The Monetization Pod at Skillz is focused on unlocking new revenue streams to enhance player lifetime value while maintaining a fun, fair, and rewarding player experience. Core areas of exploration include rewarded ads, display ads, in-app purchases (IAPs), cosmetic items, battle passes, and subscription models.

Part 1: Market & Competitive Analysis

• Research 2-3 comparable companies or ecosystems (mobile games, esports, adjacent platforms).

• Identify at least two monetization models they’ve used successfully.

• Analyze what made those models successful and how/if they could be adapted to Skillz.

PUBG Mobile

PUBG Mobile is a battle royale shooter that has achieved over $10 billion in lifetime revenue, making it one of the highest-grossing mobile games globally. PUBG Mobile’s monetization is exclusively via in-app purchases, avoiding disruptive ads, which helps maintain player retention and enjoyment. Key monetization models include:

Monetization Models:

1. Seasonal Battle Pass (“Royale Pass”): PUBG Mobile introduced a tiered Battle Pass system in 2018, inspired by Fortnite’s success. Each season, players can purchase the Royale Pass to unlock missions and earn cosmetic rewards (outfits, weapon skins, emotes, etc.) by leveling up the pass. This model drives consistent engagement: players log in daily to complete Royale Pass challenges and progress through tiers. Notably, nearly 50% of top-grossing mobile games use some form of battle pass, underscoring its effectiveness. By offering a stream of rewards at a fixed price, it converts a large base of moderate spenders, rather than relying only on a few big spenders.

   It also adds social pressure: PUBG lets paying users form “RP Teams” where a group’s pass progress is combined for extra rewards, motivating friends to buy the pass to not let teammates down. This seasonal pass model has proven so effective that after its introduction, games like Clash of Clans saw a 72% revenue spike in the month after launching a $5 season pass. For PUBG Mobile, the Royale Pass keeps players continually engaged and monetized in cycles, contributing to its 40 million+ MAUs and $600+ million annual revenue in recent years.
   
   

2. Cosmetic In-Game Purchases (Skins & Themed Events): PUBG Mobile monetizes purely through cosmetic items – outfits, weapon skins, parachutes, emotes, etc. – which do not affect gameplay balance. Players acquire cosmetics via direct purchases, crates (loot boxes), or as Royale Pass rewards. These items appeal to players’ desire for personalization and status. Limited-edition skins and crossover events create FOMO (fear of missing out) that spurs spending.

Why These Models Succeeded in PUBG:

Both the Royale Pass and cosmetic sales succeeded because they align monetization with player engagement. The battle pass gives players clear goals and rewards for regular play, effectively increasing retention and lifetime value. Even though the pass is inexpensive (~$10 or less), the massive user base makes up for it, and the pass in turn increases overall IAP spend by boosting activity.

On the other hand, cosmetic IAPs leverage players’ social motivations (status, self-expression) without harming game balance. Exclusive skins (especially time-limited ones) create urgency and community buzz, driving revenue spikes during special events. PUBG’s use of big IP collaborations (like Godzilla, Arcane) attracted both existing fans of those franchises and gave current players novel content, boosting acquisition and monetization simultaneously.

Recommendations for Skillz:

• Implement a Seasonal “Skillz Pass” – Skillz can introduce a battle pass style system across its platform. For example, a Skillz Season Challenge Pass could reward players for participating in a series of tournaments. Players who purchase the pass would unlock premium rewards such as bonus Z-coins (virtual currency), exclusive profile badges or avatars, and entry tickets to special tournaments. This would encourage more frequent play and retention, as users strive to complete the pass.

  
  Importantly, rewards should remain cosmetic or access-oriented (non-competitive) to maintain fairness – e.g. unique profile customizations or the ability to enter an invite-only prize event, rather than any in-match advantage. A low-cost seasonal pass (e.g. $5) could significantly broaden Skillz’s payer base by converting casual competitors into paying users, much like PUBG’s Royale Pass drove conversion by offering high perceived value at a modest price. Skillz should also consider adding social features to the pass: for instance, a team-based pass challenge where a group of friends on Skillz collectively earn rewards (mirroring PUBG’s RP Team concept), which can boost referrals and viral engagement on the platform.
  
  

• Cosmetic Monetisation: Introducing customization options for players’ profiles, avatars, or even in-game effects (celebratory animations, custom skins for generic game elements) can open a new revenue stream. For example, players might buy exclusive avatar frames, emotes, or tournament victory animations to show off their Skillz achievements. These cosmetic purchases give players a way to express status (“I won last season’s Skillz Championship”) and personalize their presence on the platform.
  Skillz could rotate limited-time cosmetic items (themed around holidays or partner brands) to create urgency and fresh content, just as PUBG does with its seasonal skins. The key is to maximize visibility of cosmetics – e.g. showcase player badges on leaderboards or highlight a winner’s custom avatar in tournament lobbies – so that players derive social prestige from these purchases.

  
  Skillz might explore branded sponsorships for cosmetic content or events, similar to how PUBG Mobile runs branded campaigns without hurting retention. For instance, a sponsorship could fund a free entry tournament with a special cosmetic prize (bearing the sponsor’s theme), yielding value for both the sponsor and the players while adding to Skillz’s income via the sponsorship fee.

Roblox

Roblox is an online platform with millions of user-created games and virtual experiences. It operates on a freemium UGC model – anyone can play for free, and monetization happens through its virtual currency and services.

Monetization Models Used:

• In-Game Purchases via Robux: Roblox’s economy runs on Robux, a virtual currency that players purchase with real money. Players spend Robux on a variety of in-game items and upgrades, from avatar cosmetics (clothing, accessories) to game-specific perks or access passes. A portion of every transaction goes to the game’s developer and to Roblox itself. This has been hugely successful – the platform essentially takes a cut of a long tail of microtransactions across thousands of games. Free access with paid virtual currency extras allows Roblox to attract a huge user base, then generate revenue from the subset who buy Robux to unlock content and support creators.
  
  

• Premium Subscription (Roblox Premium): Roblox offers an optional monthly subscription that gives members a monthly Robux stipend, exclusive items, and other perks. This provides a recurring revenue stream and rewards dedicated users with extra value. Subscribers also enjoy benefits like the ability to trade items or increased earnings if they develop games. By converting a fraction of its users into paying subscribers, Roblox gains predictable income and strengthens retention (players stick around to make use of their monthly Robux and perks).
  
  

• Advertising & Sponsored Content: While historically Roblox relied mostly on in-game purchases, it is now expanding into advertising as a new revenue stream. The company is integrating immersive ads within its metaverse – for example, virtual billboards or video ads inside games from brand partners like Walmart or Warner Bros. Roblox has begun testing rewarded video ads as well, where players can watch an ad in exchange for an in-game benefit (e.g. an extra spin, a boost in a user-made game). This approach “monetizes attention rather than transactions” and crucially doesn’t require non-paying users to spend money, allowing developers to earn revenue from the majority of players who never purchase Robux. Early examples have been promising – players get something valuable for watching an ad (a win-win), developers get paid, and brands reach engaged users. By 2025, Roblox is building the infrastructure to roll out more advertising and plans to start reporting ad revenue alongside its traditional Robux-based revenue.
  

Why It’s Successful:

Roblox’s multi-pronged monetization works well due to the scale and engagement of its platform. Key success factors include:

• User-Generated Content Ecosystem: By sharing revenue with creators, Roblox incentivized a constant supply of new games and items. This cycle (players buy Robux to spend in games; devs earn Robux and cash out, inspiring more development) keeps the platform content-rich and players spending. The diversity of experiences means there’s always something new to spend on, catering to different tastes and sustaining long-term interest.
  

• Social and Creative Value: Purchases in Roblox often have social currency value – unique avatar outfits, animations, or game perks make players feel special in front of friends. This drives a desire to spend on cosmetics and status items, similar to Fortnite’s appeal, amplified by Roblox’s large social community.
  

• Monetizing Both Payers and Non-Payers: Importantly, Roblox is expanding revenue beyond just the paying minority. The introduction of rewarded ads addresses the huge segment of players who don’t buy Robux (the “vast majority” of Roblox users). Now these players can still generate income by trading a bit of attention for rewards, without feeling forced. This hybrid model (IAP + ads) lets Roblox monetize a wide player base while keeping the game free to play, similar to what top mobile games do. It increases overall ARPU (average revenue per user) in a player-friendly way.
  

• Recurring Revenue & Loyalty: The Premium subscription locks in monthly spend from enthusiasts and gives them extra value (bonus Robux, exclusive content). This boosts loyalty – subscribers are likely to remain active to utilize their perks. It also strengthens the economy (those bonus Robux often get spent on items, funneling back to developers and Roblox).
  
  

Roblox’s model has translated into robust financial success. By combining in-game purchases, advertising, and subscriptions, Roblox reported revenue of $801 million in Q1 2024 alone, and annual bookings around ~$4 billion. This diversification helps the business remain resilient and grow (e.g. ads and licensing deals are being rolled out to supplement the core virtual goods income).

Recommendations for Skillz:

Skillz can learn from Roblox by adopting monetisation methods that leverage a platform ecosystem and player engagement:

• Cosmetic and UGC Content: While Skillz games are made by third-party developers, Skillz might facilitate cosmetic item systems within its top games or across the platform (e.g. profile customizations, avatars, collectible badges). Developers could be encouraged to offer skins or themes in their Skillz-integrated games (with rev share), similar to Roblox’s catalog of items. This would create new IAP opportunities that don’t compromise fairness (as long as they remain cosmetic or do not affect skill outcomes).
  
  

• Premium Membership: Taking a page from Roblox (and other services), Skillz could offer a premium subscription tier for players. For a monthly fee, subscribers might get benefits like bonus tournament entries, exclusive competitive events, an ad-free experience, or periodic currency/Token grants. This provides steady recurring revenue and makes dedicated players feel valued. For example, a “Skillz VIP Pass” could grant a few free tournament tickets each day or reduced platform fees, encouraging frequent play and loyalty.
  
  

• Rewarded Ads: Just as Roblox observed, not all players will pay directly – but many would watch ads for perks. Skillz could integrate rewarded video ads in non-intrusive ways to monetize the non-spending users. For instance, a player who runs out of free tournament entries might watch a 30-second ad to earn another entry ticket or extra Skillz Ticketz (loyalty points). This “win-win” model can increase engagement (players stay longer to earn rewards) and bring in new ad revenue without hurting the competitive integrity (since everyone has the optional opportunity). The key would be to place these opportunities at natural breaks (post-match screens, etc.) and cap the frequency to avoid fatigue.

Candy Crush Saga

Candy Crush Saga is a casual mobile puzzle game (match-3) and one of the most successful mobile games of all time. While not an “esports” title, it represents the freemium monetization model that many mobile games (including competitive ones) use. The game is free to play but generates enormous revenue through in-app purchases and advertising integrations.

Monetization Models Used:

• In-App Purchases (Freemium model): Candy Crush pioneered the classic freemium approach. Players can download and play for free, but the game monetizes by selling consumable advantages that ease progression.
  Key IAP offerings include extra lives, boosters/power-ups (e.g. Lollipop Hammer, Color Bomb), and extra moves to finish a level. The design intentionally creates moments of frustration or urgency – e.g. running out of lives or being a few moves short of victory – where players are tempted to spend a little to continue. These purchases are positioned as helpful shortcuts and are often bought when a player is deeply engaged and doesn’t want to quit. Over time, this model proved incredibly lucrative: since its 2012 launch, Candy Crush Saga has amassed $7.8 billion in revenue from IAP alone.
  
  

• Rewarded Ads and Ad Placements: In addition to purchases, it integrated advertising in player-friendly ways to monetize those who choose not to pay. Candy Crush lets players watch optional ads in exchange for small rewards – for example, viewing a 30-second ad to get an extra life, a free booster, or to refill the life timer faster. It also occasionally shows interstitial ads between levels (in some versions) or engages in brand collaborations (e.g. themed events) for advertising income. This ad-based model complements the IAP: players who are stuck but don’t want to spend money can still progress by watching an ad, which earns King revenue without feeling overly intrusive. By 2025, advertising accounts for a significant secondary revenue stream for Candy Crush, especially from the large segment of non-paying users. King has effectively monetized a wide player base while keeping the game free, using ads to capture value from players who might otherwise generate none.
  

Why It’s Successful:

Candy Crush Saga’s monetization success comes from a great execution of the freemium design and continuous engagement,

• Mass Appeal and Accessibility: Candy Crush targets a broad audience (casual gamers of all ages) with simple, addictive gameplay. Because it’s free and easy to start, it amassed huge download numbers (over 1.4 billion downloads). This wide funnel of players means even a small conversion rate of payers can yield huge revenue. The game currently still has millions of active users and earns $2–3 million per day in revenue – showing how large its paying audience has become over time.
  
  

• Psychological Triggers to Drive IAP: King finely tuned the game’s difficulty and reward schedule (using A/B testing and data) to encourage spending without driving players away. The limited lives system creates natural stopping points where impatience can lead to spending. Similarly, offering a booster or extra moves right when a player fails a level by a narrow margin plays on the “just one more try” urge. These tactics convert frustration into purchases, yet because players choose to pay for convenience (and can otherwise wait or retry later), it maintains a sense of fairness and choice.
  
  

• Retention Through Content & Social Features: A big factor in monetization is how Candy Crush keeps people playing for the long term. King constantly adds new levels (now 17,000+ levels and counting) and regular events or challenges. This endless stream of content gives players always something new to come back for. Social features (leaderboards, friend progress, contests) provide friendly competition and motivation to advance. High engagement and retention translate to more opportunities for players to eventually hit a paywall and spend. Notably, Candy Crush’s yearly revenue has grown each year even a decade after launch, hitting a record $1 billion in 2024 – a sign that their monetization design is sustaining player LTV effectively over time.
  
  

• Hybrid Monetization Capturing All Users: Candy Crush exemplifies the “hybrid strategy” now common in mobile games: combining IAP + ads for maximum yield. IAPs drive the bulk of revenue (especially from the minority of “whale” spenders who make frequent purchases), while ads provide incremental income from the majority who won’t pay. According to recent data, “the bulk of Candy Crush’s revenue comes from in-app purchases... however, advertising also plays a role, especially from non-paying users”. By offering multiple monetization pathways, King ensures the game makes money from virtually everyone, one way or another, without forcing any single method on the player. This strategy has made Candy Crush one of the most profitable mobile titles ever while maintaining a large, happy player base.
  
  

Recommendations for Skillz:

For a competitive platform like Skillz, Candy Crush’s strategies highlight ways to monetize casual players and retain users, which could be adapted in a skill-gaming context:

• Freemium Entry with In-App Purchases: Skillz could explore offering certain games or modes for free to attract a larger audience, then use in-app purchases for enhancements that do not tilt competition. For example, selling extra tournament entries or retries could mirror Candy Crush’s extra lives model. A player who loses a match or runs out of entry tokens might pay a small fee to immediately join another match, rather than waiting. As long as matchmaking remains fair (e.g. rematches don’t disadvantage others) and any purchasable power-ups don’t create pay-to-win scenarios, this could add revenue. In fact, entry tickets for tournaments are already a known model in skill-based games – selling them as IAP (or as bundles with discounts) could boost ARPU from engaged players who want more chances to compete.
  

• Rewarded Ads for Second Chances or Bonuses: Skillz can integrate ads that reward players in ways that enhance the experience without breaking fairness. For instance, a player who just lost a close match might be offered: “Watch an ad to get a free retry against a new opponent” or “Watch an ad to earn some bonus Skillz Ticketz (loyalty points)”. This echoes Candy Crush’s approach of giving extra lives or moves for watching ads. It creates a positive loop: the player gets a helpful perk for free, and Skillz earns ad revenue – “a win-win situation: the player gains something useful, and the developer earns ad revenue”. Such voluntary ads feel more acceptable to players than forced pop-ups, especially if framed as helpful boosts. By carefully managing frequency and placement (e.g. only after matches, not mid-game), Skillz can ensure this monetization doesn’t frustrate users. Instead, it can increase engagement (players stick around to use their “rewarded” second chance or bonus) and monetize users who might never spend real money.
  

• Ongoing Content & Challenges: While Skillz doesn’t create the games, it can introduce platform-level events or challenges to drive retention. Candy Crush’s constant updates show the value of new content. Skillz could host seasonal tournaments, leaderboards, or skill challenges with small entry fees or sponsored prizes. This keeps the experience fresh and gives players more reasons to return regularly – thereby increasing opportunities for monetization (whether through fees, IAP, or ads). A “battle pass” style challenge system (as discussed for Fortnite) could also be combined here: e.g. a monthly challenge card where completing certain competitive tasks grants rewards, encouraging players to keep playing daily or try different games on the platform.

Part 2: Player-Centric Opportunity Sizing

Using Quarterly Earnings Report Skillz data, estimate: (Link to Q2 Earnings Data)

• % of players likely to adopt cosmetic items, subscriptions, or ad-based models.

• Potential incremental revenue each model could bring in 12 months.

Read more

Part 1: Strategic Product Roadmap

1. If you joined PlaySuper today, what 3 product priorities would you define for the next 12 months?

2. For each priority:

   • What problem does it solve for gamers, studios, and brands?

   • What measurable outcomes would you track to assess success?

   • What risks do you anticipate, and how would you mitigate them?

As India’s first gaming commerce (G-Commerce) platform, PlaySuper bridges virtual gaming and real-world rewards, enabling players to earn tangible benefits (like branded discounts and products) from in-game achievements. This creates a win-win loop: gamers gain real value for their play time, studios boost retention and monetization, and brands reach an engaged audience with higher ROI. In the next 12 months, as Head of Product, I would focus on three strategic product priorities to scale and refine this ecosystem, leveraging PlaySuper’s core components:

1. Global Expansion & Localisation of the PlaySuper Platform

Expand PlaySuper’s footprint beyond the initial markets, making the platform global-ready. This means localizing our product (language, currency, content) and launching in key new regions (for example, Southeast Asia immediately, followed by Middle East/North Africa and Latin America as planned). In parallel, tailor the reward offerings to each region through local brand partnerships and culturalization of the user experience.

Problem it Solves:

• Gamers: Outside of our current core market (India), many gamers do not yet have access to PlaySuper rewards in their favourite games. Their problem is a missed opportunity – they’re playing games but not getting real-world value due to a lack of such a service. Moreover, gamers in different regions have different preferences. A reward that excites an Indian gamer (say an Amazon.in gift card) might be irrelevant to a gamer in Indonesia or Brazil. By expanding globally and localizing, we solve this by giving gamers locally relevant rewards no matter where they are. This makes the gaming experience more rewarding universally. (Imagine a Filipino player earning a GrabFood voucher from a game, or a Brazilian player getting a discount on MercadoLibre – these are meaningful in context.)
  
  

• Studios: Many game studios operate globally or at least regionally. If PlaySuper only supports certain countries, studios can’t roll it out to their whole user base, limiting its usefulness. This fragmentation is a problem for studios who want consistent features and monetization across markets. By internationalizing the platform (multi-language SDK/UI, handling multiple currencies and fulfillment logistics), we become a solution for studios worldwide. This helps studios improve retention & monetization across all their markets, not just one. In addition, as we expand, we can tap larger player bases – studios see the benefit of one integration reaching a global audience. Ultimately, a global PlaySuper means studios anywhere (and their players) can benefit from our “rewards-as-a-service” model, which will make our SDK more attractive to big publishers.
  
