The Freedom 251 Pricing Is Actually A Brilliant Marketing Move – Here’s Why

With the sale having gone viral and hopefully millions of potential buyers now aware of the brand, Ringing Bells has achieved what even a big-ticket ad campaign couldn’t have got it.

But first, if you think the Freedom 251 pricing is too good to be true, give yourself a pat on the back for managing to stay rational. Yes, you very well deserve it, especially when frenzied buyers queued up so desperately that it ended up pumping traffic at the rate of 600,000 hits per second as per a notice put up by the website itself. Everybody, from an iPhone owner to a Samsung lover or a Xiaomi enthusiast or Micromax supporter decided to give it a try, even if just for the fun of it. After all, to many of the users, the price of the phone at Rs 251 is petty change, even after adding shipping charges of Rs 40 or so.

A huge debate is raging on in the mainstream tech media as well as on the social media as to how Ringing Bells—the maker of Freedom 251—is going to break it even, forget earning a profit. A lot of people are also suspecting that this could eventually turn out to be a bogus thing or a scam. Cellular Associations of India (COAI) has gone to the extent of saying clearly that it was not possible to sell a 3G phone at a price below Rs 2,700, and going by that estimate, Freedom 251 is indeed priced to sell at a loss of over 90 percent.

I’m surprised to see that that people are actually spending time and energy in trying to figure out how Ringing Bells would sustain selling the phone for Rs 251, plus shipping charges of Rs 40 or so. (It has stopped taking registrations on the website and to those who managed to get registered, the phone would be delivered after four months.)

If you haven’t already figured it out, it’s futile to try finding out the ‘secret’ formula that would make this pricing work—there is none. It is also practically unthinkable that any potential stakeholder—be it a government or a telco—would subsidize to make it work, given that the subsidies would need to be as high as over 90 percent. And no economy-of-scale, by any stretch, could make the pricing work either.

So coming to the point that we started with—how do we solve this riddle?

I did say Aakash is a cue. Let me now elaborate. Aakash was touted as India’s cheapest tablet at under 35 dollars, though assuming a handsome government subsidy. That was then considered to be an ultra-low pricing (it still would be) and without getting into the details of it, the Aakash project in its second avatar was shut down for reasons well known to all.

Nevertheless, Datawind—the company that was initially associated with Aakash—managed to live on and do some brisk business. Its tablet models, under the Unislate brand, even went on to become some of the better-selling models at various points in time. None of these models, however, were priced in the $35-range. The lowest priced Ubislate 7SCX tablet featured on Datawind website at the time of writing this article carries a tag of Rs 3,799, which is around $56 at current dollar exchange rates. The higher end Ubislate 3G10 is priced at Rs 9,799, which approximates to $143.

So here’s the answer—the 35-dollar Aakash tablet turned out to be successful marketing ploy for Datawind, which helped sell its Ubislate tablet brand. However, to be fair to Datawind, Ubislate didn’t get the whole of the marketing brownies earned by Aakash, simply because Ubislate was not a sister brand of Aakash.

In case of Freedom 251, there are no brand gaps to be bridged for Ringing Bells and hence the rewards may be assumed to be manifold. With the message having gone viral and hopefully millions of potential buyers now aware of the brand, Ringing Bells has delivered a marketing and advertising masterstroke as it most likely saved itself millions in advertising money.  Now even if it gives away a few thousand Freedom 251 handsets to a batch of successful registrants (the number of registrants is not likely to be very high since the website was often down or functionally erratically due to heavy traffic), the company would still be spending only a fraction of the money it would have needed to achieve a brand awareness of such massive scale. It goes without saying that future models from the company are expected to be priced much higher.

This gives a glimpse of how start-ups like Ringing Bells could innovatively approach the market and create room for themselves in segments as crowded as the mobile phones. The company, however, will need to deliver on the value front also to be able to hold on to the space it created for itself, and, grow from there. Meanwhile, do expect more such branding and marketing experiments in future from some others as well.

Enter the era of start-up marketing! I’m sure friends in the advertising and media houses are not smiling.

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About the Author

Deepak carries around 25 years of experience. He is the Founder Analyst at B&M NXT. His focus areas include strategic business consulting & advisory, strategic communications, sales enablement and capacity building. He is also a columnist at Governance Now, India’s leading magazine on public policy and governance matters.

You can connect with him on LinkedIn here.

Comments

4 comments

Sayantan Banerjee

Sir,
I beg to disagree with the argument you have given. You say they have saved a lot on marketing expenses. Lets say the loss is 90% on each set which is around a loss of Rs. 2500 per set. Lets consider Rs. 2000
25 lakh bookings is what the company was targeting and got. That puts the total loss to Rs. 500 crore.
Now lets look at a new entry to the Indian market in smartphone. ASUS.
Its revenue is around $200million in India of which 50% comes from smartphone.
http://www.businessinsider.in/Asus-partners-Foxconn-to-make-smartphones-in-India/articleshow/49185096.cms

even considering the total revenue, that’s around Rs. 1400 crore.
So a company having the topline as Rs. 1400 crore, I don’t find it feasible to spend Rs. 500 crore on marketing. For a new entry with nothing lined up, its even more unfeasible.

To top that, freedom251 has advertised in newspapers as well. So there is some cost beyond Rs. 500 crore. I fail to understand how it has managed to save anything in marketing.
Yes the strategy might be mind blowing with the name now imprinted in the minds of everyone who are a potential customer, but what I feel is that, its come at too high a cost, that too if it actually launches any other new set at normal price.

Again, with this launch, Ringing Bell has positioned itself as a inexpensieve brand. Can it survive when it launches even higher priced phones?
The reason why Maruti or Nokia or for that matter Tata Nano could not reposition itself no matter how much it tried or is trying to.