Micromax Report

Submitted to: Dr. A.P. Arora

9/7/2012
Submitted by:
Ankit Gupta (12p007)
Anurag Gupta (12p009)
Apoorav Goel (12p010)
Archit Shukla (12p011)
Arpit Jain (12p012)
Lalima Bassi (12p025)

Contents I. Mobile Industry Overview…..………………………………………………………………………………………………………….3

II. Entry of Micromax and Company profile………………………..……………………………………………………………….5

III. Marketing Environment………………….……………………………………………………………………………………………….6

IV. Main Customer Segments………………..……………………………………………………………………………………………….7

V. Salient Characteristics of Key Customers………………………………………………………………………………………….8

VI. Marketing Strategy ………………………………………………………..……………………………………………………………….9

VII. Analysis and Recommendation ………………………………………………………………………………………………………11

VIII. Appendix…………………………….…………………………………………………………..…………………………………………….15

I. Mobile Industry Overview:
The Indian Mobile handset industry has been growing steadily and posting healthy figures. According to Telecomm Regulatory Authority of India (TRAI), India is second largest and fastest growing telecomm industry in terms of number of wireless connections. The Total revenue generated in 2011-12 is 31,215. It drops by 5%. But it is expected that Indian handset industry will grow at 10.7% compounded annually till 2017. Based on the total sales top 5 players in the Indian mobile handset landscape are:

Nokia continues to enjoy the number 1 position with market share of 38.0. But Nokia has been losing its market share very rapidly in India from last three years. At the entry-level handsets, Nokia is facing tough challenges from the home-grown players such as Micromax, Karbonn and Spice. At the high-end segment, Nokia is facing a stiff competition from Samsung, Blackberry and HTC. One of the key reasons for this is that Nokia has lost big chunk of its market share due to the lack of dual-SIM handsets in the portfolio and lack of adapting as per changing environment.
Samsung on the other hand has been growing tremendously – almost by 38% from the previous year – and posted a healthy sales of Rs. 7891 crores. The growth can be largely attributed to the impressive and diverse portfolio of handsets right from entry-level to the high-end segment. The ‘Wave’ series and the ‘Galaxy S’ series has been a great success for Samsung. Samsung continues to launch new product lines at regular intervals across all segments and on all operating systems such as Android, Windows and Bada.
Micromax – the homegrown handset player showed impressive growth rate and good product designs and innovations. Micromax occupies a healthy 6.3% market share and posted a sales figure of Rs. 1,978 crores. Micromax grew by 43% from 2009-10 to 2010-11.But decline (around 14%) can be seen in 2011-12. Micromax will be rolling out handsets from their own manufacturing plants this year and so can expect to do well by pricing very competitively.
Blackberry – fall by 25% from last year to post a sales figure of Rs. 1,460 crores and enjoys a market share of 4.7%. Blackberry is facing pressure from Samsung, HTC and other brands in the business phone segment and is losing its sheen among the ever-loyal fans.
Karbonn occupies the 5th slot and posted a sales figure of Rs. 1327 crores and grew by 32%. It occupies a market share of 4.3%.
According to Gartner published a forecast report on Indian mobile phone industry. 213 million handsets were sold in the year 2011 in India. Gartner expects 231 million handsets to be sold in India in 2012. This growth is expected to be driven by replacement of handsets rather than new subscribers. The mobile handset market is expected to show steady growth through 2015 when end user sales will surpass 322 million units. Almost 90% of total sales will be cover by the replacement handset. Expected up gradation in mobile technology is also one of the factors for the expected growth. Middle budget mobile phones are expected to contribute most in the growth of industry.

