It has successfully generated innovative technologies that has revolutionised the telecom user space in India. Micromax is on a mission to successfully overcome the technological barriers and constantly engender “life enhancing solutions”. Micromax has a lot of innovations for the Indian Market to its credit on their versatile product portfolio. It was the first to introduce Handsets with 30 days battery backup, with Dual SIM / Dual Standby, Handsets Switching Networks (GSM – CDMA) using gravity sensors, Qwerty Keypad Handsets, Operator Branded 3G Handsets and OMH CDMA Handsets among others. 1] To develop path-breaking technologies and efficient processes that incubate newer markets, enliven customer aspirations and continue to make Micromax a trusted market leader amongst people. [pic] Marketing Objective Volume and sales The firm aims to sustainably increase the market share by capturing the growing tele-density of India. The sales figures of the previous years’ show that with continuous product innovation and introduction of these new products will help in not only maintaining the revenue and market share but further penetrating the Indian urban and rural markets.
The current market share of Micromax by revenue has been 4. 1% as of FY2009-2010.  The company has a market share of around 10% by volume. Time frame We are looking for the rural market penetration in short term (i. e. 1 to 2 years) and then to diversify into semi-urban and urban market in long term (i. e. 2 to 3 years) Customer retention Rural: To focus on customer retention by focussing on the technology that caters to the needs of the masses and providing decent post sale services and by delivering the values as promised by the brand. Urban: The primary sales of Micromax thus far have been from the rural segment.
Hence the firm aims to increase the market share over time by introducing and actively marketing innovative and new products. These are targeted at upwardly mobile especially the feature conscious youth in metros and the price conscious consumers in the 2nd and 3rd tier cities. To compete with the larger market players with wide spread service centres, Micromax also has to improve its after sales services to better place the brand in the eyes of the incoming and current customers. Intermediary retention Growth is only possible through a well established distributor network.
The company has been able to penetrate the market due to its strong distributorship network. We aim to strengthen our position in the market by maintaining the existing relationship with the distributors & create new channel partners. Hence the company must focus on intermediary retention. Situation Analysis [pic]  [pic] Product a. Micromax, a leading Indian telecom company, is one of the fastest growing mobile handset companies. b. With its innovative and cost effective solutions, the company has many products that targets “bottom of the pyramid”. . The company draws benefits from the price sensitivity of the market, by providing the same features at lower price. d. Along with the “bottom of the pyramid approach”, company also has “high innovation quotient”, which helps it to differentiate its product in the market. [pic][pic] Competitors The mobile handset market is a fiercely competitive market with firmly entrenched players like Nokia, Samsung, LG and Motorola. All these companies have global footprint and in house product development of product and huge marketing budgets.
Besides the Big 4, it also faces competition from other local handset manufacturers such as Karbonn etc which follow the similar business model as followed by Micromax. [pic] [pic] Category Analysis Growth The graph shows that mobile handset industry is still in the growing phase (as mobile handset industry mirrors telecom industry). [pic] Mobile industry in India can be categorised in to 4 phases: 1. Phase 1 (1998 – 2003): With new tariff orders issued and TRAI being created in 1998, the actual growth started in this phase. 2. Phase 2 (2003 – 2005): Sustained increase in tele-density is seen during this phase.
Interestingly, the growth rate of 2% is greater than total growth rate of 1. 92% of previous 50 years. 3. Phase 3 (2003 – 2007): According to TRAI data, with growth rate of more than 4. 5%, the tele-density increased to 14%. 4. Phase 4 (2007 – till date): This period is seeing explosive growth, as shown by the tele-density data of 50%.  The number of telephone subscribers in India increased to 653. 92 Million at the end of May-2010 from 638. 05 Million in April-2010, thereby registering a growth rate of 2. 49%. With this, the overall Tele-density in India reaches 55. 38 %. 
As the fastest growing telecommunications industry in the world, it is projected that India will have 1. 159 billion mobile subscribers by 2013.  Stage in Product Life Cycle There is an enormous business potential for the company in this sector because of : a. Low Tele-density in the country currently pegged at 55%, providing huge upside for the company. b. Conducive business and political environment along with favourable regulatory regime makes India as one of the biggest and most attractive market. c. Recently auctioned 3G mobile technology provides other avenues such as 3G phones for the company to expand.
The above stated factors indicate that the industry is still in growth phase. [pic] |Stage |Introduction |Growth |Maturity |Decline | |Category size |Small |Moderate |Large |Moderate | |Category growth |Low |High |Low |Negative | |Category attractiveness|Low |High |Low/high |Low | As the product stays in the market, with time the size of category increases.
Also the consumer gets used to the product over time and after some time gets bored of it i. e. the product fails to attract the consumer as during the introduction stage. Hence as demand starts saturating the growth of the market starts stabilizing or decreasing. The product lifecycle shows four stages: i) Introduction stage: When the product is introduced in the market, the market visibility isn’t much; hence since it is a new product, demand for the product has to be created. Since the competition in the mobile handset market is high, with many players in the market, it may take a while before the sales start rising.
Production Costs are high at the start, with initial setup costs etc. It is required that we attract the customers by weaning them away from the existing brands of mobile phones using differentiation as also a nominally priced model. Due to Undeveloped distribution channels & losing of intermediaries to competitors costs may fluctuate, with high cost required for setting up the channels, required for attracting the distributers with discounts, credit options etc. ii) Growth stage: As the awareness of the product increases the sales start rising.