  

• Brands: Brands often target specific regions – a Thai e-commerce company wants Thai gamers, a U.S. brand wants U.S. users. If our platform is limited geographically, we can’t onboard those brands or deliver value to them. By expanding, we open the door for local brands in new markets to join (solving their challenge of engaging local gamers). Even for global brands, we enable more precise targeting (e.g. a campaign just for Southeast Asia gamers). Brands will benefit from our expansion as they can run multi-country campaigns through one platform. Essentially, we solve the brand problem of reaching “digital-first” audiences in emerging markets by growing our user base there. This priority thus positions PlaySuper truly as the commerce layer for gaming at a global scale, connecting brands and gamers across regions.
  

Key Success Metrics:

• New Market Launches: Successful deployment in X new regions within 12 months (for example: launch localized versions in at least 2 of the following by year-end – Southeast Asia, MENA, LATAM). “Launch” is defined by having live games with local rewards in that region.
  

• User Base Growth: Increase the number of monthly active users (MAU) on PlaySuper-powered games in those new regions. Track the percentage of total users coming from outside the initial market. (Goal example: achieve 5 million new users across SEA markets in the first 6 months of launch).
  

• Local Brand Integration: Number of region-specific brand partners acquired. For instance, onboard key e-commerce, retail, or F&B brands in each new region (aim for at least 5 major local brands per region within first quarter of launch). Also measure the usage of those local rewards (redemption rates by local players).
  

• Localization Readiness: Product metrics like “% of platform content fully localized” (languages, payment handling, customer support in local language). Also monitor engagement and retention in new markets to ensure our localized approach yields similar lifts (e.g. retention improvement in Indonesia after adding local rewards should mirror successes in India).
  

• Revenue from New Markets: Track portion of PlaySuper’s revenue or GMV coming from the new regions. Within a year, a target could be set (e.g. 30% of total GMV from outside India, indicating we are diversifying geographically).
  
  

Key Risks & Mitigations:

• Risk: Cultural Mismatch – Rewards or campaign tactics that work in one country may flop or even offend in another. For example, certain imagery or prize types might be culturally inappropriate elsewhere.
  
  Mitigation: Hire or consult local experts in each target region to guide reward curation and marketing tone. Ensure the content is culturally sensitive and appealing – e.g. use local holidays or trends for special in-game events. Start with a pilot in each region (with a smaller user group or single game) to gather feedback before full rollout.
  

• Risk: Regulatory and Legal Hurdles – Different countries have varying laws on promotions, sweepstakes, data privacy, and gaming rewards (some might interpret rewards as gambling or require permits).
  
  Mitigation: Research and comply with local laws: for instance, avoid any “luck-based” reward mechanics in jurisdictions where that’s regulated, or obtain necessary approvals. Our focus on non-cash rewards already helps sidestep many gambling laws, but we will also implement region-specific toggles (e.g. disabling certain reward types where not allowed). Partnering with local legal advisors or gaming publishers can smooth this process. Also, adapt our privacy policy and data storage to meet regulations like GDPR for Europe or PDPA for Southeast Asia as needed.
  

• Risk: Operational Strain – Launching in new regions requires setting up new brand deals, customer support, possibly prize distribution logistics (if physical goods), and technical infrastructure (servers closer to users). This can strain a startup team and dilute focus.
  
  Mitigation: Sequence the expansion intelligently – e.g. expand to Southeast Asia first (already in plan) where we have some footing, then use the learnings to enter the next region. Leverage the seed funding to hire regional managers or form local partnerships (for example, partner with a regional ad network or a big publisher who can bring in brands). On the tech side, ensure our cloud architecture can handle multi-region deployments (CDN for content, regional data centers for low latency).
  

• Risk: Competition & Market Fit – In some markets, there may be incumbent solutions or different player preferences. For example, if a market already has a popular gaming rewards or loyalty app, or if players there are less interested in our model.
  
  Mitigation: Differentiate our offering by highlighting integration ease and unique rewards. Do a competitive analysis per region and possibly adjust the model (maybe in one country, certain reward types like mobile data packs or game-specific items are more valued – we can incorporate those). Provide flexibility in our platform to accommodate regional reward types. Ultimately, focus on the core value that PlaySuper “makes every game session a chance to win something real” – a universally attractive proposition if delivered with local flavor.

2. Enhanced Player Reward Experience & Personalisation

The core of G-Commerce is the player’s experience: if rewards are compelling and seamlessly integrated, players will engage more, driving the retention “flywheel” between gamers, studios, and brands. This priority focuses on improving the in-game PlaySuper Store, the AI-driven recommendation engine, and the wallet/loyalty system to deepen player engagement. By making every gaming session “a chance to win something aspirational and real”, we solidify the habit loop that keeps gamers coming back.

Problem it Solves:

• For Gamers: Addresses reward relevance and user experience. Currently, PlaySuper lets players redeem in-game coins for real products (e.g. using Candy Crush stars to buy a Nike shoe at a discount). We need to ensure players always find this valuable. Enhancing personalization (via the recommendation engine) means players get tailored offers that match their interests and gameplay behavior – much like an e-commerce site suggesting the right products. A more engaging store UI/UX (e.g., dynamic reward showcases, gamified prize drops, or limited-time offers) keeps the experience fresh and exciting, reinforcing that “time spent playing has real-world value”. Additionally, a unified PlaySuper Wallet can let players track and manage their earned rewards or points across games – increasing a sense of progression and cross-game loyalty.
  

• For Studios: Solves the retention and engagement challenge. By improving the reward loop, players stay longer in the game and return more often. PlaySuper has shown it can boost Day-7 retention by ~32–36% for integrated games. By refining the reward experience (e.g., faster reward redemption flows that don’t require leaving the app, and more compelling rewards), studios will see even higher retention, session lengths, and LTV. This also can uplift monetization indirectly – more sessions mean more ad impressions and higher propensity for in-app purchases in a positive feedback cycle.
  

• For Brands: Ensures their offers truly engage players. Personalization means the right offers reach the right gamers (increasing conversion rates). PlaySuper already delivers ~8% conversion on in-game offers, outperforming social media channels. We aim to push this further by showing gamers the brand rewards they actually want, at the moments they’re most receptive (for example, after a big in-game achievement, present a relevant reward as a “congratulation” gift). A better player experience (e.g., a reliable wallet and easy coupon redemption) also reflects well on the brands and encourages users to redeem, driving higher ROI for brand partners.
  

Key Success Metrics:

• Player Engagement: Track retention rates (D1, D7, D30 retention for games with PlaySuper vs. baseline). Success means maintaining or improving the current uplift (e.g., aim for +>35% D7 retention uplift over baseline). Also monitor frequency of store visits per DAU – are players checking the rewards store regularly? and time spent on the reward store page (indicating interest).
  

• Reward Conversion & Value: Measure the conversion rate of reward offers (what percentage of players who see an offer redeem or purchase it). Aim to grow beyond the ~8% conversion currently cited through better targeting. Monitor Gross Merchandise Value (GMV) – total value of rewards redeemed – as a gauge of real-world value delivered. For instance, increasing monthly GMV from ~$350K now to multiples of that as more players use rewards.
  

• Wallet Adoption & Cross-Game Use: If a unified PlaySuper wallet or loyalty points system is introduced, track the number of active wallets and cross-game redemptions. A key outcome would be if players from one game start playing other PlaySuper-integrated games to utilize or earn more rewards (a sign of network effects). Also monitor redemption success rate (coupons redeemed without issues) and user satisfaction via surveys or NPS related to the reward experience.
  

Risks & Mitigation:

• Player Overwhelm or Intrusion: Integrating commerce into games must be delicate – if the reward prompts are too intrusive or feel like ads, it could frustrate players.
  Mitigation: Design the reward experience to feel like part of the game’s progression. For example, surface the store at natural breakpoints (after levels) rather than random pop-ups, and ensure the visual style can be skinned to match the game (since PlaySuper is white-labeled for each studio). Conduct UX tests with players to fine-tune frequency and format of reward offers.
  

• Irrelevant or Low-Quality Rewards: If players see rewards that don’t interest them (e.g., unrelated products), they’ll ignore the feature.
  Mitigation: Leverage the AI recommendation engine to continuously learn from player behavior and “suggest the right products to users inside the game’s reward store”. Start with broad categories mapped to game genres (e.g., tech gadgets in a tech-themed game) and refine with data. Also, actively rotate and curate reward options – possibly allow players to set preferences (“likes sports”, “likes fashion”) to guide the offers. Maintain a high bar for brand quality; if a reward has consistently low uptake, swap it out.
  

• Abuse or Game Economy Imbalance: A new loyalty system or easy rewards might be exploited (e.g., players creating fake accounts to farm coupons, or spending too much time on rewards instead of the core game loop). Mitigation: Implement reasonable limits and fraud detection (one account per user verification for valuable rewards, rate limits on redemptions). Work closely with studios to ensure the reward earning mechanism aligns with game balance – for instance, tie rewards to genuine achievements/progression (not trivial tasks) so that players still engage with the game as intended. Run A/B tests to ensure the presence of PlaySuper rewards increases retention without cannibalizing the game’s own IAP revenue (if any).

3. Data-Driven Analytics & Monetization Insights

Why it’s a Priority: To solidify PlaySuper’s value proposition, we must prove and improve the ROI for both studios and brands using data. This priority focuses on enhancing the Analytics Dashboard, refining pricing models, and leveraging data for AI-driven insights that partners can act on. By providing clear metrics (e.g. retention uplift, revenue share) and tools to optimize campaigns, we ensure that studios and brands not only join the platform but stay and grow with it. In essence, this turns PlaySuper from a simple tool into a SaaS platform with actionable intelligence – a key for scaling as a B2B product.

Problem it Solves:

• For Game Studios: Studios need to understand the impact of PlaySuper on their games and how to maximize it. Many studios rely on ads for revenue and struggle with retention analytics. The enhanced dashboard will show retention and monetization metrics at a glance – e.g., cohort analysis comparing retention before vs. after integrating PlaySuper, ARPDAU increase, and revenue earned from the reward store (since PlaySuper shares revenue with studios). It will also provide player insights (via Know Your Gamer analytics) such as which reward types are most popular or what time of day players redeem most. This data helps studios optimize game design and event timing around the rewards (for example, scheduling double-reward weekends if data shows it boosts engagement). Ultimately, it demonstrates the tangible value of PlaySuper to the studio’s bottom line, validating the SaaS fee.
  
  

• For Brands: Brands are effectively marketing via PlaySuper, so they need advertising metrics. The analytics should give them conversion funnels and ROI on their campaigns: e.g., impressions (how many players saw their offer), click-throughs, redemptions, and resulting sales. Since PlaySuper touts being a high-ROAS channel (8% conversion vs much lower on social ads), providing transparent data will encourage brands to invest more. Additionally, insights like demographics or game genres where their products do well can help brands refine their targeting (while respecting privacy – using aggregate cohort data. If a brand sees, for instance, that “shaving kits coupon” redeems mostly in a particular racing game demographic, they can tailor future offers or decide which games to sponsor.
  
  

• For PlaySuper (Product Team): Optimizing pricing models and the overall ecosystem health. Data from usage can inform how we set the “exchange rates” between in-game effort and reward value. For example, if too many coupons go unredeemed, perhaps the coin cost is too high or the reward not attractive. If a particular category has very high redemption, we might introduce dynamic pricing (increasing coin cost or limiting supply) to ensure profitability and exclusivity. This data-driven approach ensures the incentives remain balanced for all parties: gamers feel rewards are achievable, studios and PlaySuper earn a fair share, and brands see profitable conversions. We may also experiment with new monetization models (subscription tiers for studios or premium placement for brands) guided by usage data.
  
  

Key Success Metrics:

• Partner Engagement with Analytics: Monitor dashboard usage by partners – e.g., the percentage of studios and brands logging in monthly to check stats, and the time spent on the analytics pages. High engagement means the data is valuable. Also track NPS or satisfaction from partners regarding the insights provided (collect feedback on dashboard features).
  

• Retention of Partners & Revenue Growth: Ultimately, if studios and brands find success, they will continue and expand. Track studio retention/churn on the platform (ideally 0 churn of existing integrated studios, and some choose to integrate PlaySuper into multiple games). Likewise, track brand repeat rate (how many brands run multiple or ongoing campaigns). Growth in SaaS revenue and commission revenue from the dual model is a key outcome – for example, aiming to double the monthly commission revenue as GMV grows.
  

• Data-Driven Improvements: Measure the impact of data-driven changes. For instance, if we roll out a new pricing algorithm or a recommendation tweak based on analytics, track the lift in conversion or retention attributable to that change (A/B test where possible). Also, track accuracy of recommendations (e.g., percent of offers clicked that lead to redemption, as a proxy for recommendation quality – aiming to improve this over time with AI model updates).
  

Risks & Mitigation:

• Data Privacy and Security: Handling user and transaction data comes with responsibility. Mitigation: Continue using aggregated, cohort-based data for analytics to avoid personal data leaks. Ensure compliance with data protection laws (especially as expanding to new regions). Implement security for the dashboard (since it contains sensitive business metrics for partners).
  

• Information Overload: Too many metrics or complex charts might overwhelm partners, reducing usefulness. Mitigation: Design the dashboard with clarity and actionability in mind. Use visual highlights for key metrics (e.g., retention uplift, conversion rate) and allow filtering/drill-down for advanced users. Possibly provide insight tips or AI-generated observations (e.g., “Players redeem 20% more on weekends – consider scheduling special offers”) to make the data actionable. Offer training webinars or documentation so partners understand how to use the insights for decision-making.
  

• Misaligned KPIs or Pricing: If we optimize for the wrong metrics, we might inadvertently hurt the experience (e.g., focusing only on GMV could lead to pushing high-value rewards that don’t actually improve retention). Mitigation: Keep a balanced scorecard of success metrics – always correlate monetization metrics with engagement metrics to ensure the core player experience remains positive. When adjusting pricing models (coin to reward conversion, brand commission rates, etc.), run simulations and pilot programs. Engage a few key partners in feedback loops before global changes. This ensures pricing tweaks truly create a win-win-win scenario as intended, rather than tilting too far to one side.

Part 2: Case Analysis – Rewards Marketplace Crisis

1. If our in-game rewards marketplace experienced a 25% drop-in redemption rates over 3 months, with brand partners complaining about low ROI and studios reporting lower retention, how would you approach the problem?

2. What structured diagnosis approach would you take (pricing, coin economy, inventory, UX, etc.) to identify the root cause?

3. What would you implement immediate fixes versus long-term product changes?

4. What framework or experiment would you run to validate potential solutions?

Rewards Marketplace Crisis

Assumptions

• The in-game rewards marketplace allows players to redeem a virtual currency (coins) for real-world or in-game rewards provided by brand partners.
  

• A 25% drop in redemption rate means that over 3 months, players are redeeming rewards 25% less frequently (e.g. points issued vs. points redeemed dropped significantly). This is abnormal and not explained by seasonality or a shrinking player base alone.
  

• Brand partners’ ROI is tied to redemptions (e.g. when players redeem a partner’s coupon or item, it drives sales or engagement for that partner). A drop in redemptions means partners see fewer conversions, hence “low ROI.”
  

• Studios (game teams) rely on the marketplace to help retain players (it’s a part of the engagement loop). Lower redemption activity is correlating with a drop in player retention, suggesting the marketplace’s value to players has declined.
  

• No one-off catastrophic event (e.g. sudden outage) explains the drop – it appears to be a trend, so likely multiple factors in the product/economy are at play.
  

Identifying Root Causes

To diagnose the issue, I would break down potential causes into key areas and analyze each with data:

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Starting with Veeba’s introduction, it was founded in 2013 by Viraj Bahl. The company had a clear vision from the very beginning, and that was to offer high-quality and innovative products. In this case study, we’ll be going through the brand's journey, history, marketing strategies, and growth techniques.

After opening a chain of restaurants in 2009, Bahal found himself in a failed state. His restaurant always used to remain empty. The fact that he failed as an entrepreneur and that the little chunk of money he had was spent on buying a house and opening a restaurant was a massive challenge in itself.

Initial Phase

With legitimately zero money left with Bahl, he took the risky decision of selling his house and starting up again with a processing business that his father had earlier.

He bought a small piece of land in Neemrana, Rajasthan, which was around 90 kilometres away from Haryana, and started his company, Veeba. Bahal’s vision was crystal clear. He wanted to design his brand in such a way that it aligned with global quality standards and not just the Indian palate.

They majorly focused on in-depth research during their early stages to make sure that each product reflected brand excellence and innovation. Despite the initial challenges and struggles, the brand stood firm to maintain its founding principles.

Veeba’s vision

“To delight consumers with an unmatched food experience that delivers superior quality, service and value.”

Guiding principles

• Service

• Quality

• Hygiene

• Value for money

• Taste

B2B Insight

Their early success in the B2B industry was marked by partnerships with significant Quick Service Restaurants (QSRs) by supplying high-quality sauces. In fact, their first customer was none other than Domino's, who gave them an order of 70 tons. The brand understood the significance of collaborating with well-established brands, which actually helped them make a name for themselves in such a competitive market. Within two years, the company was able to collaborate with massive brands like Burger King, Starbucks, Taco Bell, Cafe Coffee Day, and even the PVR.

Benefits of B2B

1. Constant flow of cash:

Since it has a vast level of difference from B2C, the volume level is comparatively higher, and the frequency of orders is predictable because the company doesn’t have to go and influence multiple retailers. They could pay salaries on time and had enough money to invest in R&D. Once they had 100 crores in revenue from B2B, they entered the B2C market.

2. Quality standards:

By collaborating with high-end brands, it has also created very high-quality standards, as any high-end brand would easily reject if the product were not up to mark.

Even through their B2B approach, they were able to understand what customers actually liked. For instance, if they are selling their sauces to a brand and out of all the sauces, mint sauce gets the most sales, it would be very easy for the company to understand what people like more. Even today, they have a wide range of products that are only available to B2B businesses, like doughnut toppings, ice cream toppings, and seasonings. Their B2B revenue out of the current revenue is 8% (2024).

3. Entering HoReCa

By entering HoReCa (“Hotel, Restaurant, and Café/Catering") segment, Veeba expanded not only its customer base but also its reputation for quality. Through this approach, they were able to reach a much larger customer base, including high-end cafes, crowded restaurants, and hotels. This segment required a wide range of products, which Veeba was well-equipped to provide. They ensured that all their products met the high standards of their clients. This step made Veeba a leader in the condiments industry; it helped them build a strong and trustworthy customer base.

Entering the retail sector

In 2015, Veeba entered the retail sector by launching a wide range of health-conscious products to meet the needs of consumers. The fat content in this range was as low as 1%, although these products were not accessible to the Indian market. But soon, in 2017, Veeba launched another range of products that had around 19 products specially designed for the Indian palate. It had numerous kinds of dips and mayonnaise that were also reasonable. This decision was an excellent step taken by Bahal to make a direct connection with consumers.

Their primary focus under this was their packaging, which was hands-down commendable as it was both attractive and practical. They could quickly gain insights into customer preferences, which excelled at product innovation and diversification. These products are now present in almost every retail store throughout the country.

In 2019, Veeba stepped into the nutrition segment, where they provided products related to child nutrition. After a heavy loss of 70 crores, Bahal stopped this segment.

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Veeba’s Marketing Strategies

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We’re living in a developing nation that still needs to grow and improve in various sectors. There is still a lot of work to put in. Apparently, logistics in any country defines how efficient the country is. The cheaper and quicker the logistics are, the country is ranked even better. 

