The big cat is going for the cream
When it comes to making money, Reliance has shown itself to have an uncanny skill, and is one of India’s largest and most successful companies. Now the next generation, Reliance Jio is getting on the bandwagon.
Jio has been making waves in India with its launch preview offer of unlimited free 4G internet and unlimited voice calls for three months up to Dec 31, 2016. That’s the kind of offer no college going kid can ignore and though Jio put an age restriction of 18+, the showrooms have been clogged with youngsters clamouring for the service.
Here’s where Jio begins to reveal its game plan.
Catch them young
18 year olds in India are usually in college and not likely to have their own income. So the majority tend to limit their mobile expenses between ₹200/month ($3). Take a look at what ₹200 gets them from Jio, once the preview offer is done on Dec 31.
If they take the Rs 149 pack, they will get 300 MB which is peanuts. Yes, they can use the unlimited at night part (2am to 5 am) to schedule downloads, but their style is still going to be severely cramped during the day. If they are lucky to be near a Jio Wifi hotspot, they get another 700MB. At this point, they may think of pushing up their monthly budget to ₹299 which gives an acceptable 2GB. But there’s a catch. It’s only for three weeks. Basically it would now be ₹100/week, or ₹400/month.
So come January, only the students who can afford to push their budget to ₹400 or more will remain with Jio. But students are a huge future market that Jio would not want to alienate. So Jio is offering all students an additional 25% WiFi data at Jio hotspots, to tempt them to stay. Those who can’t afford Jio, will return to the other networks where they can manage with their current budgets.
Controlling expenses for the working class
Most people with a fixed income currently will have varying expenses depending on numbers of calls, STD calls, and roaming expenses. In general, it would be above ₹500 and go up to ₹2000 depending on their packs. So why should they switch to Jio?
Because Jio allows them to limit their monthly expenses without limiting their mobile phone use. See the chart below.
Those who don’t use the internet much can even cap their monthly expense to just Rs 500. They will get 4GB of data, unlimited calls and free roaming.
Even businessmen with postpaid connections may be tempted to cap their expenses by taking one of the higher end data packs which gives free minutes on ISD calls, while they enjoy the luxury of watching cricket in live HD on their mobiles.
Free Publicity
The preview offer had a simple objective. Make a lot of noise in the media so people become aware of Jio, and sign on. Once the free trial is over, only the weathier students and the working class who spend over Rs 500 a month on mobile usage will stay with Jio.
The offer served its purpose by putting Jio in the spotlight with no major cost. The whole media and blogosphere has been talking about Jio. Even if phone calls are not working too well now, it may not rub off on Jio as they will blame Vodafone and other networks for poor inter-network connectivity.
Lapping up the cream
Once the preview offer is over, the freeloaders will leave. Jio’s network clogging will stop, and high spending Jio customers who have signed up will get the promised 4G speed and clear phone calls. They will be highly unlikely to switch in future as Jio is good value for money for those spending over ₹500/month. If Jio can grab a lion’s share of that market, they are made, as all those 500s will add up.
Later, Jio can cross-sell and upgrade those customers to their other products like paid video calls on 4G, live HD TV, music, movies, chat, and more. And get them to consider fibre optic broadband connections, TV where available. In short, Jio is grabbing the cream of the market and leaving the low spending customers for the other networks.
I think it’s a brilliant marketing strategy, and if they can pull it off, it will be a case study for the books.
Brilliant Afterthought
Funny thing is the whole pricing policy seems to have been an afterthought. Take a look at the outdated tariff slip that came with the Jio SIM card pack I picked up a few days ago (see title photo). It shows a rate card similar to all other networks. But somewhere the shrewd minds that make Reliance the moneymaking machine it is, seem to have intervened, and turned the whole thing around.
We are watching Indian marketing history being made.
