Mumbai: The Rs 14,000-crore-plus Reliance Infocomm project was soft-launched on 28 March 2002, the birth anniversary of Dhirubhai Ambani, who founded the giant Reliance group. As Ambani had done in his lifetime, this project was also set to outdo the competition and change the rules of the game.
The initial overs have just been bowled, but Reliance has just realised that it is on a sticky wicket and that it has to first change its game plan before it can change the game itself.
The success of the project hinged on Reliance's retail marketing strategy. For their retail set-up, Reliance had appointed dealers for some particular areas. These dealers had to pay an amount of Rs 50,000 to have the right to sell Reliance's products and services in their areas.
After the launch, Reliance issued advertisements inviting applications under the Dhirubhai Ambani Entrepreneur (DAE) programme. Under this programme, an army of entrepreneurs were to be created who would storm the streets and households of the country to market Reliance's products and services. According to the advertisements, all that an applicant had to do to become an entrepreneur was to shell out Rs 10,000 and have the ability to fill up an application form.
A mad rush followed and entrepreneurs were selected. There is no clue on what basis they were selected. But, in a matter of weeks, the country, which is woefully short of entrepreneurs, got blessed with 50,000 entrepreneurs.
A connection gone haywire
Reliance Infocomm was conceived and launched over a period of two years, presumably after a painstaking process. Their entrepreneurs, though, did not have to go through any pain. A single-day DAE training programme was held where they were supposed to have been trained in entrepreneurship and the arts and crafts of marketing telecom products and services.
How many entrepreneurs attended the programme is not known, but after the programme, these entrepreneurs were let loose on the streets and all hell broke loose. The originally appointed dealer had the mortification to see his next-door neighbours, the chemist across the street and the lassi vendor at the corner, peddling the company's products in his territory. The discerning customer observed this confusion and was not buying. 'Wait and watch' was perhaps the policy.
There was confusion on the pricing front, too. The project was prepared on the basis that the price be fixed first and the product and services be structured to suit the price. The idea was to fix the lowest price (remember, outdo the competition?). Thus, the pricing of the products and services were such that the customer had to pay more now and less later so that ultimately, over a three-year period, he ended up paying less than what the competition was offering.
Alongside with the basic pricing came a slew of freebies. A discount, if you do this, and an incentive, if you don't do that. Clever or confusing, the customer was just not buying. A mega advertising campaign was launched. The blitzkrieg coincided with the world cup cricket tournament. This ensured that practically the whole of India was watching and listening.
Many analysts are of the opinion that the main theme of the campaign was the iconisation of Dhirubhai Ambani rather than what Reliance Infocomm is offering. Maybe they were relying on the Dhirubhai magic to see them through. The products were also highlighted as magical products - 'Kabhi mobile, kabhi computer' - most of the times perhaps neither.
Reliance is now coming up with a new campaign when the products are formally launched on 1 May 2003. This time round, Reliance is dispensing with the DAE concept. Instead, it will set up its own chain - over the next few weeks the company will set up over 250 web stores and about 100 phone stores nationally.
At the web store the customer can interface directly with the company officials, see, touch and try the products and then buy. At the phone stores, the customers can buy the phones directly across the counter. At the end, there will at least one web store in all the towns where Reliance Infocomm has a presence.
Damage-control exercise on
According to the company, the reason why its strategy did not work is because of the Indian mindset. The company thinks the Indian customer just needs to see the catalogue of a product after which he can make a buy decision. This is the western mindset where even cars are bought on the basis of a catalogue posted on a company's website. The Indian mind set has not reached to that level as yet. The Indian customer needs to touch, try and even chat with the seller on unrelated topics before he is convinced.
True, but a comment also needs to be made on the Reliance mindset. According to Reliance watchers, Reliance truly became big after the successful launch of Vimal, a retail product. After that, the group forayed into several activities that did not require retail marketing. Reliance, over the years, seemed to have lost its mindset on retail marketing.
A story goes that when the group was expanding, it had set up a project department for identifying new projects. A project manager came up with a Rs 20-crore project. Anil Ambani is supposed to have pulled him up for coming up with such a small project. He wanted a project of the size of Rs 500 crore and not a Rs 20-crore paan ka dukan.
More recently, after Mukesh Ambani became the group chairman, he was asked how he and his brother would manage the group between themselves. He said there are many areas for each to look after and that Reliance is not paan ka dukan where he would sit in the mornings and Anil would sit in the afternoons.
Well said, but they must now ensure that the 500-odd paan ka dukans, which they are setting up, are given their prime attention. These retail stores, after all, will be the vehicles that would sell Reliance products in the future - be it phones, digital products, LPG or oil.