Also due to economies of scale, production and some operating costs reduce (e. g. due to building of distribution channels). Also we start finding more destinations for cheaper production where it is possible to find economically viable locations (e. g. SEZ, low labour cost countries etc). As Competition increases, pricing gets more & more competitive. iii) Maturity stage: Sales volume starts reaching its limits due to market saturation. Demand starts decreasing as competitors start introducing variations in the product and due to this average market prices start dropping.
Brand differentiation & feature diversification is required to maintain market share. It is required to extend the maturity period of the product, this can be done by increasing the advertising, with more aggressive advertising strategies it is possible to take over the competitor market share and increase sales It is the best time to relaunch the product. We can also launch the product in a new market like new countries where the consumer reaction to the product can be predicted (e. g. Launch in Sri Lanka); this offsets the investment on product development.
According to the Ansoff’s matrix, we can take two routes for increasing market share 1) Market penetration 2) Market development | |Current products |New products | |Current market |Market penetration |Product development | |New market |Market development |Diversification | | | | | |Ansoff’s Matrix | v) Decline stage Sales volume starts declining after a period of time when it is no longer possible to introduce strategies to increase sales Profit can be maintained only by production efficiency or by handling distribution channels well. Seasonality and sales cyclicity: Seasonality in sales doesn’t play much of a role in mobile market, though minor upside is seen during festivals such as Diwali and Durga Puja, where consumers tend to buy new things for themselves as a good omen. Profits Micromax posted revenues of Rs 1,600 crore and a net profit of Rs 150 crore in 2009-10. 6] Category Factors a. Threat of new Entrants • A profitable industry attracts more competitors looking to achieve profits; cell phone industry is one of them. With the market expected to grow at around 19 percent in volume, it is expected that the market will see more and more new entrants. • There are some barriers to entering the industry: i. One of the biggest barriers is the presence of a huge competitor (Nokia). ii. Initial capital requirement is large, due to requirements of R&D, distributor channel building, advertising etc. iii.
A very important requirement when in the cell phone industry is to have a good customer service. iv. Numerous retail outlets are required to increase availability to customers also to increase visibility in the highly competitive market v. In a competitive market like cell phones a major facet of selling is building a good distribution channel. A strong network with loyal retailers, distributors, whole-sellers. This requires an investment of promotion strategies, commissions, relationship building vi. Economies of scale play an important role in reducing the cost of production.
This proves as a setback to the new entrants, as the cost of production eats up their profits as Compared to bigger and older players where the risk of investment is lower. • However it is easier to pick up technology in the market hence the entry barriers on that front is comparatively lower. • Micromax has differentiated its product on the basis of features as well as better than competitor b. Bargaining power of buyers • Bargaining power of buyers is comparatively more because of the number of players in the cell phone market and these are keeping on adding with local Indian players (like Virgin, Max, Karbonn, Lemon) entering the market. However cell phone market in India is characterised by a major player Nokia in the market hogging up more than half the market share, hence limiting the power of buyers however the market leader calls the shots in deciding the average market price. • Customers are feature-conscious; they are aware of the products available in the market, make informed decisions after research. This gives them more power to affect a price change or feature improvement.
• The switching cost for cell phones is low because of the large number of options available in the market. Micromax has adopted product differentiation as the main strategy for attracting customers. This provides leverage to Micromax as buyers would not bargain on price when provided features that other competitors don’t. • Brand plays a major role which may keep buyer from switching; hence investing on brand management will help in building a positive brand image in the market. • Since the market is still growing and hasn’t saturated or working at over capacity, the bargaining power of buyers still remains relatively low. c. Bargaining power of suppliers • Due to the growth in cell phone manufacturers, Cell phone industry as seen a large increase in the number of suppliers for different parts required. • Suppliers may be classified as sources for critical and non-critical parts. The non-critical parts may be procured from varied suppliers. Hence it doesn’t stand as a great risk in the supply chain management. • However critical parts are outsourced to only specific suppliers. The firm closely works with these suppliers to introduce new designs, or for improvement in designs or change in material. There is a lot of transfer of knowledge; hence they play an important part in the supply chain management.
Hence switching cost for the supplier are high. • There is also a Threat of forward integration of suppliers, when designs and technologies are shared and outsourced, it leads to knowledge transfer using which the suppliers may start their own business. d. Pressures from substitutes • More the substitutes available in market, lower margins are earned. • Low end local Indian competitors-coming up with competitively priced phones • High end competitors Nokia, Samsung, Motorola can invest more in research, development, promotions • Micromax is differentiating its product on the basis of: design, quality, service.
