It’s a Classic case of how low prices can drive volumes in the cost-sensitive market. When Reliance Communication launched its Classic range of handsets at unbelievable three-figure prices on 2 May, the market responded with unparalleled fervour. Priced between Rs 777 and Rs 888, the three-model range of handsets is perhaps the cheapest sold in the country. In the first week of the offer itself, Reliance sold more than one million handsets—an average of almost 100 phones every minute.
{mosgallery}India is a booming mobile market with almost 150 million subscribers and six million new ones joining them every month. Market research firm iSuppli estimates that 69.3 million handsets were sold across the country in 2006. It expects the total number of cell phone connections to rise to almost 484 million by 2011. That means every third Indian will have a cell phone by that time.
This is where Reliance’s clever marketing strategy comes into the picture. By bringing down the price of handsets, the company has opened the floodgates of a mass surge in new connections. The lowpriced handsets would expand the market for cellular services, adding a new slab at the bottom of the consumer pyramid.
Do we hear other cellular service providers scoffing at Reliance’s bid to tap the lower end of the market? They may do so at their own peril. It’s true that this segment does not account for too much revenue. But the sheer size of this market is gigantic. Besides, today’s low-usage subscriber could be tomorrow’s high-flying consumer.
