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Contents
INTRODUCTION...........................................................................................................2 ABOUT FREECHARGE.IN..............................................................................................2 How Does FreeCharge Work....................................................................................3 SEGMENTATION & TARGETING...................................................................................7 MARKET POTENTIAL....................................................................................................7 COMPETITION.............................................................................................................9 Direct Competition................................................................................................10 Indirect Immediate Competition............................................................................11 Indirect Far Competition........................................................................................11 POSITIONING............................................................................................................11 COMMUNICATION DILEMMA......................................................................................13 COMMUNICATION RECOMMENDATIONS....................................................................13 CONCLUSION............................................................................................................16 REFERENCES............................................................................................................17 REFERENCES

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INTRODUCTION
Promotion is considered a very critical element of an organizations marketing mix rest being Product, Price and Place. The promotion strategy adopted by organizations can make or break their brands. The purpose of brand promotions is not only to make consumers aware of the brands presence, it is also to differentiate your brand against that of competitors, communicate the superior value your brand offers and occupy an distinctive mind space in a consumer which results in greater demand for your brand. Given this premise, we would be analyzing the promotional and communicational strategy adopted by a leading ePayment company in India FreeCharge.in. We would study the present marketing strategy the communication message and the channels (media) it uses, benchmark it against similar organizations and finally suggest on the communication message and the channel FreeCharge could adopt for increased return on marketing efforts.

ABOUT FREECHARGE.IN
FreeCharge, launched in August 2010, in an online service that enables the mobile/DTH/data card users to recharge their mobile phone (or DTH/data card) online and make it free. The primary service offering of FreeCharge is providing a convenient single platform to internet users to recharge a variety of their equipment ranging from mobile phones to Direct To Home services like Tata Sky or Airtel Digital or their wireless internet data cards (like MTS, Tata Photon or Reliance). The unique selling proposition of FreeCharge according to them is not just being a platform for users where they recharge their mobile & other prepaid or postpaid Page 4 of 23

equipment. It is according to them, making their recharge free. By free FreeCharge means - for every recharge done on Freecharge.in, it provides discount coupons of top Indian food joints and retailers, equivalent to the recharge amount. For example, if a user were to do a prepaid recharge of their Vodafone phone through FreeCharge.in of ` 200, he can avail of discount coupons worth Rs. 200. These coupons are delivered at users door step. Coupons can be used to save on purchases in day to day transactions like at eat outs, movies, gaming, music, grocery, etc. The focus of FreeCharge.in is to create innovative channels which can deliver value for money to the Indian consumers. The web portal of FreeCharge.in provides a very convenient, user friendly interface for people to make their transactions, as can be seen from the images that follow in the following few pages. Due to the novelty value of FreeCharge.in, we would briefly have a look at the model that FreeCharge follows.

How Does FreeCharge Work

Step 1: Enter Number & Amount For Recharge Once a user logs onto FreeCharge.in website he is prompted to select the service he is interested in. It might be recharging their prepaid/postpaid mobile phone, topping up internet data card or paying DTH bill. As can be seen from the top portion of the snapshot of FreeCharge.in homepage (see below), almost all telecom operators have been listed, so are the DTH and data card service providers.

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A person interested in recharging his mobile should enter his mobile number, select the operator (Airtel, Vodafone, Idea, etc.), select circle (New Delhi, Orissa, etc.) & enter the amount to be recharged. In most cases the website itself identifies the

operator and the circle on just entering the mobile number. Step 2: Select Coupons of Equal Amount For Free

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After entering the mobile number and the amount to be recharged, FreeCharge prompts the user to select discount coupons up to an equal amount as the recharge amount. The coupons listed on FreeCharge give the consumer a variety of choices across sectors. For example, in the food space there are coupons by pizza chains Dominos, Papa Johns & Pizza Hut, coffee chains Caf Coffee Day & Barista, other fast food joints like McDonalds, etc. Apart from food chains (which generally are more popular), there are other coupon options like from book store Crossword, travel site goIbibo.com & Via , multiplex PVR, and a variety of others. As can be seen from the snapshot below, for the recharge amount of ` 300 the user has

