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To lure fresh consumers to new product categories, especially in the smaller towns, fast-moving consumer goods (FMCG) companies successfully have adopted the sachets model quite a few years back.
Not only FMCG companies, even telecom service providers have introduced the sachet model early this year. And, it worked well.
The Re 1 gimmick
In April this year, the country’s largest telecom operator by subscriber base Bharti Airtel started offering video content for just Re 1, making it sound affordable for everybody, especially for mobile users in the rural and semi-urban markets. It was an instant success which not only helped Airtel increasing its data revenue, but also helped it to acquire new customers.
During the first quarter of this fiscal year, Airtel got four million new first time mobile internet users, taking its total video store customer base to 12 million, stated the company. Data consumption has grown by a hopping 117% to 27.3 MB during the first quarter, and at the end of Q1, 2014, 24.4% of Airtel subscribers are data service users, up from 20.6% in the corresponding quarter last fiscal year, it added.
Traffic volume on Airtel LIVE increased to 22 million in July 2013, from just 12 million in March 2013. And, about 52% of Airtel’s data users are from rural telecom zones. Karnataka, Andha Pradesh, Tamil Nadu, Delhi, Rajasthan and Uttar Pradesh (East) registered maximum data adoption for Airtel.
According to Airtel, Bollywood movie songs videos are most popular, followed by fashion videos. Most interestingly, most of these customers are not smartphone users who try these sachet offers. About 80% of these sachet offers are being availed by the feature phone users, according to Airtel.
Why is it attractive?
Convenience is the key to luring consumers to new things. “People who have never used data service may not be willing to pay for the whole month. Rather, they could be interested to try out a few new things on pay-as-you-go basis. And, people would not think twice if something is available at just Re 1 at this time when almost nothing can be availed at this price. This was well structured marketing of service,” said Mritunjay Kapur, country managing director, Protiviti Consulting. Not only Airtel, other companies are also expected to replicate the sachet model.
“We observed a strong need for simplification of the vocabulary through which people related to mobile internet -- i.e. stepping away from the GBs and MBs and talking to customers in the language of content, product and services that they identify with. Demystifying the pricing and making mobile internet pricing more affordable was another key market factor that emerged. With this in mind, we launched 'Re 1 Video Downloads' as an exciting mobile internet proposition that offered a wide range of video content at the simple and affordable 'Re 1' tag. In line with our estimates -- the service saw over a whopping 12 million users leveraging the mobile internet experience in a matter of days, of which 50% came from rural India,” said N Rajaram, CEO (Data Services), Bharti Airtel.
Is it really affordable?
While Re 1 sounds cheap, the reality is that consumers are paying more.
According to Bharti Airtel, about 65% of ‘Re 1 video download’ customers have consumed 1-5MB of data for each video.
At present, companies offer 1GB data for Rs 125 a month, which means 1MB of data costs just 12.2 paise for the monthly pack users. Considering that a video requires 5 MB of data, in the Re 1 packs, a consumer is paying 39 paisa more for a video as compared to the monthly data pack users. There are plans for one paise per 10KB data, or Rs 1.02 per MB.
But, it makes sense for the first time users, said Kapur. “Consumers would not mind paying some extra as there is no monthly commitment. And, the user profile is also different. These people are unlikely to go for monthly data plans,” he added.
Going the Trial way
Not only Airtel, every telecom service provider has introduced some convenience packs following the sachet model to attract fresh users.
The country’s second largest mobile carrier, Vodafone India had, in April this year, launched ‘One Time Trial Packs’ at Rs 25 for 2G and Rs 49 for 3G offering customers 500MB of data, with a validity of seven days.
As Vodafone India chief commercial officer Vivek Mathur had said that time, it was launched to lure non-internet users. “We have introduced a new category of trial packs to make mobile internet more interesting, less intimidating for them. We see tremendous potential in this offer as non-users will be able to discover the benefits of mobile internet and how it can change their lives,” he added. The response was “very good”, especially during the Indian Premier League (IPL) season.
Aircel, similarly, has pocket internet at Rs 24 with a validity of 30 days. On the other hand, Idea Cellular has different data trial packs available for different telecom zones.
Sistema Shyam Teleservices, which provides CDMA services under the ‘MTS’ brand, too has data plans priced as low as Rs 5 (for 8 MB usage with single-day validity). Uninor, offering only pre-paid services, has plans for Rs 9 for 60MB of data for two days.
More in just Re 1
Last month, Bharti Airtel announced launch of its virtual “Re 1 Entertainment Store’ following its success of Re 1 per video concept. Now, Bharti Airtel has decided to offer music, video, games, photos and internet browsing packages for Re 1. Users can also avail 3Mb data for Re 1 which is valid for just one day, to access Facebook, Yahoomail, Twitter and LinkedIn. Consumers will have to pay additional volume-based changes beyond the 3Mb limit.
