With 283 million subscribers, India has the second-largest mobile user base after China's 500 million. Growing consumerism in India is paving the way for mobile coupons in a market used to bargain-hunting.

Jasper Infotech, the New Delhi-based promoter of MoneySaver, is one of the Indian leaders in sales promotions and coupon delivery. MoneySaver coupons are delivered to consumers in the Greater New Delhi region through print and mobile via the company's proprietary technology.

MoneySaver clients include McDonald's, adidas, Domino's Pizza, Dockers, Reebok, Levi's and Baskin Robbins. Offers include discounts from 15 percent to 20 percent, buy-one-get-one-free and gift vouchers for Rs. 250 ($1 = 50 rupees). The goal is to drive traffic to stores.

Other offerings under the MoneySaver brand include alliance-building, offline and mobile marketing campaigns and loyalty programs.

In this dialogue, MoneySaver cofounder and former Microsoft executive Kunal Bahl explains the benefits of mobile couponing compared with print and online, challenges local to India and the opportunities available as more Indians acquire a taste for impulse shopping.

Mobile's biggest advantage over the wired Internet is market penetration. According to the Indian government's Department of Telecom, India has only 11.8 million dialup and 4.18 million broadband connections for a population of 1.1 billion.

"Couponing essentially serves as a tool which enables bargaining for organized retail," Mr. Bahl said. The interview:

What's the mobile coupon opportunity in India?
India has 283 million mobile phone users, most of whom are very comfortable with using SMS for more than just sending text messages for downloading ringtones, wallpapers, games, et cetera.

By 2012, there will be 39 million households in India in the top two socio-economic demographic groups, defined by the basket of consumed products and services.

Purchases of Indian consumers have always been largely driven by bargain-hunting. With rapid increase in organized retail in India, couponing essentially serves as a tool which enables bargaining for organized retail.

How big is the Indian market for mobile marketing and commerce?
Mobile marketing in India is currently dominated by free-to-customer push SMS companies that have a very large base of subscribers willing to receive regular SMS messages.

There is a lot of activity on the WAP and mobile applications front, though given Internet activity on the mobile is still nascent in India, these spaces will take some more time to gain broad traction.

While it's anyone's guess as to how large the overall mobile marketing and commerce industry in India can grow to, with one of the highest mobile penetration markets in the world, we are definitely playing in big numbers here.

Have online coupons worked in India? What about print?
Online coupons have not taken off in India. As a matter of fact, online coupons even in developed markets have never really exploded, even though there are many players.

There are two reasons for online coupons not taking off in India.

First, Internet penetration continues to be fairly low. More importantly, the usability of an online coupon is highly frictional, as it requires significant pre-planning and a printer, which many people don't have at their homes.

We are seeing print coupons gain rapid traction in India, though the industry is nowhere close to its counterpart in developed markets, especially the U.S.

Domino's, for instance, has been doing print coupons in India for nearly 10 years now.

Our belief is that while print couponing will grow in India marketers will be closely watching redemption rates and hence cost effectiveness of the print coupons versus mobile coupons becomes important.

India is on the path to witnessing a leapfrog effect straight from print coupons to mobile coupons.

Online couponing will gain traction with time as Internet penetration grows, though this channel will primarily be limited to distributing coupons for online portals, as there can be instant gratification in that case.

Does this mean that India's mobile couponing technology is far more advanced than other markets worldwide?
The mobile coupon technology doesn't require great advancement to be effective.

Usage simplicity is the most critical aspect of any kind of promotion, mobile coupons being a subset of the same.

[Take] the ability to understand simple aspects about usability, for instance. Consumers will be making a lot of spelling mistakes when requesting coupons. Having a catch-all algorithm built into the system helps to ensure a seamless experience in such cases.

There are many other consumer-insight-centric parameters that one needs to account for in such a system, so that anyone can use it, anytime and anywhere.

What's MoneySaver's model? How do your mobile coupons work?
We sell prepaid subscription cards -- similar to mobile credit top-ups -- for one month/three months/six months validity, which give a consumer access to our mobile coupon platform for the validity of the subscription.

The consumer buys a prepaid card, sends the registration code by SMS and starts using the service instantly.

Once the customer is in front of an adidas store that accepts MoneySaver coupons, they will see a "We Accept MoneySaver" sticker. All the customer needs to do is to text adidas to our number and they will instantly receive the adidas coupon with the discount details and a unique coupon code.

This SMS is shown to the cashier, who administers the discount in his point-of-sale system.

We mail a monthly catalog to every subscriber which details all the offers available to them with their MoneySaver subscription.

