Best marketing practices of Indian Mobile service operators – Part I

So what are the practices that made Indian cell phone market one of the most lucrative in the world? Let us examine.

1.      1. Life time validity: Initially the cell phone had a separate tariff for incoming and for outgoing calls. But the market savvy mobile service operators saw a huge business opportunity. The SIM card used to cost to be very cheap but the pre paid connection used to be very costly. Upto Rs 1500/- used to charged for a connection. Airtel was the first one to offer the connection in installments and offered a carrot - life time validity. Of course now a days the connection has become so economical that a connection can be had for less than Rs 50/- . At the same time incoming call were made free. This killed whatever nascent and minuscule market that was held by the paging service providers. At the same time it opened huge market of users like heavy duty truck operators, drivers, and courier boys. These users only have to receive calls and rarely made any outgoing calls.

2.     2. Tie up sales: The mobile cell operators hit upon a win-win situation. The Mobile phone manufacturers started offering post paid connections a part of the package and this spouted the sale of the cell phones. The same was used by the cell phone service providers. For a connection and a sum of let us say Rs 1,500/- they started giving a connection and a basic cell phone was thrown in free. This way the customers gets an connection and the instrument and can start using the service immediately. In a fiercely competitive market like the mobiles the customer has to start using the service immediately and he has to use it frequently and for lots period of time.

3.       3. 1 paisa and ½ paisa per minute:  For a long time it was De rigor for the cell phone operators to charge Rs 1/- for any call made. This was the legacy from the BSNL times that the cell phone operators were en cashing on. There was equilibrium in pricing and no operator was complaining. The only people complaining were the customers who were being fleeced Rs 1/- for even ten seconds call. It took a maverick like TATA DOCOMO to turn the traditional wisdom on its head. It introduced 1 paisa per second tariff. Suddenly paisa gained prominence.

Everyone laughed at TATA DOCOMO and TATA DOCOMO laughed all the way to the bank. It quickly gained market share and even the market leaders BSNL and Airtel had to follow suit. Now it is quite common for all operators to charge a 1 paisa tariff. Significantly the profitability of all the operators have dropped drastically but at the same time the networks were being utilized much better and the 1 paisa tariff had brought new customers and also added customer who have taken second and in many case even three connections.