This leverages the product in the market, as it becomes more difficult to substitute the product with a competitor product. e. Category capacity • Around 117 million mobile phones were sold in the India during 2009-10. • The mobile handset market grew 4. 2 per cent by revenue during FY 2009-10 compared to 7. 9 per cent in 2008-09. • Sale of mobile handsets in India should rise by 18. 5% this year on increasing telecoms penetration in Asia’s third-largest economy, research firm Gartner said. • Mobile handset sales will rise to 138. 6 million units in 2010 and 206 million by 2014, up from 117 million last year. 7] • Huge market and scope to grow, and Micromax has a scope for increasing market share, profitability with its product differentiation. • Since market is constantly growing and hasn’t been completely saturated by players price bargaining power of buyers is relatively low. f. Current rivalry Competitors:  |Competitors |Market share | |Nokia |52. 2 | |Samsung |17. 4 | |LG |5. | |Others (Karbonn, Lemon, Max) |14 | • The market has 4-5 firms (Nokia, Samsung, Motorola etc) which have been in the industry for long and are well balanced with respect to investment capability. This is a cause for increase in rivalry among players. • Not many small players, but there are huge investments on aggressive marketing and promotional offers. • Rivalry is being seen mainly in pricing and innovations (features). • Exit barriers for entrants are high, as size of firm increases it becomes more difficult to exit due to amount of investment.
It has resulted in higher competitiveness as all the players are fighting to stay in the market. The market is not yet saturated so even with aggressive competition there’s some share for everyone. Environmental factors a. Technological factors • CDMA Micromax has realized the dearth of CDMA phones based on the open-market handset (OMH) in Indian market. The OMH-compliant Micromax C350 was launches for CDMA subscribers in India. The phone can be used for any service provider by using the respective SIM card. • 3G The company has been quick in realizing the market potential for 3G phones.
Micromax has tied up with state run MTNL to provide MTNL-Micromax 3G HSPA Mobile phone H 360, at cost much lesser than available in the market. • Smart Phones India is a price sensitive market and people aspire to have feature rich products at low price. Micromax made it viable and thus people from Tier II ; Tier III cities grabbed Micromax phones as it was laden with features but not heavy on pocket. Its QWERTY phones come below Rs. 5000. • Innovations The company has been at the forefront of the innovation since its inception in the mobile handset market.
The biggest USP of the company has been the ability to provide high end technology to the customers at affordable prices. ? Indian telecom market is one the cheapest in the world. Many Indian consumers are constantly juggling with multiple SIM cards to extract the maximum out of the various tariffs plans. The company has leveraged the opportunity in this area and has been a pioneer in dual SIM handset market. Till recently, the company had 22 dual SIM handsets out of 26 models offered by the company. ? Handsets with 30 days battery backup (Micromax X1i) which has revolutionized the rural sector. There’s a mosquito-repellent phone, which is designed to emit frequencies to repel mosquitoes, a phone that doubles up as a computer mouse, and a waterproof one.  ? Micromax recently a motion sensor handset G4 Gamolution at an astonishing price of Rs 5650. b. Political Factors The government of India supports ; follows a proactive approach for the mobile handset industry. The policies have been formulated to make India a favorable destination for handset manufacturing industry. The main highlights are :- • Govt. of India banned cheap Chinese mobile without IMEI no. because of security concerns.
This has created a void in the industry, which the big brands are unable to fulfill due to their costly products. Therefore the companies like Micromax which has a cost leverage have exploited the opportunity to capture a substantial market segment. • Industrial Licensing has been virtually abolished • Large Industries (investment more than Rs. 10 crores) are only required to file information in the prescribed Industrial Entrepreneurs’ Memorandum (IEM) Government of India and obtain an acknowledgement. Immediately after the commencement of commercial production, Part B of the IEM has to be filed.
No further approval is required. • Foreign Direct Investment up to 100% is allowed under the automatic route from foreign/NRI investor without prior approval. • Parts, components and accessories of mobile handsets including cellular phones are exempted from basic customs duty and excise duty/CVD. • Full exemption from 4% special CVD on parts for manufacture of mobile phones and accessories has been reintroduced for one year i. e. up to 6. 7. 2010. As a very small percentage of mobile phones sold in India are manufactured in India, the government realizes the growth potential of handset manufacturing industry in India.
That is way, the government has been formulating favorable industrial and export-import policies. This opportunity can be exploited by Indian manufactures like Micromax to reduce their dependence on imported mobiles. The FDI policy also, allows the Indian firms to attract a substantial investment. In Jan’10 the firm sold around 20% stake to Private equity firm TA Associates for $45 m, thus valuing the firm at about $200 m. c. Economical Factors • Market Share As per the IDC reports, Micromax has a market share of about 4. 1% by revenue. The form enjoys a healthy 10% market share by volumes and expects to reach the second spot soon.
The company had a revenues of around 1500 crores last year and plans to raise it around 3000 crores in the current year. • Funds The firm recently sold 20% of stake to TA associates for $45 m. Soon it plans to bring an IPO in the market to fund its expansion plan. Micromax is looking for a valuation of around RS 3000-3500 crores.  The company plans to gather around Rs 600-800 crores from the IPO. d. Social Factors • As a best Interactive medium The mobile phone has come up as interactive medium which can connects people anytime at any place.
Therefore, the ready acceptance of the mobile by the society will further fuel the consumption in the future. • Local Advantage Any firm operating in a home market enjoys a certain bias from the consumers due to its made in the country batch. This factor can help Micromax to touch the emotional chord of the consumer albeit if they continue to provide value for money products. • Mindset of the consumer A society which lays a lot emphasis on the value for money of the product, the feature packed low priced products can generate a lot of appetite in the consumers. e. Legal Factors • Some laws regulate the businesses e. g.
