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November 14, 2010

Best marketing practices of Indian Mobile service operators – Part II

Incidentally India is one of the few countries in the world that does not respect its own small change. No one in India accepts 25 paisa any longer. And in many places even 50 paisa is not accepted. One rupee has become the minimum currency that is being accepted. Just imagine the extra profit that all the retailers especially the super markets and petrol bunks must be making by not giving out the change. One report says that over 300 crore rupees is gained in a year only by the retail petrol bunks. Loose change is not something that has to be sneered at. It is money after all. 

1.       4. Location wise tariff: This was the innovation of Aircel. I would say a very interesting concept. It works on the concept that there is heavy traffic on some networks and less traffic on some other networks. I assume that customers are made to pay more for calls made on more populous networks and less on less populous networks. But what happen if the customers were to be in a car and keep moving around in the city and would use different networks at the same time? Would he be charged an average of all the different network usage? Very confusing for the customer, I would say! The scheme has not been popular as the customers found it very confusing and the savings if any were very difficult to quantify. This was definitely no no for the cost conscious Indian cell phone users. Like the management saying goes - Keep It Short and Simple (KISS principle).

2.       5. Five  number concept: a concept that encourages users to get a rebate on the tariff if the same number is being used again and again, The same concept is extended if the user were to lock his home number as his favorite number. This strategy is something that is puzzling. What does the service provider gain by offering rebate on some numbers? I assume that the 5 number plan acts as a loss leader pricing (a concept where a seller offers one product at a loss and expects to gain overall profitability when the user buys a basket of products).

3.       6. SMS service: a smart move to tap the texting craze that has sprung up. The operators offer add on the regular packages that offer as many as 300 SMS messages at a throw away price of Rs 30/-. At the same time the cell phone operators are happy as on any special occasion like the Diwali or a national festival the rates jump to Rs 1/- per SMS. The rate of SMS for finding out airline timings are charges at Rs 3/- and participating in game shows and Television programmes  make the pocket of the user lighter by as much as Rs 6/- per SMS. SMS is always a very lucrative business as text messages occupy less band width and many can be squeezed at less cost than network demanding and band width guzzling voice calls. Vodafone the street smart operator has concentrated on the value add services and is supposed to be more profitable than the voice dependent players like BSNL and Airtel.


  1. Sir,

    Though you are right at your point in saying that it is loss leader pricing.
    But if you might have noticed then these kind of offers are for on network numbers only (i.e. numbers from their own network).
    And for a mobile operator an on net call does not cost even a single penny for them and so they are not loosing anything on that particular call even after offering it for free.

  2. Nice one Neeraj,

    Great your comment was very thought provoking. I think I will have to check out if the net calls (calls in the same network are really free). Very good take. Then if they are free why is that more are not offered? I think that free calls can jam networks and cause traffic problems