More Telecom Lessons

The Economic Times - 21 April 2003

The last time I wrote in this column about the telecom business, a senior person from within the business called saying he wanted to salute my courage - the 'fools rush in where telecom experts fear to tread' sort of courage. I probably have a death wish, so here I am again, venturing an opinion on the 'hot topic' of Reliance Infocom's proposition to consumers, and what works and does not work with Indian consumers. In my line of work, there is a lot of agonizing about whether enough alternate ways of playing in any market have been explored. Yet there is a significant gap that exists between the aspiration of 'changing the rules of the game' and the actual development of a revolutionary business strategy to achieve it.

The same old way of looking at consumers - same old segmenting variables, same old pricing paradigms, same old obsession with current market as served by main competitor, and so on. Market strategy innovation comes from different views of seeing the same market that others see, and from seeing the same thing as everyone else, but thinking differently about it. For this reason alone, I must doff my cap to Reliance Infocom, for reminding me there is far more scope for 'consumer offer' innovation in any market, than one thinks there is.

Illustration one: Pricing. The general idea of getting consumers to pay a larger fee upfront and then a small amount after, maybe a fixed amount, is an interesting win-win idea for both the company and a certain segment of consumers. Consumers hate opening their phone bills. How profligate have I / my family / my business partner / my teenage kid, been with STD? They are looking for nice ways to bring some predictability and control into consumption of this product, without having to practice too much denial. The increasing contribution of prepaid cards to the total market actually validates the consumer need for this. Standing the pricing paradigm of the ordinary telephone on its head by offering a "higher one time cost, and marginal running cost" is interesting, because it potentially places a telephone in the same durable category as a television or a refrigerator - what every household must buy, and then use painlessly. Changes the consumer's price processing mechanisms altogether, and also his price sensitivity equations.

Illustration two: Consumer segmentation. Whether it was done accidentally or by design as a "where to compete" choice, it still demonstrates that there are many more bases of consumer segmentation beyond the standard aarpus, sme/ corporates/ rich vs. poor households, voice vs. data etc., all of which can be actioned with tailor made service offerings. For example, segmenting by usage behaviour: people (corporate or otherwise) who talk very frequently and /or for a long time to specific numbers, long distance vs. people who spread their talk time over many numbers. (Interesting Idea: Assuage guilt about being a bad son. Give your elderly parents in another city, the gift of chattering on endlessly about neighbourhood trivia, at an affordable price!) It also underlines the fact that not everybody needs and values everything - like seamless mobility for example. There are people who actually derive more value from having the same easy to remember number across different locations but with changed sim cards (making the caller foot the STD bill, but being always accessible). For example, 80% of my travel is to three or four cities only, and while I am happy with everyone having my Bombay number, I do not want to pay for the plumber and carpenter's calls to me when I am traveling.

I can see the next phone call - so where did all this innovation get them? When will you consultants, especially marketing types, understand what real business is. I do want to make a distinction between the success or failure of the offer and the learning it provides about how consumers think and behave - so that this learning can be leveraged across many other categories, not just telecom. This is especially important in markets like ours where consumers are morphing all the time, and we are never very sure what MAYA is (most advanced, yet acceptable!) Reliance Infocom has provided all of us with another 'live learning' data point since it made many 'never before' type of offers to consumers. I also believe that for the purposes of better analysis and understanding, we must make a ruthless distinction between the attractiveness of the consumer proposition to consumers, and the supplier's ability to deliver on the proposition, exactly as promised, no fine print, no hidden surprises and caveats. Obviously, if the proposition is a non starter where there is no hope in hell of delivering, like "a new Mercedes car at the price of a Maruti 800", there is not much purpose in doing this analysis. I don't think the Reliance Infocom offer can fairly be put into this category.

Based on my ad hoc consumer contact, it does appear that Reliance Infocom has generated a lot of consumer interest and enquiry - it was not a damp squib, the proverbial crow's child that only the crow found to be oh so cute. If one were to do market research around whether the Reliance offer evoked feelings like "hey, this seems like a good deal, how do I get to know about it", or whether it evoked the "hmm, must check out the idea", whether pappu's father told geeta's father that the people downstairs got a Reliance phone and seem to be talking for hours on it (neighbours envy, owner's smugness!), the answers could be surprisingly more positive. Research around "what do you think of the Reliance Infocom brand (i.e. the way they delivered their promise finally), may be surprisingly negative. But confusing the two, hides learning about what kind of price processing different types of customers have and how the market will start segmenting itself.