Should Corporate Political Lobbying Come under Scanner by Regulatory Mechanism?: Vaishnavi Corporate Communication and 2G Spectrum Scam:

Should Corporate Political Lobbying Come under Scanner by Regulatory Mechanism?: Vaishnavi Corporate Communication and 2G Spectrum Scam:

S. Jayachandran (IIT Madras, India)
Copyright: © 2014 |Pages: 11
DOI: 10.4018/978-1-4666-4357-4.ch019


Marketing is more political in the free market economy today than ever and firms need to apply social power and public relations either to enter into a new market or to operate more successfully in the existing market. Often, they apply reward power and political lobbying as marketing strategic tools. The Indian telecom market is booming fast and becoming highly competitive. Accordingly, there is an aggressively, rushed bid for 2G spectrum license. In the mean time, the telecom ministry’s decision of, “First come, First serve,” instead of an auction method, paved the way for political lobbying. At the end of 2G spectrum allocation, there was widespread allegation that the cellular operators fraudulently secured licenses from the telecom ministry by using power and public relations and in doing so played an important role on behalf of its clients. The apex court monitored the investigation of 2G scam and ordered cancelling of all licenses granted in 2008. This case raises four vital points for discussion as the backdrop of the changing marketing environment: 1.) Should marketing facilitating agents bother with the ideals of morality? 2.) Is it wrong that Vaishnavi Corporate Communication exploited weak and corrupt system of governance in favor of its clients? 3.) Are the actions of government watchdog agents justifiable, when an issue is concerned with public interest? 4.) Should political lobbying come under scanner by a regulatory mechanism to contain adverse implications of firms’ marketing strategy? If so, what should be the modus operandi of the regulatory mechanism?
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Today’S Marketing Is A Political Exercise

In the current competitive environment, marketing is increasingly becoming a political exercise. A firm has to manage different stakeholders in order to market successfully and it seems sometimes a tough task. Often, there is a need for applying power and public relations skills either to enter a new market or to operate more successfully in the existing market. It becomes obvious that the traditional assembling of marketing mix strategy is not sufficient when there is a certain extraordinary market situation and marketing executives may be lacking skills of handling such market forces, which warrant application of power and public relations. So, corporate houses seek the services of facilitators who include agents, brokers, market research firms, advertising agencies, public relations consultants, event organizers, freelancers, experts, professionals, and so forth. The facilitating agents charge commission for the service they render.

One significant development in the post liberalization era is the tremendous boom in the services sector, which includes banking and financial services, telecom services, tourism and hospitality services, health services, retailing services, and more. All of these service providers need the services of some professionals/specialists/experts/consultants in one way or other and most often the service providers are clients of these facilitators for successful marketing of their services.

The facilitators often use power and public relation skills to achieve the desired result on behalf of their clients. Generally, they apply a power base appropriate to the situation in order to influence the party involved in a buying-selling relationship. Such power bases have been identified as reward power, coercion power, legitimate power, referent power, and expert power (French & Raven, 1959).

Reward power is most often used in marketing of products/services and this may be in the form of fabulous gifts including kickbacks, valuable items, and so on. Coercion power involves intimidating the other party for compliance and this includes social boycotting, financial harming, and physical threatening. Legitimate power is applied by legal authority to secure the compliance of the other party. Usually, a state authority is exercising such power to extract compliance from its citizens. Referent power is also known as attraction or status power and the one who enjoys such referent power obtains compliance from the other party by his/her very presence or involvement in a social relationship or buying-selling relationship. Expert power is based on the wide recognition of an individual’s expertise in a particular field and such expert’s opinion or views will prevail in an issue. In other words, the other party simply yields to an expert’s views as there is widespread recognition for his/her expertise in the particular field. Possession of information/knowledge with regard to a specific issue/subject is also considered as expert power.

Applying a power base alone may not help a company to get access into a market if it fails to cultivate appropriate public relations. Before entering a market, a firm must understand the structure of different stakeholders of a business (different publics) and how power is being distributed in the target community. In the Indian democratic polity, for example, single party rule has ended long ago. A coalitional form of government has come to exist at the centre and the same will continue in the coming years as there is no hope for single party rule. When power is vested among coalitional partners (political parties which have formed the government jointly at either the centre or state), a corporation has to work through the coalition to achieve its business goal. Therefore, marketing firms need to assess the relative power of each political party and forge a grand strategy by applying power and public relation skills.


Indian Telecom Industry And The Market

The Indian telecom industry is booming phenomenally and it is not only growing fast but also as the second largest in the world after China. Currently, the GSM (Global Standard for Mobile) operators occupy 80 per cent of the total mobile telephony market and the CDMA (Code Division Multiple Access) services account for 20 per cent of the wireless market.

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