Marketing Management Report: Analysis of Paytm's Marketing Strategies

This report provides a comprehensive analysis of Paytm's marketing strategies within the e-commerce and digital payment industry. It begins with an overview of Paytm, its services, and the competitive landscape, including an industry overview and the company's evolution. A marketing audit is conducted, encompassing an external market attractiveness assessment and an examination of potential market growth. The report then delves into market segmentation, targeting, and competitive positioning, focusing on demographic factors. SWOT and PESTLE analyses are used to evaluate Paytm's internal strengths, weaknesses, and external opportunities and threats. The report concludes by proposing new marketing mix actions to address gaps between Paytm's current strategy and the external environment, offering recommendations for improvement and future growth within the evolving digital payment sector.

Marketing
Management

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Overview of company and industry ......................................................................................1
Marketing audit, external market attractiveness and potential for market growth.................2
Market segmentation, market targeting and competitive positioning....................................7
New marketing mix actions to achieve gaps between Paytm's present marketing strategy and
external environment............................................................................................................10
CONCLUSION.............................................................................................................................12
REFERENCES................................................................................................................................1

INTRODUCTION
Marketing refers to management and study of exchange relationship It is business
process in which relationships are created with customers and their satisfaction. It is one of most
crucial factor of management of business. Paytm is e-commerce industry which provides user
with digital wallet. Services like recharge, online shopping, booking tickets for travelling and
entertainment are covered in their application. This report covers about Paytm and Internet
industry. It provides complete details related to internal and external environment of Paytm in
which SWOT and Pestle analysis is done. It also include segmentation, targetting and positioning
of Paytm in which focus is on demographics. New marketing mix is created to find gap between
existing and new strategies.
Overview of company and industry
PAYTM (Pay through mobile) is an Indian company which deals with digital wallet and
e-commerce payment system. It was founded in 2010 by Vijay Shekhar Sharma and has
headquarter in Noida, Uttar Pradesh, India. Initial investment was of $2 million and it started
with DTH recharge platform and prepaid mobile. Then they also started giving landline bill
payments, post-paid mobile and data card payments in 2013. Then they provided additional
features in 2014 by launching Paytm Wallet. It was used by Uber and Indian Railways as a
payment option.
It is private business which serves in India and Canada. Products which are being offered
by Paytm are Paytm payments bank, Paytm gamepind, Paytm money and Paytm mall. It provides
services like digital wallets, payment systems and digital wallets. Revenue made by them is
around 814 crore (US$110 million) and their parent company is One97 Communications Ltd. It
is in present in 10 different Indian languages and offers mobile recharges, travel, event bookings,
movies and utility bill payments. Apart from this, services are also provided in-store payments in
fruits, vegetable shops, pharmacies, tolls, parking, restaurants, education institutions and grocery
stores with usage of Paytm QR code.
Around 7 million merchants in India use QR code to make payments into their bank
account directly. Through paid promotional content and usage of advertisements, company
generate their revenues. It became India's first app which crossed 100 million downloads in 2017
and it also started with Paytm gold which provided users with facility to buy pure gold online as
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little as 1. It allowed merchants to accept UPI, Card payments and Paytm into their band₹
directly with 0% charge in 2018. In march 2018, merchant base grow to around 7 million
(Bagozzi and et. Al, 2018). It also launched into investments and gaming by becoming partner
with AGTech to set up platform for mobile games. With this Paytm Money brought wealth
management products and investment for Indians with an investment of around 9 Crores. It acts
as virtual wallet with help of which money can be stored online and can be used anywhere.
Paytm regulates in Internet industry. This industry comprises of companies which
provide heterogeneous services and products online through their respective Website. Operations
include travel services, dial up and broad band services, retailers, search engines and many more.
This industry is not capital intensive but participants invest in operations for being competitive.
Many organizations have healthy cash flow which they use to repurchase shares, to make
acquisitions and for capital expenditure. Organizations which use internet industry obtain highly
competitive advantage as technology is changing rapidly (Baker and Saren, M. eds., 2016).
Paytm basically works with e-commerce which is part of Internet industry. E- commerce is part
of selling or buying products via internet. Electronic commerce depends on technologies like
automated data collection, inventory management systems, electronic data interchange (EDI),
online transaction processing, internet marketing, supply chain management, electronic funds
transfer, mobile commerce and world wide web. Applications of e-commerce are in almost all
sectors like digital wallet, electronic tickets, Newsgroups, online banking, pretail and many
more.
