Low cost Play!

Like we had mentioned earlier in this blog sunrise industries like telecom , insurance , airlines , and retail have the same environment in terms of the work , the big low penetration story in the market :) ,the future is bright ,market is big , haven't we heard all this !

But one common factor which is bleeding all of these sectors is the low price play being ventured into by some of the players ( 1 rs travel , lowest prices , lowest premium but highest insurance ), the latest to join in this play is the telecom sector( 1/2paisa per sec ) , so how long would this continue ?

Low price has helped in building in volumes and -Buying- customer market share ,and also opening up the market by getting at the "non users " all this doesn't seem to be sustainable for long --as even in retail- low cost -high volumes -doesn't mean PROFITS , so it would be a careful MIX or category play to compensate the low margins , its here that private labels come to play .

Its also imperative that along with low cost play you could also play the higher end play to boost profits ie mix the premium stuff too , In the low cost play the Opex is always a hot Item , cost is a bad line item .Alternatively play the completely premium game which gives you the necessary margins and profits provided you get the customers in !

In the Mad rush for market expansion which most sunrise sectors players have done effectively which has also led to some Cut throat competition ,who have come in and are venturing to further reduce prices to gain shares , this game is NOT SUSTAINABLE , whichever way you look and however deep your pockets could be , for long you cant be buying customer market shares without a bottom -line .

All sunrise sectors would see consolidation soon among market players , it would be airlines ,telecom , retail in that order , lets wait and see ,who among the sunrise players have an early sunset !