Marketing Report on Micromax by Vishal Singla

MARKETING PROJECT REPORT, MASTER OF INTERNATIONAL BUSINESS

Micromax - A Study of  Marketing Strategy A study on how Micromax emerged as the dark horse of Indian mobile telecommunication market and its future challenges.

Submitted by:Vishal Singla (66)

Submitted on: 20 th Sept’ 2010

2010

0

MASTER OF INTERNATIONAL BUSINESS, DEPARTMENT OF COMMERCE, DELHI SCHOOL OF ECONOMICS UNIVERSITY OF DELHI

 Acknowledgement  Apart from the efforts made by the team, the success of this project depends largely on the encouragement and guidelines of many others. We take this opportunity to express our gratitude to the people who have been instrumental in the successful completion of this project. We would like to show show our greatest greatest appreciation to our Marketing teacher Prof. S.K.Jain. We can’t thank him enough for his tremendous support and help throughout the period of making of this project report. Without his encouragement and guidance this project would not have materialized. We are also thankful to Mr. Andre (Marketing Personnel, Micromax) who devoted his valuable time and enlightened us about interesting marketing strategy being followed by Micromax and also promised to help in any future effort of the team. We are also thankful to all the retailers and consumers who answered and contributed in the survey conducted by the team. Without their constructive help this survey would not have been possible. Finally, we must mention that the continuous hard work put in by all the team members viz. Ankit Singh, Anuratn Purushottam, Iti Chaudhary, Nripanshi Bansiwal, Rohit Kumar Sarang, Sunita Arora and Vishal Singla proved vital for the success of the project and is responsible for the positive outcome.

 Ankit Singh  Anuratn Purushottam Purushottam Iti Chaudhary  Nripanshi Bansiwal  Rohit Kumar Sarang Sunita Arora Vishal Singla

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 Acknowledgement  Apart from the efforts made by the team, the success of this project depends largely on the encouragement and guidelines of many others. We take this opportunity to express our gratitude to the people who have been instrumental in the successful completion of this project. We would like to show show our greatest greatest appreciation to our Marketing teacher Prof. S.K.Jain. We can’t thank him enough for his tremendous support and help throughout the period of making of this project report. Without his encouragement and guidance this project would not have materialized. We are also thankful to Mr. Andre (Marketing Personnel, Micromax) who devoted his valuable time and enlightened us about interesting marketing strategy being followed by Micromax and also promised to help in any future effort of the team. We are also thankful to all the retailers and consumers who answered and contributed in the survey conducted by the team. Without their constructive help this survey would not have been possible. Finally, we must mention that the continuous hard work put in by all the team members viz. Ankit Singh, Anuratn Purushottam, Iti Chaudhary, Nripanshi Bansiwal, Rohit Kumar Sarang, Sunita Arora and Vishal Singla proved vital for the success of the project and is responsible for the positive outcome.

 Ankit Singh  Anuratn Purushottam Purushottam Iti Chaudhary  Nripanshi Bansiwal  Rohit Kumar Sarang Sunita Arora Vishal Singla

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“We just did not have

 presence in certain segments. Period! People mistake this in their  analysis and minds for   poor performance from Nokia. But, when we have  presence there, we emerge as market  leaders. Price is not an innovation if you are not  the lowest-price manufacturer.” 

Mr. D. Shivakumar  Managing Director, Nokia India

“ We We identify the

requirements of  customers and bring out   phones that are finetuned to their needs. We are in the game of  innovation for the local  masses, a parameter that  global companies cannot  match. We have proved  all critics wrong by  establishing a sustainable business model selling over a million handsets every month.”  Rahul Sharma, COO, Micromax 

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Table of Contents

Acknowledgement ......................................................................................................................................... 1 Specific problem to be investigated .............................................................................................................. 7 Objectives of the study .................................................................................................................................. 7 Research Methodology Methodology .................................................................................................................................. 7 Introduction.................................................................................................................................................... 8

A brief history of Micromax .................................................................................................................... 8 The Big Break .......................................................................................................................................... 9 What is Micromax today? ..................................................................................................................... 10 Factors that contributed to quick rise of Micromax in Indian Market ....................................................... 11

Differentiation-Key strategy: .................................................................................................................... 11 Thrust on Dual SIM Phones: ...................................................................................................................... 11 Aggressive Marketing, Research, Innovation & Smart Distribution Channel Management: ................... 11 Feature Rich phones at affordable price: ................................................................................................. 13 Channel Differentiation ............................................................................................................................ 13 Small steps forward: Success of Micromax X1i ........................................................................................... 14

The first step of Micromax in India ........................................................................................................... 14 Micromax- Manufacturing and Distribution ............................................................................................. 15 The effect on other Brands ....................................................................................................................... 16 What do figures say? ................................................................................................................................ 17 Can Micromax outlast competition? ........................................................................................................ 18 Advertising and Promotion by Micromax ................................................................................................... 21

IMC tools used by Micromax .................................................................................................................... 21 Events and experiences ............................................................................................................................ 21 Advertising ................................................................................................................................................ 22 Advertising Agency - Lowe Lintas.............................................................................................................. 22 Source, Message and Channel Factors ..................................................................................................... 22

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Source ................................................................................................................................................... 22 Message ................................................................................................................................................ 23 Channel factors ..................................................................................................................................... 23 Advertising Objectives and Advertising Budget .................................................................................... 23 In short the advertisement objectives of Micromax are ...................................................................... 24 Micromax Product Life Cycle ....................................................................................................................... 25

Product Life Cycle and Micromax ............................................................................................................. 25 Introduction Introductio n stage ................................. ................ .................................. ................................... ................................... ................................... .................................... .......................... ........ 25 Growth Stage ........................................................................................................................................ 26 Maturity stage................................. ................ .................................. ................................... .................................... ................................... ................................... ................................ .............. 26 Decline Stage................................... .................. .................................. ................................... .................................... ................................... ................................... ................................ .............. 27 Comparison of Different Brands .................................................................................................................. 28

How different brands perform in the market today ................................................................................. 28 Micromax .............................................................................................................................................. 29 Karbonn ................................................................................................................................................. 29 Lava Mobiles ......................................................................................................................................... 30 Geepee .................................................................................................................................................. 30 Spice ...................................................................................................................................................... 31 Videocon Mobiles ................................................................................................................................. 32 Maxx Mobiles .................................. ................. .................................. ................................... .................................... ................................... ................................... ................................ .............. 32 The Nokia Story ............................................................................................................................................ 34

Nokia- The Indian telecom market leader ................................................................................................ 34 The IDC Report 2009 ............................................................................................................................. 35 Nokia Market Share - the Writing is on the Wall .................................................................................. 36 Quick snapshot of Nokia’s presence in India ........................................................................................ 36

The Samsung Story ....................................................................................................................................... 37

Introduction .............................................................................................................................................. 37 Mass reach ................................................................................................................................................ 37 Samsung to gear up its marketing in India ............................................................................................... 38 The Survey Conducted and Analysis ............................................................................................................ 39

Sample Consumer Questionnaire ............................................................................................................. 39 Consumers’ Survey: SAMPLE QUESTIONNAIRE .................................................................................... 39

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Consumers’ Survey: RESULT & ANALYSIS.............................................................................................. 43

Retailers Survey: SAMPLE QUESTIONNAIRE ......................................................................................... 50 Retailers’ Survey: RESULTS AND ANALYSIS ........................................................................................... 51

Complains about Micromax .................................................................................................................. 52 Conclusion and Findings ............................................................................................................................... 53 Recommendations ....................................................................................................................................... 53 Bibliography.................................................................................................................................................. 54

Material and Information from Books: ................................................................................................. 54 Material and Information from Journals, Magazines and Newspapers: .............................................. 54 Material and Information from Internet: ............................................................................................. 54

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 Specific problem to be investigated  

Study the marketing strategy of Micromax Mobiles over the last two years.



Comparative analysis with other players like Nokia, Samsung, lava, Maxx etc.



Studying the brand image amongst consumers.



Studying its transition from rural to urban India.

Objectives of the study  

To Study the marketing strategy of Micromax mobiles It is a new cell phone Company challenging Samsung India Electronics Pvt. Ltd and LG Electronics India Pvt. Ltd as one of the top three sellers of cellular phones in the country, overtaking rivals such as Motorola Inc. and Sony Ericsson Mobile Communications AB and prompting it to look overseas to expand sales.



Analyzing the effectiveness of advertising in changing the consumer’s behavioral pattern.



Suggesting future course of action with regard to following problems: -

Alternative strategy to combat the challenge from low end mobile makers like Karbonn, Lemon, Samsung guru etc. flooding the Indian market.

-

Gaining 2nd position in terms of market share in the near future and moving on to being no. 1 later.

-

Changing brand perception from low end mobile to a mobile capable of catering to the needs of high end users.

-

Striking balance between price and quality.

Research Methodology  

Second hand data collection from magazines, books, newspapers and web.



Primary data collection in the form of questionnaires from dealers and consumers and thereby classifying, analyzing and interpreting the information using statistical tools resulting out of it.