Developed nations like the USA and China spend almost 8 to 10% of their GDP on logistics, whereas our developing nation, India, spends around 14% of its GDP on logistics, which is definitely a matter of concern. 

Today, let us talk about Porter, an intra-city logistics company.

Start-up of Porter

It was founded back in 2014 by Pranav Goel, Uttam Digga and Vikash Choudhary, and its current investors are Sequoia Capital, Mahindra Group, Lightrock, Vitruvian partners, LGT Lightstone, Kae Capital, Innoven Capital and Tiger global management. 

Let’s go back to their time when they were working at JP Morgan in Mumbai in 2013. They were stunned by Uber and how it handled the problems that were present in the commute. Uber was barely available, and if they were, the prices would be so high, and similarly, the same problem would be faced by the logistics sector. 

They legitimately talked to 500+ truck drivers and understood the problem that they were facing along with small businesses. They were badly getting around 1 to 2 customers a day. They were only at 30% utilization of their vehicle. 

This is exactly where it came into their minds that if Uber can bring about such a change, why can’t we do that with goods? 

This led to the birth of Porter, they left their jobs and started working towards it.

Initial Stage

During the initial stage, there were just two people, Pranav and Uttam. They divided the work roles between them. While one would stay connected with the truck drivers, the other would talk to the small business owners. Initially all their work was done by them through their phones. The moment they would get a lead. They would connect them to the truck driver. When the work started increasing, the options they had were not sustainable anymore. This is where the third founder, Vikas, came in. 

When they started it there, the only pitch was “Book from us. We are 20% cheaper.” 

And guess what? Their pitch actually worked. We could see it in the graph in less than a year, they had around 500 business customers and almost had a monthly revenue rate of around 30 lakh and that too just through the help of their website. They did not have an app for it. As the market was growing, they had all the required things: they had enough money, they had ideas, customers, and whatnot. Now, their only focus was on building things better and much stronger.

Porter App 

After a year, in 2015, they launched their app. Since the business was going well, things were getting better. They got the idea of starting up intercity services, but this is where they started facing problems. Their business was only running in Delhi NCR and Mumbai at that particular point in time; their intercity work was still going on. There was still a lot more work that needed to be put into it, and without giving it a second thought, they jumped to the intercity part, but this sector already had a number of competitors that had good names, for example, Delhivery and FedEx.

Downfall

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In the ever-evolving industry, you will find competition at almost every step you take, be it in any field or business for that matter. Eggoz has emerged as a true model for innovation and sustainability. 

It was founded in 2017 by Abhishek Negi and Vishal Chaudhary. The company currently has a presence in cities like Chandigarh, Jaipur, Delhi, Bangalore, Lucknow, and Kolkata.

They had a deep-rooted passion for animal welfare and quality. For any business in the market, it is essential for the founders to first find out the gaps that are going on, and as we know, specifically in this field, there are lots and lots of gaps, like lack of hygiene and high prices, that are exactly put into most of their work. The quality of their products is worthy of appreciation. It is rapidly growing from just a small business start-up to a well-established egg brand in the market and has a profound impact on the Indian market. 

Brand Building 

Their major focus was on customer expectations, and they were undoubtedly meeting them by setting standards in egg production. By implying producer- and consumer-friendly services and methodologies, they were rapidly increasing their business, keeping in mind their premium quality of packaging. 

They were using technology and sustainable farming methods; they focused on addressing all the necessary challenges, ensuring animal welfare, and delivering consistently high-quality products to the consumers in the market. Their marvellous approaches not only differentiated them from other companies or businesses, but they also had a good position in the Indian market by practising ethical agricultural methodologies. 

Technology Growth

Farming practices like cage-free farming, which not only improve animal welfare but even the quality of the product, were adopted by the brand.

In one of his interviews, he stated that their eggs had a solid checking system, and they were checked on almost every phase. If they found any kind of deformity in the egg, it was well-cleaned and sanitized, and hygiene was taken with proper care.

He even talked about how they use the growing technology of artificial intelligence in their business. As the egg business is a very seasonal business, it might rise like anything during the winter season and also, at the same time, decline like anything during any religious time, which makes it very important for the producers to keep track of everything. They could track the health of the birds through it, and such advancement really made them set their bar high. 

Eggoz Business Model

As it was stated by Negi, their ultimate plan for their business model was that they wanted to sell their eggs in proper packaging. Their model was to connect small-scale and mid-scale farmers within a streamlined program. Through this partnership process, they received veterinary care, technical support, and audits. 

They aim to deliver superior-quality eggs from these farms directly to urban and semi-urban consumers. Eggoz’s distribution strategy employs an omnichannel distribution strategy, including D2C, which means direct-to-customer, modern trade, and general trade, keeping their market presence on top. 

To bridge the gap between farmers and consumers through the creation of a sustainable supply chain in the market for eggs, thereby benefiting both the farmers and the consumers. They claim that their repeat customers are around 80%, which is a huge number without a doubt. 

Eggoz Product Range

Eggoz, being a brand that has definitely distinguished itself, has launched quite a few products that are not just unique but also consumer-friendly. 

They have these fortified eggs, then brown eggs that apparently come up from a whole different bird (though he stated that there was no such difference between the white eggs and brown eggs, other than the different birds, as per the consumer’s eyes, there was no major difference), free range eggs, and even their new inventions like “3 minute omelette eggs,"  “egg momos,"  “egg nuggets,” and even “egg burgers”! Who would go for these overpriced egg burgers in the market when we have the quickest and tastier solution? 

Look at how easy they’ve made their marketing with such innovative products! They not only catch the consumer’s eye but even give massive competition to other brands. 

Expenses Breakdown

Roughly 50% goes to the farmers, 5–8% to the packaging, ensuring their premium quality, 5% to the logistics, and around 10–11% to their manpower. 

According to them, their eggs can be consumed by anyone. Be it the kids, adults, fitness freaks, or mothers. Their major target consumers are mothers and children. 

Their eggs are offered at a price of ₹9 each, in contrast with ₹7 for lost eggs. 

The brand has recently confirmed that they have crossed ₹100 crore in ARR sales within just 3 years of its launch. 

Work Division

As he stated in one of his interviews, there are three of them, and Aditya Singh looks after the sales department in the organization, the cost function, and human resources. Uttam looks after the supply chain, and Abhishek Negi himself looks after marketing, finances,  and business intelligence. 

Brand design and Marketing strategy 

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Nowadays, we see that people are actually becoming aware of the health risks that they might face from eating junk food. Especially post-pandemic, concepts like healthy snacking have evolved and gained a lot of significance and curiosity among people.

According to recent data, around 40% of Indians are suffering from obesity, and all the credit goes to unhealthy snacking habits. However, the major issue is that when it comes to healthy snacking options, they are super expensive, which means that when people buy other alternatives, they are full of ingredients like sodium, saturated fat, and sugar. 

This is exactly where it clicked into Akash Sharma and Abhishek Agarwal’s minds: they are IIT alums, and  have established their business in 2017. They have a wide range of options for healthy snacking, including dry fruits and nuts. Their products were first sold through Flipkart, and within a year, they were rated as the best sellers in that particular category. 

Target Customers 

For any business, it is a key task to identify its target customers. In the case of Farmley, their major focus is on dry fruit consumers aged between 25 and 45. They ensure that they cater to health-conscious individuals who are looking for premium-quality dry fruits at reasonable rates. 

Makhana

So, Makhana, being their central source of inspiration, actually deserves all the recognition. It is just grown in Bihar, and that too in a very particular region. There’s a particular community that grows them, which is called the "Mallah” community. 

According to their business plan, they do all the work related to makhanas in Bihar, Mangaluru, where they do all kinds of cashews and Sangli for raisins. 

Safety and quality checks

Agarwal stated in an interview that they do around 30-35 inwards in a day, and almost 10% of their material goes for sampling and checking. They even perform a chemical check for all the seasonings. Talking about their rejection and acceptance rate here, around 20% of this material gets rejected. 

Production and storage

They approximately produce 15 tons a day (2024), which was as low as 5 tons last year. There are certain products, like raisins, that contain high moisture, which is why they require separate storage. Such products are stored separately in cold storage. 

Initial funding and supply chain

Initially, the idea was to crack the supply chain and work accordingly. They directly managed networks with farmers and importers. Later on, their focus shifted to adding more value to the supply chain. From organizations like Reliance, they could easily manage their cash flow. They directly source their products from farmers, eliminating the middlemen. They have established deep back-end linkages with 5000+ producers and farmers. They have around 2 crores of packaging material at this point. 

Growth of Farmley

In the past 18 months, they have significantly increased their revenue by 10X. Without compromising customer expectations, Farmley has kept building trust as its centre of focus. They have raised their total funding of $14.9 million in four rounds. Its first funding was done in February 2018. Eight investors participated in its recent funding round, which was in April 2023 and was led by Jindal Group. They have 2000+ retail outlets in Delhi, Hyderabad, Chennai and Bangalore. 

Manpower

Farmley had around 90 employees as of April 23, 2023, which was nearly 53% more than that of April 22. 

Funding raised by the company

They have successfully raised $9 million in funding from a group of investors, including:

1. Omnivore

2. Insitor

3. Alkemi Partners

4. DSG Consumer Partners

How does it differentiate itself from its competitors?

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Louis Vuitton is not just an icon, but it also represents a man who initiated the early stage of his career as a homeless boy. Ironic, isn’t it?

At 13, he left his house for a number of reasons and travelled to Paris, where he started working at the age of 16 with a man named Romain, who was a box maker and a packer. This is the place from which he learned the fundamentals of crafting the finest quality bags for 16 years.

In 1853, he was appointed by Eugenie De Montijo, who was the wife of Napoleon III, as a trunk maker.
This was the turning point in his career; he actually went from being an ordinary assistant to a well-renowned craftsman and designer in France.
Louis started his own workshop, which specialises in designing bags for rich people in France. Soon, people from all over the world got attracted towards it even the viceroy of Egypt came to buy his bags.

What is so special about Louis Vuitton bags?

Why do people specifically want bags from him and not others?

Because he found three big gaps during those days,

• Firstly, the bags at that time were made from thick pig skin, and these bags were very durable but very heavy, which means that even without packing them, they themselves had a lot of weight. Also, the pig skin used to crack after a certain point.

• Secondly, the bags were dome-shaped tops, and the ideology behind the structure was that if mud or rain fell on it, it would just simply roll off. This was specifically crafted, keeping in mind the people who used to travel by horse carriages but the drawback came in later. When steam engines started getting popular, people didn’t need to worry about rain and mud. Rather, it created a problem: the bags couldn’t get stacked due to their dome shape.

• Thirdly, these bags weren’t waterproof at all.

That is when he realised that the best kind of a bag would be one that is light, watertight and made in such a shape that it works according to trains. This was when he came up with his iconic product, “steamer trunk”

Master Invention

The steamer trunk was flat at the top and was made with canvas material that had glue-based treatment. They were made with popular wood and metal buckles, which made them look elegant. It was undoubtedly a revolutionary invention back then because it apparently solved all the purposes at once due to which all the rich people used to buy these bags. This is how he established himself as a luxury bag designer.

Damage due to the Franco-Prussian War

The war between France and Prussia that broke out around 1871 brought a lot of damage to Louis’s work. His workshop place and home were both bombarded and shattered.
Despite getting agitated, he found this as a huge opportunity to broaden his business. Now, he opened his shop in a great location, which was a hub or a centre called Opera. It was near to the railway station and a very famous hotel in Europe called Le Grand Hotel. He apparently opened his shop in such a place which was surrounded by the richest residents of Europe, but he faced another problem here too.

Common issues faced by high-end brand

Whenever they launch a new elegant product, there is a cheap dupe for it in the market. So the question is, despite all these cheap copy products, how do these high-end products maintain their market, or how did Louis maintain his brand? This is where he got into his differentiation phase.

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Differentiation Phase

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Colgate-Palmolive started up a small business in New York back in 1806 and has now become an international powerhouse, but the question is how? They have not only maintained but even expanded their global market by meeting the needs of their consumers and bringing time to time changes. Let’s delve deeper into their marketing strategies, innovative productions and Their commitment to quality, research, and development has enabled them to introduce groundbreaking products that cater to a diverse global audience. By leveraging effective marketing strategies and embracing innovation, Colgate-Palmolive continues to thrive in the competitive consumer goods market.

The story behind their logo and branding:

Colgate's brand logo is a simple yet iconic symbol that represents its commitment to dental health and hygiene. The logo features a round red disk with the word "Colgate" written inside it. This design has been around since 1953 and is instantly recognizable worldwide.

The choice of red for the disk is deliberate. Red symbolizes vitality, energy, and health, which are qualities closely associated with dental care. The font used for the word "Colgate" inside the disk is clean and easy to read, reinforcing the brand's message of cleanliness and reliability.

Over the years, Colgate has updated its logo to keep it modern and relevant while maintaining its core elements. This ensures that the logo remains familiar to consumers while adapting to changes in design trends.

The logo plays a crucial role in Colgate's branding strategy. It helps create a strong visual identity for the brand, making it easily identifiable on products, advertisements, and across various platforms. This consistency in branding reinforces Colgate's reputation as a trusted provider of oral care products globally.

Colgate's logo is a red disk with the word "Colgate" inside it, symbolizing health, vitality, and trustworthiness in dental care. Its simple yet effective design has stood the test of time, making it a cornerstone of the brand's visual identity.

Innovation and Technology

While development is essential for any product, so is innovation across all aspects of the company’s organisation. For instance, Colgate’s active salt toothpaste, focuses on the age-old traditional beliefs that salt benefits oral care. Innovative is undoubtedly central for their booming growth. They’ve not only excelled in their innovative toothpaste products but even pet nutrition and home care products.

Marketing and Branding

Beginning from their super-hit tagline “Cleans your breath while it guards your teeth” by Alicia Taubbins to their phenomenal brand campaigns like “Smile with strength”, “12 Hour anti-germ protection”, and whatnot! They’ve given noticeable competition to all the brands in the global market. They’ve built their brand strong by customer trust, product quality and decades of brand heritage. They’ve utilised their social media handles to effectively engage with their target audience by giving them tips while simultaneously focusing on their brand reach. They have done several brand collaborations with celebrities like Ranveer Singh, which influences not only the Gen-Z but also a huge number of people.

Sustainability Efforts

• Hydrologic management- They focus on minimising the use of water in their product formation and formulation.

• Waste reduction- The focus on sustainable packaging of their product which can easily be recycled in future.

• They have set specific targets to achieve carbon neutrality by 2050.

• Supplier engagement- they engage with their suppliers to make sure that sustainability standards are practised throughout the entire supply chain.

Community Engagement

Colgate engages in community initiatives focused on education, healthcare and sanitation. They implement programs to promote sustainability awareness and engagement among employees, encouraging sustainable practice, both in their work and personal life. One of their very popular brand campaign involved free dental screenings and community outreach activities. Their STEM education in communities is also very famous. They work with local governments, NGOs to foster better sanitation options and promote hygienic practices.

With their presence in over 200 countries, their global presence has been tailored in such a way that various cultures and various religional traditions have been taken care of while maintaining their worldwide recognition.

Customer feedbacks

Colgate pays close attention to customer feedback to continually enhance their toothpastes and other products. They value what customers have to say and use various methods to gather insights.

Firstly, they conduct surveys to ask customers about their satisfaction levels, which products they prefer, and any suggestions they might have for improvement. This helps Colgate understand what people like about their products and where they can make adjustments to better meet customer needs.

Secondly, they keep an eye on online reviews and social media comments. By listening to what people are saying on platforms like Facebook, Twitter, and product review websites, Colgate can quickly address any concerns or issues that arise. They also take note of positive feedback to see what customers appreciate most about their products.

Thirdly, Colgate's customer service team plays a crucial role in gathering feedback. They listen to customer questions, complaints, and ideas shared through phone calls, emails, and online chats. This direct communication allows Colgate to respond promptly and effectively to individual concerns while also identifying broader trends in customer feedback.

Additionally, Colgate conducts focus groups and market research to dive deeper into consumer preferences and behaviours. These sessions provide valuable qualitative insights that complement the quantitative data gathered from surveys and reviews.

All this feedback helps Colgate improve their products and develop new innovations. Whether it's adjusting formulas for better results, redesigning packaging for convenience, or introducing new flavors and features based on customer requests, Colgate strives to ensure their products meet and exceed customer expectations.

PRICE MIX OF COLGATE

Colgate has positioned toothpaste as the company’s primary product, with all of the other oral care products placed around it. To compete with its different rivals, the organization has settled on a dynamic pricing strategy. The prices are comparable to or slightly higher than those of other goods. It uses purchaser psychology to its benefit by presenting its goods as having a longer duration and far-reaching effects on the oral care of the patrons. Prices for different goods are different to suit the needs of different parts of society.

For example, Visible white toothpaste will cost more than Max Fresh toothpaste as it provides extra oral care and whitening. The products are available in numerous sizes and combo packs that make them more attractive to consumers. The company has consultants who keep a close eye on the competition and are constantly revising the pricing strategy to retain its customer base.

Empowering Women and Youth:

Education and Scholarships

• Colgate supports educational opportunities for women and girls globally. They provide scholarships, mentorship programs, and access to educational resources aimed at enhancing academic achievement and career readiness.

• For instance, in partnership with NGOs and educational institutions, Colgate offers scholarships specifically designed to support women pursuing higher education in fields such as science, technology, engineering, and mathematics (STEM).

Skills Training and Employment:

• The company promotes skills training programs that equip women and youth with practical skills for employment and entrepreneurship. These programs often focus on vocational training, financial literacy, and business management.

• Colgate collaborates with local organizations to offer workshops and training sessions that empower women and youth to enter and succeed in the workforce.

Economic Empowerment:

• Colgate fosters economic independence among women by supporting initiatives that encourage entrepreneurship and small business development. They provide access to microfinance loans, business incubation support, and market access opportunities.

• Through partnerships with women-led cooperatives and enterprises, Colgate helps women gain financial stability and contribute to their communities' economic growth.

Health and Hygiene Education:

• Colgate promotes health and hygiene education programs tailored to women and girls, emphasizing the importance of oral health and overall well-being. These initiatives include workshops on proper dental care practices and menstrual hygiene management.

Impact of data analytics and AI

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The beginning of 2023 marked the rise of the Indian company Noise, which soon became the world’s third-largest manufacturer of smartwatches. Although it was behind Apple and Samsung, impressively, it was started only 7 years ago, against the decade-old companies. What's even more impressive? It was a completely self-reliant company back then. Today, noise is the market leader in India, building future technology products from India for the world. In this article, we will talk about the journey of two brothers from the small town of Bikaner in Rajasthan to become owners of one of the biggest conglomerates in the world.

Origin of Noise

Noise, known today for its smart wearables, was started as a phone cover company. It was founded by Amit and Gaurav Khatri in 2014. Gaurav, who loved tech from a young age, got his first iPhone in 2007 when Apple launched it. He asked his cousin Amit, who was working in Hong Kong, to bring it for him. Gaurav was excited about his new smartphone and wanted a cover for it. When he couldn't find one in India, Amit got it for him from Hong Kong. This gave Gaurav the idea of starting to sell phone covers in India.

At 17, starting a business wasn't practical for Gaurav, but his interest in gadgets stayed strong. By his 20s, he was a business major and was ready to pursue his passion. In 2014, during India's smartphone boom with new companies like Lava and a growing interest in stylish phone covers, Amit got him 50 covers for Xiaomi phones. They sold out in just 15 minutes on an e-commerce website. This success led to the birth of Noise 1.0 in 2014.

