The way I see it most telecom companies have adopted an act, wait and watch approach to Reliance Jio launch. As I stated in my analysis of Jio, its a landscape altering threat to existing players. And I am enjoying the battle play out.
Vodafone recently launched Flex where one can purchase flex points which can be used for data/voice/sms. Vodafone states the below in its promotional material. (src vodafone site)
The intention appears to be good. It looks like a strategy to block Jio ( though I think this was being piloted independently. Something so radical would take ages.). But Vodafone in my opinion fails in the execution. Jio has the power of simplicity as I wrote in my earlier post but vodafone literally seems to have forgotten to anyalyze the final product.
Firstly each recharge gives different flex points which again costs different. While this incentivizes higher value top-up the issue is it becomes confusing. If I as a customer don’t know how much in rupees it costs me to make a call, its a waste. The idea was uniform flex consumption but it’s no longer true if the price changes.
Someone forgot KISS- Keep it simple Stupid
Secondly , the issue is with reliance Jio making all call free, a new product will barely make a dent or have strong product recall unless its something great. The price points are just not exciting. With the vast majority of vodafone customers on normal confusing plans, with recharges, special tariffs etc and the flex plans having no clear advantage to adopt, the plan will die a slow death and remain ignored. If a customer was active enough to be aware of the advantages of Flex, he would rather move to Jio simply as it represents a better proposition.
If I was the product manager , I would have kept Flex at 50% of the present price and raised tariffs later. Of course in a large company, courage is rare. The solution to sell to boss and super boss route is not the one for radical bets.
I have done a quick analysis in excel and you can see my concern. The price variation is significant. An outgoing call costs .76 rupees in the lowest priced recharge and .45 paisa in the highest priced recharge.
|S.No.||Description||FLEX 325||FLEX 700||FLEX 1200||FLEX 1750|
|1||Price in Rs.||123||198||298||396|
|4||Cost per MB(in Rs.)||0.38||0.28||0.25||0.23|
|5||Price for 1 Gb data(in Rs.)||388||290||254||232|
|6||Outgoing call cost (in Rs.)||0.76||0.57||0.50||0.45|
|7||Flex used for 1 Gb data||1024||1024||1024||1024|
|8||Expense for 20 mi daily calls for 28 days||423.88||316.80||278.13||253.44|
|9||Annual cost assuming 1 recharge 28 days||1,603||2,581||3,885||5,162|
Finally , most telecom companies are betting their customers wont enmasse move to Jio. They are forgetting if enough people move and give a good feedback, the rest will follow. The time to grab the initiative is now.