First hand study of Micromax Marketing strategy as followed by the company and the challenges perceived by them, in a meeting with their Head Office (Gurgaon) Marketing personnel.

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Introduction A couple of years ago no one would have believed that Micromax could become a popular handset player in India, but last year saw the phenomenal rise of the company. Their sales figures probably caused sleepless nights for the larger sharks of the Indian mobile handset ocean such as Nokia, Samsung, LG and Sony. Micromax has not only carved out their feeding ground, they’ve displaced a few of the top sharks to become the third largest handset maker in India. Since 2001, Micromax has distributed IT peripherals and landline equipment. They faced extinction with the onset of mobile revolution, but reinvented themselves as a mobile handset maker instead.

“Nothing like anything” Nokia and four other international players owned the Indian handset market for a long time, until innovation and price wars started to take their toll. Micromax has climbed the success ladder, embracing shanzhai traits of innovative, low cost handsets, with dual SIM features and handsets designed for specific market segments.

 A brief history of Micromax Before it found its centre, Micromax dabbled on the fringes, changing its identity repeatedly. Rajesh Agarwal started Micromax in 1991 to distribute IT peripherals. One of his neighbours in Pitampura, in West Delhi, was Rahul Sharma. In Delhi’s Jamia Milli a University, Mr. Sharma was friends with Sumeet Arora, a junior. And one of Mr. Arora’s friends was Vikas Jain. It would be eight years before they would come together to do business. After college, Mr. Jain moved to the US and joined GE, Mr. Arora joined Blue Star and Mr. Sharma worked with an auto components company called Bundy Engineering. In 1999, all three quit their jobs to join Mr. Agarwal. They set up Micromax Technologies, as an IT education company dealing in ecommerce and embedded technologies. The four divided responsibilities on functional lines, which hasn’t changed since. Mr. Jain, 35, is

the business director; Mr. Agarwal, 45, managing director, handles finance; Mr. Sharma, 34, executive director, oversees marketing; and Mr. Kumar, 35, is the chief technology officer. While they don’t say how the equity is divided among the four, they do say theirs is an easy relationship.

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The Big Break  Their big break came in 1999, when Nokia signed them up as an all-India distributor for machineto-machine devices — essentially landlines that were customised to run on a mobile network. They were used by call centers and PCOs. By 2004, Micromax had revenues of Rs 10 crore and employed about 80 people. It was installing about 10,000 Nokia 32s a year in India, making it the largest Nokia distributor worldwide for these products. But, overnight, it all threatened to come apart. The same year, Nokia decided to exit this segment. “As much as we were shocked, we decided to turn this into an opportunity,” says Mr. Agarwal. So far, they had been customizing a Nokia instrument. Now, they decided to build and sell the whole thing themselves — that too 40%

cheaper than the Nokia 32. Airtel was its first client. Against the 10,000 devices it sold for Nokia in a year, Micromax was selling 35,000 of its own within a year. Business peaked in 2007, with sales of 250,000 devices. Then, the mobile revolution took over. Overnight, again, Micromax faced extinction. Again, Micromax converted the threat into an opportunity. Then, instead of manufacturing itself, Micromax sourced its handsets from 12 factories in China, South Korea and Taiwan. It was model-based sourcing: Micromax would come up with an idea and give it to the factory best placed to deliver it. This is different from, say, Nokia, which would be compelled to stay in-house or go to a vendor-partner, even if another vendor had better capabilities to execute a particular model. Micromax also looked at distribution in a new way, standing by its cash-only model. While rivals offered a 60-day credit line, Micromax refused to give credit. “If the distributor does not buy your handsets, there is no pressure on him to sell them,” explains Mr. Agarwal. At the same time, Micromax offered to supply distributors regularly to keep inventories down. So, distributors didn’t have to shell out large amounts upfront or have a lot of money locked in. Micromax has 34 super- distributors across India. Unlike a Nokia or a Samsung, it doesn’t interact with the 500-plus sub-distributors. Neither does it intervene in how the super-distributors sell or place the products. Some of Micromax’s competitors, who do not want to be named, say the company fares poorly

on after-sales. It addresses a segment that is comfortable with the use-and-throw philosophy; also, the company’s claim of 450 service centers is inflated. Nokia and Samsung have 900 and 800 service outlets, respectively. The Micromax promoters refute these charges saying that the plants Micromax is associated with also manufacture handsets for all global majors. They don’t apply different standards while manufacturing for Micromax. Micromax is investing Rs 100 crore to set up a manufacturing plant in Baddi, Himachal Pradesh, to ensure its outsourcing model does not cause supply-side uncertainties. Production is being scaled up from 50,000 units per month to 500,000 units a month by March 2011.

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Micromax has already used its funds to expand to neighbouring countries such as Sri Lanka, Bangladesh and Nepal. The company now plans to expand to Middle East, Africa and Latin America. Over the next six months, Micromax plans to launch four handsets a month. 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. The truck-battery philosophy still rules at Micromax. Micromax has climbed the success ladder, embracing shanzhai traits of innovative, low cost handsets, with dual SIM features and handsets designed for specific market segments. It realized what MNC mobile brands couldn’t realize. Today it’s India’s third largest selling company by volume after Nokia and Samsung. Brand’s succe ss can be attributed to its ability to understand the need of the market, aggressive marketing with a budget of Rs.100 crore and smart distribution channel management.

What is Micromax today? As per IDC report Micromax displaced LG to become 3rd largest selling mobile handset company in India with a market share of 6%. Nokia is market leader with 62% share and Samsung is on second place with 8% market share. The company today sells more than a million handsets a month and is now a Rs. 1600 cr worth brand. The company has presence in more than 500 districts and 90,000 retail outlets. The company started its Mobile handset business in 2008 and the challenge was to establish an identity in a market dominated by big MNCs like Nokia, Samsung, LG and Motorola. The company realized the fact that there are certain unmet needs still there in the market which is not being addressed by big brands. Micromax’s strategy, since their inception has been to identify the unmet latent needs of people and come up with a product which no one else has and thus fits well with the consumer need. It didn’t bank on price competition only rather it catered to the needs of people unaddressed by MNC brands. Micromax initially targeted rural market and once it established its presence went on to lure urban youth. Micromax specialized in entry-level and mid-segment handsets priced between Rs 1,800 and Rs 2,400 when it started selling the devices in 2008, confining itself to small towns and rural areas in the first 12-18 months. Encouraged by its success, the firm expanded to larger cities as part of its strategy to raise sales to 1.5 million handsets a month. The journey is also now spans through the wide range that Micromax plans to offer to its consumers in the coming period. Micromax is planning to expand its range in keeping with new market demands.

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Factors that contributed to quick rise of  Micromax in Indian Market  Differentiation-Key strategy: Micromax has a lot of interesting and thoughtful products to its credit on their versatile product portfolio. It was the first to introduce: 1. 2. 3. 4. 5. 6.

Handsets with 30 days battery backup (Micromax X1i) 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 etc.

Its gaming phone Gameolution has caught the fancy of youngsters. This phone works like wireless wii which works on motion sensor technology and can convert PC/Laptop in gaming device. Then it came up with MTV music phone MTV X360 with Yamaha amplifiers targeted at music loving youth. With a 360 degree advertising and marketing strategy sketched out, the company has an optimistic outlook for the telecom consumer space.

Thrust on Dual SIM Phones: Micromax understood the need the market and gave thrust on DUAL SIM phones. Most of its phones are Dual SIM. Intense competition has led to stiff fall in call rates and operators keep on coming with various offers to lure customers. Thus customers do not want to remain loyal to one and desire to avail best available offers at any time. With dual SIM phones they can keep their one number constant and another one changing to avail the best offers. This has led to increase in popularity of Dual SIM phones and Micromax has grabbed substantial market in this category. Surprisingly Nokia didn’t hear this need and doesn’t have any Dual SIM in its brand portfolio.

 Aggressive Marketing, Research, Innovation & Smart  Distribution Channel Management: It was in 2008 that four friends —Rajesh Agarwal, Sumeet Arora, Rahul Sharma and Vikas Jain — decided to diversify their IT hardware distribution business and start making mobile phones. The move towards selling handsets was a natural progression. They saw that the MNC brands were not selling phones that suited Indian consumers' requirements. This void had to be filled. So in

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April 2008, Micromax forayed into the handset market, one of the four founders of Micromax Infomatics, the company that owns the Micromax Mobile brand. Micromax also gets its handsets contract manufactured from China. A zero-import duty on cell phones has helped the industry proliferate. After a slew of phones targeted specifically at the rural masses, the company made a shift towards selling handsets that come with features appealing to urban consumers such as music phones, QWERTY and internet-enabled handsets. Micromax approached the market in a different manner by first going to rural and semi-urban areas, establishing a good distribution base and then targeting the big cities. Innovation and R&D power Micromax’s growth and set it apart from the crowd. So, the brand

has been integrating different solutions into one, to churn out mobile handsets that are unique and differentiated through the features that they provide. Today mobile phones are the

nucleus

of 

entertainment for Gen X, who don’t just look out for  mesmerizing or couple of    fascinating

features,

but 

indeed, want the best of  both to be packaged in the right

mix.