II. Entry of Micromax and Company Profile:

Micromax as a company is not new to the market. It was established a way back in 1991 by Rajesh Aggarwal. It was basically a distributor of computer hardware. Then in 1998, three more gentlemen Sumit Aggarwal, Vikas Jain, Rahul Sharma joined the firm as a co-founder. And they were branched out from a mere distributor to a marketer of telecommunication equipments. Later, Company realized the fact that there are certain unmet needs still there in the mobile phone market which is not being addressed by big brands. They decided to cater to these needs of people unaddressed by MNC brands. Hence, they entered into the mobile handset market in 2008. They have to compete with existing big players, so they have to devise their marketing strategy such that they can position in the mind of customer as their preferred brand. But within four years after entering the market, Micromax becomes the third largest manufacturer in India ranked after Nokia and Samsung and the largest domestic manufacturer. According to Strategy Analytics’ Global Handset vendor market share report, it is the 12th largest mobile brand in the World with a global market share of 1%. In 2011, Market share of Micromax is around 6.3% with annual turnover of Rs. 1978 crore ranked after Samsung (25%) and Nokia (38%). Even 45% share of domestic manufacturers is occupied by Micromax. Brand’s success in such a short span of time can be attributed to its ability to understand the need of the market, aggressive marketing and smart distribution channel management. Other main factor that introduced the company with a bang in market is that they focus primarily on the needs of rural customer. Generally big brands neglect the rural market but Micromax introduced itself in rural market and developed the product considering the need of rural customer. X1i Marathon Battery phone with 30 days standby time & 17 days Talk time is a good example of that which is cheap as well as covers the electricity concern of rural area. As a result 80% share of rural Indian handset market is captured by Micromax. Today, Micromax is not only confines to India only. It has international presence in Bangladesh, Nepal, Sri-Lanka, Maldives, UAE, Kingdom of Saudi Arabia, Kuwait, Qatar, Oman, Afghanistan and Brazil. Even they are dealing in USB drives, data card and fixed wireless drive. III. Marketing Environment:
Micro-economic factors: Company:
In 2008, Micromax entered mobile handset business and by 2010 became the largest Indian domestic mobile handsets company. Through its emphasis on adapting to the changing market dynamics, introducing feature-rich phones and smartphones that are innovative and unique, Micromax has today become a brand to reckon with. Today, Micromax has presence across India and global presence in Bangladesh, Nepal, Sri-Lanka, Maldives, UAE, Kingdom of Saudi Arabia, Kuwait, Qatar, Oman, Afghanistan and Brazil. Micromax sells around 1.3 million mobiles handsets every month, with a presence in more than 500 districts through 100,000 retail outlets in India. Customers:
Micromax strategy has been to target the rural area initially when they entered the market. For instance they launched a phone with battery back -up of 30days to cater to the power problems in the rural area. After this the target customers have been the youth and the female mobile users who have been given a complete range of phones to choose from. Competitors:
Micromax had known from the start the competition from the established international players like Nokia, LG, Samsung, Sony, Blackberry and some domestic players like Spice, Lava etc. in the Indian mobile phone market. As these players had established markets in the urban area and were consistently indulged in R&D and diversification of products Micromax targeted the rural market to launch their product. Context:
According to leading technology researcher Gartner, Mobile handset sales in India, the world’s second-biggest wireless services market, are expected to grow an annual 8.5% and reach 231 million units in 2012. There are more than 900 million mobile phone users in India and the country is one of the world’s fastest-growing cellular markets in subscriber additions. The market, however, is very price-sensitive, with low-cost phones dominating sales.

Macro-economic factors:

Demographics:
About 25-30% of the Indian population lies in the age group between 20-35 and majority of the population resides in the rural area. Hence it was an opportunity up for grabs to target the rural population and Micromax was successful in tapping that market. Apart from that the youth of India today demands advanced features and designs in the mobile phones available for which Micromax has been consistently been working hard.

Economic Environment:
Income levels have been increasing both in rural and urban areas of India. The cost of livelihood has also increased which is higher in the urban areas than rural areas. This leaves people in rural areas with more disposable income and buying power. However agriculture still being the major occupation of the people in rural areas the income remains seasonal and unpredictable.

Technological Environment:
With literacy levels increasing and technology getting improved by leaps and bounds year by year it is imperative for any company to remain consistent in progressing with the industry. Improved designs, features, added services along with the handset are some of the features in demand. Micromax has been consistently evolving with the new technologies like Android etc. in the market.

IV. Main Customer Segments:
A market segment consists of group of customers who share a similar set of needs and wants. Rather than creating the segments, the marketer’s task is to identify them and decide which one(s) to target. Main consumer market segments of Micromax are: 1. Rural Customers:
Rural Market is the prime contributor to the revenue generation of Micromax almost x% of its revenue is from rural market. Micromax unlike the industry trend identifies the needs of rural market to get the best/latest features that big brands are offering at the lowest price. They also cater the issues like electricity problem, internet connectivity that rural market is facing while developing the product. They have 80% share of rural market in 2011.

2. Working Executives/Professionals:
It has been identified by the marketers that these day professionals prefer to keep two mobiles. One is for private use and the other one is for professional use. Micromax identifies it as an opportunity. To avoid the clumsiness of keeping two mobiles Micromax came up with idea. Dual SIM phones (GSM + CDMA) having all the features that business executive is looking for like email, pdf reader, priority list etc.

