The following article is based on my own interpretation of the said events and/ or publicly available information. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.
Shivani Manchanda, MBA 2016-18, Vinod Gupta School of Management, IIT Kharagpur
Being the frequent users of data packs on phone, some of us these days ponder upon the cheap data plans of Reliance Jio. How are they making money? How are they providing us with the cheap data plans? What is their business strategy? Why other companies are not providing at the same prices as Jio?
Reliance Jio is different from other network providers because they have the capability to provide us with unlimited data. Other companies have to pay fiber optic companies but Reliance has bought Infotel Broadband. If a network providing company has once build the complete infrastructure required then they can provide us with unlimited data without further putting in some money. Also the tariff plans made by Jio are defined strategically to make profits. If the user spend anything above Rs. 150 per month which is the average revenue per user, he is considered to be high value customer. Reliance Jio has kept no plan in between Rs. 149 and Rs. 499. So most of the users think of the benefits they are getting in Rs. 499 pack and go for it which is directly making them high value consumers.
The multiple business verticals Reliance Jio is entering, should also be looked upon. Jio apps and LYF phones are good sources of profits. They are providing Jio apps like Jio Play, Jio drive, Jio news etc. for free till 2018 then they will make huge profits from these apps as the apps can only be used by the Jio users and the experience provided by these apps is excellent. Initially Jio was providing all the unlimited preview offers only if you buy the LYF phones, this increased the sales of these phones with not so good specifications which led to the increased profit margins.
Reliance Jio is playing with the minds of consumers yet as a user we all are getting benefited. They are not compromising on any of their profit makings, they have taken sufficient time and have made a proper strategy which in future is going to benefit them as well as our country.