Micromax is arguably one of the biggest success stories when it comes to ‘Desi’ branded mobile phones. The company has grown quickly over the last 6 to 7 years to become one of the largest Indian mobile handset manufacturers with a major presence in South Asian countries and with revenue touching Rs 7500 crores. However, the company is yet to establish a global footprint.
The market entry strategy
Micromax had a clear positioning strategy when it started its operations; it had a huge domestic market to tap. Samsung and Nokia were battling out for supremacy in the Indian market; however Micromax was quick to see some of the gaps, especially in ‘affordable’ feature and smartphone segment to tap rural Indian markets and middle class who were looking to upgrade to smartphones, but with lesser spending power. Their first line of phones was around the features of ‘dual SIM’ and ‘longer battery life’, which made their phones hugely popular among the Indian masses.
When Samsung launched Galaxy Note, Micromax was already selling its tuned down version with almost all the features at quarter of its price. Micromax believed in faster turnaround, launching new models quickly at lower price. This really helped them to grow faster and penetrate the price sensitive Indian market. According to Rahul Sharma, one of their founders, their aspiration is to become ‘Zara’, a Spanish fashion brand which launches thousands of design every year.
Buy Vs. Build
Now what it takes for faster turnaround? Efficient R&D and highly efficient supply chain always helps. It was sure that Micromax cannot compete with giants like Apple and Samsung on spending huge money on R&D, however they concentrated on supply chain and buying the technology which will work for them to bring out comparable good quality models at lesser price. For example they were the first to bring in MediaTek quad core processors to handset in India. It can give reasonably good performance when compared to high end Equinox processors of Samsung. They had handsets sourced from China earlier, but now they are planning to build some of it in their Indian plant where their tablets and LED TVs are already being manufacturer. Their USP was around choosing partners and having a tight relationship with them so as to deliver any design in double quick time compared to Industry standards. They harped on ‘agility’ to compete in the market and they put their bet on buying technologies and bringing in right partners. They brought in Canvas 2 with in few months after their first Canvas phone version, with dual core processors sourced from China and other upgrades like camera. It was able to capture the good feel which was there in market regarding Canvas first version.
The other advantage that has worked in their favour has been their aggressive approach when it comes to product design and launch. We can see this in couple of instances, when they brought out 5 inch screen phones and also when they brought in Android in entry level phones. Their Canvas phone which had a 5 inch screen compared to 5.5 inch of Galaxy Note of Samsung did well to capture initial sales volume. They also were aggressive in bringing Android in 256 MB RAM phones, something which was never attempted earlier. This strategy helped them to tee off Nokia’s Asha phones and Samsung’s lower end models.
Direct competition with Samsung
Many research agencies indicate that Micromax is now standing second to Samsung in Indian market. Though Micromax threated to reduce Samsung’s share initially, now it seems to be fading. Their market share has dipped from over 20% to now 15%. Samsung seems to getting better all the time with 35% share now. Samsung unlike Nokia and Apple have been quite successful in bringing out localization strategies with multiple models to different local segments and a strong distribution and servicing network too. Of course Samsung has multiple appliances and they already have a strong outlet chain and servicing network. This is where Micromax is falling behind. However they seems to be investing big time in CRM systems and also in their sales and distribution network to claw back their share in Indian market.
Good time to enter global markets?
Micromax is still struggling to keep their share intact in domestic market. They still work on pretty low margins, around 6% compared to more than 15% for Samsung. This would mean they have a much lower cash bank to support their expansion plans. However the company seems to be stepping up their effort to get global. They spent around Rs 30 crores for their latest campaign featuring Australian actor Hugh Jackman.
They have been attempting entering global markets from 2010, their first effort failed in Latin America. They are also attempting to sell through distribution outlets of Carrefour in West Asia markets. Though they have found reasonable success in South Asian markets, their share of revenue coming from abroad is still less than 10%. They are betting bigger on markers like Russia, Eastern Europe and Africa where handsets are sourced more from manufacturers than operators with bundled plans.
The company has set its vision to make global revenue equal to revenue from India in another 3 years. Do you think it is possible given their strengths and strategies they have used to tap to the domestic market? What they need to do different to compete in global emerging markets compared to India? Or should they further consolidate their presence in domestic and South Asian markets before going global?
[message_box title=”Disclaimer” color=”red”]The case is prepared based on secondary data and the purpose of this case study is to just bring out the key marketing strategies and techniques deployed by different firms from our perspective.[/message_box]