The

new 

Micromax Q55 Bling phone is set to deliver it all, and to be precise, it’s set to rock  The Micromax Q55 promotion advertisement. The phone appears to be a vanity mirror.

the entertainment lovers.

Mr. Vikas Jain, Co-founder,

Micromax  The company already has a universal remote control phone, one that can be paired to household appliances like the TV, AC, to act as a remote control for them. Then there are gravity sensitive phones and a whole gamut of different feature laden phones that the company is guarded about, but is going to launch in the days ahead. It has to be quick in launching new products as competitors can also copy a lot of this soon enough.

Micromax has already realized the fact that it has to build the brand and bring awareness in a market where people don’t rely on unbranded phones. The company went for aggressive marketing sponsored many cricketing events and allocated the budget of Rs.100 crores. Recently company roped in Bollywood Actor Akshay Kumar as Brand Ambassador. Innovation, CostEffective, Credible and an Insightful R&D are given high emphasis at Micromax in the telecom vertical. The Brand Micromax has now started gaining acceptability not only with the consumers but also with the images, which now has started portraying it with a positive image. Micromax seems to have taken a breath of fresh air and totally remade their presence. From their

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previously drab website, they’ve moved into a much more vibrant state and there’s clearly a

significant difference in their mobiles as well, at least cosmetically. Micromax has also tied up some pretty big brands like Yamaha for enhancing their audio experiences and the X360 comes with an MTV branding and exclusive content.

Feature Rich phones at affordable price: India is a price sensitive market and people aspire to have feature rich products at low price. Micromax made it possible and thus people B&C category towns grabbed Micromax phones as it was laden with features but not heavy on pocket. Its QWERTY phones come below Rs.5000. The Micromax mobile Q2 is a GSM mobile which comes with bar style and it is a great buy. It is a feature rich mobile with background

music

playback,

yahoo

messenger, flight mode along

with

recording

and

playback.

It

portable

and

video video is light

very to

All said and done the company has few challenges to tackle too. It has to build trust among people in product performance and after sales service. Nokia & Samsung have a very strong after sales service centers.

Channel Differentiation Micromax has invested Rs 100 crore to set up a plant in Baddi in Himachal Pradesh as it feels outsourcing manufacturing completely leaves the door open for supply-side uncertainties. Production will be scaled up from an initial 50,000 per month. According to Micromax If  everything goes right, by the third phase in March 2011, the Baddi plant will be making about 500,000 handsets. If the plant isn’t able to cope with the numbers, the fallback plan is to acquire a facility in South Korea, Taiwan or China. Nokia has a plant in Chennai, established in 2006 at a cost of around $150 million, from where it also exports.

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 Small steps forward: Success of Micromax X1i  The first step of Micromax in India Micromax launched its first phone in the rural market with a very unique USP - a 30 days battery standby time, it had a battery that could last 30 days on a single charge and provide 17 hours of  talk-time. Micromax asked its vendors in China and Taiwan to manufacturer 10,000 handsets based on this battery. The brand was launched from a consumer insight that most of the rural households do not get enough electricity to recharge phones on a daily basis. The feature is a boon for the Indian population living in villages, where power cuts are a major problem. Besides packing in a ground-breaking feature, Micromax aggressively promoted it through print and electronic media. Hence a phone with a 30 day battery standby would be a worthwhile differentiation. The first product was a big success. The first product Micromax X1i priced at Rs 2150 was lapped up by rural market. The success of X1i encouraged the company to go aggressively into the market. But tapping the rural market is not an easy task. There is severe logistics pressure in servicing these markets. One of the first things that Micromax did was to establish the distribution network. According to a report in Forbes India

(March

distribution

5,

2010),

network

Micromax

comprising

of

created 34

a

super

distributors, 450 distributors and around 55,000 retailers. The brand could also take advantage of the inroads made by other brands into advantage. 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 (if the Forbes report is true). Micromax has also launched a MTV phone, the MTV X360, which is replete with Yamaha amplifiers for listening to the MTV music channel. Then there is a Gameolution phone, targeted

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at teenagers who love motion sensor gaming. The X235 on the other hand can work as a universal remote for electronic devices including the television, air conditioner, music systems, etc. BlackBerry QWERTY phones are quite costly and Micromax has a complete range of QWERTY mobile phones for under INR 5000 (USD 100). The Bling, for example, is a stylish phone aimed at ladies, with Swarovski crystals; today it is one of its most successful phones, selling 35,000 units a month.

Micromax- Manufacturing and Distribution Micromax phones start at as low as $40 and cater to the local taste by adding in unique features. Micromax is seen as an innovative brand in India, being the first to introduce dual SIM branded handsets. Nearly 90% of Micromax mobile phones come with a dual SIM feature, then followed the handsets switching GSM and CDMA networks using gravity sensors, operator branded 3G handsets, OMH CDMA handsets, and more. Micromax has plans to release touchscreen phones and embrace the Android OS in the near future. The company has grown dramatically in a very short time span, says Rajesh Agrawal, Managing Director Micromax, “We sell a million handsets a month now. Wit h a market share of about 10%, we are a close second to Samsung.” Micromax and several other local vendors are responsible for the downfall of Nokia’s share from 64% in 2008 to 52% in 2009, grabbing nearly 12% from world’s leading phone brand in just one year. Although the 10% figure is still in ambiguity, the company has shown revenues of Rs 1,600 crore and a net profit of Rs 150 crore in the financial year of 2009-10. Micromax’s manufacturing and distribution model is a key factor in its growth. It has be en

designing phones in-house, pretty much always including a unique feature, and then manufacturing is done by vendors in China, South Korea and Taiwan. The company is; however, planning to open manufacturing plants in India to double up the production. Micromax also follows a cash-only distribution service unlike its contemporaries, who offer a 60-day credit line. On the top of these strategies, Micromax has an INR 100 crore (nearly USD 21 million) annual advertising budget. Their brand, which most Indians hadn’t even heard of, suddenly flashed to the limelight by sponsoring the Indian Premier League and a lot of other big cricketing events. Micromax also signed up top Bollywood actor Akshay Kumar as its brand ambassador. Micromax is now selling more than a million handsets a month from 90,000 retail outlets in over 500 districts of India. Anubhuti Belgaonkar, telecom managing analyst, Ovum India said, “Lower price points with similar features as that of a Nokia or a Samsung are driving Micromax’s growth,” CEO Vikas Jain however disagrees, “We had two options — compete on price or be different, we decided to be different.”

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Jain expects Micromax to reach the second top spot by displacing Samsung in the next fiscal year. Micromax has already started exploring markets of neighboring countries like Sri Lanka, Bangladesh and Nepal, but they’re not sticking to growth on the Indian subcontinent, with plans to expand the business to the Middle East, Africa and Latin America. Micromax’s growth has attracted a lot of in vestment as well. Boston-based private equity firm

TA Associates has recently invested USD 45 million to buy a minority stake in the company. Naveen Wadhera, TA Associates Advisory director explains, "We did spend a lot of time with the broader universe of  Indian phone makers.” He adds, “But what we specifically wanted was someone with a real focus on product and a real effort at innovating. The others have a bit of a me-too sort of strategy." Gartner predicts the mobile handset market in India will grow to 206 million units by 2014 … that’s USD 4.3 million worth of handsets. Nokia still a dominant player, but unless they make some changes soon they’ll find it hard to retain their position by sticking to the basic phones in the low price segments. Price sensitive Indians want feature rich phones and they are getting them, if not from Nokia then from Micromax.

The effect on other Brands Micromax has successfully generated innovative technologies that have revolutionized the telecom consumer space. So far it appears to be on a on a right path to achieve its mission to successfully overcome the technological barriers and constantly engender “life enhancing solutions”. The company’s vision is 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. The Micromax ideology stems from its rooted belief in ‘Innovation’ and delivering “nothing short of the best” . In just 30 months, by staying with this philosophy of making handsets that address specific user needs and are also affordable, it’s come a long way. With a market share of about 10%, Micromax is close second to Samsung. There are many views on that 10% figure. Citigroup put it at 10% in February, a top executive of a rival says it’s 8%, IDC India says it was 4.8% in 2009. According to IDC, Nokia had a market share of 54.1%, Samsung 9.7% and LG 6.4%.

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Never mind the quibbling over numbers. Fact is, the company is mounting a serious challenge to the slippery No. 2 spot in the mobile handset business. In the past four years, the second spot has been lost by Motorola, Sony Ericsson and LG. Samsung has held it for the past 24 months, but Micromax is catching up. “We will be No. 2 by the end of this fiscal,” says co -promoter Vikas Jain. Micromax had two options — compete on price or be different. It decided to be different. In its case, different meant a longer battery life or a phone that had two SIMs. Micromax has taken the utilitarian philosophy to the mid- and high-end also, with a reasonable degree of success. But here’s where it gets tough er. Nokia is the dominant player in India’s Rs 30,000-crore handset market predicts a bleak future for majority of the domestic players that entered this space recently. The managing director of the Finnish company’s operations in India D Shivakumar said that the hand set segment in the country will soon witness a similar shake-up being witnessed in the mobile operators’ space, where most new entrants are battling for survival.