Pivot to Smart Devices

Recognizing the growing trend towards smart devices, Noise changed its business strategy. Inspired by Apple's introduction of smartwatches and wireless AirPods in 2015 and 2016, which sold millions, Noise saw an opportunity. In India, the market for smartwatches was just starting, with sales growing significantly between 2014 and 2015.

In 2016, Noise entered the smart wearables market, launching smartwatches and wireless earphones. This move was timely, aligning with the increasing interest in health and fitness tracking. Brands like Xiaomi and GoQi were growing, but their quality products were expensive, and their affordable options were limited in utility.

Noise aimed to offer affordable and functional smart devices. They collaborated with tech partners in Taiwan and China to manufacture, import raw materials, and assemble products in India. Their first smartwatch, the U8, had poor ratings on Amazon and faced issues like “not turning on”. The manufacturing wasn't directly by Noise but by their partners in Taiwan and China.

Despite early setbacks, Noise improved its products based on customer feedback. In 2018, they launched the popular ColorFit and ColorFit Pro smartwatches, known for their features and affordability. Their revenue grew from 24 crore rupees in 2018 to 49 crores in FY19 and 156 crores in FY20.

Growth During the COVID-19 Pandemic

The COVID-19 pandemic marked a turning point for Noise. With more people working from home and focusing on health, the demand for smartwatches increased. People wanted to track their calories and blood pressure, making smartwatches essential. In India, smartwatch sales jumped to 26.6 lakh in 2020 and 1.2 crores in 2021.

Noise capitalised on this trend and saw substantial growth. By 2020, Noise sold four products every minute, capturing a 27% market share and becoming the market leader. Their focus on affordable, feature-rich products resonated well in India.

In 2020, Noise reported significant revenue increases, and by 2022, it became the third largest smartwatch brand, behind only Apple and Samsung. Revenues grew from 370 crores to 800 crores. Statistics highlight this growth, by mid-2020, Noise had captured a large share of the Indian wearable market, competing closely with global giants like Apple and Samsung. According to Counterpoint Research, Noise was among India's top three smartwatch brands during this period.

Challenges for Noise

Despite its success, Noise has faced several challenges,

1. The wearable technology market is highly competitive, with constant pressure to innovate and stay ahead of rivals. When they first started, they were one of the few smartwatch makers in the country, but now, more than 80 companies have come up with companies like Boat and FireBolt.

   For example, Boat had only a 2.8% market share in 2020, which increased to 25% by the end of 2021, primarily because of its aggressive marketing skills.

   Noise was solely dependent on smartwatches, with more than 80% of revenue coming from smartwatches, which became an existential crisis with the emergence of more and more smartwatch companies.

2. Complaints regarding quality and after-sale services further served the blow.

3. Additionally, supply chain disruptions posed significant challenges, particularly during the pandemic. Ensuring consistent quality and timely delivery of products has been a critical hurdle for Noise.

4. Another major challenge is maintaining affordability while incorporating advanced features. Consumers expect high functionality at lower prices, a balance that is difficult to achieve. Moreover, the rapid pace of technological advancements requires continuous research and development, adding to operational costs.

Future of Noise

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In the rapidly evolving landscape of Indian e-commerce, quick commerce companies like Blinkit, Zepto, and Instamart are making waves. These companies are not just disrupting the market but are also positioning themselves as potential challengers to established giants like Amazon and Flipkart. This article delves into Blinkit's innovative strategies, their impact on the market, and the valuable lessons that can be gleaned from their success.

Blinkit’s Rise to Prominence:

Blinkit, initially known for its food delivery service through its subsidiary Zomato, has transitioned into the quick commerce sector. This move has not only diversified its business model but also set the stage for it to compete fiercely with major players in the e-commerce space. Recent reports indicate that Blinkit’s sales have even surpassed those of Amazon for some brands, showcasing a significant shift in market dynamics.

Initial Challenges of Quick Commerce:

In 2022, quick commerce companies faced three primary challenges:

• Low Average Order Values: Initial order values ranged between ₹350-400, making profitability difficult.
  

• Low Gross Margins: Margins were around 20%, which is insufficient to cover high delivery costs.
  

• High Delivery Costs: These costs eroded the already thin profit margins, turning the business model into a "cash-burning machine."
  

Evolution and Strategy:

1. Increasing Order Values

Over the past year, quick commerce players have made significant strides in increasing their average order values. Blinkit, for instance, has seen its average order value rise to ₹635, surpassing competitors like Zepto and Instamart. This increase has been instrumental in improving their gross margins and moving towards profitability.

2. Focus on “India 1”

The key to this success lies in understanding and targeting the right consumer segment. India’s consumer market can be divided into three segments based on income levels:

• India 1: High-income households (30 million) that prioritize convenience and are willing to pay a premium.
  

• India 2: Moderate-income individuals (300 million) balancing cost and convenience.
  

• India 3: Lower-income groups (1 billion) who are cost-sensitive.
  

Blinkit has strategically focused on "India 1" leveraging their preference for convenience over cost. This segment, while small, accounts for a disproportionately high share of consumption in various categories, making it a lucrative target.

The Three C’s of E-commerce

Convenience, Cost, and Catalog.

E-commerce success is often determined by three factors:

• Convenience: Quick commerce companies like Blinkit offer delivery in as little as 10-20 minutes, setting a new benchmark.
  

• Cost: Although price sensitivity varies, offering competitive pricing is still crucial.
  

• Catalogue: A wide product range ensures that consumers find everything they need on one platform.
  

Blinkit has excelled particularly in the area of convenience, which has become a critical differentiator in the competitive landscape.

Financial Insights and Unit Economics

1. Revenue and Margins

Blinkit’s financial strategy has been meticulously crafted to maximize profitability:

• Revenue Sources: Blinkit generates revenue from product sales and delivery charges.
  

• Direct Costs: These include costs of goods sold and delivery expenses.
  

• Contribution Margin: Defined as revenue minus variable costs, Blinkit’s contribution margin per order is approximately ₹15.
  

2. Fixed vs. Variable Costs

Understanding the difference between fixed and variable costs is crucial for scaling operations:

• Fixed Costs: Expenses such as rent and salaries that remain constant regardless of order volume.
  

• Variable Costs: Costs that vary with the number of orders, like packaging and delivery.
  

Blinkit can reduce the fixed cost per order by increasing the volume of orders, enhancing overall profitability.

Data Utilization and Competitive Edge

1. Leveraging Data:

Blinkit, along with other quick commerce platforms like Zepto and Swiggy, has effectively leveraged data to gain a competitive edge. Data-driven strategies have enabled these companies to optimize their operations, personalize customer experiences, and anticipate market trends.

2. Barriers to Entry:

Effective data utilization also helps in creating barriers to entry for competitors. By continuously analyzing and acting on data, Blinkit can refine its business model and maintain a strategic advantage over new entrants.

Business Lessons

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The Indian telecom industry has been a warzone of the giants of the industry who all wish to own the supremacy of the telecom sector, which is competitive as well as quick-paced. From the monopoly to the time of the current competitive market, the story has unfolded, new players came in and old giants changed their strategies.

What is noticeable in the telecom saga is Reliance Jio which at the speed of light became a disruptor that irreversibly changed the thinking of the sector. With a bang, Jio, which appeared in 2016, dealt with several game-changing strategies such as providing free data and voice calls, aggressive pricing, and bundled offerings to stay competitive. Its flash increase in users and the spreading trend made former top companies Bharti Airtel and Vodafone accelerate their efforts.

Fresh of the battle, there was a new norm – a duopoly between Jio and Airtel, with Vodafone trying to rebound to retake its strong foothold in the market. These big telecom names, individuals with their unique strategies, are today engaged in a very serious battle competing for the attention of the Indian population. Whether it is the aftermath of this clash or collateral damage, the impacts will be not only restricted to the industry but will go beyond it to consumers, businesses, and the national digital environment.

Jio's Rise to Dominance

The emergence of Reliance Jio in the Indian telecom market in 2016 was nothing other than a massive disruption. Being financed by the deep pockets and foresight of the Ambanis, Jio launched with a bang. Leading Jio's revolutionary strategy was its free data and voice service, which rocked the industry with such a hit. Subscribers joined Jio in massive quantities, lured by the offer of the highest-quality connectivity at zero cost. 

The size of the market was merely a stepping stone for Jio, while its objective was to take the country's telecommunication to the grassroots level. Perceiving the vast resources of India's feature-phone users and rural populations, Jio came out with Jio-Phone, a cost-effective and feature-rich device that demystified the digital divide in society. Along with its cheap data schemes, this tactic was able to penetrate India's region, and it started getting strong ground in the outback of Indian country.

On the other hand, the leadership of Jio was not just caused through the price cutting but innovative offerings as well. Among the most important factors for the company's success has been its strategic partnerships with the top tech companies all over the world starting from Facebook through Google to Intel.

Jio's launching effect was shocking for the industry as a whole. The smaller players, who didn't have enough strength and power to compete with Jio's enormous resources and bullish tactics, were eliminated one after the other. And, sector consolidation began. Vodafone and Idea, two giants of the industry, merged to form a new company that currently is struggling to stay afloat. Jio and Airtel now are the dominant players in the marketplace.

Airtel's Resurgence: A Strategic Shift

The miraculous growth of Reliance Jio caught Bharti Airtel off-guard while it was still sailing the Indian telecom rule in its domain. Even with Jio's tactics that Jio disrupted and with Airtel's shrinking market share, Airtel was forced to rethink and adapt its strategy because of the changing dynamics of the telecommunication industry.

Originally Airtel faced numerous difficulties that were quite complicated. Jio's zero-charge data and voice deal was a deal breaker to a lot of users; as a result, Airtel started flowing the most significant amount of market share. Well, its misery was compounded by the crippling debt burden that was imminent to shatter its financial base. Nevertheless, Airtel’s resilience and talent for strategic thinking soon became visible, and the process of the bold transformation was initiated.

Airtel’s strategic direction started with an intentional customer cleansing of 49 million low-value subscribers in the year 2018. This move facilitated Airtel with all the operations clearance and maximum concentration of resources on that end which was the most profitable for them. However, in addition to this strategy, Airtel went further introducing minimum recharge plans that implied the effective rise of the entry barrier.

Airtel's customer-oriented strategy focuses on beyond the subscriber's lists. Through heavy investment in customer experience upgrades, AI and data analytics were applied to predict the customers' needs and expectations.

Airtel, however, aspired to explore further than the consumer market. The firm's business-to-business (B2B) segment, developed into a strong market player, holding a market share of 33.67%. Airtel provided services to global enterprises and small-to-medium enterprises; fetching a well-established revenue and a trusted partner in the digitization of India Inc.

Tata Telecom's Resurgence: A Surprising Contender

The mighty two, Reliance Jio and Bharti Airtel have always dominated the Indian telecom industry. However, a surprising contender has emerged, determined to reclaim its rightful place in the market: TataTelcom. Tata Group had a presence in the telecom sector for a few decades, during which its participation was from mobile to fixed-line services. Even though, at one time the Tata name was close to telecom excellence, the company suffered as it was fighting for survival through the industry disturbance and rising competition.

Nonetheless, Tata Group's resilience and forward-thinking are the leading industrial house of the country in the telecom area. Tata's strategic alliances and acquisitions have been a significant contributor to its revival, in which the company procured a paramount Canadian joint venture with Telesat, to explore the highly potential satellite broadband growth sector.

The partnership between Tata and Telesat has brought Tata Group to the top of the satellite communication (satcom) industry, which is one of the domains with great opportunities for India’s communication infrastructure development. Through utilizing Telesat's conventions and Tata's deep pockets, the partnership intends to provide high-speed and dependable broadband services to the area's rural and remote regions that were unserved.

Tata Group has not only shown leadership in the satcom domain but also in 5G network deployment, as well as infrastructure investments. While Jio and Airtel concentrate more on the consumer segment, Tata carries a very selective approach, namely, these niche and underserved markets. Through the vast ecosystem of the Tata conglomerate, the company is in a good position to counter the threats posed by the telecom giants, by providing innovative and customized solutions both to consumers and businesses.

In the heat of the high-profile Jio-Airtel tussle to gain market prominence, the emerging Tata Telecom is set to reshape the scene and generate its share of the telecom pie. Tata's turnaround in the telecom sector with its strategic outlook, technological flair, and deep pockets forms a novel twist in the ongoing saga giving the industry watchers and consumers something to ponder about.

The Satcom Battlefront: Airtel, Jio, and the Race for the Sky

While the local telecom beasts Airtel and Jio clash in an endless fight for supremacy in India, a new battlefield arises – the sky for dominance of their companies. The satellite communication field has to itemize in all the new battlegrounds in which industry giants are struggling to secure landing possible in the disruptive technology.

Satcom, famous for giving heaven-based broadband, is just a dream. This has huge promises to alter the Indian telecom scenario. Utilizing a group of satellites, internet service providers are increasingly able to extend internet services to even the most dispersed and disadvantaged locations, thus taking care of the digital divide for good and paving the way to innovation.

Nonetheless, the supremacy of satcom is not without its problems which are the contentious matter about the spectrum auction among Airtel, Jio, and other parties. The question as to whether they will be auctioned or whether they will be given out administratively is raised. This highly contested issue has now emerged as the main diversion, with either side presenting strong argumentation to dig the regulators and the government towards one or the other side of the spectrum.

Airtel is standing out with its partnership with the English satellite association OneWeb in the way it is progressively widening the area it covers by satellite and presents itself as the main player leading critical mass development. Airtel seeks to achieve greater connectivity in the rural and remote areas of India through the utilization of its satcom capabilities, generating more coherence for its terrestrial network and by extension securing its position as a complete telecom provider.

In contrast, Jio has also created its road, establishing a joint venture with a company called SES that is based in Luxembourg to improve its satellite broadband aims. The philosophy underlying, Jio's satcom initiative has the ubiquitous connectivity plan at its core, where the aim is to proliferate its affordable and available integrations into the most remote corners of the nation.

Being the center of the satcom war, the licensing regulations and the government's stand on the spectrum allocation are key issues. The two telecommunication giants are facing off, one lobbying for his preferred way of spectrum allocation—the result of which will determine the future of the affected industry.

The fight for the skies has a brand new aspect to it, which is the telecom war, as Airtel and Jio are mobilizing all their assets and knowledge to gain a head start. The finality of the sitcom debate and subsequent rollout of such world-class technologies will indisputably influence the telematics landscape in the country over the years with an opportunity to revise how connectivity is perceived.

The Battle for 5G and Fixed Wireless Access (FWA)

The telecom giants clashing in the satcom arena have another confrontation line – the race to be the first to go live with the 5G technology and seize the FWA market. Both Airtel and Jio have been competing to launch their 5G networks, each endeavoring to be first in the queue to provide incredible speed to the masses. Airtel has been accelerating its 5G deployment pace immensely all through the country, and on the other hand, Jio has also been strengthening its 5G deployment to maintain its outstanding position in the market. Both Airtel and Jio have entered a fierce bidding war through the government which is auctioning off the valuable airwaves and they have been competing to secure the frequencies required to run them efficiently.

An important factor powering the 5G race is the promise of FWA (fixed wireless access) services. AWT, which is equivalent to wired broadband in the speed aspect, has become the very contender between Airtel and Jio. The FWA technology gives operators the capacity to offer fiber-like speeds without laying out miles of fiber optic cables. Therefore, FWA enables the development of new revenue streams and boosts the telecom giant's profitability.

With Jio often being the disruptor, they have taken the bold move by arguing that the administratively allocated satcom spectrum should not be used for commercial FWA services since these are considered as a use case of 5G. Jio has proposed auctioning the spectrum and conducting the auction on fair terms so that the sanctity of the auction process is maintained.

Airtel along with its partner, Eutelsat OneWeb, has also said that satellite-based FWA is not the same as the 5G-based FWA with different business models. They argue that the administratively allocated satcom spectrum for this purpose should also be allowed for commercial FWA offerings because it caters to the special requirements of the country's rural and remote areas.

As the fight for 5G and FWA supremacy reaches a fever pitch, the telecom giants face a strategic struggle, with the outcome expected to significantly affect the industry, the consumers, and the whole digitization of this country. The capacity to roll out the fastest, widest coverage networks will not only dictate who wins and who loses in this struggle but also form the future digital reputation of India in the global arena of technology.

The Battle for Customer Loyalty and Retention

A. The High-Value Customers Focus of Airtel.

1. Subscriber Cleanup and ARPU-Centric Approach: Airtel by dropping 49 million users with low value in 2018 focused and simplified operations to concentrate on a specific customer base which was more profitable.

2. Airtel Finance and Prepaid-to-Postpaid Conversion: AI-powered credit scoring will help Airtel determine creditworthy prepaid users to get a raise to higher postpaid plans.

B. Jio via Mass Market Strategy was a great success.

1. Affordable Plans and Bundled Offerings: Besides cheap mobile plans, Jio comes up with a bundle of services.

2. Jio Phones and Feature Phone User Penetration: Jio's strategy with feature phone users, laptops, and smartphones as well as bundled services has helped it to tap such markets that have not been reached before.

C. Customer Experience as a Distinctive Competence.

1. Airtel's AI-Driven Customer Service Improvements: Airtel allocates money for AI solutions that will help provide customers with enhanced services and solve problems with more efficiency.

2. Jio's Brand Positioning and Customer Engagement: The business Jio strives to develop a strong brand identity and keep customers intrigued with innovative marketing strategy.

The Tata Telecom Factor: A Wild Card in the Game

1. Tata-Telesat Partnership and Satellite Broadband Ambitions: Tata's alliance with Telesat makes it the first instance in the satellite communication revolution with the primary purpose of delivering high-speed internet in rural and remote places.

2. Tata's 5G Network Rollout and Enterprise Solutions: Tata Telecom continues to do well with the 5G rollout and the services provided including enterprise connectivity and digital transformation for businesses.

B. Tata's Targeted Approach

1. Focusing on Niche and Underserved Markets: Tata Telecoms concentrates on rural, semi-urban, and enterprise segments, and thus differs from Air-tel and Jio which focus on the consumer market.

2. Leveraging Tata's Conglomerate Ecosystem: Tata Telecom works with many other groups of companies to provide customers with breakthrough and idiosyncratic solutions.

C. Tata's future effect on the individual existing dominance of Airtel and Jio.

1. Challenging the Status Quo with Innovative Offerings: Being positioned uniquely and having the leading technological potential, Tata Telecom may undermine the established market structure.

2. Disrupting the Market Dynamics: Tatas’ launch could shake the status quo to which both Airtel and Jio have to adjust.

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In the contemporary world of e-commerce, where customers are getting increasingly demanding towards speed and convenience, quick commerce platforms have become one of the battlefields in the Indian market. Strangely enough, one of the companies, Milkbasket, has managed not only to establish itself in the extreme rivalry but also to set an unusual example for the tendencies in the market.

Here is a detailed case study of Milkbasket, in which we will discuss in-depth about the strategies and techniques that have helped Milkbasket to jump to the top of the Indian quick commerce sector. From startup to its acquisition by Reliance Retail, we will uncover the fundamental factors that have made Milkbasket a huge hit.

Milk Basket's Origins and Inception

Milkbasket began when its founder, Mr. Anant Goel, had a very simple yet very deep thought. When Goel was in the UK, he noticed the comfort of having fresh milk delivered to his door every morning. This experience sparked a eureka moment in his mind, why don’t just repeat this model in India, where we have a very deep and profound love for dairy products and a virgin field of undeveloped home delivery services?