Marketing audit, external market attractiveness and potential for market growth.
Marketing audit: It refers to interpretation, evaluation, analysis, systematic and
comprehensive representation of marketing environment of business both in terms of internal and
external perspective. Its principles, strategies, objectives and goals to ascertain opportunities,
area of problem and recommendation of plan to escalate marketing performance of business.
Third person conducts marketing audit. Marketing audit must bind all areas of marketing and
analyse where problem persists. Recommendations are addressed in marketing audit to
acknowledge and rectify problem from source.
Paytm conducts marketing audit to enhance knowledge about requirements of customers
and address problems which are being faced by customers (Baker, 2014). They tend to improve
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it and provide new benefits in terms of services as per requirements. Marketing audit will help
Paytm to analyse micro and macro environment.
Paytm provides service of Paytm Wallet which is digital payment instrument used to
transfer money from credit card or bank to do transactions on specific platform. Paytm account is
made using contact number and email id so that money can be transferred to wallet. Know your
customer (KYC) process is done when customer wants to exceed limit of 10,000 in wallet in₹
period of a month. With help of KYC customer can keep 1 lakh at any moment of time in their₹
Paytm wallet. Money can be added to wallet using credit card or debit card, through net banking.
By selecting pay or send option, money can be transferred to someone else. Payments can be
done to any bank account or others by scanning QR code or money can be transferred using
phone number of individuals to whom payments are to be made. Money which is present in
wallet is secured under Escrow account within a reputed bank. It uses 128-bit encryption
technologies which means length of password or password cannot be revealed. This is foremost
reason that individual feels safe to keep their money in wallet and use to anytime when it is
required.
SWOT analysis of Paytm is shown below to analyse internal factors:
Strengths Weakness
 Paytm is recognized brand and it offers
multiple cashback options like once a
month and many more like 10% of or
more.
 Marketing campaigns are organised for
brand awareness.
 It is accepted by large number of
merchants due to which it has grown a
lot even after demonetization.
 Cash is considered as major priority.
 Individuals think that their card details
will be leaked due to which they do not
opt for Paytm.
Opportunities Threats
 More banking services can be provided
along with online payment options.
 Paytm can provide education to
 Major threat is that banks have started
offering ewallets to customers who are
having their saving account.
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customer regarding cashless payment
which will increase their customer
base.
 They can extend their services in other
countries also.
 Paytm considers privacy and security of
user are vital concerns.
Pestle analysis of e-commerce industry is done to examine external factors which are
affecting this industry. It will help this industry to monitor and evaluate macro-environmental
factors that have impact on specific organisation. Pestle analysis of e-commerce industry is
provided below:
Political factors: Digital India is an initiative with an aim to connect around 2,50,000
villages in order to provide high speed internet network. Google has installed free Wi-Fi in
around 52 railway stations and also aim to provide it in public areas so that effective services can
be provided and people who can afford, can also take benefits from this. Government has given
opportunities to business organisation related to FDI and this include 15 key factors, which
includes e-commerce and brand retail (Burns, Bush and Sinha, 2014). Indian manufacturers who
have done foreign investment and are controlled by Indians can sell their product via online
channels. This include that 30% output is sourced from locals that is products are made in India.
As per notification of Department of Industrial Policy & Promotion (DIPP), retailing has
expanded up to 49% without approval of Government. Service tax has increased to 14% and
VAT varies as per state government. When service tax is increased their services will be affected
as they are offering services and people will not opt for particular service when their price
increased instead of that they will look for alternatives. Paytm has to abide all laws and
strategies which are made by them to ensure safer side.
Economic factors: One of fastest growing country in world is India in terms of
economy. Here per capita income has increased a lot in last 15 years. Smart phones are made
available at affordable prices within market. With usage of Paytm application around 5 million
transactions are done with which around 50 billion gross transaction value is attained in a year.
There is significant growth in money transactions which is around 500%. Digital payments via
Paytm have increased and customer base has increased to 50 %.
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Social factors: They play vital role in this industry as it provides easiest way to
embellish locally. Growing usage of mobile phones have great positive impact on e-commerce
industry. This industry attracts lot of customers as individuals who do not have sufficient time to
go for shopping or any other purpose, they prefer to use services provided by this industry via
electronic gadgets. They (customers) provide trust in online shopping and provides better
comfort table level for customers. As per latest trends people opt more for online shopping rather
then spending their time in going to malls. They have different options for payment like
payments can be done via usage of credit/debit cards or cash. Young individuals are addicted to
smart phones so they prefer to use such services more.