Drawing parallels with telecom operators’ industry, the Nokia India MD points out that for ma ny

of the new operators, price was the only innovation as they attempted to garner market share from the biggies such as Bharti Airtel and Vodafone Essar. “Price is not an innovation if you are not the lowest-price manufacturer. If you can produce a minute at the lowest cost, which I believe Bharti Airtel does, then everybody else is giving away margin. If you look at Indian business — be it detergent, retail or FMCG — price warriors have never succeeded,” said Mr. Shivakumar. He also added that it is already dawning on new players in the handset space that sustaining businesses required a lot more than a marketing approach. “It needs a strategy and a business model that can generate value.” There is not a chance for 50 players in the handset space just as there is no chance for 10 telecom operators to survive in India, Mr. Shivakumar added. The tariff wars in the telecom operators space resulted in consumers picking up prepaid cards form new entrants to utilise ultra-cheap call rates, and a significant majority of these opted for dual SIMs, the USP of most domestic handset makers, who launched operations in the past 18 months. For instance, leading domestic player Micromax introduced this feature in 23 of the 26 models the company offers. Nokia, however, did not have a presence in this space till last month. They launched two low-cost handsets with this feature; a move some analysts said was a ‘startling late reaction’.

What do figures say? Numerous surveys put Nokia’s current market share in India between 54% and 60%. But, in mid-

2009, the same surveys had said that the handset major accounted for over 60% of the market, with some reports even putting the figure as high as 67-70%. According to IDC, Nokia’s share in 2009-end was 54.1%, while Samsung’s share ros e marginally to 9.7%. The report added that among local players, Micromax led with a market share of 4.8%. IDC also said that local

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manufacturers combined — of which the top five were Micromax, Karbonn Mobiles, Spice Mobiles, Videocon Industries and Lava International — have grabbed 17.5% market share compared to 0.9% a year back. Recent reports have also put Micromax’s market share at about 8%, making it the number three player in the country. Nokia has disputed IDC’s numbers stating that IDC did not take into

account its production facility in Chennai, which ships 50% of its output to the domestic market in India. Nokia India MD said that while most of the new players had launched between 40 and 60 models, 50% of these models did not sell more than 500 units per month across the country as per market data compiled by ORG. Micromax has just been launched in Nepal also, the company’s founder and business director Vikas Jain, expects the firm to grow 417 per cent in FY 2009-10 in revenues. How did Micromax, which started off barely three years ago, grow to be the third-largest handset maker? The answer lies in differentiation from both international players and the fastmushrooming local handset makers. Micromax knew that market was there and MNC companies wer en’t catering it. Analysts say Indian firms have benefited from the price sensitivity of the market. Most Micromax models cost less than Rs 5,000. “Lower price points with similar features as that of a Nokia or a Samsung are driving Micromax’s growth,” say s Anubhuti Belgaonkar, telecom managing analyst at Ovum India.

Can Micromax outlast competition? Two years ago, when the Goliaths —Nokia, Samsung and LG—had a firm grip on one of the fastest growing mobile markets in the world, a David was born. Just two-years old, still in its nappies, this David has pushed Goliaths into a tight corner and is giving them a run for their money.

In the past, others such as Motorola, Sony Ericsson and LG have occupied the third position, but all have given way sooner than later. Only Samsung managed to move ahead to come in at the second place and it is not resting on its laurels. “We are doubling our business,” says Ranjit Yadav, director, mobile and IT, Samsung India. “We don’t look at competition as a threat. We look at the market opportunity.” LG, however, declined to comment. In an indication of its ambitions, Micromax expects to move up the ladder to be the No. 2 by the end of this fiscal. Jain would also like to see the company listed in the next couple of years, to fund further growth. “We are first-generation entrepreneurs,” says Jain. “A lot of blood and sweat has gone into it *Micromax’s success+.” But staying on at the top can prove to be even more difficult than getting there, as TCL and Haier’s vanishing from the same market proves. Micromax has received commendable response for its unique and interesting handsets. Innovation, Cost-Effective, Credible and an Insightful R&D, have now become synonymous to Micromax in the telecom vertical. Today Micromax has become a brand which people relate and look up to for realizing their individual device preferences and other out-of-the-box solutions.

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Motorola lost the game in the mobile space because they did not innovate. The Nokia claims that their entry into these segments will impact domestic players, on which Micromax says that the only segment Nokia was not present was dual SIMs and long battery life. Micromax took both these sectors and also created several new segments for Indian consumers. “In the mid - and high-end,

Nokia also said that while the company may miss out on certain customer preferences, it can always work its way back into such trends. In 2006, people accused Nokia of having missed the boat on the slim-phone segment but now there is no question of  who owns this space in India once the Nokia 6300 came in. The same thing happened in the music segment, music section was dominated by Sony but as soon as Nokia ExpressMusic series came into the market, Sony vanished. Nokia responds to the falling market share to the new entrants by saying that the company had lost ground to the new players in low-cost touch phones as we did not have products in this range till January 10.

customers expect certain service quality. Micromax’s challenge will  be to achieve such quality  standards, and convey the same through branding and positioning.”   Asks Ajay Parmar, head  (institutional research), Emkay  Global Financial Services: “Their  biggest challenge will be brand  stickiness. Will their existing customers buy Micromax again?” 

Romal Shetty, National  Telecom Head, KPMG

Until April, Nokia did not have a low-cost memory device, or an all-rounder phone with advanced functions. Then it introduced the Nokia 2690 and currently, the sales of this handset alone can make it the second-largest handset company in India ahead of all competition put together. The same thing happened with handsets having QWERTY keypads. Nokia is coming back strong there. Videocon Industries chairman VN Dhoot agreed with Nokia’s views that many domestic handset makers may not eventually survive. But Mr. Dhoot, whose company entered the handset space last year, warned that Videocon’s standing in India in the consumer electronic space wa s similar to that of Nokia in the devices segment. Videocon warns Nokia that they will not only survive, but have firmed up plans to get a 10% market share, and that will come at the expense of  companies like Nokia. Analysts agree that it will not be easy for Nokia to regain market share by  just following domestic players and launching handsets in segments they currently don’t exist. The huge price difference between the Micromax, Carbon, Lava and others to Nokia is just one factor. These players offer handsets that are significantly rich in features, which the large incumbents may not be able to match. Nokia must also watch out — these domestic players are steadily moving up the value chain with feature rich phones and targeting their (Nokia’s) core customer base,” Romal Shetty, head of the telecom practice at consulting firm KPMG, said. “While there may be quality issues with some of  the new domestic players, customers go for it

19

due to the price and features. It remains to be seen if Nokia can compete at this level, which is below Rs 3,000, and also match them on the features front,” Mr. Shetty added. Lava International sales and marketing head Praveen Srivastava feels that consolidation will happen, but will be limited to the bottom of the pyramid. The top five Indian brands have differentiated themselves from the rest of the labels. They have invested in distribution models to extend their reach, and have also spent their resources to ensure quality standards that are at par with MNCs. These players will continue to take on the likes of Nokia and are well placed to do so.

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 Advertising and Promotion by Micromax  IMC tools used by Micromax Advertising is the one of the biggest tool to development of integrated marketing

communication. So the Micromax uses IMC tools to promote the product and build the strong image of the brand in the consumers mind. Integrated Marketing Communication (IMC) is the practice of unifying all marketing communication tools so the send a consistent, persuasive massage promoting company goals . With a 360 degree advertising and marketing strategy sketched out, the company has an optimistic outlook for the telecom consumer space. The following tools of IMC are being used by Micromax:

Events and experiences For marketing of its products the company is riding on two enduring Indian obsessions —sports and films--to build its brand. Following up on its association with the popular Twenty20 cricket Indian Premier League (IPL), Micromax, a brand that is less than three years old, has become the title sponsor of almost all tournaments and series of which India is a part, including the recently concluded Asia Cup, the forthcoming India-Sri Lanka Test series and the India-New Zealand-Sri Lanka tri-series in August. The objective behind the cricket "roadblock", as such behavior is termed in advertising, is to drive brand awareness and recall. The company believes that while cricket may boost a brand instantly, viewers may still not remember the brand after the match or the tournament. Even if  consumers remember a series, they may not remember the advertisers. That's when they thought of a roadblock and decided to sponsor all cricketing properties post IPL. Bollywood is also a major platform for the brand, which is targeting consumers between 18 and 27 years. Bollywood's most bankable star Akshay Kumar was signed on as the brand ambassador six months ago. More recently, his wife Twinkle Khanna was engaged to promote Micromax's Bling phone that comes with Swarovski crystals and a vanity mirror. To push its association with films, the firm also sponsored the IIFA (International Indian Film Academy) Awards held in Sri Lanka, where Micromax recently launched its phones. The brand is now ready to enter Bangladesh and West Asia.