The Sale of Goods Act 1974 stating all products must be fit for the purpose they are intended. A mobile phone must therefore work. Certain laws are created to regulate particular industries. Examples include the ban on using holding a phone while driving introduced in 2003. Company & Competitor Analysis 1. Product Feature Mix • Micromax entered the mobile phone market 2008, confining it to rural and semi rural areas. • Initially, Micromax specialised in entry level handset, priced it between Rs 1400 to Rs 2400. • The embedded software part of Micromax phones is designed by the in-house research and development team.
The on-board chips are supplies by MediaTek Inc. , Qualcomm Inc.  • Manufacturing is outsourced to about 11 factories in Taiwan, South Korea and China. • Hence as compared to Samsung and Nokia, where emphasis is from “from scratch” development of product, from hardware for the phone to software and testing of the phone being done in-house, Micromax imports hardware from Taiwan and South Korea and hence saves on development cost and time. • As a result, as seen from the product feature matrix, Micromax is able to provide to provide phones with a lot more features at comparable prices to the competitors Key Features |Samsung E1081[pic] |Nokia 1618[pic] |Micromax X215[pic] | |Price |1350 |1400 |1400 | |Bluetooth |No |No |Yes | |Music |MP3 ring tones only |No |Mp3/MP4 player | |FM radio |Yes Yes |Yes | |GPRS |No |No |Yes | |Battery Life |Up to 6 hrs |Upto 4 hrs |Up to 10 hrs | |Video |No |No |Yes | |Phone Book capacity |1000 |500 |1000 | |Memory |No |No |Up to 2GB | |MMS |No |No |Yes | |WAP |No |No |Yes | 2. Objective & Strategy Market Segmentation
The mobile market can be broadly segmented into rural, sub rural and urban market. 1. Urban market: • Mature market with high brand awareness among the customer. • High Entry Barriers as there are lot of existing players in the market like Nokia and Samsung. • Lot of marketing muscle is required to compete in such a market. • Innovation driven market hence need to be innovative, i. e. need to keep up with the latest innovation such as Near Field Communication Devices (Nokia’s Innovation). 2. Rural and Sub Rural market: • Not as mature as Urban markets • Low entry barriers as there are not many big players in these markets. • Low brand awareness among the customer, hence easier to penetrate these markets.
Market Targeting: [pic] • Rural customers are the Micromax’s first target market since there was not much competition in this market. • Micromax was also able to spot the supply demand gap in this market, and hence launched its innovative product like mobile with marathon 30 day battery life at reasonable prices. Market Differentiation and Positioning: • Micromax stared to differentiate itself by offering dual SIM card phones at dirt cheap prices to attract the ultra cost conscious buyers, who use one SIM for incoming calls and swap prepaid SIMs to take advantage of cheapest call rates. [pic] QWERTY Q3 Company also launched first sub –Rs 5000 QWERTY keypad phone to attract the youth. • Recently company also launched a motion sensitive video game controller phone. • Micromax also offers lucrative revenue sharing agreement to its dealers, who get better margins than what they get for big players. • To sum it all, as one of the marketing executive of the company says : • “We’re trying to make a new segment in the industry — where technology comes cheap”.  Competitors Analysis The two major competitors for Micromax in mobile handset market are Nokia and Samsung. Nokia’s Strategy [pic] In the recent years, Nokia has focussed largely on rural markets.
The introduction of a “made-for-India” Nokia-1100 was the first in the string of incentivised marketing strategies that Nokia has been making. To understand the Indian rural markets, one needs to look at basic effectiveness and costing. With this purpose in mind, Nokia can be seen to have a clear divide in its product bouquet. There is a low cost, no frills line of phones and then, there are the high range, sophisticated models with specific features.  Samsung’s Strategy [pic] As far as Samsung is concerned, it relies on product innovation, superior product quality backed by the reassurance of Samsung service and an enhanced channel penetration to drive our growth.
Both these companies took a diagonally opposite strategy to that of Micromax, i. e. they entered the market at the premium segment, and are now trying to go down the pyramid with their existing set channel partners. So recently, a spate of products to cater to the “bottom of the pyramid” has been launched by both these companies, such as Samsung’s Guru. [pic] 3. Marketing Mix Product a. Variety: Micromax offers its customer a range of handsets with little variation in features. It was the first fir, to offer a QWERTY keypad at the under 5000bracket. Aimed at the rural, semi urban and middle class people, Micromax was also the pioneer in the Indian market for dual SIM phones.
Nokia follows a series pattern that divides its 114 models available in India (including accessories). In every series of Nokia there are a large number of handsets available, thus a large variety in terms of feature set. The entire concept of a series in Nokia is to distinguish a certain set from the other. There is the entry level segment like the 1200, 1208, 1100, 1110, 1110i, 1112 etc and then there is the touch screen segment of 6600 etc. [pic] Samsung has recently introduced a whole new set of touch screen mobile phones spread over various price ranges. The bouquet on offer consists of 84 products that also include its original accessories. Unlike Nokia, Samsung does offer dual SIM mobile phones. b. Quality:
Micromax follows a dual quality check intrinsically due to the manufacturing procedure followed. The phones, manufactured in Taiwan and china, are imported in India and then the software is loaded. This provides for a sound quality control. Each Nokia handset undergoes stringent quality checks before it hits the markets. Its battery production, because outsourced, had created some problems in the recent past. But being an internationally recognised and respected brand, Nokia does not allow for errors in its products. The entire batch of faulty phones was recalled and replaced. Samsung mobile phones also deliver world class quality in its products.
