Before we get into what Reliance Jio’s innovative market strategy really is, it is important to acquaint ourselves with one term – ARPU or Average Revenue Per User. This term states how much revenue a telecom operator earns per user.
On an average, telecom operators like Airtel or Vodafone earn around Rs. 180 to Rs. 190 from each user. So if a telecom operator has 1000 users, they would earn Rs. 180-190 from each, on an average. This is very important to note.
Now, when Jio introduced their services, they did not charge a single rupee. This meant that from September 2016 to March 2017, Jio’s ARPU was Rs. 0. However, after March 31st, Jio charged Rs. 99 for their Prime membership, and Rs. 303 for 3 months of free services. This raised the ARPU of Jio from Rs. 0 to a whopping Rs. 300.
At the time when Jio offered free services, it had around 108 million users. As soon as they monetized their services, this number dropped to 72 million. That is a conversion rate of 67%.
Basically, Reliance Jio earned around 50% more than what its competitors earned while charging a fraction of the price and after providing free services for 6 months. Whoever came up with this innovative market strategy surely deserves a medal, in our opinion.
Apart from targeting higher ARPUs, Jio also ensured that they had a bulletproof penetration strategy. They hyped their services and initially rolled them out to employees. Buzz was created and subsequently, demand was generated. Because of this, you had to wait in long queues to get your hands on a Jio SIM card.
Not only that, but Jio also launched their LYF smartphones. This meant that they would earn revenue by smartphone sales too, and those who bought LYF phones got access to a Jio SIM card before others. It was a win-win situation.
But as we all know, simply creating hype is not nearly enough. You need to deliver on that hype. And deliver on that hype is what Jio did. It gave all promised services along with other services like JioTV, JioMusic, JioMags etc. This made it worth everyone’s while.
Another part of Jio’s grand market strategy was their focus on the weak points of other telecom operators, such as ludicrously high data prices. Even after paying for Jio’s services, a consumer will still pay a lot less than what he/she typically would. ISD calls have been priced very reasonably, too, and this opened up a whole new market for Jio. ISD calls using your regular SIM card was finally feasible!
Jio also focused a LOT on marketing. While their services did more or less market themselves, getting the ball running is no joke. You need to hire experts and gauge the market accurately before launching a marketing campaign in order to make it successful.
All things considered, Jio’s innovative market strategy was textbook stuff. And the best part is that it was executed almost perfectly from Jio’s end, and whatever hurdles were faced, Jio was quick to rectify them. They looked at the market from a different perspective, and chose to tackle existing issues while still earning a pretty penny. A lot of careful thought went into this, and that is evident.
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Also read: Telecom Industry Analysis: Data Prices