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 Advertising Broadcast media Micromax use television to broadcast their advertisements. Apart from using cricket, films, celebrity Micromax also advertise through news papers. They also utilize hoarding and bill boards to advertise their products. Prime site recently kicked off a month-long campaign for Micromax mobile phones in Delhi, executed mostly through hoardings. Going further, this promotion will be extended to the other regions of northern India as well. The city of launch was Delhi to start with, and post which we did the launch in Patna and Jaipur. Indore is next in line. There are more cities where the campaign will be launched in the near future for which we would be briefed accordingly.” All the Medias used by Micromax are very carefully selected as to reach its target audience and through each medium the innovative aspect of the product is portrayed.

 Advertising Agency - Lowe Lintas Lowe Lintas is one of the India’s largest and most storied communication groups. It was founded

in 1939 as a part of Hindustan Lever. Headed by Chairman and Chief Creative Officer R. Balakrishnan (Balki) and CEO Charles Cadell, Lowe Lintas employs over 650 people across eight divisions and nine cities all over India. Lowe Lintas is a full service agency, it provides all the service to its clients like market research, production, designing, selecting and purchasing media. Today, Lowe Lintas India is a wholly owned subsidiary of the Interpublic Group, and one of the star offices in the Lowe Worldwide network. Headquartered out of London, Lowe Worldwide has over 80 offices in 73 countries and a client roster that includes Unilever, Johnson & Johnson, Nestle, Ericsson, Sharp, TATA, Saab and many more. Lowe Lintas India leads global and regional communication for several Unil ever and Johnson’s Baby brands.

Source, Message and Channel Factors Source Celebrity: Micromax has used Akshay Kumar and very recently his wife Twinkle Khanna to

endorse their brand. These celebrities are used as brand ambassador because of the following reasons.

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Familiarity: Akshay Kumar is a very famous celebrity in Indian villages as well as urban areas, so

he is very familiar to the target audience i.e. the youth. It was a good decision to get him to endorse this brand. Likeability: many of the youth in India resemble themselves with Akshay; hence there are great

chances that if he endorses this brand, it will become more popular among youth

Message Through all the medias Micromax is conveying a very clear message that we are best in manufacturing phones which have innovative features which makes yours life simpler and at a very affordable price.

Channel factors The different channels that Micromax is using for advertisement are: 

Broadcast: It is using television as well as radio to reach the target audience. it use  personal  channel  as all of its advertisement is focused to the youth .



Print media: it is creating a lot of noise by using news papers, in these advertisements it also focuses on innovation of their product.



Support Media: Micromax uses also support media to reach their target customers.



Clutter: Since it an industry where a lot of competition exists. Every company is using all these Medias too; hence a lot of advertisements are aired by different companies, which create a lot of disturbance .

 Advertising Objectives and Advertising Budget 

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When Micromax was launched in 2008 the main objective of the advertisements was to create awareness about the brand as it was a new entrant in the market and very established brands like Nokia, Samsung, Sony Ericson were present. So, the initial objective of the advertisement campaign was to catch the attention of the customers and to create awareness about the brand. This phase of creating brand awareness was carried out for 12  – 18 months from the launch of  the phone. After that the company realized that awareness was created among the customers but they were not able to recall their brand, hence they shift their focus to brand recall. For this they have sponsored a lot of cricket events and film events. Now since they have attained 10% market share and reach at the 3 rd place in mobile handset manufacturers they must focus on creating brand value. For this they have sign up with Akshay Kumar as their brand ambassador.

In short the advertisement objectives of Micromax are 

To create awareness



To increase recall of their brand



To create brand equity.

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Micromax Product Life Cycle

Product Life Cycle and Micromax A new product progresses through a sequence of stages from introduction to growth, maturity, and decline. This sequence is known as the product life cycle and is associated with changes in the marketing situation, thus impacting the marketing strategy and the marketing mix. Considering the product life cycle of Micromax it is under growth stage and other stages are yet to arrive. We will explain all the stages of Micromax product life cycle.

Introduction stage Micromax introduced its mobile phone when there was already large number of mobile phones providers were well established in market. Micromax tried to build product awareness and develop a market for itself. It followed the marketing mix of 4 P’s. 1. Product

Micromax innovated and entered in market with some new type of products like 30 days battery backup, dual SIM, handsets switching networks (GSM -CDMA) using gravity sensors, aspirational QWERTY keypad handsets to operator branded 3G handsets to the most exciting OMH CDMA Handsets, etc. Every product of Micromax had the potential to grab the attention of media as well as the consumers in a market which is already flooded with mobile phone handsets and a launch is there in every day or two. Micromax ’s first innovation was a handset with 30 days of standby battery life crucial in a country like India where power failures are common. 2. Price

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Micromax specialized in entry-level and mid-segment handsets priced between Rs 1,800 and Rs 2,400 when it started selling the devices in 2008.It basically understood that in India purchasing power of customers is not so high. So it priced its product accordingly. 3. Positioning & Segmentation In the first 12-18 months Micromax confined itself to small towns and rural areas .As the urban market is already captured by Nokia and other big brands, Micromax found that small towns and rural areas are not targeted by any other brand. 4. Promotion Micromax tied up with Akshay Kumar to promote its product, who himself is a big brand and helped in attracting masses. It did aggressive advertisement to promote its product. It created awareness by educating people about special features of its mobile phone like dual sim, 30 days battery life etc.

Growth Stage Presently Micromax is in growth stage. It is focusing on building its brand preference and increasing its market share, in which Micromax seems to be very successful till now considering the Marketing mix of Micromax in growth stage. 1. Product- Retaining its original features like 30 days battery backup and dual sim, it has come up with additional features like T.V. remote control, Mosquito repellent etc. Micromax is coming up with new innovation day by day. 2. Price-The pricing is maintained as its enjoying increasing demand with less competition. 3. Positioning & Place- Micromax is now coming up with products for all the segments in market, It has launched many smart phones and other high end phones. It has already increased the number of distribution channels. 4. Promotion- Micromax has come up with aggressive promotion by sponsoring IPL, India  – South Africa series, launching Twinkle Khanna as a brand ambassador of its product Bling. Micromax is presently in growth stage, but we can draw the behavior of Micromax in later stages but studying the behavior of other brands like Nokia, Motorola. The best example is Motorola, at one time it had a significant market share but now, it has almost disappeared from market do to tough competition, and the other ones include Sony Ericsson, Benq

Maturity stage At maturity, the strong growth in sales will diminish. Competition will appear with similar products like lava, Karbonn, Maxx. The primary objective at this point will be to defend market share while maximizing profit.

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1. Product – It features may be enhanced to differentiate the product from that of  competitors. 2. Pricing- It prices may be lower because to compete with competitors. 3. Positioning & Segmentation - It will become more intensive and incentives will be offered to encourage preference over competing products. 4. Promotion – It will look for some new methods of promotion to emphasize product differentiation.

Decline Stage At this stage sales will start declining and one of the following steps will have to be taken according to conditions1. Maintain the product - Micromax will possibly rejuvenate its products by adding new features and finding new uses and will try to maintain itself in market. 2. Harvest the product  –Rather than producing for everyone, it may reduce costs and continue to offer it, possibly to a loyal niche segment. 3. Discontinue the product -This is most unwelcomed step but may have to be taken if  the conditions will be very adverse .This includes liquidating remaining inventory or selling it to another firm that is willing to continue the product. The marketing mix decisions in the decline phase will depend on the selected strategy. For example, the product may be changed if it is being rejuvenated, or left unchanged if it is being harvested or liquidated. The price may be maintained if the product is harvested, or reduced drastically if liquidated.

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Comparison of Different Brands How different brands perform in the market today This table shows different brands in the Indian Telecom market there comparison with each other on grounds of features, their promotion, market share etc. Micromax yes

Karbonn yes

Maxx yes

Videocon yes

lava yes

spice yes

Brand ambassador

Akshay Kumar and twinkle Khanna

M.S. Dhoni

none

none

Sonam Kapoor

Market share

8%

Virender Sehwag and Gautam Gambhir 3%

4.7%

Just started

1%

3.9%

Special innovative features

Mosquito repellent, TV-remote control

Nothing different

Nothing different

Nothing different

Nothing different

12 mega pixel camera

Sponsoring events

Sponsored IPL 2010 and India south Africa tri series

India Sri Lanka series

No event

No event

Smart phones

Already in market and planning to launch few new products

Not started

Not started

Not started

Sponsored strategic timeout and play-off  games of  IPL Smart phones are in pipeline but have not been launched yet.

58

53

35

22

Dual Sim

No. models

of  48

big No big event

big

Many good smart phone models already in market. Its smart phones are based on android. 87

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Today almost every person in India has mobile. Recently with the entry of many new players there has been a big revolution in Indian mobile market. There was time when very few mobile operators are there in Indian market and prices was very high. but now we have new brands which have bring down prices to relatively very low level. Below we will compare the different new brands which have entered the Indian Market.