Our subscribers can also visit www.moneysaver.in to search for their desired offers. This touch-and-feel aspect to the service is very important.

The consumers pay us for the subscription -- $2 per month -- and we charge retailers for our services on a per-contract basis, which range from six to 12 months.

Just to put the numbers in perspective, mobile phone average revenue per user in India is around $8 per month. [Editor's note: Airtel, India's No. 1 wireless carrier, claims ARPU of $7.1, while it is as low as $5.50 for Idea Cellular. Thus, the blended ARPU may be lower than Mr. Bahl's estimate.]

How does your technology work? What about the others?
Once a customer sends us the registration code by SMS, our system instantly creates an account for them.

After this, every time a customer sends us a coupon request by SMS, a Web query is fired to our system, which matches the request to the available coupons and replies back with the desired response -- mobile coupon, coupon already used, et cetera.

Our service works on 100 percent of the handsets and 100 percent of the operators in India.

How many companies offer mobile coupons in India?
We are a first-mover in the mobile coupon space in India, and there are no competitors at our scale.

Some retail companies have tried mobile coupons as a custom solution for a brief promotion campaign. However, these campaigns usually involve sending a broad SMS push with a static promotion code, hence there isn't much control or trackability.

Any examples of successful mobile coupon efforts?
Again, in India, our company started early and has gained significant traction in terms of number of merchants as well as customers.

There are mobile coupon companies in other parts of the world. [South Korea's] SK Telecom has a mobile couponing initiative which has been doing quite well. Then, there is Cellfire in the U.S.

We are witnessing a couple dozen companies spring up in the mobile couponing space across various markets, and some of them will certainly become larger as time progresses, and spends get moved from print-based coupons to mobile coupons.

Which merchants or brands in your network have found the best market reception?
Food is a clear winner. Our food and beverage merchant partners such as [ice cream maker] Baskin Robbins witness thousands of redemptions a month.

For frequent, low-ticket purchases, we see higher number of redemptions. However, if we were to aggregate the savings, apparel does quite well, given savings per transaction are very significant.

What's the typical redemption rate? How does it compare with print and online coupons?
For food, we see a redemption rate of 8 to 10 percent. For apparel, we see a redemption rate of 4 to 5 percent. Lots of moving parts in the apparel business, so wider variation across merchants.

Offers for online portals -- travel, movie tickets, photo printing -- witness redemption rates that can go up to 20 percent as well, depending on frequency of purchases, i.e. movie tickets will be much higher than, say, travel.

What's next for your company?
We are focused on rapidly expanding the subscription base.

We constantly add more merchants to our network. We currently have 250-plus merchant partners, ranging from small businesses to large national retailers.

What can other markets learn from India?
I had worked in emerging markets at Microsoft in the past, launching technology incubations, and the big learning for me was that while it is easy to club the macro trends in the BRICM [Brazil, Russia, India, China and Mexico] countries, there are fundamental differences in customers and industry environments that need to be taken into account.

One big, and seemingly obvious, learning for us was that riding on an existing platform such as SMS is a much, much better idea than investing on a platform such as WAP, mobile apps, which are still nascent.

If a lot of people aren't redeeming the coupons, the retailers will become wary of continuing the partnership.

What can India learn from other markets, including the United States and Britain?
Our big learnings from other markets can be summarized in two parts.

First, choice of platform as SMS, as we had seen other models that were facing some challenges in adoption, even though they were providing a richer user experience through WAP sites or applications.

Second, given couponing is a highly evolved industry in developed markets, we developed a lot of expertise in promotion-definition based on the merchant's product or service. This helps in enhancing the ROI for the merchant.

For instance, combining one aggressive customer acquisition offer and one milder come-back-again offer works extremely well to drive loyalty in customers, and get them to come back to the merchant even when they have no coupons left.

What's the challenge that mobile coupons help address for marketers and retailers in India?
Currently, marketers have broadly two options for promotions. Above-the-line media such as newspaper, TV, radio ads. Also, in-store signage.

While these options can provide reach, they don't provide any trackability or control to the marketer.

Most importantly, since the targeting is low, the marketer is paying to deliver impressions which are not going to provide ROI.

Our service is more of a post-paid advertisement for marketers, wherein they pass on the significant monetary benefit only to the customer who is making a purchase.

Finally, with rising consumerism in India, most people young and old carry cash and credit cards with them, and walking around a mall, if they like something, they just buy it.

This is very different from traditional [Indian] purchase behavior, where nearly everything was a planned purchase.

Hence, mobile coupons enable the convenience that goes hand-in-glove with the rapid rise in impulse purchases.