Technological factors: E-commerce industry depend on technology at every extent.
Services which are being offered whether they are sales or customer care services, everything
depend on technology. Every e-commerce company tends to be ahead from their rivalry
company in terms of technology. Paytm has given their customers a great experience due to
which its popularity is high. Due to technology, communication has become effective, faster and
economical. Market is attracted by this as payments can done by just one click as Paytm wallet
has stored money with it. Apart from this time is also saved as technology helps to perform all
operations just at one click like mobile and DTH recharge, online shopping and many more
activities can be done. As technology is rapidly growing, Paytm ensures that latest technology is
being used and customers are aware of those services.
Legal factors: It is important for business globally. IT Act and Indian Contract Act must
be read to understand validity of e-contracts. From Information Technology Act, 2010; Section
10A validates e-contracts (Chaffey, 2015). It is important to ensure that it has obtained age of
majority. Section 43A and The Information Technology Rules, 2011 provides structured
guidelines for protecting online consumer data in India. Paytm ensures that sensible precautions
are taken to prevent destruction or loss, damage and corruption of data or information even if
contracts between parties are terminated. Paytm Wallet have specific clauses to handle privacy
concern and subcontractors, agents and employees are bound to them.
Environmental factors: E-commerce do not harm environment as it does not
manufacture products by their own and just displays products of other vendors. But it encourages
consumption via mega sale events. Bandwidth is vital factor which can have best and worst
impact on e-commerce industry. If bandwidth provided is high then customers can easily get
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through all products and may buy something which will eventually increase sales. Paytm offers
services when internet connection is available in mobile phone and those services will have a
great impact when there is fluctuation in bandwidth.
Apart from these factors which have positive and negative impact on Paytm, Paytm
Wallet has around 100 million users which is more than Maestro and Visa penetration in India.
Paytm has claimed that it is largest contributor in India of UPI payments with growth of around
600% transactions in last six months. UPI (Unified Payment Interface) is instant payment
platform which is formulated by NPCI (National Payments Corporation of India). Paytm has
contributed 179 Mn payments out of 482.36 Mn UPI transactions in October as per reports
generated by NPCI. Paytm BHIM UPI is used for different services like metro commute, water
bills, electricity recharges and in offline stores for payments. Through this digital payment has
been enhanced and Paytm is investigating for further usage of adoption of online services. It has
also provided offline payments options for promoting and enabling Paytm BHIM UPI. Out of
around 9.5 Mn offline merchants or vendors around 6 Mn vendors accept payments through
Paytm. 80% shares are owned by them in case of offline merchant transactions which are
conducted on UPI. For future growth Paytm is looking to establish in 2 and 3 segments for future
growth. From above figures it can be assured that Paytm is growing industry.
For growth Paytm has aimed to increase almost double quarterly transactions from
around 1 billion to 2 billion quarterly through end of this year. In terms of financial services,
Paytm aims at bringing or launching new products within market (Chernev, 2018). Due to RBI's
KYC requirements Paytm has faced 10-15% fall in transactions but at later moment of time they
recovered it and grew. CEO of Paytm ensures that money is invested in financial services as
individual’s life cycle is growing to upper level of maturity. Like they have enhanced their
services in field like ticketing and travelling, they are working to escalate their market size. New
way of wealth management, newer types of insurances and new types of loans will be provided
but for these licences are required and establishment of new products will take some time. For
potential growth Paytm is about to look for around 55,70,00,000 pounds, in financial and
payments sector. They expect that majority will be received from financial services. Paytm is in
partnership with ICICI Bank for launching post-paid services and are looking for becoming
partner with others also.
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Based on above information it has been summarised that Paytm has wide scope of growth as it is
capable to invest more in different segments and is collaborating with different banks so that
maximum number of individuals can use their application without hesitation that more money
will be deducted from money is transferred to bank. Apart from this they are starting their
business in new countries to increase their revenue. Pestle helped Paytm to analyse different
factors to gain competitive edge.
Market segmentation, market targeting and competitive positioning.