Micromax

Micromax as already stated is one of the most popular Indian mobile brands out there. Since its launch it has opened 23 domestic offices across the country and they even have a presence in Hong Kong, USA, Dubai and Nepal. The company has so far rolled out more than 30 models ranging from basic handsets, to high-end mobile phones with touch screen and QWERTY keyboards. The company’s aggressive marketing strategies have led to Micromax’s rapid presence on a global level. A flashy website, customer support and TV commercials have been impressive ways to win the confidence of customers.

Karbonn

Karbonn is the joint effort of two Indian telecom majors: UTL and Jaina. UTL is headquartered in Bangalore and Jaina is headquartered in New Delhi. Realizing the potential mobile market in India, the companies collaborated to introduce Karbonn mobiles, offering feature rich handsets at very affordable prices. Karbonn has around 30 models (GSM/CDMA) with prices ranging from USD 35 to USD 160 depending on the features. To make the brand popular, Karbonn Mobiles sponsored the India Vs Sri Lanka ODI series (Karbonn Mobile Cup). Not a bad advertising idea

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Lava Mobiles LAVA is another rapidly growing mobile manufacturer and like other Indian mobile manufacturers, LAVA focuses on developing quality innovative products at affordable prices. LAVA has currently rolled out 9 mobile phones with prices ranging from USD 40 to USD 120 and new models are on the way. The company has support and service centers in almost every state of India.

Geepee Like Karbonn, LAVA and Micromax, GeePee is a new player, although they already have more than 20 models available. The company has aggressive future plans and want to set up a CKD mobile manufacturing base targeting the manufacture of  30-40 million handsets every year.

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Spice Spice was the first one to launch Dual Sim phone in India. Spice Mobile Phones are looking forward to capitalize on the existing opportunity. As the first truly ‘Made for India’ mobile phone brand, there growth plans in India were based on the understanding of the market and consumer needs and they took their first step targeting the entry-level segment. Earlier in an effort to distinguish themselves from the clutter, their phones were based on the value for money proposition, offering consumer’s phones, power packed with features unheard of in the entry-level segment . They introduced S 500, a monochrome phone with speakerphone and embedded content in the form of Singtones; the S 404N, another feature-rich and stylish monochrome phone; the S 555, a true-tone - true-colour GPRS phone; and the S 600, a 65,000-colour GPRS phone with an MP3 player and 128MB in-build memory. The S-450 and S 540, both FM B/W and Colour phone respectively was again targeted at the entry segment, which was followed by our product offerings in the mid-segment. The S 800 with 1.3 mega pixel camera was a first phone with Video-Caller ID and the S-8, a mega slim and 2-mega pixel camera phone were both priced below Rs. 10,000. Today, Spice Mobile has built a reputation for itself and has established its brand identity across the country. In tune with their communica tion theme “Style International Dil Phir Bhi Indian”, Spice is all set to introduce its high-end phone range  – Enhanced Bluetooth enabled phones, Smart Phones, and PDA. They value our customers and channel partners who have helped establish Spice Mobile Phones as a truly ‘Made by India’ mobile phone brand.

The booming mobile phone market is also witnessing a rise in consumer demand for cutting edge phone accessories. Their strategic partnership with Plantronics is in keeping with this demand. Under this partnership Plantronics’ mobile headsets – Bluetooth® and wired  – will be

sold through Spice Mobile Phones retail channel along with options of bundling these high-end accessories with their wide range of mobile handsets and selling as a package to the customer.

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Videocon Mobiles

Videocon is a well established and very well known company in India having dominated the home appliance segment since it was founded in 1979. With such a historical presence in the Indian market, the company joined the mobile phone segment in November 2009. They have released more than 23 models of mobile handsets, with prices ranging from USD 50 to USD 350.

Maxx Mobiles Maxx Mobile is a leading Mobile Phone Accessories manufacturing & distribution company which has stepped confidently in to Mobile Phones emerging business with the vision of providing the latest & widest range of mobile phones to customers backed with a proven & strong Customer support network & a comprehensive research, design and manufacturing strategy. Maxx mobile provides Dual SIM mobiles phone and CDMA mobiles. It has currently 53 models in market. Having Mahinder Singh Dhoni as a brand ambassador this brand promises a lot.

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Reading above details of all the brands, we can make out that competition is very touch among different low cost brands in Indian market .All the coming up with Innovation day by day. But till now Micromax is the leader, just because of its proper segmentation, no-doubt Spice entered Indian market before Micromax; still it could do the proper segmentation as Micromax did. Spice dual sim phones were cost relatively higher so it couldn’t target the low end customer as effectively as Micromax did. Also the factor which distinguishes Micromax from other brand is aggressive advertisement. Micromax is associated with Bollywood and Cricket both, while other brands are stick to one of them or none. What makes a brand progress is not innovation but continuous innovat ion and that’s what Micromax is doing. All other brands are not so active in innovation as Micromax. It innovated T.V. remote control, mosquito repellent .This approach of  Micromax make it a leader even in such strict competition. Spice is also providing a 12 mega pixel camera which no other brand has done yet. But still if we compare the comfort level and frequency of requirement to consumer, a mosquito repellant and a T.V. remote will provide more comfort and will be used more frequently than a 12 mega pixel camera .Micromax is now targeting high end consumer of also with its smart phones, while other brands like Videocon. Maxx and Karbonn haven’t even launched any smart phone yet. So, Micromax is trying to be first mover in every new field, which distinguishes it from any other brand.

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The Nokia Story  Nokia- The Indian telecom market leader

Nokia losing market share is no big news, but it is big news when the story is happening in India or any other emerging market, where Nokia always had a strong hold. The crucial aspect of  Nokia's investment strategy has always been focused on building its brand. Here, the company ran into a problem. The Nokia range available in India extends from Rs 1,499 ($37) at the lower end to Rs 45,000 ($1,125) at the high end. Marketing theory says a brand cannot be all things to all people. This is the reason that Hindustan Unilever, with quality built around its brand, refused to match Nirma, which came out with a cheap detergent. This is also why Eveready, the battery manufacturer, refused to lower prices when faced with a Chinese challenger in the dry cell market.

But Nokia has a problem promoting other brands under its corporate umbrella. Unlike the FMCG (Fast Moving Consumer Goods) market -- where the product lifecycle is at least 10 and sometimes 50-100 years -- models have a lifespan of 15-24 months here. With such a lifecycle, promoting various models would mean watching money go down the drain in a couple of years. Instead, Nokia is promoting platforms -- music, for instance. With this approach, one model can replace another while the branding remains the same, or is extended slightly with the E series and N series. Nokia has done well to focus on the 'mother' brand rather than on 'another' brand. Nokia has understood the Indian market by straddling all segments: the high, the middle and the low end. The company has created a ladder for consumers to climb from the low end to the middle end to the high end, while being fully assured that they will be with the mother brand Nokia.

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Kapoor views the Nokia brand in terms of his proprietary "REAPS" model, which takes into account five needs -- rational, emotional, aspirational, physical and spiritual -- of the Indian consumer. Nokia believes that as a brand it has been able to address all the five needs to various degrees at various stages.

The IDC Report 2009 We earlier shared a report by IDC India on the growth of mobile sales in India (for 2009) and some of the key numbers from the report were: 







Nokia market share in India fell from 56.2% share in 2008 to 54.1% in 2009. Local players have grabbed 17.5% market share [from 0.9%, a year back] Only 5 local manufacturers in 2008 and the number stand at 28 now! Samsung’s share rose marginally to 9.7% from 9.5%

Nothing much has changed in 2010 and here are the latest figures (comparison between ‘08 -09 and ‘09-10, from Voice Data) 











Nokia market share dipped from 64% in ‘08 -09 to 52.2% in ‘09-10. Samsung gained the market share  – 10% to 17.4% in ‘09-10. LG’s market share increased marginally from 4.5% to 5.9%.

Losers include Sony Ericsson (market share fell from 6% to 3%), Motorola (3.5% to 1%), ZTE (5.6% to 1.9%). Micromax has been one of the major winners, from nothing to 4.1% [drive by huge advertising during IPL]. Karbonn’s market share too increased to 3%

As per Industry estimates, 108 million mobile phones were sold in the country in 2009-10, resulting in sales of Rs 27,000 crore as against Rs 25,910 crore during the previous year.

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Nokia Market Share - the Writing is on the Wall Nokia’s revenue too fell from Rs16, 567 crore to Rs 14,100 crore and the company is now betting

big on services like messaging, life tools and digital music.

Quick snapshot of Nokia’s presence in India



Launched 22 devices during FY 2009-10



45% of its 2 lakh retail outlets are in the rural areas



Crossed production of 350 million handsets in April 2010

In India, Nokia is betting big on life tools products even though the company seems to be losing the Smartphone war. We have been quite vocal in talking about the loss of strategy at Nokia and even though the above market share numbers need not be truly correct, the writing is on the wall. Not just market share, Nokia is losing mind share too and is desperately looking for 1100 magic.

