Tag: Amazon Prime

 

 

With apologies to none at all

By Vikas Mehta

 

Indians want free programming. Indians will not pay more for data. Indians buy the cheapest option.

Jio succeeded because it gave free data for more than six months. Netflix is not doing well because it is not cheap.

Sometimes, I am amused at such cliches which are used to define success or hide failures. Sure, price is important. Definitely, everyone loves free. But it would be imprudent to define failure or success due to such unidimensional thinking. And, no, Indians are not some out of the world consumers who live by a different paradigm.

There are two factors here. One is the definition of value and the second is the role of other marketing factors which accentuate the free or cheap story.

Let’s look at some examples. Netflix which became a household name globally worked on a simple premise. Great programming which is ad-free. The OTT channel invested a huge amount of money into producing independent programme content and dished it out on the back of subscription fees. It was lapped up globally and even in India its numbers initially were impressive. But then after it had reaped the low hanging fruit of urban, English-speaking affluent Indians, it stuttered and spluttered. The reason trotted out was its premiumness. Its subscription cost was Rs 799 per month. Compare that to Amazon Prime which then was Rs 999 a year and Hotstar which was around the same. Netflix was almost 10 times more expensive. To woo the Indian audience, the channel put out a Rs 199 a month mobile phone offer and then reduced that to Rs 149. Other rates were also slashed by around 20-60%. It seems, that barely moved the needle and Netflix subscription in India languishes at around 6 mllion subscribers.

So, the above statements about Indians and cheap or free etc.

But that’s barking up the wrong tree. Let’s look at the Netflix product. It has very little programming in Indian languages and the subtitles option relevant for India are only in Hindi and English. According to the 2011 census 46% of Indians claim Hindi to be the first language and 11% claim English to be the same. So, even if we ignore that some percentage of such Hindi speakers may not be comfortable reading Hindi, this means that more than 55% of Indians have a problem with Netflix as a product. And mind you, subtitles is always a compromised product. The bare minimum that Netflix needs to do in India is start dishing out subtitles in at least six-seven more languages.

This brings me to the second point. There is not much value to pay for a channel whose product to a big majority of Indians is not suitable. Specially, when compared to local competition like Hotstar or Amazon Prime or Sony Liv. Because these, offer something extra too. Some sports like cricket or football or free online delivery which Amazon Prime offers. And of course a deluge of Indian language programmes.

Indian consumer is not just price conscious but value conscious too.

What about Jio, you say. Of course, Jio gave free services for about 9 months after launch. But do not forget, it had a great product. Not only was it 4G but Jio was giving it out in spades. Till Jio came on the tariff of all telecom service providers was call centric. So many calls, so many SMSs and a miniscule amount of data per month. A typical post-paid plan which cost around Rs 400 per month would give 2-3 GB a month data. Jio turned it around on its head. It’s launch plan for Rs 149 for 28 days included 1.5 GB a day data and unlimited free calls and SMSs. The price was down by 80% and data had increased by almost 20 times. Was that cheap or was it more value?

Now let’s look at a category like soaps. This is a category where brand loyalty is tested quite often. And enough brands are available which cover not just all price segments but also all imaginable features and benefits. In the plethora of these brands Godrej No.1 was launched with a high TFM Grade 1 claim. Not an easy differentiation to express but they did a decent job. And they did not stop at that. They discovered a new pricing. Actually, pricing in the garb of an offer. Buy 3 get 1 free. And then they made only these packs available. Value? Yes. Indians love more value for the same price.

But India is not a large pack market. Sachets have revolutionised the Indian market. So, by making only buy 3-get-1 free packs available was Godrej barking up the wrong tree?

Actually, it was a classic case of right product with the right pricing, right promotion and also right retail push. Retail push because the retailer now had the opportunity to pocket more money. India being a single unit market, the retailer would break open the pack of four and sell each pack individually. Even if he sold it at a lower price than the MRP he was actually selling one extra pack, the whole value of which was his earning. Not just the margin but actually the selling price. And this was being done by the retailer. So, he was not just happy but would actually push the brand, citing TFM, grade1 soap. And currently I see the brand being sold in large packs only. Sometimes even pack of 8 or 9. It’s not being targeted just at the consumer but at the retailer. It’s value for the retailer too.

Value and price is fast evolving into a challenge for the brands. Traditional discounts are being traded with value. When one is dealing with aspirational products like say 5-star hotels, it hurts them if they have to offer big discounts during off season or when occupancy is low. If an average room costs Rs 25,000 per night and occupancy is low then the standard way of looking at the situation is to cut prices. For a hotel, at midnight the value of an unoccupied room becomes zero. Their thinking is that instead of zero even if I can get Rs 10,000 then it’s a bargain. Therefore late night deals and sites like booking.com give massive discounts to very late bookings. But Hotels now are changing the game. They are trying to attract a different target, those who aspire to stay at 5-star or want the comfort of a great room but till now cannot afford it. The concept being used is less value for less price. So, the room is available at Rs 15,000 or even Rs 12,000 but the resident cannot use the gym and the swimming pool and of course, no free breakfast. Suddenly, a whole new market opens up for the hotel.

We Indians are famous for jugaad. But the above sort of thinking where value is redefined, where product is redefined and where new rules are explored is what is redefining jugaad and making  marketing more exciting today. The question that every marketer needs to ask themselves today is “Are we barking up the right tree?”