Sunday, November 13, 2011

Micro turns Max

Priyanka Parmar, Ashwini, Patil | NMIMS University

Micro Turns Max

It came. They saw. It conquered. Who would’ve imagined that an Indian mobile company would manage to grab a whopping 6% market share within two years of its inception! That’s Micromax for you in a nutshell! As the Indian market gets increasingly competitive in the handset category, Micromax comes as a fresh breath of air with its innovative offerings. Below is an attempt to analyze how this brand has managed to capitalize on a price sensitive yet technologically oriented customer of today’s India.
Micromax is the latest buzzword among cell phone enthusiasts and is perceived today as India’s answer to Nokia. A quick reality check and one finds that Micromax happens to be the 3rd largest handset producer closely behind Samsung and Nokia. Many companies have been here, done this before so what is that Micromax does so differently that it gets talked about?
The cell phone market has evolved considerably since it was first launched in the Indian market about seven years ago. Nokia has always had the first mover’s advantage in the Indian cell phone market. Despite the competition from other players, no entrant has been strong enough to pose a threat to Nokia’s domineering position. Nokia initially had no specific product range customized for the Indian market. But once competitors emerged, Nokia had to change this strategy. Nokia strengthened its position with the launch of Nokia 1100 popularly known as the “Made for India” phone, a handset meant for the rural markets. Touted as one of the best examples of understanding consumer needs and developing a product, Nokia’s glocalisation strategy seemed to be truly in place.
But at the same time, Nokia never built upon this concept. Nokia failed to harness the potential of the market that this phone had opened up for it. Neither did any of its existing competitors focus on it, rather concentrating on the continuous innovation in coming up with smarter, better phones in the premium ranges.
Micromax, a company primarily into distribution and the business of PCOs found itself staring at a really big opportunity when it noticed people had to charge their batteries by lugging it to trucks or even had to pay for charging due to electricity issues in the rural areas. At the same time, as the telecom companies slashed prices, the only impediment for a person to use a cell phone turned out to be the cost of the phone.
Capitalizing on this, Micromax launched its first cell phone in the rural market with a 30 day back up battery at an absolutely unbelievable price. One of the major challenges of operating in the rural areas were the logistic issues faced but Micromax built a network comprising of 34 super distributors, 450 distributors and around 55,000 retailers. Also the highlight of their distribution strategy was that Micromax managed to make these distributors pay in advance by offering them more margins. Micromax was not really a pioneer of this strategy (to offer such kind of discounts for advance payments (cash discounts)), but it managed to convince the distributors accept this offer. Tapping the rural markets could have proved to be a risky move but the price point and the differentiating features of the model won the battle for Micromax. With stiff competition in the telecom sector which is still prevalent, operators kept coming up with various offers luring customers to switch loyalties. The price conscious Indian thus felt the need to own more than one SIM card in order to leverage the benefits. Micromax was the first to identify this requirement and launched its dual SIM phone opening up more cost effective options for the users in terms of tariff plans.
But it is very important to note the fact that he didn’t stop with this success but ventured further which has led it to its present position.
The growing middle class residing in the tier 2 and tier 3 cities in the country was no longer content with the lower end product thanks to immense exposure due to the advent of internet and television. Noting this, Micromax zeroed down on the next market it wanted to target. It realized that it was important to cater to the needs of the mid-market customers with the launch of premium handsets rather than simply catering to premium customers.
As Micromax targeted the semi urban and urban markets it launched a series of handsets with innovative features which had never been seen before.
The aspirational QWERTY keypads earlier available only to the high end smart phone users were made available at affordable prices. They addressed the need of using chat based tools on cell phones. These models continue to outsell Blackberrys’ as of today, by huge numbers.
The launch of the Swarovski crystal phone appealed to the low price chic, incorporating great features and style emerging as a status symbol in the tier 2 and 3 cities.
Also a cell phone working as a universal remote control just exhibited the out of box thinking and workmanship at Micromax making people curious about its forthcoming product ranges.
