When Mukesh Ambani announced an almost free JioPhone handset on a fully refundable deposit of Rs 1,500 at the company’s 40th Annual General Meeting (AGM) on Friday, it further challenged the Rs 2.55 lakh crore telecom sector already reeling under heavy debt burden and worsening financials.
After launching mobile services in September 2016 with a slew of offerings -- free voice calling, zero roaming charges and cheaper data tariffs for Jio customers besides a 'free welcome offer' for customers from 5 September till 31 December, free data services for four months, affordable tariffs of Rs 149 a month for low data users and Rs 4,999 a month for heavy data users – Mukesh Ambani’s latest offering of a virtually free phone has further shaken and stirred up the sector.
The free JioPhone offer comes under its Dhan Dhana Dhan offer with free voice, free SMSs and unlimited data at Rs 153 per month which can be paid in installments, too. Jio as a telecom brand has made data affordable to lakhs of rural people and has been making rapid inroads into remote areas of the country where data usage was unthinkable because of its cost. So, how has the brand transformed and challenged the telecom sector in the short span since its mega launch last year? Brand specialists decoded the reach and impact of Jio and the manner in which it has disrupted the sector.
Any offering from the Reliance brand has been considered as path-breaking so far, says Harish Bijoor, Chief Executive Officer of brand and business strategy firm Harish Bijoor Consults Inc. This is because the company has adopted a different marketing strategy. To that extent Jio is seen with a great degree of caution and respect by the consumer, he says.
What has made the difference to the almost sedentary telecom sector save for changes initiated by the Telecom Regulatory Authority of India (TRAI) is that Reliance with its Jio brand has brought in far-reaching changes which has pushed its competitors to a corner. They complained of the ‘tsunami of free traffic’ that Jio had ushered into the sector.
But it has been a win-win situation for the consumers. From a few mobile phone users in 1994 to reach an even larger section of the population by the end of the last millennium to now making the mobile phone a mandatory item in every one’s hands in the country, the telecom sector has grown slowly over the years.
The slow pace of progress of the sector has been given a huge jolt by Jio. “Mukesh Ambani has disrupted the sector with Jio and brought everyone out of the ambit of the dark days of data. Now seeing a man in a village watching entertainment on his mobile phone is no longer a novelty. Everyone is able to afford data,” says N Chandramouli, CEO, Brand Trust Authority.
The Jio brand has dented the competition and also impacted the lives of consumers. It now pushes competition to consider mergers and acquisitions to beat the competition provided by Jio, says Santosh Desai, Managing Director and CEO, Future Brands.
“In its set of competitors, Reliance has disrupted business models and what was seen as an entry strategy – offering services as free, but has continued down that path and made the strategy work for the brand and the company. In the process what Reliance has done is bring in higher quality data for a larger number of people enabling certain categories like entertainment, for instance to be viewed by almost everyone,” said Desai.
What has worked for the brand is its consumer-friendly approach. The consumer will favour the brand as long it has benefits for him/her. But with the JioPhone offer, Reliance Jio has shown that it is committed to its consumer so far, says Chandramouli.
By its latest myriad offerings that touch every touch point of the consumer – free offer of the phone, consumer-friendly tariffs, new piece of technology with VolteGE, it has ensured its offering will have more reach, visibility and consumer respect, says Bijoor.
So, what can be expected is a bloodbath in the telecom sector with Jio’s latest offering, say brand specialists. “With Jio’s latest offering, Mukesh Ambani has made data affordable and further expanded the brand's reach,” said Bijoor.
Reliance Jio has now raised the customer expectations. If it does not fulfill promises made to customers (though it has with its latest announcement at the 40th AGM), customers will be angry at the promise not being met with, says Chandramouli. The company is subsidising offerings for its customers which it can afford because of its strong financial position. But it should ensure that Jio hai na, which the customer is now saying while watching YouTube videos on his mobile phones, continues without any major tinkering in charges.
The company should be able to sail through if it continues in the same vein, says Bijoor. But if it bundles offerings or even a single offering that the subscriber has not asked for and charges for it, it will be in trouble. “It must ensure that the network is always clean,” Bijoor emphasises.
Obviously, Jio's competitors will be rattled. Data being offered at cheap rates will hurt the competition. “But Reliance Jio must ensure it does not withdraw any of its lifetime offers. What matters is that people have access to cheap data and affordable tariffs for a lifetime. That the company will sustain it is to their – consumer and company’s—advantage,” says Desai.
(Data support from Kishor Kadam)
(Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.)
Updated Date: Jul 24, 2017 16:18 PM