Spotting an opportunity in the Indian dairy market, Goel and his partners, Anurag Jain, Ashish Goel, and Yatish Talvadia, decided to shake up the entire system the way Indians received their daily necessities. From the humble stall to an apartment complex in Gurugram, it was the beginning of what was to become a rapidly growing delivery business.

To start with, the founding team carried milk themselves, using their vehicles. On the positive side, the surge in demand led them to hire auto-rickshaws initially and then to create their delivery fleet. In just a few months, Milkbasket was able to garner over 30,000 customers in Gurugram alone, another indication of the initial success of their new approach.

Understanding the Quick Commerce Challenges

​​The quick commerce sector, which stands for the immediate delivery of all kinds of products, includes numerous tasks that firms specializing in this field have to cope with. Milkbasket focused on solving the high cost of last-mile delivery and the problem of getting an acceptable AOV in the price-sensitive Indian market.

Last-mile delivery, a final part of the supply chain, consumes about 30% to 50% of the total supply chain costs. his huge cost issue has been a heavy load on the profitability of quick commerce companies, the majority of which are struggling to find a business model that works long-term.

Furthermore, consumers in India are very price-sensitive therefore, it was a challenge to go beyond the average order value of Rs.500. In general, quick commerce, due to its true nature of a small order size, is unprofitable, and the delivery cost cannot be distributed evenly as it can be in a traditional e-commerce situation.

The promise of convenience and speed was the driving force of the quick commerce model for a long time, even though in many cases the cost-effectiveness suffered as a result. Companies dedicate time to having their order delivered in 20-30 minutes by limiting the radius for deliveries and by ensuring that their network of warehouses and delivery personnel is dense enough to handle the high demand for fast fulfillment.

Milk Basket's Innovative Model

Financial inclusion is one of the primary challenges that milk-basket had to tackle, and it did so by utilizing one of the most respected elements of Indian culture, which is the love for milk and dairy products. Thus, milkbasket found a new way of doing quick commerce.

One of the top strengths of Milkbasket lies in the fact that milk is an essential part of daily routine, which creates 100% loyal customers. Despite the very thin margin on dairy items, the company perceived how important milk in the Indian diet is and it could be viewed as a way to compete and win the customer's trust and loyalty.

1. Customer Loyalty and Trust: Consumers are notoriously loyal when it comes to their milk, which means that Milkbasket ends up with a lot of steady customers. Not only does this coterie of brand-loyal customers ensure a constant crust of revenue, but it also serves as a base for establishing trust and credibility.

2. High Inventory Turnover: The quick restocking of inventory allows margin losses to be offset by selling more products, contributing to capitalization. The high turnover rate enables Milkbasket to stay within the limits of meagre margins whilst being economically viable.

3. Milk as an Entry Point for Upselling: Forming a bond of trust by regularly supplying the customers with milk, Milkbasket opened the doors for upselling more than just milk, thus, increasing the number of household essentials offered by them.

4. Pre-order System for Next-Day Morning Delivery: Milkbasket invests time and gasoline that could be wasted for intensive deliveries during the day by having customers place their orders by midnight for delivery the next morning. Using this approach, Milkbasket contributes to saving on the distribution cost and the company extends the radius of its delivery to more places while the need for multiple warehouses is minimized.

5. Consolidated Deliveries Reducing Costs: Dispatching orders at one time has helped cut down delivery costs, expanding much of fast commerce companies. This incorporates the optimal method, which is not only beneficial to the efficiency of operation but also contributes to the overall profit of the business.

6. Extending Delivery Radius: Milkbasket enlarged its delivery range for up to 15 kilometres with the pre-order system and, in turn, switched to a less dense warehouse distribution system. helping the business save money as a result of a more cost-effective expansion strategy.

7. Minimizing Need for Multiple Warehouses: Through grouping orders and broadening the area of delivery, Milkbasket has considerably reduced the number of quick commerce providers and their costs that are normally highly concentrated on logistics.

The Economics Behind Milkbasket

An important thing to consider that will further help to reveal the secret of Milkbasket's success in the quick commerce area is a thorough analysis of how it operates economically.

1. Average Order Value and Margins: With an average order value of Rs. 200, and a gross margin of 15% to 20% it operates in the price-sensitive Indian marketplace. The AOV may seem paltry compared to traditional e-commerce operations, but the Milkbasket model allows them to achieve profitability because of operational efficiency and the relatively large number of orders.

2. Part-time Delivery Staff: Part-time delivery staff is one of the core factors that cost Milkbasket less. By employing a flexible workforce, Milkbasket will utilize its logistics operations more efficiently and decrease expenses resulting from regular staff.

3. Subscription Model and Delivery Fees: Milkbasket uses a subscription model, which costs customers Rs. 149 monthly. Moreover, the people who are not subscribers are charged 12 rupees as delivery expenses per order. These revenue streams, accompanied by the cost-effectiveness of their operational model, were also contributing factors to the business's success.

4. Scalability and Path to Profitability: As Milkbasket's operations expand over time, its special model grows more profitable. The company's plan of big volume orders, smooth delivery operations, and loyal customers makes it possible for the enterprise to develop long-term sustainability and profitability.

5. Comparison with Traditional Quick Commerce Players: The Milkbasket model is a cost-efficient solution in comparison to other huge competitors that tend to concentrate on speed over profitability. Through implementing concentrated deliveries and exploiting the consumer's loyalty to milk and dairy products, Milkbasket has proved that the traditional approach could be outdated and a cost-effective quick-commerce concept tuned to the Indian market could serve as an alternative.

Marketing Strategies and Expansion

Milkbasket's business model stands as an innovation with operational quality that has helped the company realize its potential and connect with the target audience, create the brand name, and drive customer acquisition and retention.

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On December 6, 2023, Google made a groundbreaking announcement by launching Gemini, its latest and most powerful AI model. The introduction of Gemini marked a pivotal moment in the tech industry, showcasing Google's commitment to staying at the forefront of artificial intelligence.

The choice of the name "Gemini" suggests a duality or twinning, hinting at the model's potential to coexist and compete in a rapidly evolving AI landscape.

The rise of ChatGPT and its impact on Google

Prior to the Gemini launch, the tech world experienced a seismic shift with the rise of ChatGPT. OpenAI's ChatGPT, a generative AI model, had quickly become a phenomenon, capturing the attention of millions of users. Its ability to generate human-like text responses and engage in meaningful conversations led to an exponential growth in its user base.

The impact of ChatGPT on Google was particularly significant. Google, historically dominant in the search market with a 91% market share and 4.2 billion users, suddenly faced a disruptive force. Despite ChatGPT having a smaller user base compared to Google, its astonishing growth rate posed a credible threat. This threat was not just about numbers; it was about the transformative nature of AI chatbots and their potential to reshape user interactions with technology.

Google's response with Gemini

Faced with the unprecedented rise of ChatGPT and recognizing the need to stay competitive, Google swiftly responded with the introduction of Gemini. Gemini was positioned as Google's answer to the challenges posed by ChatGPT. It was presented as a more capable, flexible, and smartphone-optimized generative AI model, showcasing Google's determination to maintain its dominance in the evolving AI landscape.

The launch of Gemini represented a strategic move by Google to reclaim its position as a leader in the AI space. The announcement not only aimed to showcase the technological advancements of Gemini but also to reassure stakeholders, investors, and users that Google was ready to face the challenges presented by the rapidly changing dynamics of the AI market.

The Context of the AI War

A. ChatGPT's Rapid Growth and Impact on Google's Market Share

The AI landscape witnessed a seismic shift with the meteoric rise of ChatGPT, an offering by OpenAI. Despite starting with a relatively modest user base, ChatGPT quickly gained traction and became the fastest-growing consumer app in history. While Google maintained a formidable 91% market share in the search industry with 4.2 billion users, the disruptive nature of ChatGPT posed a unique challenge.

ChatGPT's impact was not solely measured by its user numbers, which were considerably smaller than Google's. Rather, it was the unprecedented growth rate that caught the industry's attention. In a matter of days, ChatGPT reached 1 million users, and within 60 days, it amassed a staggering 100 million users. Comparatively, popular platforms like Instagram and TikTok took much longer to achieve similar milestones.

The exponential growth of ChatGPT raised concerns within Google about the potential erosion of its market share in the search industry. The user-friendly and rapidly evolving nature of AI chatbots presented a paradigm shift in user interactions with technology, prompting Google to reassess its strategy.

B. Microsoft's Involvement and the Dynamics of the Tech Industry

Amidst the rise of ChatGPT and Google's response, Microsoft played a pivotal role by strategically aligning itself with OpenAI. In 2019, Microsoft announced a substantial investment of $1 billion in OpenAI. This strategic move signified Microsoft's commitment to advancing AI technologies and its recognition of the transformative potential of OpenAI's developments.

Microsoft's involvement added a new layer to the dynamics of the tech industry. The collaboration with OpenAI empowered Microsoft to leverage its cloud infrastructure for AI, while OpenAI gained access to Microsoft's resources to further develop and monetize its technology. This partnership positioned Microsoft as a formidable player in the evolving AI landscape, introducing a new element of competition and innovation.

C. Google's Existential Crisis and the Need for a Competitive AI Model

As ChatGPT continued its unprecedented growth, Google found itself in the midst of an existential crisis. The 91% market share in the search industry, once considered unassailable, now faced a formidable challenge from the rapidly evolving landscape of AI-driven applications. The emergence of ChatGPT and Microsoft's strategic moves created a sense of urgency within Google to reevaluate its position and respond effectively.

The existential crisis at Google was not merely a speculative concern but was reflected in tangible market reactions. The stock price of Google experienced a significant dip, falling by 10% in response to the perceived threat from ChatGPT and Microsoft's collaboration with OpenAI. The $60 billion search engine business, a cornerstone of Google's revenue, was suddenly under threat.

Faced with the risk of losing its dominant position, Google recognized the need for a competitive AI model that could not only match but surpass the capabilities of ChatGPT. This realization marked a pivotal moment in Google's strategy, leading to the development and launch of Gemini, the company's latest and most powerful AI model.

Gemini Nano, Pro, and Ultra

Google's response to the AI war came in the form of a trifecta – Gemini Nano, Pro, and Ultra. These products were introduced as Google's cutting-edge solutions to counter the challenges posed by ChatGPT and to reaffirm its dominance in the AI space. Each variant of Gemini was designed with specific capabilities to cater to diverse user needs and industry demands.

The term "revolutionary" aptly describes these AI products, as they represented a significant leap forward in terms of design, functionality, and adaptability. The collective introduction of Nano, Pro, and Ultra showcased Google's commitment to addressing the multifaceted requirements of the evolving AI landscape.

A. Gemini Nano: Lightweight Version for Smartphones

Gemini Nano, the introductory member of the Gemini family, was designed to cater to the growing demand for AI capabilities on smartphones. Recognizing the widespread use of mobile devices, Google engineered Nano as a lightweight version of its powerful AI model. This variant aimed to bring the transformative power of Gemini to the fingertips of smartphone users, enabling seamless integration with everyday tasks.

Nano's lightweight architecture allowed it to run efficiently on Android phones, even without the need for a constant internet connection. This feature addressed the practical constraints of mobile users, ensuring that Gemini's capabilities were accessible anytime, anywhere. The introduction of Nano signified Google's intention to democratize AI, making it a ubiquitous presence in the lives of smartphone users.

B. Gemini Pro: Heavy-duty Version for AI Services

Gemini Pro, positioned as the heavy-duty workhorse of the Gemini family, was engineered to power Google's AI services across various domains. This variant represented the technological backbone of Google's AI infrastructure, with capabilities designed to handle complex tasks and provide advanced AI services. Gemini Pro served as the engine behind Google's AI-driven applications, ensuring a seamless and powerful user experience.

The capabilities of Gemini Pro extended beyond traditional chatbot interactions, encompassing a broad spectrum of AI-driven services. From language processing to image recognition and complex problem-solving, Gemini Pro emerged as a versatile and indispensable tool for enhancing the efficiency of AI services across the Google ecosystem.

C. Gemini Ultra: Targeted Towards Businesses and Data Centers

Gemini Ultra, the most powerful member of the Gemini family, was tailored to meet the specific demands of businesses and data centers. Google recognized the need for a robust AI solution capable of handling large-scale operations, intricate data analysis, and diverse business applications.

Targeted towards enterprises, Gemini Ultra aimed to revolutionize how businesses approached AI integration into their operations. Its advanced computing capabilities, coupled with extensive language and data processing capabilities, made it an ideal choice for data-intensive tasks. Gemini Ultra not only signified Google's commitment to serving the enterprise sector but also its ambition to remain at the forefront of AI innovation.

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Technical Differences: Gemini vs. ChatGPT

A. Natively Multimodal vs. Just Multimodal Systems

One of the key distinctions between Gemini and ChatGPT lies in their approach to handling different types of data – a concept categorized as natively multimodal versus just multimodal systems.

1. Natively Multimodal (Gemini): Gemini is designed as a natively multimodal system, meaning it is inherently built to process various types of data, including text, image, and sound, seamlessly from the outset. This design philosophy allows Gemini to handle multiple forms of data in a cohesive manner, without the need for significant modifications or adaptations. The natively multimodal nature of Gemini positions it as a versatile AI model capable of addressing a wide array of user inputs and tasks.

2. Just Multimodal (ChatGPT): In contrast, ChatGPT initially evolved as a text-based model and later incorporated additional features to process images and sounds. While ChatGPT has demonstrated adaptability by extending its capabilities beyond its original text-centric design, it can be considered a just multimodal system. This implies that the model, originally conceived for processing text, has integrated functionalities for handling other data types as additional features rather than being inherently built to handle them.

B. Gemini's Design for Processing Text, Image, and Sound from the Start

Gemini's design philosophy is rooted in the concept of natively multimodal systems, allowing it to process text, image, and sound seamlessly from the moment of its inception. This design choice empowers Gemini with a holistic understanding of various forms of data, enabling it to generate responses, provide analyses, and offer solutions across a diverse range of inputs.

1. Text Processing: Gemini's prowess in processing text is foundational, aligning with traditional AI chatbot functionalities. Its ability to comprehend and generate human-like text responses forms the core of its communication capabilities.

2. Image Processing: Where Gemini truly shines is in its capacity to analyze and interpret images. This enables users to input visual data, and Gemini, with its natively multimodal architecture, can extract meaningful insights or generate responses based on the visual content provided.

3. Sound Processing: Gemini's capacity to process sound adds another layer of sophistication. It can comprehend and respond to voice inputs, making it a versatile AI tool for users who prefer interacting through speech.

C. ChatGPT's Evolution from a Text-Based Model with Added Features

ChatGPT, on the other hand, started as a text-based model, primarily focused on generating human-like text responses. Its evolution towards a multimodal system involved the incorporation of additional features to process images and sounds, adapting to the changing landscape of user preferences and technological demands.

1. Text-Based Model: Initially, ChatGPT's capabilities were centered around processing and generating text-based responses. Its proficiency in understanding and generating coherent textual content contributed to its rapid growth and popularity.

2. Integration of Image and Sound Processing: Recognizing the need to expand its capabilities, OpenAI incorporated features to enable ChatGPT to handle image and sound data. This evolution was driven by the desire to enhance user interactions, allowing ChatGPT to respond to a broader spectrum of inputs.

Superpowers of Gemini

A. Versatility in Handling Various Types of Data

One of Gemini's standout superpowers lies in its exceptional versatility in handling an extensive range of data types. As a natively multimodal system, Gemini is inherently designed to process text, image, sound, and potentially other forms of data seamlessly. This versatility is a game-changer, allowing users to interact with Gemini in ways beyond traditional text-based inputs.

1. Text Processing: Gemini's proficiency in text processing remains a foundational strength. It can generate human-like text responses, engage in meaningful conversations, and comprehend the nuances of language.

2. Image Analysis: Gemini's ability to analyze and interpret images elevates its capabilities to a new level. Users can input visual data, and Gemini can derive insights, provide information, or generate responses based on the visual content.

3. Sound Recognition: The inclusion of sound processing is another dimension of Gemini's versatility. It can understand and respond to voice inputs, making it a dynamic tool for users who prefer interacting through speech.

The seamless integration of these capabilities positions Gemini as a truly multimodal AI model, capable of adapting to the diverse ways in which users interact with technology.

B. Extraordinary Computing Power of Google

Gemini draws its power from Google's extraordinary computing capabilities, which stand as one of its superpowers. Google's prowess in the realm of computing is expected to be five times more than OpenAI's by the end of the year, with projections indicating a staggering 20-fold increase by the following year.

1. Quick Learning and Evolution: The abundance of computing resources empowers Gemini to learn and evolve rapidly. This capability is pivotal in ensuring that Gemini stays ahead in the dynamic landscape of artificial intelligence, adapting to emerging trends and user preferences.

2. Advanced AI Models: The computing power at Google's disposal contributes to the development of advanced AI models, including Gemini. The complex computations required for processing diverse data types and executing sophisticated AI tasks are handled efficiently, enhancing Gemini's overall performance.

C. Abundance of Data from Google's Diverse Sources

Gemini's access to an extensive and diverse pool of data from Google's proprietary sources is another superpower that propels its capabilities. Unlike some competitors reliant on public data sources, Google possesses its own datasets from platforms like YouTube, Google Books, and Google Scholar.

1. Training Data Advantage: Gemini's training isn't limited to English text; it includes a plethora of languages, mathematical data, and even scientific papers. This broad range of training data provides Gemini with a unique advantage in terms of diversity and depth of knowledge.

2. Legal and Copyright Advantage: Unlike startups facing legal complexities over using copyrighted material, Google's access to its datasets eliminates such obstacles. This legal advantage enables Gemini to undergo training without running into legal issues, ensuring a smooth and comprehensive learning process.

D. Benchmark Comparisons between Gemini and ChatGPT

Gemini's superpowers are further underscored by benchmark comparisons with ChatGPT, where Gemini outperformed its counterpart in a series of tests. Notably, in 30 out of 32 benchmarks, Gemini demonstrated superior performance.

1. Multitask Language Understanding Benchmark: A particularly significant benchmark was the Multitask Language Understanding Benchmark, covering 57 different subjects. In this test, Gemini Ultra scored an impressive 90.4%, surpassing human experts at 89.8%. This result indicated Gemini's not just superior understanding but also its ability to reason about complex topics more effectively than human counterparts.

2. Continuous Evolution: While the comparison with ChatGPT shows Google's superiority by a small margin, it is crucial to note that OpenAI is gearing up with GPT-5, promising further advancements. This neck-and-neck competition reflects the ongoing evolution in the AI landscape.

AI War Chronology: Google vs. Microsoft

A. Google's Move with DeepMind in 2014

In 2014, Google made a strategic move in the AI landscape by acquiring DeepMind, a British artificial intelligence company. This acquisition marked a pivotal moment in Google's commitment to advancing AI technologies. The purchase amounted to $500 million, reflecting Google's recognition of the potential transformative impact that AI could have on various industries.

1. DeepMind's Expertise: DeepMind brought advanced expertise in machine learning and artificial intelligence to Google. The company was known for its work on deep reinforcement learning, a subfield of machine learning that focuses on training models to make decisions through trial and error.

2. AI Research Papers: Following the acquisition, Google emerged as a major contributor to the field of AI research. As of 2021, Google boasted the highest number of research papers on AI, a testament to its commitment to staying at the forefront of technological innovation.