Thus with a lot of firsts to its credit, which include introducing Handsets Switching Networks (GSM – CDMA) using gravity sensor, Operator Branded 3G Handsets, OMH CDMA Handsets, etc. Micromax has essentially become synonymous to innovation.
After having gained enough foot hold in the rural and semi urban markets, Micromax has now finally begun its brand building exercise in a full-fledged manner with aggressive marketing strategies allocating a budget of around 100 crores.
Cricket being one game which cuts across religion, gender, age proves to be an ideal platform for promoting a product which has universal appeal, usage and need. Recently, they have sponsored the India cricket series and used innovative technological practices to stand out among the herd of its competitors. It has solely sponsored an entire series rather than single matches to break free from the clutter of sponsors that the viewers are exposed to.
It has also begun creating awareness among the youth by tying up with MTV to launch a phone MTV X360 with Yamaha amplifiers targeted at music loving individuals. Also its gaming phone Gameolution has become popular with the youth with its innovative features which works on motion sensor technology and can convert PC/Laptop in gaming device.Although Micromax has achieved a substantial market share in the past two years, a closer look at its overall branding strategy shows that the brand has mostly spent heavily on advertising of its individual products. The recent roping in of the celebrity couple Akshay and Twinkle Khanna to endorse their Gamolution and Bling versions respectively is a demonstration of this strategy. Several reviewers have criticized the ads for creating noise and missing to communicate the point to the viewer.
Amongst its reputation of being reasonably priced and having a strong product line, it becomes extremely critical for a brand of this magnitude to shift focus from individual campaigns to a brand identification exercise. Hence, as this product centric strategy has not proved the most appropriate way to go, the brand has only recently ventured into overall brand promotion. This conscious move from product awareness to brand building is evident in the latest advertisement by Micromax, (for the very first time focuses on the brand as such rather than on an individual handset) shows absolutely unthinkable uses of a cell phone, rightly ending with the tagline ‘nothing is anything’.
Being on the forefront of technological innovation in the handset market, the brand may also suffer from low individual product recall value as the numerous technologies introduced in the different handsets may create confusion in the minds of the consumer. Also, it faces the risk of its technology being easily replicated by other smaller brands. Ask a Micromax user what he would like to change about the phone, and one is most likely to get a reply stating its ‘Indian’ish interface. With an increasing user base, Micromax would also have to focus on erecting customer service centres which are currently not even half as much as Nokia or Samsung has. Initially when Micromax entered the markets, it was devoid of the overheads like advertising, etc. which helped it give its customers huge value for money. But as it competes with the cell phone giants of the world it is questionable whether such advantage can still be sustained.
Though the story so far has been nothing less than phenomenal, the future is only going to get tougher. Android based smart phones are a lucrative opportunity to capitalize on. With app stores being the talk of the town lately, Micromax can innovatively cater to different user application needs across app stores across the world. Innovation being its core strength, the way ahead is to build an image of being a credible technological handset producer for a price sensitive customer.
Currently, the brand targets the rural and the technology conscious urban youth. It could also expand its target audience to the older generation by introducing phones with large keys and a help button. Similarly, it could also expand its technological expertise to suit the needs of children. This could be done by packaging it as an add-on phone with child lock and a single dial phone designed to be very simplistic. It could also venture into foreign markets like Middle East, etc since it already has plans to build up its manufacturing capacity in Taiwan, China, etc.
Recently the IPO for Micromax having been approved, the resulting investment would bring forth a great opportunity since the timing cannot be better with people getting more expermentative and mobile usage and development at its helm. The brand may boast of being ‘Nothing like anything’ but has a long way to go to become everything!
It is important to keep this model fresh and rejuvenate it with the changing times. The reason is that it is a medium which is catering to the attention span of the people on the move. Thus, the execution has to be highly precise. Nothing can be closer to truth than this. It is important to understand that every new medium would meet resistance and would take time to gel with the status quo. At the end of the day, it is the people who drive the market.

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