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selected four McDonald coupons worth ` 50 each, and one Crossword coupon worth ` 100. This totals to a recharge coupons value worth ` 300 (see right side of image). Step 3: Verify & Pay To Get Recharge Instantly Once the coupons have been selected equal to the recharge amount, FreeCharge prompts the user to enter the coupon delivery address. This is followed by the verification & payment gateway screen (as can be seen from the image below). FreeCharge lists in a very visual friendly interface the summary of the amount to be recharged on your mobile equipment, the recharge coupons you have picked and the total payment that needs to be made. A point to be noted here is that while the service is free, FreeCharge charges a fee of ` 10 as Handling Charges for delivery of coupons to your address. Please note if the user were to just recharge his mobile and not ask for any coupons to be delivered, he wont be charged anything extra. The amount he pays would be same as the recharge amount.

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Step 4: Get Coupons Delivered At Your Home On successful payment through the secure payment gateway (via Debit Card, Credit Card or Net Banking), user receives a SMS on his mobile phone & an email intimating him of the transaction, while also his mobile balance is updated within a few seconds of making the payment.

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This is followed by delivery of the coupons that that user had selected. The coupon delivery is made through a courier service and happens within 15 days. As can be seen from the image below, the coupons delivered by FreeCharge look the way they are shown in the image. On the coupons there is a very clear and distinct FreeCharge branding and also very distinctly is mentioned the validity date of the coupons. Post this date, the coupons are rendered invalid. Finally, on the reverse side of the coupons a few customary terms & conditions are mentioned. The user can take this coupon to the store/brand that is offering discount and give it to the shopkeeper while making the purchase.

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SEGMENTATION & TARGETING

In marketing texts when one speaks of segmentation & targeting of markets there are a few attributes that are widely acknowledged to be considered during the process. A brand would want to target those segments that are identifiable, substantial, measurable, accessible & responsive. In the case of FreeCharge.in, since it is a service being provided online it becomes necessary that the customers have access to Internet. Also, given the growth in internet penetration in India and the speeds, a typical broadband user would enjoy speeds greater than 256 kbps, and is likely to belong to SEC A, B. There of course could be computer literacy in such a family/household, and as earlier mentioned belong to SEC A, B. Finally, since the socio economic classification of A, B implies households with more than a few basic amenities they would invariable have at least a mobile connection if not a DTH service (or a personal wireless data card).

MARKET POTENTIAL
Indias online retail market is valued today at a modest ` 2,000 crore. It is projected to grow to ` 7,000 crore by 2015, according to the Associated Chambers of Commerce and Industry of India. In customer volume terms, ideally everyone with a mobile phone or a DTH connection or having a wireless data card is a potential customer for FreeCharge. However, out of this marketing universe based, the target segments are those with broadband access. This makes us look at the telecommunication scenario in India. India represents among the fastest growing telecommunication markets in the world. The wireless mobile phone subscribers in India at 893.84 million (as on 31Dec-2011) are the second highest in the world, only behind China. Also, with a teledensity of 74.15% in India there still are growth opportunities to be exploited. Talking about the internet penetration in India, nearly 120 million people access Page 11 of 23

Internet in some form or the other. However, this number is misleading in the sense that not all people access Internet from their desktops. Most of these 120 million access Internet through their mobile phones through the normal 2G network to download something like jokes, cricket score or ringtones. This huge majority of 120 million just dont have the means to access FreeCharge.in website even if they were aware of or wanted to. Having rendered an unattractive segment the vast majority of 120 million, there is a portion of it that is of utmost interest to all the e-commerce companies in India. As of 31st of December, 2011 India has nearly 13.13 million broadband connections. The Telecom Regulatory Authority of India (TRAI) defines broadband as those Internet connections where speed is greater than 256 Kilobits Per Second. To place this speed in perspective, this speed is good enough for quick download of webpages through internet, though one might not get good continuous streaming of YouTube videos. Nonetheless, it is pretty decent speed that allows people to browse the Internet and gives them the freedom to have electronic commerce and transactions. Total Subscriber Base Instrument (as on 31-Dec-2011) Growth Rate (Y-o-Y) Subscriber Projection (for 31-Dec-2012) Wireless Phones Direct Home Internet (Total) Broadband ( >256 kbps) 110 million 13.13 million 13% 38% 124.3 million 18.12 million To 35 million 30% 45.5 million 893.84 million 28% 1144.12 million