Market Segmentation: It refers to process of classifying or dividing customers into
certain groups based on common characteristics. Homogeneous market is broken down into
heterogeneous segments which helps organization to consider and analyse requirements of
market and their (company's) ability to serve those requirements (Galliers and Leidner, 2014).
This helps Paytm in understanding its customers in terms of their needs and requirements.
Market segmentation is done by Paytm to analyse what all is required by customers as
single organisation or product cannot satisfy everything. Customers are divided into groups. This
helps Paytm to meet needs of individual group in cost effective manner which will provide them
competitive edge. Bases of segmentation are demographics, geographic, personal characteristics,
situational factors, purchasing approaches and operating variables which are described below:
Demographic Segmentation: In this type of segmentation market is divided into groups
which are recognisable with respect to factual and physical data. This includes nationality,
religion, race, family size, marital status, occupation, income gender and age.
Geographic segmentation: In this potential market is selected based on their location. It
includes population density, natural resources, terrain and climate (Hutchinson and et. Al, 2015).
Markets are divided into different regions so that difference between customers can be evaluated
from one region to another region.
Psychographic segmentation: It is classifying market on basis of lifestyles, interests,
motives, values and personality traits. It can either be combined with other variables or
segmentation or can be used by themselves for segmentation of market.
Behavioural segmentation: It is outlined as segmentation of market as per purchase
behaviour of individuals. It is prominent with determination of particular buying behaviour, in
terms of volume of purchase and shopping frequency; and with benefits sought from product.
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Product related segmentation: This kind of segmentation depend on services or products
which are to be marketed (Mata and Quesada, 2014). In e-commerce industry this variable
includes number of smart phone users, number of users using online services for buying, selling,
payments of bills or for any service.
Paytm uses demographic segmentation. In this segmentation, Paytm considers age group
as major factor. Paytm looks for different age groups by analysing them and doing surveys. They
focus on people in age group of 18-50 as they are more addicted to technology and maximum of
time they are with their smart phones. This is done by Paytm to increase their customers and
generate profit from it.
Market targeting: In this, segmented buyers of services are targeted which increase or
bring profit to organisation on basis of attractive ones. Potential growth and size of group is
analysed to know which age segment can enhance their revenue
Paytm targets segment d users according to their age group because modern era
generation is addicted to services which are provided via internet or online services. At this age
people are aware of facts related to security and trust worthiness due to which they feel safe to
keep their money in Paytm Wallet and use it whenever they need. Whereas customers whose age
is near by 60 years, they do not use these apps as per their perceptions and are not aware of
various offers or services being provided. They lack knowledge of certain things related with
usage of particular services and hesitate to use them even if they are aware of those.
Example can be considered to further understand concept of targeting. Paytm evaluates
market size, revenue and profit of each segment. In segment A suppose profit is of Rs 200 crore,
segment B provides profit of Rs 800 crore and segment C provides Rs 400 crore. It will help to
decide which segment must be given preference. Like in this, segment A provides highest profit
so focus will be on this section. Further segmentation can be done by Paytm on basis on age like
segment A covers age between 1-18 years, segment B 18- 60 years and segment C covers above
60 years. So growth is obtained at age group of 18-60 years.
Competitive Positioning: It is final step in marketing process followed by paytm. In this
focus is on analysing how services are provided to target segment. This target segment is chosen
from above two stages (segmentation, targeting). Focus is on marketing channels and their
presentation. For these exceedingly useful and uniquely positive traits which competitors offer
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are evaluated (Ngai, Tao and Moon, 2015). In this Paytm consider that why customers should
prefer them rather than other competitors.
Source:CASE STUDY: Paytm, Journey From Mobile Recharge to E-Commerce Market, 2018
Requirements of each segment are analysed by them (Paytm) or service which is being provided
by them. Marketing campaign is organised by Paytm to value propositions so that audience can
appreciate firm services on the basis of innovation and differentiation..
Example can be considered like Paytm provides options for online shopping and make
payments by scanning OTP or by directly doing transactions using mobile number of individuals
to whom payments are to be made which makes it different from other online shopping
applications like Flipkart, Amazon and many more. Paytm Wallet has made it easier as it stores
money rather than entering debit or credit card details. It saves time and even different offers are
provided like once a month offer or some percent off on some specific option. Further,
managing customer relationship is another factor which is considered by Paytm for competitive
positioning where firm provides extra benefits to services user with every pay like vouchers,
cashback, etc.
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Illustration 1: Paytm - M/E-Commerce Leader