Its design facilities and manufacturing units follow the same quality control as is followed for the other Samsung products. c. Design: Micromax mobiles does not offer its users various design options as far as shape is concerned. Their first slider phone, Q55 was recently launched and is also one of their most stylish products. The phones are available only in the flat design though with keypad variations. Nokia handsets are of various design such as Flip phones, Flat phones, Sliders phones and even phones a with rotating camera etc. In view of growing markets, Nokia also has a range of touch screen and smart phones. Samsung’s offerings in terms of design features are very close to those of Nokia but differ in their sporty looks.
Nokia phones are classy and have a formal look. Samsung, in its aim to capture the urban youth market, has a range of touch screen, QWERTY and sporty phones. d. Features: Micromax mobiles come with a closed set of features. The biggest advantage of Micromax has been its battery life. This was the differentiating factor for Micromax and still is their unique selling proposition (USP). Nokia has kept the feature set as a differentiating factor between segments they offer. Each series of a Nokia phone has a varying feature set though a few always remain constant. •Nokia 2000 series –Basic series •Nokia 3000 series –Expression series •Nokia 5000 series –Active series Nokia 6000 series –Classic Business series •Nokia 7000 series –Fashion and Experimental series •Nokia 8000 series – Premium series •Nokia 9000 series –Communicator Samsung also offers very similar product features and utilities. Most of the new age phones introduced also offers additional applications, popularly known as apps. Samsung is also the leader in dual SIM phones in India. e. Brand: Each phone is individually branded for all the brands. It is the public perception within the markets that delivers returns. With the cool quotient still associated with foreign brands like Nokia and Samsung, players like Micromax have to work harder to achieve acceptability. f. Packaging:
Given the target markets and low cost that drive the sales of Micromax, packaging is kept simple and utilitarian. There are no fancy boxes and innovative packaging that is involved with Micromax. Almost all boxes are red and black-the colours of Micromax. Nokia is very particular about packaging. Each phone, depending on the cost and target audience has a very individualistic look and adds to the appeal of the product. Set detail information is always given along with its own booklet with information about its features. Samsung too is known for its boxes. Though not as innovative and stylish as Nokia and Motorola, Samsung delivers its phones in funky and well designed boxes. Price
Micromax: Price being the biggest differentiating factor with Micromax, its handsets start at as low as Rs900 and go up to Rs 6000. Nokia is price targeting both the ends-higher and lower segments. Nokia also offer cash allowances and has a recently introduced EMI scheme for users. The price range is from Rs1500 to Rs 42700. Samsung has a pricing strategy starting at the lower end at Rs 1800 and about and going up to Rs 25000. Most of the business derived is from the middle segment of under and about 10k. Promotion a. Advertising: Through various mediums of visual advertising like print and tv. Huge billboards of latest and upcoming models are easily seen.
Pamphlets and banners in localities further add to their presence. b. Sponsorship: Micromax has recently undertaken a lot of sponsorship in international events like Asia cup in cricket and IIFA in cinema awards, to increase its recall value and brand perception. Nokia did not associate with any such external sponsorship at such a large level till recently. It sponsors smaller, people oriented events like concerts. But in view of rising competition, it does sponsor Kolkata Knight Riders because of its owner and Nokia brand ambassador Shahrukh khan. Samsung mobile phone is the official sponsor the Chelsea FC. It believes in sponsorship as an effective tool of promotion.
In India too it is visible in sponsorship activities. c. Brand ambassador: Micromax uses Akshay Kumar and Twinkle Khanna for its two high end products. [pic] For specific series, Nokia has resorted to brand ambassadors like Priyanka Chopra and Shahrukh khan. [pic] Samsung uses Aamir Khan as a brand d. Personal selling: Nokia provides its distributors and retailers training in the product features to better approach the customer Place Micromax has leveraged its presence in the rural markets and its unparalleled distributor network to create an enviable network of dealers. Micromax is thus easily available. Nokia is easily and widely available all across the country.
There is some variation in the series available according to the location of the store but otherwise almost all phones are available everywhere. [pic]Nokia priority dealers are exclusive Nokia stores and are prominent across the biggest markets. Placing and advertising of the product vis-a-vis competitors is very visible in the case of Nokia. With each new product getting a new marketing strategy and designer look, the firm invests a lot into it. Samsung has put in a lot of effort to create a customer centric approach to mobile phones. It is available throughout the country. 4. Value chain Manufacturer ;gt; Distributer ;gt; Whole seller ;gt; Retailer;gt; Customer Micromax deals directly with distributors.
It does not allow for credit sales and thus creates a pressure on the retailer to sell the product as soon as possible. Unlike other players, Micromax delivers products on a regular basis and thus does not create an unsold inventory for its retailers. Nokia has recently introduced an EMI scheme that allows for delayed payments and is gaining momentum. The goods are sold on credit and the distributor network has sustained even the toughest times. Samsung, being a consumer electronics firm, had a strong field presence with regards to direct ground sales and a sound distributor channel. So taking off from there, Samsung has kept its distributors and retailers happy by regular promotions and new products.