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The market potential appears huge. According to a latest media article (dated January 24, 2012), a leading venture capital firm Sequoia Capital invested ` 20 crore in FreeCharge, as FreeCharge wants to scale up and needed more liquidity. The article also states that FreeCharges user base has grown to 1.5 million. This is still a far cry from the number of broadband subscribers in India. Also, taking into consideration the latest trends in telecommunication sector one would say the future looks extremely bright. For example, there is an exponential increase in number of smart phone users. This enables people to surf internet more conveniently. Also, the 3G services being provided enable users Internet speeds on portable devices up to 2-3 MBPS. Finally, the latest market news is about the launch of 4G services, also termed as BWA (Broadband Wireless Access) or LTE (Long Term Evolution). These services shall bring people even closer to internet as it promises to offer speeds up to 20 mbps at a more economical price than 3G services. Entirely taking this into context, it promises to be a very exciting market for all e-commerce players and especially FreeCharge, with tremendous potential and growth.

COMPETITION
The online recharge market in India is as fragmented as the industry it serves. Similar to telecom industry, there are number of players operating in this field, and newer ones surface by the day. Though FreeCharge is regarded as among the leading, if not the leader in the online recharge market place, it has huge competition that speak of value proposition similar to FreeCharge or in some cases even better. In order to study the competition that FreeCharge faces, we would be classifying competition into three broad categories Direct Competition, Indirect Immediate Competition & Indirect Far Competition. Let us look at each of them in greater detail.

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Direct Competition
Direct competition refers to brands that compete in the same category, provide same functionality and same benefits to consumers. The online recharge model of FreeCharge in which users get discount coupons in exchange for their mobile/DTH recharge is followed be a few other organizations as well. Prominent among them are RechargeItNow.com and Paytm.com. These two brands are the biggest competitors to FreeCharge and follow nearly the same business model. The only difference being what these competitors offer to users and what FreeCharge offers is the limit of value on the discount coupons. In the FreeCharge user gets coupons worth the same value as recharge, but in the case of RechargeItNow.com and

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Paytm.com user can avail of discount coupons of value as much as ` 10,000 on a single recharge. Hence, to users such competitors might appear a superior value proposition.

Indirect Immediate Competition

By Indirect immediate completion we refer to the competitors that provide the same technical functionality as the primary brand, but differ in the attributes that help in fulfilling that technical functionality. In our case of FreeCharge, there are many online sites that allow users to recharge their mobiles online. However the business model is not the same. These set of competitors dont provide additional benefits in the form of coupons or anything else to the users. Some examples of indirect immediate competition are mobivik.com, EasyMobileRecharge.com and the regular telecom websites like Airtel.com or Vodafone.in. They pose a considerable threat to FreeCharge, especially the established website like those of original telecom companies (Airtel.com, etc.) as there is a greater level of trust involved.

Indirect Far Competition

Indirect far competition constitutes those organizations or brands that can act as substitutes to the primary product or brand. For example, in the case of FreeCharge a user might as well opt to get his mobile phone recharged from the friendly neighborhood retail outlet that offers recharge facility. This channel sees by far the highest volumes in the mobile recharge market as it is characterized by convenience of quick recharge, high trust and other benefits (many retailers extend credit facility to their regular customers). To underscore the importance of this channel, Airtel for example has nearly 1.2 million retail outlets in India from where one can get his Airtel mobile recharged. Hence, this channel forms a competition to FreeCharge in the long run; however we are in our study focusing only on the direct and immediate competition.

