Snapdeal case study 2, Assignment 1:

Shortcomings of the existing models and suggested solution:

From the case study we observed that the existing model of sms based discount coupons did not have a touch and feel aspect of erstwhile coupon books and apart from this when the company experimented with monetizing the service with fees of 99/- per month, the number of users drastically fell from 171000 during free scheme to just 1000 users when chargeable. As enumerated in the case study, the average realization from printed coupon books was around 50/- per book and in the second pivot the annual cost to the consumer was around 1200/- per annum (99/- pm), which in my opinion, many consumers would have felt to be on the higher side.

So, to solve the problem of touch and feel alongwith the pricing issue, I would suggest the launch of a discount card which is like a credit card and which could be issued at a lower entry price with differential pricing. The customers could present this card at the point of sales and get the relevant discounts. We could have pricing structures like say 300/- annual fees for cumulative purchases of 50000/- and below and 500/- to 1000/- if one buys beyond this limit in a year. So, in such a scenario, the consumers who shop more would tend to buy the higher value card.

In such a differential pricing structure, the customers would be tempted to think of their early break-even by buying the card for a very small entry price and at least experiment with the discount card. For a customer, if he buys at least products worth only 3000/- and gets an average discount of 10%, his upfront payment of 300/- gets recouped and still has 47000/- of remaining value on which discounts could be availed.

So, in my opinion, rather than going for freemium approach or a higher flat subscription model, one should take the approach of differential subscription model.