36

The Samsung Story  Introduction The Korean consumer electronics giant is now reaching deeper and wider into the Indian market, tempting consumers with technologically advanced products specially tailored to their needs. Showrooms are being brought under a common umbrella brand and now, a new facility may well become a manufacturing hub for Samsung worldwide. Over the past decade, Samsung has clung to its premium positioning, with products that emphasized

design,

aesthetics

and

cutting-edge

technology

and

prices

that

were

commensurately higher. Until now, for the first time, it is moving downwards, so much so that industry observers believe Samsung may go after the masses much like its arch rival LG Electronics did until a couple of years ago: already, Samsung flat televisions are among the cheapest in the market.

Mass reach Sunil Dutt, Country head (mobile business), Samsung India, said, "We are looking at doubling our market share to 15 per cent in 2008, which at present is around 7-8 per cent. The company will make required investments in building the brand, expanding channels and rolling out new models." Samsung India, the 100 percent subsidiary of Samsung Electronics Co. Ltd. had a manufacturing unit at Noida and also imported high-end mobile phones from the parent company. Samsung, which had firmly established itself as the No.2 player in the global arena in 2007 with a 14.3 percent market share, trailed Nokia, Motorola, and Sony Ericsson in India. With Nokia's market share dropping from 78 percent in 2005 to 48 percent in 2007 and its stranglehold on the Indian market loosening, its rivals including Samsung were gearing up to boost their market share further. Analysts expected fierce competition in this market as all the companies viewed India, which had emerged as the world's fastest growing mobile phone market, as a key market. Earlier in 2006, Samsung India had planned to increase its market share to 20 percent by 2008, focusing primarily on the mobile phone replacement market. With this in mind, the company had discontinued its cheaper monochrome-screen models and focused on offering sleek and stylish mobile phones.

37

Its slim phones, in particular, were popular with a segment of the youth population. However, its market share continued to hover at around 10 percent. In March 2008, Samsung India strengthened its distribution network. It signed an exclusive agreement with some 40 distributors who had earlier been working with the market leader Nokia. With the addition of SSK and Link to its two existing regional distributors Telemart and United Telelinks, it had four distributors operating on a regional basis.

Samsung to gear up its marketing in India It’s time now on for Samsung to speed up its marketing strategy thereby revamping its hold in the Indian market. As the world’ s second largest mobile maker, Samsung is on the verge of 

installing 17 sales offices in major cities of India, while decentralizing the operations to reach more locations. Having witnessed slow sales, Samsung is making all out effort to double its share by the end of this year. With 8% share already in hand, Samsung’s thirst is to be quenched with more share and for this the restructuring of the organization is its initiative. The new sales offices will look after satisfying the expectations of the customers; simultaneously, the distribution network will also come under changes, said the company’s head Sunil Dutt. From

the initial single distributor for the entire north, now the company has increased it to four. Samsung was able to achieve a sales figure of double the volume in 2008 and this paved the way for promoting more distribution centers. Samsung has up in its sleeve, some 30 new models for this year, focusing on touch phones, dual-SIM phones, music and entry-level handset models. Without compromising on cost, the entry level handsets are designed to provide features and functions. Samsung is eyeing on the customers who opt for dual SIM and it has yielded a positive feedback. In fact it has reinvented itself and the new touchscreen and PDA revolution by Samsung has helped it to occupy a considerable share in the very competitive market. Many new phones which include Samsung Star Galaxy and Wave and in lower end GURU is in the front seat with Aamir Khan as the promoter. Despite of the new entrants in the market, MICROMAX which is of the main concern has captured around 4 percent market share, is giving hard times to such companies as they are giving many features at a very lower price so it is the main concern for other players to reinvent there strategy according tin re dynamic environment.

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The Survey Conducted and Analysis Sample Consumer Questionnaire

Consumers’ Survey: SAMPLE QUESTIONNAIRE Respondent Details

Name

:

Age

:

Gender

:

Occupation

:

Special needs

1.) Eyeglasses 2.) Hearing aid 3.) Speech impairment 4.) Any other physical or cognitive challenges Education (the higher status currently possessed)

Illiterate Master Bachelor degree Diploma /Certificate High School or below

Q1

Which mobile brand are you currently using?

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A) Nokia B)

Sony Ericson

C)

Motorola

D) Samsung E)

Micromax

F)

Spice

G) Karbonn H) LG

Q2

I)

Intex

J)

Maxx

K)

Videocon

In what price band does your mobile falls (at the time of buying)? A) below 1000 B)

1000-2000

C)

2000-3000

D) 3000-4000

Q3

E)

4000-10000

F)

10000 and above

How long ago did you purchase it? A) Less than three month ago B)

3-6 month ago

C)

7-12 month ago

D) Within past 2 years E) Q4

More than 2 years ago

Which of the following feature best interests you when purchasing a mobile phone? A) Style B)

Infotainment

C)

Multimedia

D) Business E) Q5

Connected

Which one of the following option you consider when purchasing a mobile phone? A) Calls B)

SMS

C)

Browse the internet

D) Take Photos E)

Check emails

F)

Record video

G) Music H) Mobile TV Q6

For what reason you choose the mobile brand? A) Convenience Handset B)

Cost control

40

C)

Value added Service

D) Discounts Q7

Which factors influenced you in purchasing the mobile brand you are currently using? A) Price/Offers B)

Brand name

C)

Availability in store

D) Different size E) Q8

Mobile battery

You consider owing a mobile handset as a A) Necessity

Q9

B)

Status

C)

Luxury

What other brands of mobile phone regardless of type have owned in the past? Currently Own

Q10

Owned in the past

A) Nokia

__________

_______________

B)

Sony Ericsson

__________

_______________

C)

Motorola

__________

_______________

D) Samsung

__________

_______________

E)

Micromax

__________

_______________

F)

Spice

__________

_______________

G) LG

__________

_______________

H) Karbonn

__________

_______________

I)

Videocon

__________

_______________

J)

Intex

__________

_______________

K)

Maxx

__________

_______________

Which one of the following features you choose when purchasing mobile phone? Attributes

Q11

A) Design

-----

B)

Brand

------

C)

Durability

------

D) Sound quality

-----

E)

Battery life

-----

F)

Display

-----

G) Camera & music

-----

H) Multi Media

-----

Which mobile do you prefer considering attributes like design, brand, durability, sound quality, battery life,

display, camera & music, multimedia ?

41

A) Nokia B) Sony Ericsson C) Motorola D) Samsung E) Vodafone F) Spice G) LG Q12

As a consumer what are your expectations from camera phone regarding different brands? Nokia

Sony

LG

Motorola

Samsung

Ericsson A) Celebrities icon B)

By mail

C)

Brand store

D) Magazine ads E)

TV ads

F)

Posters

G) From relatives H) Newspaper ads Advertising Perception

Strongly Agree

Agree

Neutral

Disagree

Strongly Disagree

1 ) Advertising result in better products for the public 2 ) Advertising give me more choice in making brand purchase decision 3) Advertised brand can be trusted more than those that are not. 4 ) Information from advertisement help me in making brand purchase decision 5 ) It is most likely that I would choose a certain band if I liked its advertisement 6 ) It is most likely that I will choose a certain brand if I like how the model is portrayed in the ad 7 ) It is most likely that a unique and / or interesting advertisement would influence my choice in a certain brand 8 ) It is most likely that I would choose a certain brand if its ad is easy to recall

Q13

Have you heard of Micromax? If Yes What are your views about it?

42

Consumers’ Survey: RESULT & ANALYSIS Sample Size: 60 Age

Age 3% 21%

0-12 13-20

16%

21-30

25%

35%

31-40 41 & above

Majority of the respondents were from the age group of 21 - 40. Gender

Gender 32%

Male 68%

Female

Educational Qualification

Education Masters

20%

34%

Bachelor degree 13%

Diploma/Certificate

High School 28%

5%

Illiterate

As our Survey was mainly from the bottom of the pyramid People and most of them were Rickshaw pullers & various vendors of the street they were illiterate.

Q1

Which mobile phone brand are you using currently?

Brand

3%

2% 3% 2% 0% 3%

Nokia Sony Ericson Motorola Samsung Micromax

11%

Spice

41%

Karbonn LG

16%

Intex 10% 9%

Maxx Videocon

Nokia being the leader in the market, the same was reflected on our survey with 41 % of respondent having a Nokia phone, Micromax clearly is catching up the market with 11 % carrying the phone. Q2

In what price band does your mobile falls (at the time of buying)?

Price 3%

10%

17%

below 1000 1000-2000 2000-3000

11%

27% 32%

3000-4000 4000-10000 10000 & above

A very Interesting thing here as a large no. Of Respondents buying phones in the range of Rs.2000 -4000. As the respondent happened to have a low monthly income, consumers mostly look for phones offering decent features with an affordable pricing. Q3

How long ago did you purchase it?

