REDtone International Bhd is a well-known company since the early days in 1996. It pioneers in discounted calls and due to the rapid change in the telecommunications industry, it had brought down the company. As such, the company made a lot of changes and had a hard time before thriving back in 2009. The discounted calls service are still their core business.

In this industry, the technology plays a big part in affecting the products and services offered by the companies. Hence, REDtone had repositioned its company to accomodate the consumer's demand for broadband and data plans. However the discounted call business is still ongoing and receiving a revenue of 30% from their total profits.

REDtone's Low Price Plan

The continuous success of this discounted call business is due to the price elasticity concept. Making calls is one of the basic thing that everybody does in this new era. However, the cost of making calls is high especially for the business people. However, when the price is lowered, the demand for the telecommunication service for REDtone will have a higher increase, the company will reap revenue from the increase in demand. This means that the percentage of increase in demand for the service by REDtone is large due to the small change in price.

I feel that REDtone could focus on the small, medium and government enterprises or agencies to reap more profit. When they reduce their price by a little it will increase the demand for their products and services. The responsiveness of the consumers to the price change is a key to REDtone's success in discounted call business and also their newly penetrated market, the broadband and data provider. Besides REDtone, all the other companies in this industry are also manipulating the price elasticity theory to generate revenue. Furthermore, the price elasticity will benefit both the company as they will still get profit while the consumers are able to get their products and services at a lower price.

Reference: http://biz.thestar.com.my/news/story.asp?file=/2012/11/17/business/12322072&sec=business

Written by Chen Nan