B. Microsoft's $1 Billion Investment in OpenAI in 2019

In 2019, Microsoft made a bold move by announcing a substantial investment of $1 billion in OpenAI, a research laboratory committed to developing artificial general intelligence (AGI). Microsoft's investment signified its determination to play a significant role in the AI revolution.

1. Strategic Partnership: The investment established a strategic partnership between Microsoft and OpenAI. It enabled OpenAI to leverage Microsoft's Azure cloud computing platform, utilizing its extensive cloud infrastructure for AI research and development.

2. Collaborative Goals: The collaboration aimed to foster the development of AGI and advance AI technologies responsibly. Microsoft's commitment reflected the recognition that AGI could shape the future of computing and necessitated significant resources and collaboration.

C. OpenAI's Launch of ChatGPT in November 2022

In November 2022, OpenAI unveiled ChatGPT, a generative AI model that captivated the world with its ability to engage in dynamic and coherent conversations. ChatGPT's launch marked a significant leap in the capabilities of AI-powered chatbots, capturing widespread attention due to its conversational prowess.

1. Fast-Growing Consumer App: ChatGPT rapidly gained popularity and became the fastest-growing consumer app in history. Within a short span, it amassed 100 million weekly active users, surpassing the growth trajectories of social media giants like Instagram and TikTok.

2. Market Impact: The rise of ChatGPT disrupted the search engine market dominated by Google, signaling a potential shift in user preferences for information retrieval and interaction with AI models.

D. Google's Response with Gemini in December 2023

Faced with the disruptive impact of ChatGPT and the existential threat to its market dominance, Google responded strategically in December 2023 with the launch of Gemini. Google's Gemini was positioned as a robust countermeasure, aiming to reclaim its standing in the AI landscape and address the challenges posed by ChatGPT.

1. Gemini Nano, Pro, and Ultra: Google introduced three variants of Gemini – Nano, Pro, and Ultra, each catering to specific use cases. Nano targeted smartphone users, Pro served as the heavy-duty AI engine for Google's services, and Ultra was designed for businesses and data centers.

2. Technological Advancements: Gemini's technical differentiators, such as being a natively multimodal system and its versatility in handling text, image, and sound from the start, showcased Google's commitment to pushing the boundaries of AI capabilities.

Gemini's Application Potential

A. Real-World Applications Demonstrated in Google's Official Documents

Google's official documents showcase Gemini's prowess in addressing real-world challenges and providing practical solutions across diverse domains. The applications demonstrated underscore Gemini's versatility and its potential impact on enhancing user experiences.

1. Problem Solving in Education: In an official Google document, Gemini is demonstrated solving a physics problem. A student inputs a handwritten solution, and Gemini not only understands the content but also provides a detailed explanation of the correction. This application hints at Gemini's potential role in education, assisting students in understanding and correcting complex problems.

   

2. Cooking Guidance through Images: Another application demonstrated involves a user showing an image of ingredients and asking, with voice input, how to make an omelet. Gemini, utilizing its multimodal capabilities, identifies the objects in the image, understands the context, and provides a step-by-step process for making an omelet. This showcases Gemini's potential to revolutionize cooking guidance and extend its applicability to various visual recognition tasks.

B. Gemini's Ability to Analyze Handwritten Solutions and Provide Detailed Explanations

Gemini's unique capabilities extend beyond conventional text-based interactions, as evidenced by its proficiency in analyzing handwritten solutions. This ability holds significant implications for education, problem-solving, and the interpretation of diverse inputs.

1. Handwritten Solution Understanding: Gemini's capacity to understand handwritten solutions opens new avenues for users to interact with the AI model. This feature facilitates the input of information in a more natural and diverse manner, accommodating users who prefer handwriting or visual expressions.

2. Correction and Explanation: Gemini not only identifies handwritten content but also provides detailed explanations of corrections. This goes beyond traditional AI models that may struggle with nuanced handwritten inputs. Gemini's nuanced understanding and explanatory capabilities position it as a valuable tool for learners seeking personalized feedback.

C. Multilingual and Multidisciplinary Training Data for Diverse Knowledge

Gemini's training data encompasses a broad spectrum, including multiple languages, mathematical content, and even scientific papers. This extensive and diverse training dataset contributes to Gemini's unique advantage in terms of knowledge depth and adaptability across various domains.

1. Language Diversity: Gemini's ability to understand and process multiple languages makes it a versatile tool for users worldwide. The inclusion of diverse languages ensures that Gemini can cater to a global audience, breaking language barriers in its interactions.

2. Mathematics and Scientific Papers: The training data includes mathematical content and scientific papers, indicating Gemini's proficiency in handling complex and specialized knowledge domains. This breadth of knowledge allows Gemini to provide meaningful insights and solutions across multidisciplinary subjects.

3. Advantage of Diversity: The multidisciplinary training data gives Gemini a unique advantage in terms of diversity. It not only understands textual content but also processes mathematical expressions and scientific terminologies. This diverse knowledge base enhances Gemini's utility across various professional and academic contexts.

Lessons Learned from the AI War

Lesson 1: No Company is Safe from Disruption

The first lesson emanating from the AI war underscores the reality that no company, regardless of its dominance or monopoly status, is immune to disruption. Google, with its 91% market share in the search market and 4.2 billion users, faced a significant existential threat when OpenAI disrupted the search engine market with ChatGPT.

1. Vulnerability of Monopoly: Google's supremacy in the search market, considered unassailable for years, faced a challenge from ChatGPT, a newcomer in the AI landscape. The rapid rise of ChatGPT showcased that even behemoths with significant market shares could be vulnerable to innovative disruptions.

2. Impact on Market Dynamics: The emergence of ChatGPT not only questioned Google's dominance but also reshaped user preferences and expectations. The lesson here is that complacency in the face of technological advancements can lead to a swift erosion of market share and influence.

3. Continuous Innovation Imperative: Businesses, irrespective of their size or market standing, must adopt a mindset of continuous innovation. The AI war highlights the importance of staying agile, anticipating market shifts, and actively seeking opportunities for improvement and evolution.

Lesson 2: Continuous Upskilling and Adaptation to AI Tools

The second lesson revolves around the imperative for individuals and organizations to continuously upskill and adapt to the evolving landscape of AI tools. As AI technologies advance, the ability to leverage these tools becomes a crucial factor in maintaining relevance and competitiveness.

1. AI as an Intangible Asset: The AI war showcased the transformative power of AI tools, with ChatGPT becoming the fastest-growing consumer app in history. Individuals who possess skills in using these tools effectively become valuable intangible assets to their companies.

2. Business Resilience through AI Uptake: The narrative of Gemini and ChatGPT emphasizes that businesses need to invest in the upskilling of their workforce. Those who adapt to and harness the capabilities of AI tools are better positioned to navigate industry changes and disruptions.

3. Experimentation and Discovery: The lesson here is not just about acquiring existing AI skills but also about fostering a culture of experimentation. Businesses and individuals should actively explore the applications of AI tools, as even small discoveries can yield significant advantages over competitors.

C. Lesson 3: The Importance of Timing in Business Success or Failure

The third lesson extracted from the AI war narrative underscores the often underestimated variable of timing in determining business success or failure. Google's decision not to launch its initial chatbot, followed by the rushed introduction of Google Bard, exemplifies the critical role timing plays in the business landscape.

1. Timing and Strategic Decision-Making: Google's decision to withhold its chatbot due to safety concerns, while commendable, had profound implications on its competitive position. The subsequent introduction of Google Bard, perceived as a response to ChatGPT, demonstrated the consequences of mistimed strategic decisions.

2. Opportunities and Risks: Timing not only pertains to the release of products but also to the recognition of emerging trends and market shifts. Businesses need to balance the opportunities presented by new technologies with the potential risks associated with delayed or hasty responses.

3. Strategic Foresight: Successful businesses display strategic foresight, recognizing the optimal moments to enter or exit markets, launch new products, or adopt emerging technologies. In the AI war context, the timing of product launches influenced market reactions and shareholder sentiments.

In the past five years we have seen a dozen players jump into the digital payments market and BharatPe in spite of being a newbie in the crowded wallet market has already reached a 2.8 billion dollar valuation in just three years of its launch and within this short span of its existence, it's already serving more than 7.5 million merchants in more than 140 cities and claims to process over 110 million UPI transactions per month.

But at the same time, if you look at the other side of it according to FinTrackr while the operating revenue of the company went from 0 to 5.96 crores, the losses of the company shot up by 839 % going from 23 crores to 216.32 crores and for FY21 their cash burn is already at 2.6 million dollars per month that's close to 19 crore rupees a month.

So the question is in spite of such scary figures why is BharatPe considered among the top five fintech firms in the country, what is their business model and how on earth can BharatPe become profitable in the presence of giant competitors like PayTm PhonePe and GooglePay and most importantly what are the key pointers that you need to keep an eye on to understand BharatPe and the evolving fintech space of India.

This is a story that dates back to 2016 when the payment renaissance of India began due to demonetization and as we all saw 86 % of India's cash was declared invalid overnight but all thanks to the internet and mobile penetration PayTm came as a savior and helped us transfer money even to the smallest vendor through a QR code and as usual with such a huge untapped market several other payment gateways started offering cashback to onboard as many merchants and customers as possible.

While most of us very easily became the adopters of this digital payment system behind the scenes an IIT Delhi student named Shashvat Nakrani noticed three critical problems in the system,

1. Since each payment app needed a different QR code, when you went to a Kirana/Grocery store at the time of making the payment it would turn out that the shopkeeper only had PayTm while we had migrated to GooglePay or PhonePe so obviously the shopkeeper would then insist that we make the payment in cash and this defeated the entire purpose of going cashless.
   

2. While payment apps charged zero % fee on transactions for customers like you and me for merchants there was not a single wallet that was taking less than 1.5% in commissions.
   So, if you bought groceries worth 500 rupees the profit of the vendor itself is just 50 to 75 rupees and in that also 1.5 percent of the purchase value which is 7.5 rupees used to go to the payment gateways as commissions.
   

3. Lastly, the awareness of UPI system which was practically free, was very very less and that's when it struck him that there has to be some way of leveraging UPI to remove all charges on payments.

   
   

This is when on 20th of march 2018 Mr.Nakrani and his co-founder Mr.Ashneer Grover launched BharatPe with a vision to revolutionize the payment systems in India and the first thing that they did was that they leveraged UPI’s star feature which was inter-operability so now a single QR code was enough to transfer funds from your bank account to my bank account without any hurdles of a closed ecosystem and the best part of this entire transaction was that it was free for both the merchants and users and another plus point for merchants was that while most wallets and payment gateways had a minimum 2-day settlement window through BharatPe they got their money credited on the same day itself, as a result, thousands of merchants adopted BharatPe.

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Now, the question is if this entire transaction was being done at free of cost then how did BharatPe make money?

Mr.Ashneer Grover has spent years in American Express wherein he met more than 100 founders who were into the payment business. This helped him understand the fintech space properly on top of that since he was the CFO of Grofers he understood the problems of the merchants more than anyone else and this experience gave him two critical insights:

1. The margins and retail were too low to burn a hole in the pockets of the merchants with commissions so the right way to make money was definitely not commissions.
   

2. He understood that although shopkeepers won't pay for the service, they would be more than happy to pay interest on loans. Because one major problem with Indian banking is that despite micro small and medium enterprises being such an indispensable pillar to our economic growth no private bank wants to lend them money due to either lack of documents or collateral and it's quite understandable because lending wouldn't make sense if there is no instrument to measure the risk of actually lending money to an individual.

So in spite of all these merchants having healthy balance sheets in spite of they having an incremental increase in their growth, unfortunately very few banks wanted to lend them money and guess what this unmet credit gap of micro small and medium enterprises is one trillion dollars in India.

This is a reason why BharatPe tabbed on this golden opportunity to start a merchant lending system and they entered the lending space by partnering with non-banking financial companies this target segment included 65 million msmes in india that employ close to 80 million people.

Now the question is that if banks couldn't lend to small merchants what was so special about BharatPe that they could tap onto this golden opportunity and more importantly how do they intend to become profitable?

Well this is where BharatPe's AI algorithm comes in and here's an oversimplified explanation to understand how it works.

Just like our credit card companies note our spending pattern every time we make a payment. Every time you make a payment at a store through the QR code the BharatPe algorithm takes note of the cash inflow at the merchant's end similarly when a merchant pays his supplies through BharatPe the algorithm keeps note of her monthly inventory value and it also notes a spending pattern and several other parameters to estimate the Projected Savings, Income and Consistency of Income.

And just like credit card companies look at your spending pattern to decide how credit worthy you are, the algorithm of bharatpay uses this data to calculate the risk of lending to a particular merchant.

This way without paperwork the BharatPe algorithm can decide the credit worthiness of a merchant even if he/she is in the remotest corner of the country and all the progress that our Grocery store makes is officially documented by the BharatPe’s algorithm.

Once this lending procedure starts the algorithm gets smarter and smarter at risk assessment based on the merchant's loan history and credit score. This is how BharatPe currently provides unsecured loans in the range of Rs.10,000 to Rs.7 Lacs for up to 12 months and charges an interest of about 2 % per month.

One of the biggest problems with lending is the collection challenges and defaults.

So even if a company wants to scale its lending business through the lenghts and breadths of the country they need a tremendous amount of workforce for recovery.

According to BharatPe its repayment rate is 96% which is among the best in the market. Instead of requiring the merchant to pay monthly installments, it deducts the amount from the transactions before the bank settlement for each day.

Example: If the merchant has to pay back Rs.15,000 installment per month and he has an average inflow of Rs.15,000 per day so instead of asking for the payment at the end of the month, the app at the end of the day it by default subtracts five hundred rupees as daily installment and then pays fourteen thousand five rupees to the merchant at the end of the day.

This creates a win-win situation wherein the merchants are not burdened they don't need to be reminded about payments and at the same time BharatPe can ensure that its repayments happen without any problems.

This is how merchants pay back their loans in easy daily installments as small as Rs.430 per day average this is the reason why BharatPe has an astonishing repayment rate of 96%.

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As of october 2021, BharatPe had already facilitated loans to over 3 lakh merchants and disbursed over Rs.2,800 crores in loans.

As of october 2021 according to economic times BharatPe was processing loans worth Rs.300 crores each month and today BharatPe loans are available in more than 11,000 pincodes in 24 states and has a sales force of 4000 agents to educate merchants on various financial products.

On top of that they have an insane retention rate with 45% of its merchants taking repeat loans and all of this is being done digitally in a hassle-free manner with no application fee and most importantly without a collateral.

Therefore more merchants means more data, more data processing means better risk assessment, better risk assessment means less bad debt which means insane profitability.

This is a reason why BharatPe spending $2.5 million a month to onboard as many merchants as possible.

this is how BharatPe is solving a major problem for the MSMEs of india using its insane artificial intelligence algorithm as a result they have witnessed a crazy growth of 10x in the last fiscal and now bharatpay aims to disburse loans worth 1 billion dollars among merchants.

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• Product Metrics

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• PM Interview Experiences

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  • Drop in Netflix's Key Metric

  • What would you do if there is a High Acquisition but Low Retention?

  • Common Mistakes to avoid while Answering Product Manager Problem-Solving Questions

  • How to Answer All Types of Product Execution Questions?

• Product Roadmap

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  • How would you prioritize new product features for Facebook?

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• Product Strategy

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• Google Product Manager Interview [FREE]

  • Google Product Manager Interview Guide 1

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  • Google Product Manager Interview Guide 3

  • Google - Product Manager Interview Questions 1

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• Facebook Product Manager Interview [FREE]

  • Facebook Product Manager Interview Guide - Part 1

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• Business Case Studies [FREE]

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• Mission Statements of Top Tech Companies [FREE]

• 100+ Product Manager Interview Questions [FREE]

• PM Interview Questions from your Work Experience [FREE]

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In 2007, J P Morgan’s analyst Barton Crock put out a statement, wherein he said that Netflix is facing tougher competition from blockbusters than originally expected because Netflix in 2007 was facing a very peculiar situation. And after this news came out, the stock prices of Netflix went down by 5%. The market, in general, became skeptical about Netflix's progress. But Netflix was so strategically able to navigate through the situation that, in the next  10 years, Netflix went on to become one of the best-performing stocks in the world which gave out a return of more than 10,000%  from 2007 to 2018.

But very few retail investors knew that, in 2021,  Netflix is in trouble again. And coincidentally, this trouble situation is very similar to that of 2007. And how it reacts to the situation  will actually go on to determine, whether Netflix stock shoot up or crashes down. 

This is a story that dates back to 1997 when the very popular  Blockbuster failure saga actually started. Back then, Blockbuster was a movie rental service that had physical stores of DVDs all across the United States. And the general American tradition back then was, renting a movie on Friday and giving it back on Monday. In 1997, Blockbuster was a billion-dollar company with more than 6000  stores in the US alone and had a revenue of 3.91 billion dollars. But the problem was 60% of that revenue came from late fees, which was annoying millions of customers. That is when one of the customers were fined an exorbitant amount of 40$ in the late fees.

And, it annoyed him so much that he went on to start a company of his own. This man was none other than Reed Hastings and the company he founded is what we know as Netflix today. He was so pissed that the very tagline of Netflix itself was “No Late Fees”. In  1997, Netflix started out as a subscription-based DVD mail service.  If someone wanted to watch a movie, instead of going to a Blockbuster store, make a list online and send it to Netflix. They would deliver the DVDs within 2-3 days. And, when you return the DVD that you had, they would send you another one. All of this was being offered at an affordable subscription fee and without any late fees.

Over here, the X factor turned out to be the mindset of the company.  While on one hand, Blockbuster was extremely adamant upon keeping their late fees and made millions of dollars out of the pain of its own customers, while on the other hand, Netflix leveraged the same undesirable attribute to build a million-dollar business. And by 2004,  it had a revenue of 500 million dollars. This is when there came the first twist in the tale.

In 2004, Blockbuster understood the DVD in-mail service is a big market and they made a grand announcement and launched their own  DVD in-mail service as a direct competition to Netflix. And they started growing as fast as Netflix, adding 2.1 million subscribers in the very first year itself. Now, on paper, Blockbuster was all set to crush Netflix. Because on paper, they had such a vast network of stores that 90% of the American population were at an accessible distance to a blockbuster store. And this meant, when Netflix DVDs will take 2-3 days to come from a warehouse that is hundreds of kilometers away from the warehouse, Blockbuster could have delivered the same movie within just 2 hours because those movies will come from the nearest Blockbuster store of the customer which was hardly a few kilometers away.

But to our surprise, Blockbuster still failed. Why? Because they did not use their store network to deliver DVDs and on top of that,  within just that one year, they cut down on late fees which costed them about 200 million dollars in revenue and setting up the DVD in-mail service cost them another 200 million dollars. So, they were practically 400 million dollars in debt and this made it very difficult for them to experiment with new methods and systems. But even their market share kept growing rapidly and by 2007, they started eating into Netflix’s revenue.

In that year itself, Netflix lost  55,000 subscribers as Blockbuster kept growing steadily. This is a  context-based on which J P Morgan put out the statement saying that Netflix is facing tougher competition from Blockbuster than originally expected.

And this is where Netflix did something amazing to surprise the world. They identified 2 major threats to their business. First one was obviously Blockbuster entering the DVD in mail service because considering their huge network of stores, they could have delivered a much better service than Netflix with very less efforts, using their existing supply chain itself. Secondly, they realised that they had a hidden competitor who was strangely eating into the profits of both Netflix and Blockbuster. And this mysterious entity was none other than Walmart.  

