SmartMoney: Digital Payments Strategy in India

On March 25, 2019, the head of business growth for SmartMoney, owned by the Indian conglomerate Smart Industries Limited, was expected by his company’s management team to propose a strategy for capturing 10 per cent of India’s digital payments market in financial year 2019–20. He knew that the market was vast and fragmented and that he was working with a platform business, where fast mobilization was a key factor. SmartMoney already had market presence, resources, and the required expertise to be competitive on the merchant side of the industry over the long term. Therefore, the immediate and considerable challenge was how to mobilize the consumer side, where the company faced various well-established and aggressive incumbents. To thoroughly asses the market, the head of business growth had to integrate a great deal of available information. He would need to select the right entry strategy and target a consumer segment, offering appropriate incentive schemes to attract business. His challenge was to devise a strategy and build a stable, substantial customer base that would deliver the desired results to sustain long-term growth for both SmartMoney and its parent company.

This case is suitable for graduate- and postgraduate-level courses on marketing management or digital marketing courses that cover platform mobilization, customer segment selection, and customer lifetime value. It can also be used for market entry strategy formulation, where the late entrant builds the business by taking upfront financial losses. The case discusses the use of loss-leader strategies in networked businesses, where a first-mover advantage can be substantial and where monetization strategies can be profitable over the long term. It discusses cross-side network effects, winner-takes-all strategies, platform mobilization techniques using loss-leader strategies for customer acquisition, customer lifetime value, and different mechanisms to monetize a business. After working through the case and assignment questions, students will be able to do the following:<ul><li>Describe how the operation of platform businesses differs from that of other businesses (e.g., due to the specific network effects of a platform operation).</li><li>Diagnose situations that can create winner-takes-all outcomes, and identify the benefits of using loss-leader strategies to acquire customers.</li><li>Outline the ways that monetization strategies can include sources beyond the main business, such as consumer data that can be synthesized to make meaningful marketing inferences.</li><li>Use the customer lifetime value to evaluate business potential and make decisions on marketing investments.</li></ul>

• digital payments
• market entry strategy
• platform mobilization
• tipping of markets
• customer lifetime value