The short shelf life is also countered by the flow of goods in a regular time interval. 5. Differential Advantages a. Ability to design new products Micromax Micromax has designed a slew of innovative products. Some of the firsts it has to its credit are Handsets with 30 days battery backup, Handsets with Dual SIM / Dual Standby, Handsets Switching Networks (GSM – CDMA) using gravity sensors, Aspirational Qwerty Keypad Handsets, Operator Branded 3G Handsets, OMH CDMA Handsets. Initially the company was targeting the lower market segment hence the products with feature like longer battery life and dual SIM. Now it is focussing on the higher market segment and carving a niche for itself in the metro and sub metro areas.
Hence products like Bling , Q7 and Gamolution. [pic][pic][pic] Q7 Gamolution Bling Nokia Nokia is the world leader in mobility, driving the transformation and growth of the converging internet and communication industries. It is the market leader in almost all the segments. Nokia constantly updates its product catalogue to fend of competition from its rival firms. Nokia has announced to introduce four new mobile phones in the lower segment of Indian market. The move is seen as a response of the growing market share of homemade mobile companies like Micromax, karbonn mobile etc.
Earlier it has Nokia 1100 and Nokia 1110 which price ranges in between Rs. 1000 to Rs. 2000. Now it is going to introduce 1800, Nokia 1616, Nokia 2690 and Nokia 1280. Also it has enabled push email services on the lower end segment. In similar lines Nokia has launched dual-sim phones C1 and C2 responding to the spiralling demand by the operator juggling customers. The Finnish giant faces a tough competition in the smart phone segment. It has launched products like N8, X5 and X6. SAMSUNG Samsung seems to focus mainly on the high end segments. It brings in the use of the cutting edge technology to create product differentiation. The products are more futuristic in outlook.
They have introduced ‘bada’ (ocean in Korean), a new mobile platform, that will be the key driver for their global Smartphone strategy. The next generation touch screen phones — Wave and Galaxy S — come with latest applications and features, priced at Rs. 19,100 and Rs. 31,500 respectively. The company claimed that both Smartphones come with world’s first Super AMOLED display, excellent screen experience on a Smartphone, besides 1GHz powerful processor for best graphic performance. b. Ability to Finance Micromax The company was set up in 1990s by four friends from engineering college— Vikas Jain, Rahul Sharma, Rajesh Agarwal and Sumeet Kumar.
The success of Micromax prompted US private equity group TA Associates to buy “less than 20%” of the firm for around $45 million (Rs210 crore today) in December, valuing it above $225 million and indicating confidence in its growth potential. Jain estimated that the firm will close the fiscal with sales at around Rs1,500 crore. The company is also eyeing at an IPO and talks regarding the same are going on. Nokia Its a well established company with diversified product portfolio. The operating profit of the company as quoted earlier speaks volumes for its financial stability. During the past few years Nokia has been actively acquiring companies with interesting new technologies and competencies, including also investments in minority positions.
All of these acquisitions and investments were targeted to enhance Nokia’s ability to help create the Mobile World. Some of these include Novarra Inc, Meta Carta Inc. Also Nokia has been divesting businesses which have not a critical component to its vision of The Mobile World. This strategy has enabled Nokia to focus on shareholder value by concentrating on the core competencies and business areas where they see the most value added and the best growth opportunities. Thus the firm seems to possess a mature financial culture Samsung Samsung mobile is part of The Samsung Group a multinational conglomerate corporation headquartered in Samsung Town, Seoul, South Korea. It is South Korea’s and the world’s largest conglomerate by revenue.
Samsung Group accounts for more than 20% of South Korea’s total exports and in many domestic industries, Samsung Group is the sole monopoly dominating a single market, its revenue as large as some countries’ total GDP. In 2006, Samsung Group would have been the 35th largest economy in the world if ranked, larger than that of Argentina. Hence it can be inferred that the company enjoys strong monetary support by its parent organisation.. c. Ability to Market Micromax Distribution One of the highlight of their distribution strategy was that Micromax managed to make these dealers pay in advance by offering them more margins. Marketers will vouch that the most difficult part in managing distribution is the payment collection part. According to the news report, Micromax managed this hurdle through this strategy of more margins for advance payment.
It is not a new strategy to offer such kind of discounts for advance payments (cash discounts), but to make a retailer accept such an offer is indeed a remarkable feat. Advertising Micromax has come up with interesting and innovative commercials which have been able to capture the imagination of the people. Whether it is the resounding laughter of Akshay Kumar from the gamolution ad or the twinkle of Bling possessed by Twinkle Khanna or the “we are sorry” catch line of the wifi enabled mobiles, the advertisements have been a great success. Services Micromax has been criticised for its after sale services. The company however denies this and has plan to increase the number of service centres. Samsung
Distribution • The company has 17 sales offices in key smaller markets. • Samsung has five distributors in the North zone distribution structure of having just one distributor for each of the regions. • A dedicated national distributor for the organised retail business to drive efficiency. Nokia Distribution ; Services Nokia has one of the largest distribution network with presence across 1,30,000 outlets. In addition, the company also has Nokia Priority Dealers across the country and Nokia ‘Concept stores’ in Bangalore, Delhi, Jaipur, Hyderabad, Chandigarh, Ludhiana, Chennai, Indore and Mumbai to provide customers a complete mobile experience.
