Freedom 251 Controversy: Smartphone at a Breakthrough Price

Details

Case Code : CLMM127
Publication date : 2017
Subject : Marketing Management
Industry : Consumer electronics
Organization :Ringing Bells
Length : 5 pages
Teaching Note : Available

Pricing

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Abstract:

Ringing Bells, a little known mobile phone company in India, launched its flagship product, ‘Freedom 251’, an Android mobile phone, at a breakthrough price of Rs 251 (less than US$4). The company claimed that it could offer this feature rich phone at such a low price as it had a unique business model that reduced costs at various levels. The company stated that it aimed to support the ‘Digital India’ vision of the Government of India through the launch of the smartphone. But the device soon came under a cloud of controversies with widespread skepticism raised about its price and sustainability. The company soon came became the subject of scrutiny of the regulators, as the tech community questioned its unrealistic pricing and accusing it of perpetrating a fraud. However, the company vowed to keep its promise of continuing with the project and delivering the handsets at the promised prices. Whether it could keep its word remained to be seen.

Issues:

» Understand the issues and challenges in pricing.
» Understand how Ringing Bells could price its smartphone so incredibly low.
» Discuss and debate Ringing Bells’ strategy.
» Understand the challenges faced by the company going forward and explore the ways in which it can overcome the challenges.

Introduction

On February 17, 2016, Ringing Bells Pvt. Ltd. (Ringing Bells), a Noida-based start-up, launched India’s most affordable smartphone dubbed as ‘Freedom 251’ at a price of Rs.251 (less than US$4). With its promising price, the smartphone had the potential to disrupt India’s smartphone market. However, after the highly publicized launch of the smartphone, the cheapest in the world, the company was caught up in a series of controversies. While the introduction of the device could revolutionize the smartphone scenario in India, analysts pointed out that its unsustainable price, ambiguity of design information in newspapers and on the website, and its weak communication with the media fuelled suspicion over the availability of the device in the market. Industry players questioned the viability of ‘Freedom 251’ at such a cheap price, its uncanny iPhone-like design, and its website glitches. Despite severe criticism and scrutiny from several quarters, Ringing Bells claimed that it would never close down the project and would keep its promise of delivering the handsets to customers within the stipulated time period...

Key words:
Pricing; Pricing strategies; Managerial Economics; Digital inclusion; Ethics; Freedom 251; Smartphone">

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