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Economics Overview of BRICS- Market Analysis-India

            To become a winner in the market place, a company has to understand all aspects involved in the marketing strategy. Gogo In Air Online service is an American telecommunications company that offers in flight broadband internet services. An expansion into wider markets will require marketing strategies and management skills that will ensure the business is as successful in other markets, as it is in the parent market. An expansion into one of the BRICS is expected to be a formidable business idea. The BRICS include countries that have the potential of exponential economic growth that would enable the investments in these countries to be profitable. India, being among these countries, Gogo In Air services has to understand the market potential of India before expanding their business there. To understand the Indian market, Gogo In Air Online service has to determine market issues such as the nature of the market, geographical coverage, and market size. It also has to determine the growth rate of the market, trends and possible competition.

The defined market that Gogo In will try to reach out to is the airline industry in the country. The Indian market has a massive internet following. India is ranked as the third largest country in terms of internet users and has been characterized as one of the fastest growing telecommunications industries in the world (Dhawan 2007). The telecom growth in India is driven by the use of modern technology and a highly competitive atmosphere. This is also driven by good government policy and the dynamic consumer behavior (Panagariya, 2010). Gogo In Air’s aim is to tap into this potential by giving the Indian market a chance to explore internet accessibility when flying. This is aimed at ensuring that flyers have the ability to stay connected with their offices and other important business commitments.

In-flight internet services on Indian airlines are wide open and unexplored despite India’s vast potential for the Industry. One of the reasons is that the Indian government does not allow international airlines operating the Airbus A380, which has the in-air communication capabilities, in India (Bloomberg, 2011). However, these capabilities could be made available in India by enabling internet services on planes allowed by the government. In addition, the telecommunications companies in India have also not ventured into the business. This has been occasioned by the fact that the start up costs for such a venture is extremely high. This is has been occasioned by the fact that internet companies struggle with establishing lasting internet infrastructure. Since Gogo Inc has experience in the business, it is easier for them to set up in India.

The primary geographical market would be to target the customers of airline companies that operate within India. The services will mainly extend to the business class who would like to stay connected with their businesses while still in the air. Gogo In Air Online services will have to seek a partnership with some of the airlines make this investment a success. The domestic air travel in India grows every year. In 2007, the domestic airline industry increased seats on aircrafts to 1.7 million and the flights increased by over 8,500 flights in that year (Dhawan 2007). The trend has continued, and this should be an indicator for Gogo In to invest in the country’s airline telecommunications industry.

The market size in India is massive with a coinciding growth rate. The Indian economy is constantly growing with an annual rate of 9% (Kapila, 2009). This gives the consumers an increased spending ability able to sustain new investments in the country. The Indian domestic airline industry has eight different airlines making the industry very competitive. The competitive nature of the airline industry serves to identify the best airline to collaborate with to offer the services. Therefore, to achieve success, Gogo In Air Online service has to collaborate with an airline that already has a considerable market share. However, since there is no immediate competition, the company has the option of taking up a partnership with all the airlines. By involving all the airlines in the country, it gives the company a chance to harness maximum profits from across the board. This is especially because the leading airline, King Fisher airlines do not have a significant lead with regard to other airlines.

The trends in the internet business in the country are increasingly supporting wireless broadband internet services (Dutz, 2007). This technical trend is an advantage for Gogo In since their services are offered through wireless networking. India’s reputation for being the fastest internet community is with their ability to adapt to new trends as fast as or even faster than more technologically forward countries. While internet capabilities in India are growing fast, these services are largely offered to high-end customers. For Gogo In, this is an advantage. This is because air travel is linked to a high-end clientele in the country who also form the bulk of the internet business on the ground. The social trend in the country is the growing use of the internet. This new social culture of the internet in the country is bound to work in favor of Gogo In Air Online services.

There are several barriers to the entry of the industry. These barriers include a high start up costs, the language barrier, and regulatory protectionism of the local industry by government and substantial expertise in the industry. With regard to the substantial expertise, Gogo In Air is ahead of any prospective competitors. This is because the company has managed to succeed in one the most competitive markets in the world. Their experience in the business gives them an operating advantage that would enable them to survive an untapped market. The internet companies in India do not have the capability yet, to offer internet services in the air. However, the company will still have to understand customer preferences in this market before the offering their services. The operating companies such as Bharti Airtel have an existing market rapport that may give them a competitive age in terms of customer needs if they decide to explore this option.

Gogo In Air Online service may have a hard time entering the industry due to the high start up cost. These costs may arise because of the infrastructure that is required to handle such a venture. The inability of existing companies to explore this venture is because of poor infrastructure. For the company to reduce the start up costs, it may be necessary to collaborate with existing telecom companies to ease the transition into the country. India is a market-based economy that has created a liberal, business atmosphere in the country. Therefore, government regulation and protectionism may have little impact on Gogo In’s capability to operate in the country. Language barrier may not be a substantial issue in terms of entry into the market. This is because India is a multilingual society that also includes English as the language of business. Therefore, Gogo In is capable to operate effectively with little fear regarding language hurdles in India.

Several companies offer broadband internet services in India. These companies include Airtel, Airmesh, Skynet, Aircel, Sify, Vodafone, and Idea Cellular among others. Airtel and Vodafone are among the most successful companies in terms of internet revenue and market share. In the year 2012, Airtels market share in India stood at 19.5% making it the most successful mobile operator in the country (Silicon India, 2012). Consequently, this market share has also translated to the internet broadband services offered by the company. Reliance communications and Vodafone follow closely with 16.7% and 16.4% respectively (Silicon India, 2012). The communication companies in India share among them 900 million subscribers (IBEF, 2012). Their success is an indicator of the potential of the industry in India. Gogo offering the same products will not work out as expected. Entry into the market will require that Gogo Inc enter the market with a different idea making its services unique and unchallenged.

There are no other companies servicing the industry with what Gogo is proposing. Gogo In offers a unique product that promises to revolutionize flying in India by providing internet services on air. The only other company offering airline internet services is On Air. However, the company deals with international Lufthansa flights between India and German cities (ITR Staff, 2012). On Air, on this account, does not offer competition for Gogo In. Gogo proposes an idea of offering in flight online services to flights that operate within India. In terms of market share, Gogo is believed to have the ability to capture the whole market with this product. Having a dominant market share will enable the company to maximize profits and become extremely successful.

In terms of issues related to supply, Gogo has to come up with infrastructure to support this venture in India. Gogo Inc in America has the have over 135 antennas on the ground (Daley, 2012). The aircrafts have to be installed with devices that will be able to pick up the signals so that passengers can access internet services in flight. The cost of installing infrastructure will be on the higher side especially if it is looking to cover the entire Indian geographical landscape all at once. In terms of expenses, this method is cheaper than offering satellite based services (Daley, 2012). Another issue with supply is finding the right airlines that promise a steady stream of customers. The airline companies have to agree to the proposal that may increase airfares. In view of such developments, Gogo In have to make sure that the internet services provided are effective and meet customer expectations. One other issue is marketing. The company has to develop a marketing strategy that will ensure effective market presence. An effective campaign that creates effective market awareness is likely to boost consumer and other partners’ confidence in the product

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