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POSITIONING
FreeCharge as a consumer brand is very new in the market. Being in existence for just about 20 months, and establishing itself as a innovator and a leading playing in this market, it would be difficult not to comment on the position it occupies in the minds of the consumers.

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We look at the positioning of FreeCharge through the positioning grid (refer to the image on next page), the two attributes we look for in a e-commerce service are functionality and trust. By functionality one would refer to the benefits being

provided and if it fulfills the basic task satisfactorily. By trust one refers to how comfortable your target segment is in using the service. For example, there are many fraudulent websites in this space, that promise of mobile recharge and on entering credit card details, either nothing happens or your payment is made (amount deducted from your bank account) but the actual recharge never happens. Hence, trust becomes extremely critical in e-commerce setting.

As can be seen from the image above FreeCharge scores very high on functionality. It has been able to foster this image on the minds of consumers as being among the best websites available, which offers unique benefits in the form of coupons on Page 17 of 23

every single recharge. However, the stereotypical attitude of people towards new or less known e-commerce ventures places FreeCharge low on the trust scale. While something like the company website of Airtel, Vodafone, Idea or Tata Docomo though are low in functionality, less convenient to use, are very high on trust. The original company website stand for a brand that the user has regular interaction with and the user attaches trust to the brand, which leads to trusting even the ecommerce functionality on websites of such brands. Speaking of positioning, another aspect one observes is the clutter of similar website in the top left quadrant. FreeCharge hasnt been able to differentiate its offerings from those of its competitors. People view it as being one among the many web services that offer online mobile recharge. While, FreeCharge is a more comprehensive service offering facility to pay bills, topping your DTH accounts and also paying and buying for internet data cards it hasnt been able to communicate this effectively.

COMMUNICATION DILEMMA
The marketing plank for FreeCharge is delivering maximum value to customers in the form of free coupons of the same value as their recharge amount. While the concept is indeed highly innovative and does deliver value to customer, they face a bottleneck in communication. Today, India has more than 850 mobile subscribers, and more than 90% of these are on prepaid. There is decent Internet penetration with 110 million, and broadband users around 13 million. Inspite of this, Indians find it extremely difficult to recharge their mobiles online. The reason is the online recharge gateways of telecom players Airtel, Vodafone or Idea are anything but user-friendly. The very limited advertising one sees from FreeCharge, it speaks about the concept customers being rewarded through coupons. However this is not a differentiating factor as other players like Paytm.com and RechargeItNow.com offer similar (rather Page 18 of 23

more attractive) benefits. Hence it is my view that FreeCharge should alter their communication message which can help it differentiate itself from the rest of the competition. We would see how FreeCharge can do so in the following section on recommendations for communication.

COMMUNICATION RECOMMENDATIONS
The online payment for telecommunication utilities is a cluttered space with nearly 20 players vying for market share, and new players cropping up by the day. The basic functionality, the technical product offered by each of these services is the same online recharge of your mobile. In their bid to differentiate from each other, each player tries to bring something new to the table that other players have not got. For example, in the case of FreeCharge it is the discount coupons. Also, the players try to differentiate against each other through the width of the service. For example, not all players have a tie up with all the telecom companies for providing recharge. Hence, their recharge platform might be functional for a few set of telecom operators, but it not be for the other set. Another thing to note is RechargeItNow has existed for years while FreeCharge and Paytm are relatively new players in the market. Nonetheless, they have managed to capture significant market share and are today the top three players. Though there are many fringe players in this space biting at each others market share, they are recognizing the potential and steady revenues this business offers. FreeCharge.in was the first company to offer discount coupons for every recharge transaction, and were the pioneers of this business model. However, others like RechargeItNow and Paytm have copied the model and to an extent gone more aggressive by offering coupons up to ` 10,000 on a single recharge. The free coupons plank was supposed to serve as a source of competitive advantage for FreeCharge. Quite understandably, CEO of FreeCharge, Mr. Kunal Shah is quite peeved when he discusses this as is clear from one of the recent interview he gave. Page 19 of 23

We have a patent pending status on this business model (discount coupons). There are guys who have copied our screens as it is, from how it works, and tabs, and even emails. It creates a wrong impression, wherein customers think they have recharged using our site, but we dont have that order number. The copying has to be something which doesnt jeopardize the original site and mislead customers. We wont send court notices, but we are going to talk to them.