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What does Walmart have to do with entertainment and why is it competing with Netflix and  Blockbuster?

Well, as it turns out, Walmart was also eating into the profits of both Blockbuster and Netflix because it was using a pricing model called the loss leader pricing model. It is a type of pricing model wherein one sells a low cost, low margin product just so that,  customers can be exposed into buying a high cost, high margin product. In this case, Walmart was giving away DVDs on rent at a  dearth price just so that it could entice its customers to come to the Walmart store. Eventually exposing them to shop other products, which gave them more profits. Walmart did not care about making profits through DVDs which was the core business of Netflix and Blockbuster.

And this is where Netflix ventured into online streaming and pivoted to another segment. And they invested heavily into data analytics to build a formidable personal recommendation algorithm and used the Internet to distribute the content instantly and cost-effectively. This is how, Netflix, the streaming service that we know today was born. Meanwhile, Blockbuster being too late to the streaming party actually crippled with the debt, eventually,  filed for bankruptcy and the rest is history.

Netflix became an early adopter of the internet in the entertainment space. And in the next  10 years, Netflix went on to become one of the most successful companies in the world. 

But, fast forward to 2021. 14 years later, Netflix is again facing the same 2 threats that it faced in 2007 and it is practically back to square 1. These 2 threats are: 

1. Just like in 2007, Blockbuster already had a profitable network of stores and all it needed to do was to go online and merely by delivering DVDs, it could have beaten Netflix very easily. Just like that in 2021, Disney and HBO, both already have an extremely profitable network. Disney makes a billion dollars through theatre releases itself. And before the movies come to the OTT platforms, they have already made the company a ton of money. And HBO does the same through the television network. And all they need to do is start pulling out content licenses from Netflix and Prime and launch them all in their own OTT, which by the way, is happening very quickly. something, Netflix identified way back in 2011 itself.

   They knew that someday or the other, these companies start pulling out content from Netflix. And it can’t just keep making money merely by reselling movies of other companies. And hence, Netflix ventured into its 3rd orbit and started making its own content, which is what gave us the iconic ‘House of cards’ in 2013. And from there onwards, Netflix has invested very heavily to become a production company by itself. And all of this is being done just so that they can keep their subscribers from leaving even when everybody else is pulling out content from their platform. But then producing content like House of cards require a huge budget and if they have to consistently keep doing it, they need to bring in more and more revenue. But as of now, the only stream of income that Netflix has is subscription fees. 

2. The second threat is what Walmart did to Netflix in 2007, is what Amazon Prime Video is doing to Netflix in 2021, i.e., it is using the loss leader’s principle to attract customers at such an ultra-cheap price that it is almost impossible for Netflix to match its prices. The best example of the same is ‘Mirzapur’  and ‘The Family Man’. If we take a step back and analyze both these series, we can realize that kind of money they have invested in producing this content, it is nearly impossible that they make money through the meager Prime Video subscription cost.

In fact, most of us have either watched the series with one of our friend’s Prime accounts or our friend must have watched these series through our Prime account. Now, Amazon is doing this because it doesn’t care about making money from Prime video as long as we remain a Prime subscriber and we use our friend’s Prime account to order from Amazon. Because if one has prime, it will eventually lead us to shop more expensive products from Amazon which is the profit that they are looking out for. 

Therefore, just like Walmart in 2007, Amazon is using the core offering of Netflix as a loss leader which makes it impossible to match its pricing. Meanwhile, since Disney makes a lot of money through theatre releases and TV distributions even Disney can afford to give away their content for free, just so that it can entice its viewers to pay for exclusive series like Loki and Wanda vision.  Eventually, it can turn its free viewers into paid subscribers. So, to put that straight, Netflix has lost its unique selling proposition and most of its best content are disappearing, forcing it to keep producing a mammoth amount of content. But at the same time, while competitors have multiple streams of income, Netflix is solely dependent on subscriptions which makes it very difficult to maintain its profitability.

Therefore, we can say Netflix is in trouble again. Now, it’s not like  Netflix will go bankrupt or something, it’s just that it might no longer remain the market leader that it is today and once people start opting in for other services, Netflix might just be another streaming app that people have opted in for. And this brings us to the 4 very most important questions that we need to ponder over which will go on to determine the future of Netflix,  

1. How will Netflix build an alternate stream of income? Will it run ads? Or make theatre releases? Or increase its subscription? 

2. Can Netflix match the content production both in terms of quality and quantity with giants like HBO and Disney?

3. Is it going to leave its market leader position and just be yet another app that people have opted in for? 

4. Could it partner with the giant like Walmart to serve as a loss leader to help Walmart compete with Amazon?

Lessons from the case study:

There are 3 lessons that we need to learn here,
 

1. History always repeats itself, so always remember whatever is happening to a particular company today has either happened to the same company before or has already happened to some other company in some other domain. In this case, the equation between Netflix and Blockbuster in 2007 is very similar to the equation of Netflix and Disney in 2021. And these kinds of analogies will give you a lot of clarity about the future possibilities of a company.
   

2. Even companies as big as Netflix will have their own vulnerabilities popping up from time to time. And if you keep a  close eye on how they react to it, you can project the growth or the downfall of the company, way before it happens.  
   

3. The business ecosystem of the 21st century is getting more and more complex wherein e-commerce companies are now competing with entertainment companies and strategic partnerships are being formed between potential opponents.  But the nature of these strategic partnerships will give rise to new strengths and new vulnerabilities and because all of this information is freely accessible through the internet, it gives us the superpower to look into the intricacies of the market which very few people can understand.

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Connect with us on social media:

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We all know that Spotify is by far the most successful audio streaming platform in the world. In fact, even during the pandemic itself, the stock price of Spotify went up by 70%. Now, on the outside, if you look at the numbers, while apple music has only 72  million users, Spotify has more than 345 million users and the rest of the competition is not even close. On top of that, its recommendation and playlist have been so amazing that we all agree that it gave us a miraculous experience every single time.

But, fortunately, or unfortunately, in 2021, Spotify is in very deep trouble. While on one side, the losses of the company have been stacking up rapidly, on the other side, with the giants entering the streaming market, Spotify is officially in a business war. And, what we are witnessing right now is perhaps one of the most interesting business wars in history. And, if we pay very close attention, we will be able to learn some spectacular business lessons that one can apply to their start-ups.

What is this business war?

The music streaming revolution of the world started way back in the 1990s.  Now, back then, that is from 1984 to1999, CDs were the ultimate instrument of the music streaming industry. The distribution channel of the music CDs made the record labels and the musicians, billions of dollars every single year. But, in the 1990s, the internet of the computer revolution began to pick up, resulting in the massive penetration of both computers and the web into American households.

Now, if we see, it is the fine culmination of technology and connectivity and if we observe closely, every time this golden combination happens, it gives rise to a new generation of start-ups.  In the music industry, it was a company called Napster, which was started way back in 1999 by an 18-year-old kid called Shawn Fanning and Sean Parker. In simple words, Napster was nothing but a music torrent, i.e., instead of buying a CD for 20 dollars, one can download an MP3 file for free and share it with your friends.

But this invention was a disruption in making because what followed next was the first wave of music streaming. And, this way did not just change the way people listened to music, it literally changes the entire music industry. Within a few months, it has 4 million song downloads and in less than a year, Napster had 20 million users. Now,  initially people thought that it’s no big deal. But, in some time, the number of Napster exploded further to 60 million users by 2001.

And, this is when the record label began to realize that their stores are incurring losses. And, when they actually computed, it shocked them to see that they were incurring more than 100 million dollars in losses due to Napster. And, that’s when hell broke loose for  Napster. They got slapped with a lot of lawsuits and what followed next was the history that led Napster to pay millions of dollars to artists, creators, and record label companies. Eventually, they had to shut down their operations sometime.

Now, while most people thought that piracy will be gone and that CDs will be back as it turns out, Napster left the market but the behavioral design of the society had been so strongly altered that people just didn’t go back to CDs at all. The CD stores were still closing down and other piracy websites took the place of Napster.  Companies were still incurring millions of dollars of losses because people just wouldn’t pay $20 for an album. And, this is where record labels were desperately looking out for an alternative to actually get their distribution channel back on track.

And while all of this drama was going on, there was one man who noticed this and decided to become an opportunist during the times of chaos. And this man was none other than the legendary Steve Jobs himself. And, the solution that he bought to the table was to give people ultra-cheap music and to give record labels a non-pirate distribution channel for their music. And, this solution was none other than the iconic iPod and the rest is history.

The record labels again started to make billions of dollars; customers fell in love with the iPod as it brought along the second wave of the music streaming revolution. But there were 2 major  problems over here: 

1. Not everyone owned an iPod or MacBook. 

2. Not everyone could pay for each album 

But everybody had computers and the internet. Guess what, this culmination of technology and connectivity, again, gave rise to another generation of start-ups and the most successful player in this segment turned out to be none other than Spotify which started way back in 2006. Spotify learns from the pain of the customers and decided to build a music streaming platform that could be used by everyone and for free.

And this is where Spotify deploys its freemium model with an option to subscribe. But this time, it wasn’t easy because they knew what happened to Napster and the subscription model was way more complex than the discreet model of iTunes. Because when it comes to CDs or iTunes, it was pretty straightforward, if you buy a $1 album from iTunes, 80% of that goes to record labels, 20% of that is meditator fees and that’s it. Whereas in the case of subscription, it’s quite difficult because you are giving unlimited access to everyone for a defined fee. So, the revenue distribution itself becomes very complex.

But fortunately,  the Spotify guys got through it and they spent about 9.8 billion dollars between 2006 to 2018 just to get the music rights without legal issues and they built the freemium model to make it accessible to everyone. And what followed next was the third wave of music streaming, i.e., unlimited legal music which could be listened to for free.  As a result of which, again, Spotify exploded and today it is a  market leader with the highest number of paid subscribers.

But again, there were 3 problems.,

1. The Ad revenue was not enough to pay the artists well and  because the music is free, very few people actually opted in a subscription 

2. There was no profit for Spotify. In fact, the company suffered massive losses during its rise. 

3. And most importantly, things got really ugly with the artists.  Taylor Swift and Adele broke up with Spotify over low pay.  And again, it led to a series of trouble for them from the creator’s side. 

Now, the company was badly cornered with massive losses on one side, annoyed artists on the other, and on top of that, they have now got freebie-loving customers. And, this gave them no option but to run a lot of ads to push their customers to buy Spotify premium and hence a lot of interruptions. And this is when 2 more Giants decided to step into the game. In 2015, Apple introduced that it’s going to kill iTunes and launched the subscription model which was Apple music as a direct competition to Spotify. And, in just 5 months, in  November 2015, YouTube entered the streaming wars with YouTube music. Now, if we observe the streaming wars very closely, that is,  Apple Music and YouTube music, both of these services are built over the weakness of Spotify. And just a few moves, here and there,  Spotify could be killed and there could be another wave of social media revolution on YouTube.

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How is that possible?

If we look at the above table, Apple music is only for premium customers but Spotify and YouTube music is for everyone and they use the freemium model which gives them a wider audience. Now, if we look at the user base, Apple music has 1.65 billion users, Spotify has 345 million users and YouTube got 2.1 billion users. But when it comes to paid subscriptions, Spotify is way ahead of Apple because of its accessibility through both Android and Apple. While Apple Music has only 72 million users but all of them are paid, Spotify has 345  million uses out of which 155 million of them pay.

Now, the X factor over here for Spotify is its amazing playlists and podcast that is integrated into the app. And this is where we saw Spotify coming out with Spotify Originals like 22 yarns and signing up creators like Joe  Rogan to become Spotify exclusive. But, Apple and YouTube, both also have their Podcasts but separately. YouTube has Google  Podcasts and Apple has Apple Podcasts. And now, here comes the big difference, while Apple Music generates revenue of 4.2 billion dollars with very fewer profits because it’s just an ecosystem product,  Spotify being a standalone incurred a loss of 698 million dollars in spite of generating a revenue of 9.2 billion dollars, and YouTube, its way ahead of the game with 19.7 billion dollar in revenue and this is mainly because of its video service. YouTube is also one of the most popular platforms to discover musicians and artists.

YouTube accommodates every single  X factor of Spotify and Apple music in the YouTube app itself.  

1. We already search for songs and lyrics from Google and  YouTube which is the USP of the Apple Music 

2. We can ask Google which song is playing and it will find that out for you which is nothing but a Shazam feature. And, most importantly, Google has Google Podcasts and a huge base of creators who are already making Podcasts on YouTube. 

Now, every single creator knows that YouTube is by far the best platform for creating content. And user knows very well, how well  YouTube understands them and their preferences. Now, if  YouTube rolls out an update tomorrow saying that Google  Podcasts is now integrated into YouTube as YouTube Podcasts. It is going to lead another huge wave of creators who will flock to upload their audio content on YouTube because there are already a ton of audio creators who are desperately wanting to be on  YouTube. And if given a chance with YouTube algorithm, it’s going to be a game-changer for them. And the best part is because it’s available on both Android and iOS, the user base is insanely huge. So, basically, YouTube literally has the best of Spotify and Apple.  And when integrated together, it will become unbeatable in the content space just like Instagram is right now for social media networks. And some people say that one day there will be a grand announcement that is going to change everything for Spotify.  

Important Business Lessons

This brings us to the most important part of this case study, i.e., what are the lessons that we can learn from this case study,

1. Always remember that being a first mover can be a terrible thing. Its always better to be a second-mover, so that you can build upon the mistakes made by the first-mover. In this case, if you see, iTunes built over Napster, Spotify built over iTunes and Apple Music and YouTube music built over  Spotify.
   

2. Companies might come and go, but, the behavioral design they leave behind will stay forever. In this case, it is a paradigm shift from CDs to streaming. So, while most people neglect it and try to reverse it, one as an entrepreneur/PM can be an opportunist and can bring about a solution that is forward-looking rather than backward-looking. In this case, it was none other than the legendary Steve Jobs himself who built upon the behavioral design left behind by Napster.
    

3. The culmination of technology and connectivity is always the sweet spot for innovation and it will give rise to revolutionary start-ups. In this case, these were the computers and the internet, but, in the next 3 years, it’s going to be green tech and the internet, blockchain and the internet, and most importantly Artificial Intelligence and the internet.  And, this is where one can find its greatness to build a breathtaking company or as an investor find an uprising gem in the stock market.

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IKEA has now become one of the most innovative companies of the 21st century in the furniture and furnishing industry. And, the most astounding thing about IKEA is that, in spite of furniture being a highly localized business, IKEA has been the pioneer in turning the furniture business into a global success and today, IKEA draws revenue of $45 billion from 445 stores spread across 30 countries.

What’s more important to note is not the growth of the company but the fact that IKEA taught the world how to use the most powerful psychological tactics to exponentially increase sales and today, we are going to discuss one such strategy that makes IKEA stand apart from the competition. And, no matter which business you are in, no matter which field you are in, you can use these powerful psychological strategies to double your profits at 0 costs.

IKEA’s Pricing Strategy

What is the strategy?

How does it make IKEA stand apart from the rest of the competition?

How can we use them to double our profits?

The answer to this lies within a fascinating experiment conducted by Dan Ariely with the students at MIT.

In the first iteration, Dan went to his class of 100 students and asked them to choose between subscription plans for the international magazine called The Economist. So, the three options were,

• A digital version for $59,

• The print version for $125,

• The print and digital versions for the same $125.

As it turns out the 16% of students wanted the digital version, 0% wanted the print version for $125, 84% chose the print plus digital version.

So, for the second iteration, he makes a small change, he thought since nobody is buying the second option, then why keep it there in the first place. So, he removed the $125 print option and presented the same question to another class of 100 students. Now technically, by eliminating the option that nobody chose, the results are not supposed to change. Well, in the second scenario the result changed drastically.

This time, only 32% of the students opted for print plus digital version and 68% of them just opted for the just digital version subscription.

And, that is when Dan realized that something is magical about this unnecessary option that made such a huge difference in the choice of the customers and that is what we call The Decoy Effect.

The decoy effect says that the consumers change their preferences between 2 options when presented with a third option which act as an unattractive option just to make the other option look extremely fascinating.

Now, when we talk about the Decoy Effect, people think about the popcorn example wherein in the movie houses, you get popcorn of small, medium, and large at a price of rupees 300, 650, and 700. Now, because of the Decoy Effect, people tend to choose the 700 rupees variant. Now, although it is technically correct, it is the worst possible example to use. Why? Because if we look at the underlying message that is being communicated to the customers, this is what the options indirectly tell the customers:

1. Option A: Overpay for the popcorn

2. Option B: Extremely overpay for the popcorn

3. Option C: Extreme overpay for the popcorn with a little extra popcorn

And, the basic flow over is that the prices over here can in no way justify the value for the popcorn. Therefore, by default, making the purchase of that popcorn becomes a painful experience. This is a reason, why, we often feel guilty for buying popcorn. And, even some people would not even think about buying popcorn at the theatre.

Now, when this is done in a close and compulsive environment like a theater, it will definitely work, but if the same strategy is used in the free market, this strategy will backfire in a terrible way. And, if you give your customer this kind of painful experience while paying for your product, the customers will never buy from you. And, it will eventually result in heavy losses.

IKEA’s Decoy Effect

That is where IKEA’s genius application comes in. IKEA places 3 cabinets for you. Let’s suppose they are named as cabinets A, B and C.

A costs $40, B costs $60 and C costs $65.

Option A is very small with a very small cabinet, with a very smooth movement but it’s got very small space plus the material used would be very ordinary.

Option C will be a very large cabinet with premium hands, premium material and most importantly, it will offer large storage space, along with that, you will also get a $10 worth of compartment as complimentary if you buy option C.

Now, then there is option B, as large as C, but it is made out of ordinary material, does not have premium handles, and will not get complimentary compartments.

And, here’s where the catch comes in, if you look at the underlying message, that IKEA is trying to communicate using its product, here’s what they say.

Option A says, here’s a budget product with a great value for money, Option C says, here’s a premium product with a large space plus delightful complimentary product, so, high value for money, and lastly, option B, which is almost the same price, but without premium built quality without complimentary compartments.

So, not so much of a value for money as compared to option C. so, this way option B act as a decoy, so that, when comparing option B with option C, option C looks like an amazing deal. Now, while most sellers only think about the people who directly buy option C, IKEA understands that a 22-year-old boy, who just moved into the city, will not be able to afford a $65 product, which is why he would buy a $40 product. But, when he does, IKEA wants to make sure that he does not regret the purchase. So, even though, it’s a low-margin product in the race of upselling, IKEA will never ever try to rip off its customers who’ve got low purchase power.

And, the best part is, the decoy effect over here does not just make option C look great, it also made option A look great.

Because the customers feel like, they would have overpaid by choosing option B, which is 50% costlier as compared to option A.

So, by default, the budget buyer buys the smaller drawer set, and the premium customers, buy the $65 product. Why? Because they compare it with the decoy. And, this clean execution of the decoy effect gives IKEA brand 3 wonderful superpowers:

1. Irrespective of their purchase, both types of their customers get valued for their money.

2. The premium customers have been tactfully influenced to buy the $65 product. And, because the $60 product was such a bad deal, the premium customers actually feel very good about the purchase.

3. And, most importantly, when the 22-year-old boy, is extremely satisfied with his $40 purchase. Tomorrow, when he grows up and makes a handsome income, he will again choose IKEA, but, this time as a premium customer. Because, he was given value for money that he was promised, even at the $40 price tag.

   Therefore, the customer retention of the IKEA brand increases to a large extent.

