Best marketing practices of Indian Mobile service operators – Part III

1.     7. Night time calling is charged less: One of the striking feature of a cell phone is that it offers unique possibilities of having intimate conversation and it guarantees total privacy. Thus it is not surprising that a cell phone is lovers' best friend. This has been en cashed by cell phone operators who offered very good rates on users calling each other at nights. Thus a new opportunity was created to garner more business.

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2.       8. Roaming charges: This was a lucrative business for the operators. Whenever a user moved from one circle to another roaming charges were charged. This way making and receiving calls when traveling was a very expensive affair. Again the operators quickly moved in. Now days for a extra Rs 62/- the roaming charges can be slashed. Now making and receiving calls when traveling has become a breeze. Same is the case with calling relatives and friends residing in countries like the USA, UK and Canada. Calls can be made for a unbelievable rate of 1 paisa per second. 

3.       9. Talk more and pay less: It works on the simple principle that the more a service is used the less the service will cost per unit of service consumed. This way calls for the first 500 calls will be charged at Rs 1 per call. 501 to 1000 calls will be charged at Rs 0.90 per call. And Calls from 1001 to 1500 calls will be charged at Rs 0.80 per call. This meant unshackling of the Public sector mindset of Indian marketers. For example Electricity users in India are charged the exact reverse way. The more one uses a service the more he/she would be charged. That way the public sector utilities were limiting the usage of their service.

4.       10. Customized packages: Mobile service operators are very aware of the fragile relationships that they  have with their customers. Users demand exacting standards of service and they are very unforgiving of any shoddy service delivery. They demand that any complaint be addressed swiftly and to their satisfaction. In such a scenario the operators can’t lose users. A user trying to shift especially in the post paid category is induced in all possible way to retain his connection with the existing operator.CRM professionals in that company study the usage of that user and design customized packages that give the best value for the user’s money. In the same way the operators have realized that prepaid users are not very lucrative and all types of inducements are given to shift then from prepaid to post paid status. But the unsavory reputation that the collection agents of various service operators have acquired has meant that many of the existing prepaid users are not willing to convert their connection into post paid status.

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.

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. 

Mobile markets in India

Mobile services were introduced in the early 90s in India. Initially they were seen as rich men’s toys. The hand set was chunky like the wireless sets that police and airline employees possess. They were unwieldy, would not fit into the pocket and would act as very good self defense tool – you could cobble an attacker senseless with one hit from the hand set.

Incoming calls were charged at Rs 16/- and outgoing calls at Rs 32/-. Only the super rich could afford the cell phones and bear the call rates. It was very common to see a car stopping and the driver getting out of the car to take the call. It was a fashion symbol that had to be flouted.

By 2010 things have changed and boy how. The cell phone has become so common that in India today there are more than 550 million cell phones and counting. There are more cell phones in India than toilets. They have become so common that even sleeper class compartments in Indian railways carry charging points for ever eager mobile charging patrons.

India has become the mobile market of the world. With breath taking numbers that keep adding up every month it is set to outstrip China as a biggest cell phone market in the world. Its 3 G circle auctions were snapped up at awe inspiring figures.

So how did India achieve so much in so little time? India had one of the least tele densities on the world. So how did it leap frog from being the country with the least tele density to one having one of the highest tele densities on the world and all that in a decade and a half? Indian Mobile industry is a classic case study of what can happen when the shackles of protectionism are lifted off and private players come in and operate in a market place where survival of the fittest is the only mantra for success.

Fell by the way was the behemoth of the erstwhile era, the land line phone that customers used to wait for years together for a connection. Also fell by the way was BSNL mobiles services which recently lost its leadership position to Airtel inspite of having very good infrastructure, very competitive pricing and tacit governmental support.  BSNL was the only operator to have 3 G facility in India till now. 

We would examine in the next blog posting about the best marketing practices that made Indian mobile market the best in the world. Flavor this as I make my way out. India is one of the few markets in the world where share of post paid connections are much more than the pre paid connections.