The Finnish giant has set up 350 shop-in-shops inside mobile phone retail stores in top 16 cities from where it plans to distribute and sell services such as applications, music, navigation and email solutions. Future Strategies 1. Traditional competitors making an effort to increase volume in low end 2. Internet ; PC industries converge, new entrants like apple, Google, RIM creating value with mobile solutions. Nokia will be looking to explore new product categories for Symbian and Smartphone technologies, extending the reach of higher-end technologies into mid-range devices and even elsewhere. 3. Voice and design driven devices business important and volume growth will continue 4. Innovative mobile solutions 5. Goal to be a consumer driven company 6. Leading provider of mobile solutions 7. Products business: 8. Solutions business: 9.
NSN- wireless and fixed network infrastructure, communications and networks service platforms, NAVTEQ- provider of comprehensive digital map data and related location-based content and services 10. Sustainable products and solutions ; Global take-back program 11. Leveraging core strengths: 1. leading brand 2. scale 3. distribution capacity 4. product portfolio excellence 12. Developing new strengths 1. Delightful user experience 2. Vibrant partner ecosystem 3. Direct customer relationships 4. Market position in all markets Samsung Most of Samsung’s handsets today are considered feature phones, which run on the company’s proprietary OS. Samsung will launch the bada Smartphone OS which will change that.
And while, it will face competition from Apple, Google, Microsoft and Symbian, Samsung has the distribution power to make a project like this a reality. The strategy for 2020 is as below: – Samsung will try to get a competitive edge in business of mobile handsets and will try to achieve about 30 percent revenue in the remaining businesses by year 2020. – Secondly, they’ll try to find new markets for their electronic goods and while they develop their foothold in the next 5-10 years in the new market, subsequently expand into other areas – Will follow a market driven system by studying the consumer pattern and give them localized products according to the demand. Adopt an Open Innovation System by forging R;D partnerships with other companies; enhance corporate social responsibility; and create a fruitful organizational culture and amenities favouring the employees. Customer Analysis Segmentation |Segment name |The Sylvans |The Swingers |New enthusiasts |Nouveau Riche | |
Principal benefit sought |Utility, battery life |Latest features, low price|Dual-SIM, feature |Brand, looks, high end | | | | |set-looks, value addition |features | |Demographic trengths |Rural markets and tier 3 |Young middle class-tier 1 |Young middle-upper middle |Tier 1 and 2 cities: 15-30| | |cities |and 2 cities |class |year olds | |Special behavioural |low income-low expenditure|Low but increasing income |Experimenting |Impulse buyers, | |characteristics | | |Variety seeking | | |Personality |Single earning males |Not brand loyal, want |Aspirational value, |Maverick | |characteristics | |latest in the market | | | |Lifestyle characteristics |Low standard of living |College and school going |Active social life |Low life cycle of products| |Product preferred |X115 |X260 |Q7 |Q55 Bling | | |X114 |X225 |G4 Gamolution |IIFA special edition | Micromax mobiles have a very well defined segmentation of the market in terms of its product bouquet and services they provide. The primary target, as we’ve seen, has been the rural market and the tier 3 and lower cities and towns.
To Bracket these together as the Sylvans in the rural-semi urban section, we can easily identify some outstanding traits that help us to better position our product. The semi urban and rural markets are not very feature sensitive, but very price sensitive. There are some easily identifiable needs like long battery life, vernacular interface and ease of use. These requirements are met through specialised product development features and since Micromax is the pioneer in the sphere of long battery life, it clearly holds an advantage. This market has been and seems to remain the stronghold of Micromax. This market is characterised by a low standard of living and usually is financed a sole bread earning member (invariably male).
The next category of users is identified as the Swingers. These, as the name suggests, are young, educated, second or third time buyers of mobile phones. They have shifting brand loyalty and prefer to match their requirement set to those of the products on offer (conjunctive decision making). They tend to be price sensitive and also open to experimenting. It is usually the younger lot of people and they may not be repeat buyers. The Enthusiasts are more informed customers and take a conscious decision to buy a Micromax mobile. They are more features oriented and some of their biggest draws are Dual-SIM usage, wifi access, one touch internet, gaming etc.
This customer segmentation is more aware of the competitors’ product set and a lot of effort goes in to woo them. Their social circle thus is an important variable that connects Micromax’s image and eventual sales. The last segmentation is the Nouveau riche. These are typically found in tier 2cities and often in metros. The target audience in this segment is essentially the women. They do not care for the technical features but rely mostly on the glamour and style quotient associated with the product. Since they could afford a higher segment phone of a competing Finnish or Korean brand, Micromax mobile would be more of an impulse buy. Targeting |Sylvans |Swingers |New Enthusiasts |Nouveau Riche | |Radio ads |Y |Y |N |Y | |Television ad |Y |Y |Y |Y | |Print ad |N |Y |Y |Y | |OOH Ads |N |Y |Y |Y | |Word of Mouth |Y |Y |Y |Y | |Dealer Feedback |Y |Y |Y |N | |Sponsorship (Cricket/IIFA) |Y |N N |N | |Brand ambassadors |Y |Y |N |Y | |Internet ad |N |N |Y |N | |In store ads |N |Y |Y |Y | |Special promotions(IIFA |Y |Y |N |Y | |special phones) | | | | | The various ways in which the different consumer groups have been targeted are given in the table shown above.