This is actually how the decoy effect is applied. So, while most sellers use pricing strategy with the sole intent to upsell. The IKEA team constantly keeps learning and carefully deploys its strategies in such a way that it drives profit, but, at the same time, it retains its brand value. And, the wittiest thing over here is that IKEA does this literally for every single one of its 12,000 products, starting from affordable drawers all the way up to the premium beds and even wardrobes.

Now again, this might look easy to some people but here’s something that nobody will tell you if you take a step back guys, you would realize it is extremely difficult to maintain this fine balance between profit and brand value. Especially, when you are as big as IKEA, with 445 stores spread across 30 countries with 2.1 billion visitors who are coming from different cultures from all across the world.

And, the only reason, they’re able to execute this strategy is because of IKEA’s powerful philosophy of democratic design and lifelong learning culture.

Every time, IKEA enters a country, the IKEA team specifically studies every little aspect of that place, starting from the average balcony size, all the way up to the average spoon size. This is done just so that, IKEA could fit into the cultural framework of any country. Therefore, even when you apply this strategy, always make sure that you constantly keep learning about the customer’s reactions and keep a very close eye on the customer’s culture, purchase power and their spending habits. Because only then, one can understand, how to strike a balance between profit and brand value.

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Steps to apply the Decoy Effect

Here are 5 very important steps that are needed to be followed when applying the Decoy Effect to products:

1. Do a research and find out, which is the most popular and profitable product in your store.

2. If it is a premium product, find a budget substitute for the same product such that people who cannot afford the premium one can still fulfill their needs with a budget one. Why? because budget customers will soon become your premium customers. Therefore, engaging with them should never ever be underestimated.

3. The next step is to create a decoy. The most important is that decoy must not be a degraded version of your premium product. However, the premium product should have a way better offering than your decoy, so, if you are selling drawers, it’s ok to have a non-premium material, but it shouldn’t be like the drawers are rigid and they’re really badly functional because even the decoy is going to reflect the brand value. So, always try to make the premium product more attractive with the complementary offering rather than, purposefully, degrading the decoy.

4. This step would be to price your product in such a way that the premium product looks way better than the decoy and the budget product. Option A looks like the obvious choice for the customers with a lower choice power. This way, your high-margin product would look extremely lucrative driving very high sales and at the same time, the budget customers will also be very happy to get the value for their money. In fact, those people will be even happier because they didn’t have to pay 50% extra just to get a bad deal on the decoy.

5. Lastly, do not add more than 5 products and make sure that the price of the decoy is very close or even equal to the premium product. This is how, one can apply the decoy effect to their products and when done right, it can increase both, your conversion rates and both your profit margins to a large extent.

Disclaimer: In the greed of more profits, please don’t use misuse the decoy effect. Because, always remember, in a free market, the customers are just one step away from leaving you forever.

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The fashion industry, one of the most demanding industries nowadays, is a multibillion-dollar enterprise that devotes itself to the business of making and selling clothes. In today’s article, we are going to discuss about one of the greatest brands in the fashion industry, i.e., none other than ZARA.

It is so hard to believe that a venture that was started by a school dropout, has now become so huge that it employees more than 1 lakh people and has more than 2000 stores spread across 80 countries. And, the most interesting thing about Zara is that it has not incurred a loss in the last 19 years until the pandemic.

About ZARA

Now, talking about Zara, this is a story that dates back to the late 1950 in Spain when 14 years old, Amancio Ortega, dropped out of school and found a job in a local shirt megastore in order to support his family. And, for the next 10 years, he worked at multiple jobs in the garment business, from being an assistant to a tailor to delivering clothes directly to the customers.

During these 10 years of experience, Amancio Ortega made 3 very important observations that went on to change the fashion industry forever. Even today, Zara operates on the basis of the same lessons.

Core Philosophies

What are these observations? What was so special about those lessons that turned this ordinary boy into one of the richest people on the planet?

The first thing, Ortega understood is that all human beings depending on whichever age group they belong to, they put in extra money and they put in extra effort onto something called the instruments of status.

To understand it in a Mr. Amancio way, the 90’s kids could go an extra mile just to buy a Shaka Laka Boom Boom pencil, to get a MRF bat, or even to get a Ben10 watch. Whoever had these instruments of status was considered to be a cool kid.

As we are growing up, smartphones are becoming instruments of status, and if somebody has an iPhone, they are considered to be slightly rich. So, at every age, we have our own instruments of status. Just like that, Mr. Amancio understood that the most important instrument of status among women between the age of 20 to 34, were nothing but the clothes they wore.

Secondly, he also understood that along with these instrument of status, humans also has critical parameters that define the value of those status instruments.

For example, nobody cared how well actually the Shaka Laka Boom Boom pencil wrote, but in fact, most of those pencils did not even write properly. Similarly, nobody cared about the quality of wood that MRF bats were made of, in fact, most of these bats were duplicate bats just with the sticker of MRF, we only bought it just because Sachin had it.

If we see, the parameter to judge the status instrument was never the quality or utility of the product, it was just a sticker or a stupid doll. And, just like that, women have 2 primary parameters in clothing, that define their status in the social circle.

Those parameters are Variety and Design.

The combination of these parameters is what makes them great status instruments, for example, if you wear a Manish Malhotra dress, it kind of loses its value after wearing it at 2 weddings. And obviously, variety is useless, if all the clothes are badly designed. And the most interesting point to be noted here is that just like nobody cared if MRF bats were original or not. Very few women cared about the quality of clothes as much as they cared about variety and design. So, hardly a few people wanted to dress that would last for 10 years, because they anyways wouldn’t wear it frequently.

Third and most importantly, he also found out that women were extremely fascinated by fashion icons. But at the same time, the existing clothing stores never caught to these needs of customers in order to get the latest style of clothing, they only had a new stock every 2 to 3 months. On the contrary, the designer clothing that actually caught up with these strengths was quite desirable and very expensive. So clearly, there was an unfulfilled demand in the market.

Therefore, by using these 3 insights, Amancio Ortega build an agile supply chain that looked something like this.

Instead of buying high-quality clothes in less quantity, he would buy medium quality material in high quantity and then bargain with the seller to get it at a discount. Then he would do research to find out what types of design are trending in society and what types of design are doing well at the most premium outlets.

On top of that, he would even travel the city and would also keep an eye on pop culture. And as soon as, he would spot a lucrative design, he would immediately get the designers to design something similar, pass it on to the tailors, gets on to the display, within the shortest time possible. This speed was so high, that while normal shops had a new stock every 2 months, Zara had a new design every 2 weeks. This is what is known as the fast-fashion supply chain.

Not only that, he even marketed a Zara store to be selling medium quality fashion clothing at affordable prices and obsessively focused on design and variety of clothes.

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This strategy gave Amancio Ortega 3 magnificent superpowers over the rest of the competition,

1. The customers were extremely on cloud nine to find trending designs and a huge variety of clothes. The best part was that these clothes were available at ultra-low prices because the material itself was bought at a very cheap rate. On top of that, the number of visitors skyrocketed to the store because with new designs coming every 2 weeks, it sparked the curiosity of customers to such an extent that Zara stores had 3 to 4 times more visitors than the rest of the stores. This again resulted in an increment in their sales.
   

2. Because of more footfall and their fast-moving products, Zara is also called the superpower of something called Discounting.
   

3. Zara achieved the golden equation of Just-In-Time Production and Just-In-Case consumption. These are 2 types of operation in supply chain management, in fact, this mode of operation is not just applicable to just supply chain but to many of the aspects of life also.

This concept comes from the automobile industry. So, if a car company operated in Just In Case method, they will focus on keeping their inventory stocked up all the time. So, if they wanted to manufacture cars, they would by default have 300 red, 300 black and 300 yellow cars. So, regardless of what the customer wants, they will be able to deliver the products immediately. But, the major disadvantage of this strategy is that it leads to exorbitant storage costs and the inventory gets wasted if all stock does not sell. Whereas, in the second mode of operation, i.e., just in time, it is only about what is needed. So, after placing the order of a black car, the production line will start manufacturing the car, then it will be painted black. This way, there is very less storage cost because product moves quickly from the inventory and the supply chain, in general, becomes very efficient.

Now, this is the best part about Zara, Zara manufactures all the clothes in just in time approach. Wherein, they push out new designs every 15 days. So, they save a ton of money by not keeping in inventory. But the customer buys a product with just in case mindset and end up spending more than needed.

That means, if a girl sees a great Zara dress, she knows that in 15 days, it will be out of stock. Therefore, she will have the natural tendency to buy the dress even if she doesn’t need it, because she will buy it with a mindset that, just in case, I have a friend’s birthday, I will need this dress or just in case, I need to go to that trip, I would need that dress. Hence, she will end up buying more clothes than needed eventually saving Zara inventory costs but will end uploading her own inventory costs. Even if supposedly, flopped designs come in, it still gets bought by someone because they think they might need it at that moment only because of the fear of missing out.

On top of that, while the rest of the clothes are made to last for a year, Zara clothes are designed to last nearly 10- 15 washes only. Therefore, people bought 3-4 times more clothes at Zara and also shopped with 3-4 times more frequency as compared to the rest of the stores. These principles along with the supply chain evolution turned Zara into a super-profitable company and accelerated its growth.

Even today, while normal brands have 2000-3000 designs per year, Zara and even H&M end up releasing 12000 designs in a single year. This is a reason why today Zara is a 13 billion-Dollar company with more than 2000 stores across 88 countries. On the outside, Zara seems to be the perfect capitalistic miracle. Customers get a ton of variety, companies make billions of dollars, people get jobs and government makes billion of dollars in taxes.

People as much as H&M and Zara are capitalistic fairy-tale, it is equally important for us to realize that it also leads to an environmental Nightmare. And if we don’t strike the balance, the nightmare is going to be worse than the fairy- tale.

What do we exactly do about it?

Take some simple steps,

1. Take a step back and analyze your instrument of status and always make sure that you are not so exploited by brands that you end up spending more than needed and that eventually end up broke. Zara is definitely important but not that much important that you end up swiping a credit card more than needed and then struggle with your debt.
   

2. Access the ordinary things in your life and find out how the brands exploiting you to purposefully increase consumption, it starts from a disposable razor all the way up to your apparel and makes a conscious choice to support brands that decrease your consumption.

Business Lessons to Learn:

1. If you want to sell a high-margin product, try to find out what exactly are the status of instruments in your customer’s life. Most importantly, find out, what are the parameters that make those instruments of status important. In this case, the instrument of status was nothing but just the clothes, and the parameters were design and variety.
   

2. There is always a thin line between what your customers want and what you think your customers want. In this case, while on the outside it looks like quality is the most important metric for any product, it’s quite counter-intuitive that in the context of fashion, quality is actually secondary as compared to design and variety.
   

3. Lastly, once a great man said, while everybody in this world learns how to see, very few learn how to observe. And that is what makes the difference between ordinary and extraordinary. In this case, the extraordinary observation of Amancio Ortega gave rise to not just a fashion company but a fashion revolution that changed the way the world dressed.
   

   Share

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2016, a year which no Indian would forget due to demonetization. But, another major event happened that year that shook the entire telecommunication industry, i.e., the launching of Jio by Reliance industries. While we, the consumers were enjoying the newfound luxury of the internet. On the contrary, it was a dread to the rest of the telecom companies. Their stock prices came down, several giant companies shut down. The crowded telecom space of India now seemed like a deserted battlefield with only a few players left. But throughout this brutal telecom war, there was a company that stood still, and that is none other than Airtel.

Airtel not only survived the hurricane brought by Jio in the market but, was also able to move one step forward to surpass Jio in many key areas. As of January 2021, Airtel was able to add 300% more wireless subscribers as compared to Jio. In fact, as of February 2021, Airtel is the top telecom company in terms of active subscriber market share.

What is so special about Airtel-Jio's rivalry? How are they so far ahead of other telecom companies?

Although this war is just getting started, considering the state of companies like Vodafone and Idea, the above question arises.

The answer to this question lies in one of the most powerful business strategies in the 21st century which is known as the “Product Service Ecosystem”. This is a business strategy that was introduced by the legendary businessman Steve Jobs, CEO and Co-founder of Apple Inc.

It is a method where the company tries to place its products so strategically into the lifestyle of consumers that over the new course of time, the customer ends up buying the products from the same brand or find it extremely difficult to switch to another brand.

Now, to understand it in the easiest way is to understand how Steve Jobs created an ecosystem for apple users. Now, this ecosystem of Apple primarily consists of three types of elements.

1. First is the Entry-Level products.

2. Second is the Retainers.

3. Then thirdly, we have got the Upsells.
   
   And, depending on your own personal requirement, you will end up with all three of them in different ways.

For example, if you buy an iPhone, which is an entry-level product, then you will start using facetime and iMessage that is when you are making an investment in the form of chat and filesharing. And because you can’t get your iMessage on android. Your habit of iMessage and your chats act as retainers that make you cling to Apple.

Why would you stick to iPhone just because of a few chats and just one app?

Well, there are 2 reasons.

Firstly, chat conversations are more important to us than we think.

Secondly, it is not just one app, there are multiple apps that you will invest into and that will push us to stick to Apple. Some of these apps include the apple podcast recommendations or apple podcast plus and even professional camera apps like FiLMic pro etc.
So, depending on who you are, once you get a hang of these retainers, the upsell happens.

In this case, if you’ve got an iPhone 10, you are more likely to buy an iPhone 13 this year. Why? Because, your phone might have outdated, but you still want to hold on to your investments which are in the form of iMessage, fitness track, and most importantly, the habituation of user interface.

This is the magic of the three elements of the Apple ecosystem, i.e., Entry products, the Retainers, and the Upsells.

And, if we observe very carefully about the happenings around ourselves. It can be clearly noticed that Jio and Airtel are no longer just telecom companies but an entire digital ecosystem under construction and they want to place their products and services in some of the most crucial aspects of your life. And this is a billion-dollar business war that is hidden in plain sight and here’s how it works out.

When you buy a Jio sim, you also get offered JioTv, when you will buy a Jio broadband connection, you will also get a setup box as an extended offering at a very cheap price. Today, when you will buy a Mi TV, you will also get a JioFi connection. So, if we see, we don’t just buy a product, you buy into Jio’s ecosystem itself. This is how Jio is establishing its first layer of the ecosystem by easily placing its entry-level products in an easily accessible manner. Now, the most crucial reason why Airtel survived is because Airtel realized the importance of the ecosystem, and they started pivoting to building an ecosystem faster than any other player in the market.

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How did Airtel transition to building an ecosystem so quickly?

It turns out that Airtel had already done a phenomenal job with its existing services. Back in 2016-17, their DTH service was one of the strongest contenders in the market along with Tata Sky with a market share swinging between 20-25%.

Secondly, they had a very strong hold over enterprise services which is Airtel's most profitable business venture that contributed 14% to their consolidated revenue in 2020.

Thirdly, Airtel was already delivering a far better service to its customers as compared to the rest of the competitors.

And last but importantly, the foundation for Airtel broadband was already laid in 2017 itself wherein they had 21 lakh connections in place. Now, if we compare this with the rest of the competition, it can be clearly seen that they were severely lagging in multiple aspects as compared to Airtel. Vodafone and Idea did not have a significant DTH presence at all, Videocon had a good DTH presence but did not do well with the mobile users. Thirdly, Tata Sky was a market leader but Tata Docomo was a failure. But this is where Airtel took some very bold steps to hit a home run.

Airtel went on to a shopping spree to start acquiring smaller players like Videocon telecommunications in 2016, Telenor, and tata teleservices in 2017, and this gave them 2 major benefits, it brought them more spectrum and it prevented Jio from acquiring these companies and cornering Airtel.

Secondly, they decided to narrow down their focus down only to high-value customers and they imposed a minimum recharge limit. As a result, Airtel lost 4.8 crore users in the December quarter of 2018 itself. But this ended up saving them a ton of resources and improve their profitability. Last and most importantly, they started integrating their services to build an ecosystem just like Jio.

They started offering a set-top box with a broadband connection and giving access to additional services like Wynk music and here’s where the game started changing.

When a company starts integrating multiple products into its ecosystem. Apart from customer retention, the ecosystem strategy gives the brand 3 dazzling superpowers.

Firstly, it offers multiple challenges for the brand to penetrate into the lifestyle of the customers and to present entry-level products, i.e., if an iPhone fails, Apple can always come back to you with a MacBook Pro.

Secondly, it gives you the superpower of using the loss leader strategy and this is a technique to sell low margin products at a loss in order to get customers to buy a high margin product.

Third and most importantly, it gives you the opportunity to break into your rival’s ecosystem. Guess what, this is what exactly happened during the pandemic and Airtel used all of its superpowers to break into the Jio ecosystem.

What was so special about the pandemic?

Well, as we all know, pandemic skyrocketed the demand for high-speed broadband connections, because of major lifestyle changes in the consumer life in the form of work from home and education from home. Here’s what happened,

1. Airtel used its first superpower of existing b2b enterprise clients and offered all the companies to provide all their employees with a high-speed broadband connection and along with it, it also spent a ton of money and rapidly partnered with local cable operators and offered them lucrative incentives to lay their line even in tier 2 and tier3 cities and they started acquiring these broadband customers as soon as possible. Therefore, it could not give out a free sim card to get into a customer’s lifestyle, Airtel used broadband as an alternative and positioned it as an entry-level product to get customers into the Airtel ecosystem.
   
   

2. When it offered the customers broadband connections, it also came with an additional offering with something called the Airtel extreme set-top box, which gave you one month of DTH HD pack free with PrimeVideo and Disney plus, Hotstar even at the base level plan. So, what is Airtel doing over here, it is using its second superpower of the ecosystem strategy, i.e., the loss leader strategy.

3. Last and most importantly, by executing these Strategies very well, Airtel successfully placed its products even in those households which already had a Jio sim. That means it has started breaking into Jio’s ecosystem.
   
   In 2020, the number of broadband subscribers grew by 95 lakh. While Reliance Jio ended up capturing 17 lakh subscribers, Airtel, on the contrary, ended up capturing 70 lakh subscribers, which means a large number of these people has also been offered DTH service and even an Airtel sim card. Even in the wireless segment, Airtel is catching up very quickly beating Jio regularly by a large margin.
   
   In January 2021, Airtel added almost 59 lakh, wireless subscribers, whereas, Jio, on the other hand, was able to add only 19.5 lakh new wireless subscribers. And that is a growth rate difference of 300%. This is how Airtel is being a trojan horse in the Jio ecosystem and while all eyes are set on Jio, there is a chance that Airtel could actually end up doing something miraculous especially with its combative integration strategies like the Airtel black.

What are the business lessons that we can learn in order to apply to our businesses?

1. In this digital world that we live in, we will more often than not find 2 types of products, that are standalone products and ecosystem products. So, from the business standpoint, we need to see how we can build an ecosystem of our products in order to cater to your customer because this will eventually help you to avoid a major threat competitor and from the investor’s standpoint, you need to keep an eye on these companies and you should try and understand how these ecosystems are being created because that’s will help you pick the winner before the public finds out.

2. As of now, both Airtel and Jio have built only entry-level products and they are both yet to have strong retainers in place. So, always remember while entry-level products give you the customers, only the retainers and upsell can drive exponential revenue growth. So, keep an eye on how both of these companies are building their retainers in order to upsell their products.

3. While Airtel is just confined to telecom, broadband, and DTH, on the contrary, Jio seems to be building a much bigger ecosystem for itself with services like Jio mart, Jio health, JioKrishi, and many more.
   
   

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