FreeCharge owning to a very limited marketing budget and its start-up nature doesnt advertise much. However, the communication channel deployed is only digital (internet) and the common theme around the messages is the innovation it brought to the market in the form of discount coupons for every recharge. So their primary communication plank is being rewarded with coupons for mobile recharge. Page 20 of 23

If we analyze the communication strategy adopted by FreeCharge using the FCB Grid framework, we see that FreeCharge currently would occupy top left quadrant, while it would desire to move to the bottom right quadrant (see image in previous page). Mobile recharge, by its virtue is not a high involvement category and consumers display a picking behavior (indifference to brands) in getting their mobiles recharged. A consumer would only look for convenience while getting his mobile recharged. However, as we speak of greater convenience and getting the recharge done online through the web services available on Internet, the decision making process of consumer shifts to sub-contracted process or the problem solving process, the high involvement category. The consumer wont just pick any website to get his recharge done. He would like to know about the website, and trust the website to actually pass on the balance (recharge amount) to his mobile. Hence the current positioning of FreeCharge in the top left quadrant. We would discuss now how FreeCharge can bring about a positive shift in positioning.

The above figure shows the type of positioning a brand can acquire. With generic positioning, the brand only fulfills the needs of the market. With attribute positioning the brand benchmarks itself through select attributes against another brand and talks of the superiority. Finally, in the emotional positioning the brand tries to create an emotional connect with the consumer. The communication messages by FreeCharge.in have adopted attribute positioning. They speak of the discount coupons being offered. Being an e-commerce player the two cornerstones of success are the convenience you are able to provide to the consumer and the trust you can build with the consumer. Both these messages are missing in its current campaign, and lack of this messages are hurting the future growth of this company. Electronic commerce industry in India is a growth market, and hence it would be difficult for companies to entirely differentiate themselves on the emotional Page 21 of 23

positioning. However, it is in this industry more than anywhere else that trust is a very critical success factor. Hence, the companies like FreeCharge have to adopt a positioning that is attribute based and also emotional in nature. FreeCharge should speak of the convenience it brings to its customers and the coupons model, all the while laying emphasis that it is a safe website to transact with. India with its growing computer literacy and many first time e-commerce users need that trust to nudge them from just visiting the website to actually making the payment on the website. Thus, the approach of communicating and building trust along with the existing message (of coupons) would shift the consumer decision making process to a satisfaction process. The level of involvement reduces to low and there is a greater feel component. The positioning thus shifts to the bottom right in FCB Grid, which would result in greater number of customers selecting FreeCharge over competitors.

CONCLUSION
India with its telecommunication revolution is a country of staggering numbers 890+ million wireless mobile subscribers, 35+ million DTH users, internet penetration of 110+ million and broad band penetration of 13+ million. The growth in all these related sectors is again high double digits. Also, this is an industry characterized by monthly re-purchase, similar to FMCG goods. To fulfill the repeat purchase needs of these multi million consumers, many service players life FreeCharge have evolved in past couple of years. FreeCharge, pioneer of discount coupons model for mobile recharge has formed this as its primary communication message. However, e-commerce in India is still in nascent stage and people generally are distrustful of many e-commerce websites floating on the web. Hence, it is our opinion that FreeCharge should also weave in

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the convenience and the trust message in its communication and advertising strategy.

REFERENCES
1. http://www.freecharge.in/

2. http://www.freecharge.in/about-us.php 3. http://www.trai.gov.in/traiannualreport.asp 4. http://www.livemint.com/2012/01/24232908/Sequoia-Capital-invests-Rs-20.html

5. http://www.medianama.com/2012/01/223-kunal-shah-freecharge/

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