Each consumer segment is different from each other and has to be targeted accordingly. Positioning PRICE MORE SAME LESS MORE BENEFITS SAME LESS Understanding the value of segmentation and to capture the maximum size of the market, Micromax should develop products for each of the segments. Their USP lies in the fact that they are providing MORE FOR LESS. They are perceived as a value for money brand and strive for the standing as a value proposition in the sylvan group. Within the Micromax bouquet, the nouveau riche and the new enthusiasts are targeted as the premium customers responsible for the higher segment sales. Consumer behavior |Respondent 1 |Respondent 2 | |Decision Maker |Self |Self and dad | |Motivation |Need based |Girly Appeal(Bling) | |Decision Characteristic |Evaluative and research based |Impulse | |Location of Purchase |Shopping Mall |Local Dealer | |Consumption Experience |Satisfactory |Amazing | |Type of Relationship |Dependency |Honeymoon Period | |Positive Surprises |None |Mirror in the phone | |Customer satisfaction |Average |High | |Meaning to the Customer |Valuable |Extremely Valuable | |Brand Value |Yes |Yes | | | | | [pic][pic] Product Strategy BCG Matrix As seen from the BCG matrix given below, Micromax has a cash cow in terms of its Long battery Life phones, such as X1i and X2i that it sells in rural market. The product gives a steady flow of income to the company and company has a high market share in this segment. Also company has a star in DUAL SIM phones which has high market growth rate and high market. For e. g.
X215 and X235. Of late company is putting its bet on mobile phones for the high end segment, such as Gamolution, Bling, Q7, as it’s a fast growing market segment but market share of the company is low. The demand for such high end phones is increasing in the urban sector. Mainly segments of market like youth, it is using cash flow from the cash cow, i. e. coming from its product offering into rural areas such as X1i and X1+. Micromax will also introduce high end smart phones that work on windows and Google android. [pic] BCG MATRIX for Micromax  Ansoff Matrix The above matrix shows that company is following a three pronged approach i. e. : 1.
Product Development: Developing new products like android based phones for the existing Indian market. 2. Market Development: Micromax is and has entered new markets like Sri Lanka, Bangladesh and Pakistan with its existing product offering such as Marathon battery Life and DUAL SIM phones. The reason for the selection of these markets can be attributed to the similar demographic profile of the consumer. 3. Diversification: Micromax also has plans to offer new products in these markets such as android based phones. [pic] ANSOFF MATRIX FOR MICROMAX Marketing Communication Strategy ; Brand Building Advertising Agency: Lowe Lintas 1. Micromax is investing heavily to build its brand image. 2.
It’s one of the major sponsors of Indian Premier League (IPL), Indian – South Africa series, Asia Cup and other cricketing events. 3. Micromax has centred it branding exercise on cricket, apt for a cricket crazy nation. [pic] Ads concentrating on cricket 4. But most of the brand promotion is centred on products, product oriented ad campaigns, as can seen by ads for products highlighting product features. [pic][pic] [pic][pic] Product Feature centric ads 5. Micromax recently roped in Bollywood star Akshay Kumar as its brand ambassador which will give boost to the brand recall of Micromax. [pic] Akshay Kumar as brand ambassador for Gamolution
Future Communication Strategy As it product portfolio expands, Micromax should focus more on brand building than on product oriented ad campaign. As product range widens, it may be impractical for Micromax to sustain individual ad campaign. Hence it should concentrate on brand building with focus on core brand values like innovation and value orientation. Distribution Strategy The company is also planning to ramp up its distribution network to enhance sales even in the remotest parts of the country. Micromax plans to add 30,000 more retailers to its 40,000.  Due to its increasing customer base, the company needs a strong service network, says Jain.
To increase its after-sale support, Micromax will add another 300 service centres to its current 400 centres. Moreover, Micromax is also looking to support its corporate customers through onsite service support effort which it will begin soon. Future Distribution Strategy [pic] Consumer Buying Behaviour Micromax is moving up the value ladder with its focus on high end market, hence a complex consumer buying behaviour can be observed as there are considerable difference between the product offerings of rival brands such as Nokia and Samsung. So Micromax marketing team should concentrate on information gathering and evaluation behaviour of the consumer. Hence this strategy must be implemented at the distribution network.
It must therefore launch exclusive Micromax Stores (on the lines of Nokia Priority Dealers), where the sales force should be trained and motivated to cater to the needs of the customers.
Citation and REFERENCES 1. http://Micromaxinfo. com/aboutus. html 2. IDC database 3. Imagebazaar. com 4. planningcommision. gov. in/reports 5. http://www. trai. gov. in 6. http://economictimes. indiatimes. com 7. http://www. moneycontrol. com/news/business/india-mobile-handset-2010-sales-to-rise-19-gartner_473655. html 8. http://economictimes. indiatimes. com/news/news-by-industry/cons-products/electronics/Indian-brands-grab-14-share-of-mobile-handset-market/articleshow/6078904. cms 9. http://economictimes. indiatimes. com/News/News-By-Industry/Telecom/Upwardly-mobile-Nothing-micro-about-Micromax/articleshow/6165036. cms? curpg=3