44

Time of buy 8%

Less than three month ago 17%

3-6 month ago

17%

7-12 month ago

33%

25%

Within past 2 years

A good number of respondents are now changing cell phones very frequently as most of the respondents bought their current phone just 6 month back. Also because in the last 1 year the number of cell phone makers have increased tremendously, offering low cost feature enriched phones. Q 4. Which of the following feature best interests you when purchasing a mobile phone?

Best feature 20%

Style 25%

5%

Infotainment Multimedia

17% 33%

Business Connected

As observed in our Survey good music/video play er is a very important feature for the respondents. Q 5) Which one of the following option you consider when purchasing a mobile phone?

45

Usage A) Calls 1%

B) SMS C) Browse the internet

24%

1%

32%

D) Take Photos

1% 12% 7%

E)

Check emails

F)

Record video

G) Music

22%

H) Mobile TV

Apart from calling and messaging Music playing and camera phone is a must feature for low end phones ,Other features may be ignored. Q6.) For what reason you choose the mobile brand?

Reason to choose the phone Convenience 40%

25% 25%

10%

Q7

Handset Cost control Value added Service Discounts

Which factors influenced you in purchasing the mobile brand you are currently using?

46

Factors influencing Purchase

A) Price/Offers B) Brand name

17% 42%

8% 8%

C) Availability in store D) Different size

25% E)

Mobile battery

Price is still the most important aspect when consumers buying a phone with brand name and battery life the followed ones. Q8

You consider owing a mobile handset as a

Mobile Phones 17% A) Necessity 41% 42%

B) Status C) Luxury

Most of the people having low Income consider cell phones not a necessity but a status symbol, a very different picture from urban middle and upper class consumer. Q9

What other brands of mobile phone regardless of type have owned in the past? Currently Own L)

Nokia

Owned in the past

26

34

M) Sony Ericsson

6

4

N) Motorola

6

2

O) Samsung

10

1

P)

7

1

Q) Spice

2

5

R)

LG

2

2

S)

Karbonn

1

0

T)

Videocon

0

0

U) Intex

2

0

V) Maxx

1

0

Micromax

This particular data reveals the shrinking market share of N okia’s many people are shifting toward low end mobile phones, but this shift is not towards many new players but towards Micromax, Samsung, Sony and Motorola.

47

Ranking the attributes:

Attributes

Rank 1 Wt:8

Rank 2 Wt:7

Rank 3 Wt:6

Rank4 Wt:5

Rank 5 Wt:4

Rank 6 Wt:3

Rank 7 Wt:2

Rank8 Wt:1

Composi te score

Design

2

4

12

13

5

6

10

2

233

Brand

12

8

3

2

7

6

9

5

249

Durability

14

8

5

4

10

8

5

6

298

Sound quality

7

6

13

10

9

5

3

15

260

Battery life

6

9

5

9

9

14

13

15

305

Display

6

8

9

11

8

12

3

5

292

Camera & music

8

12

10

6

8

2

5

7

293

Multi Media

5

5

3

5

4

7

5

184

12

Score Design Brand

9% 11% 14%

Durability 12%

14%

Sound quality Battery life

14% 14%

Display Camera & music

12%

Multi Media

Here we have taken the ranking of various attributes which people consider while buying a phone or forming perception about any phone. We have given each ranking weights to calculate the composite score for each of the attribute. The results show 3 most important attributes for the mobile phone i.e., Durability, Battery life, Display and camera and music feature. Multimedia being the least ranked. Advertising Perception Advertising Perception 1 ) Advertising result in better products for the public 2 ) Advertising give me more choice in making

Strongly Agree

Agree

Neutral

Disagree

Strongly Disagree

8

15

10

15

12

24

16

11

4

5

48

brand purchase decision 3) Advertised brand can be trusted more than those that are not. 4 ) Information from advertisement help me in making brand purchase decision 5 ) It is most likely that I would choose a certain band if I liked its advertisement 6 ) It is most likely that I will choose a certain brand if I like how the model is portray ed in the ad 7 ) It is most likely that a unique and / or interesting advertisement would influence my choice in a certain brand 8 ) It is most likely that I would choose a certain brand if its ad is easy to recall

22

15

14

5

4

15

8

10

12

15

7

8

5

19

24

9

6

10

16

19

11

8

7

14

20

23

11

3

12

11

Coming to the Advertising perception in the respondents eyes, we see that advertising play an important but not a decisive role for buying a mobile. Consumers are smart and they know that advertising does not guarantee a superior product, although it is a very good tool for making the consumer aware of what is on the offer. Q13

Have you heard of Micromax?

Micromax

30% Yes No 70%

A good number of respondent know about the Micromax brand But a lot of them know it just as an spon sor of the various cricket tournaments and not as a mobile phone brand ,they have heard it but don’t know what it sells. A good

advertising in this section (urban poor) would o nly benefit the company to increase its market share.

49

Retailers Survey: SAMPLE QUESTIONNAIRE Respondent Details NameAddress (showroom/office)-

Q1) How many mobile phone you sell in a month? Q2) Do you keep Micromax? Q3) How many phones of following brands you sell in a month? Micromax

Videocon

Maxx Mobile

Karbonn

Nokia

Samsung

Q4) Select following option in store mark eting materials that may impact shopper’s purchase decision f or mobile

phone? A) In store TV B)

Broachers

C)

Dangler

D) Floor standee E)

Poster

F)

Leaflet

Q5) What is the frequency of complaints received (if any) for Micromax phones?

Q6) What kind of complains do you receive in general regarding Micromax mobiles?

Q7) How will you rate your relationship with the company on a scale of 1 to 5(1 lowest- 5 highest) and why? NB: The above information is intended solely for the academic purpose.

50

Retailers’ Survey: RESULTS AND ANALYSIS Sample Size: 20 Q1) Do you keep Micromax?

Availability 8%

Yes No

92%

Quite clear the distribution of Micromax has been a success in such a short time. Q2) How many phones of following brands you sell in a month? Micromax

2400

Videocon

120

Maxx Mobile Karbonn Nokia Samsung

900 1100 10000 2700

Sales 16%

14%

1% 5% 6%

Micromax Videocon Maxx Karbonn Nokia

58%

Samsung

Micromax is gaining strength in the market, and sales on ground are increasing, selling almost 300 mobiles per month in each store.

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Q3) Select following option in store marketing materials that may impact shopper’s purchase decision for mobile

phone? Attributes In store TV Broachers Dangler Floor standee Poster Leaflet

Rank 1 Wt:5

Rank 2 Wt:4

Rank 3 Wt:3

Rank 4 Wt:2

Rank 5 Wt:1

Composite Score

0

1

2

2

1

15

4

1

1

2

2

33

1

2

1

2

2

22

1

4

3

2

1

35

3

1

2

1

2

29

1

1

1

1

2

16

Instore marketing 11%

10%

A) In store TV B) Broachers

19%

22%

C) Dangler D) Floor standee

23% 15%

E)

Poster

F)

Leaflet

In store marketing particularly for retailers is important and many mobile phone companies provide banners pamphlets, brochures floor stand or even in store TV ads. We observed that mostly consumers coming to the stores don’t spend much time rather they concentrate on the

offering on pamphlets, floor stands & leaflets to decide what to buy.

Complains about Micromax Retailers are the first one to encounter the complains of any product from the consumers and the same case is with Micromax. The market is new for Micromax and most of the production is from china. There seems a shortage of  service centers to counter the rising sales of Micromax. Common Complains which we noticed reported by retailers are: 1.

low durability

2.

product looking old in just 6 months (less sustainability of product)

3.

limited service centers

4.

low display resolution even of high end offered phones by Micromax

5.

Low quality of Speakers.

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Conclusion and Findings 



 





Micromax is a very innovative company as it launches mobile phones with very unique and innovative features. It has utilized events and experience as part of their communication strategy to enhance the recall rate and awareness level. Its advertisement campaign was oriented to the rural market than the urban. It take a right decision to sign Akshay Kumar to endorse their brand as this will help them to create brand equity. It does not make very creative advertisements; they simply narrate the features of the phone. They have planned to spend a huge amount of Rs. 100 crore on advertisement and promotions.

Recommendations 

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



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 

Now they have achieved a good market share, so now their advertisement should focus on brand building. They don`t develop very creative advertisements, sometimes their advertisements are mere noises like the advertisement featuring Akshay Kumar. They must add creativity to their advertisements. The tag line is very confusing; a new tag line which can be understood easily must be incorporated. The brand's promotions, although heavy, is a big letdown. Some of the campaigns are good but most are below par. For example, the Micromax Face book ad .hence quality of the advertisement must be improved. There is a risk of the brand perceived not as an aspirational brand but a ordinary price warrior if  it does not focus on the quality of the communication. Micromax would do well if it could bring in some class in their campaigns.

Micromax as a brand should be developed focusing on the core brand values like innovation and value orientation.

When the product range widens, it may not be practical to sustain individual campaigns. So it is time for Micromax to position the Family Brand and develop a brand identity.

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