Mobile-izing the Sachet Marketing

The word sachet instantly forms the image of the 1 Re shampoo sachet hanging in the general stores across India. Its success has made the consumer goods industry in India to rely heavily on this marketing model. It has been successfully implemented by various FMCG players. Coca-Cola introduced the 200 ml bottle priced at INR 5 for its BOP customers. Godrej also launched 50 gm sachets of its popular products at low prices for the BOP customers. These have not only increased the product penetration in the Indian customers (especially rural) but also have helped to create brand loyality.
In the extremely price sensitive Indian telecom market, sachet marketing might entirely change the way the operators charge their subscribers. RCom is overhauling its pricing model to offer mobile Value Added Services (VAS) such as caller tunes, news alerts and Internet surfing for as low as Re 1, rather than a monthly subscription basis.
RCom has already successfully tested the prospects of this model in gaming. The new pricing would not only give the company a reach to a wider audience, but also encourage the data and VAS usage among its customers. When compared with countries like Japan and Korea where the VAS contributes as much as 30% to a cellphone operator’s total revenues, Indian cellphone companies typically earn 9-12% of their revenues from VAS and data services.

It means that operators still have a huge potential to tap in to. The data and VAS ARPU might not grow immediately because of the low prices, but it would rise significantly over a period of time as the low prices would populate usage.
85% of India’s mobile subscriber base consists of prepaid subscribers, and the sachet based pricing would definitely benefit this segment. However, the usage syill remains very low in the rural areas for these services. The success depends a lot on the pricing and the affordability of supporting handsets.