3. Texting and Chatting freak Youth:
It has been identified that today’s youth want to keep connected with their friends and family. They use texting and chatting to serve the purpose. From the study it has been found that on an average 3 full hours has been spent by active user on texting and chatting. Considering this need Micromax came up with the products having QWERTY keypad that make their task easy and fast

4. Users looking for latest technology and features:
It has been found that 60% of mobile handset industry is captured by people from the age of 20-40 years (basically by youth). It becomes very important for any company to capture significant share in this segment to survive in the market. This segment is basically looking for phones which have latest multimedia features, excellent touch quality, smart looks, good camera quality, good sound quality, good operating system etc. All this they want at the lowest price. Micromax with some of its product tried to capture customers of this segment.

5. Urban Woman (Fashion Savvy Woman):
Change in position of Women in the society is one of the major social changes that India experienced. They are more concerned about their looks and the things they carry. Today, Urban Woman is also a major customer of mobile handset industry. Keeping in mind of this emerging customer segment, Micromax releases some of its product that is meant for this segment only. They released product which is stylish, slick, sensual design to attract woman (diamond embedded) and have some of the basic features.

V. Salient customer characteristics of the key customer groups identified above :

1. Price Conscious:
Most of their customer group is middle level income people who are generally price conscious. They are looking up for more value for the product in comparison to price they are paying . They want to get the best/desired at the cheapest.

2. Want to remain updated with market trends:
Company’s majority of customer groups want to remain updated with market. They are looking for latest technology and innovative features. It makes mandatory for a company to keep on innovating in order to retain or attract more customers.

3. Brands is not their priority, Quality is not a concern:
Their customers are not the ones who are running after big brands. They are the ones who buy products based on their needs and pocket. They are also the ones who are not looking up for very high quality phones. Company is offering a warranty of two years, it is sufficient enough for its target customer to trust the company as they are gett

4. Unique and Stylish looks:
Their customers are looking up for the product that looks elegant. They are looking for the product that can set them apart in group.

5. Save Time and Avoid Clumsiness:
Customers are looking for the product that can avoid clumsiness. They are not looking for very complicated products. They are looking for the product that can make their work easy and save their time like QWERTY keypad phones.

VI. Marketing Strategy:
When Micromax entered the segment, it followed a simple strategy of bringing innovative products for the consumers and coupled it with smart marketing. Basically, Micromax has used the theories of Blue Ocean strategy to create and capture new demand in the rural areas of the country. It reduced the cost of the handsets to dearth cheap rates. It has used the Red Ocean strategy to beat the competition in the urban market. They made an efficient value-cost trade off and provided smart phones at almost half the prices of other handset manufacturer
Detail overview of marketing strategy adopted by Micromax. 1. Product:
Product line is the strongest component of the company. Company is spending lot of money in Research and Development. They know their target customers; develop the product for the same and innovate accordingly. This can be proved from the products that company have in its portfolio in such a short span of time. Today, Micromax has 60 + products in its portfolio. Ranging from cheap fundamental phones, feature rich, dual-SIM phones to QWERTY, touch-enabled smart-feature phones and 3G Android smart phones designed for younger consumers in suburban and urban markets. Even Micromax has lot of industry first devices since its inception:

* First Long Battery Life Phone with 30 days battery back up X1i Marathon Battery phone with 30 days standby time & 17 days Talk time * First Dual SIM Dual mode active Phone (GSM+CDMA) Micromax GC700 is the first GSM + CDMA Mobile phone * First Gaming Device G4 Gamolution phone with motion sensor gaming like Wi-fi * First Women’s Line of Devices Q55 Bling phone- First women’s phone with a swivel form and Swarovski navigation keys * First Universal Remote Control Phone X235 With Universal Remote Control for TV, DVD, AC in your phone * First phone with built-in Bluetooth
Micromax X450 Van Gogh – A stylish phone that integrates a detachable Bluetooth headset in its sleek design * First Superfone with Gesture Control
Created a new category called ‘Superfone’ with Gesture Control, power with 1GHz dual core NVIDIA Tegra 2 Processor.

2. Pricing:
This is company’s core competency. They have to compete with big international players like Nokia, Samsung, LG etc which are very old and established brands. They manufacture through their own plant in India and no extra cost of excise duty. That’s why they are able to offer very low price in comparisons to big names for the very same features. Customers must think twice before going for the names as they are getting the very same features or even better at much lesser price. So it helps the company in gazing customer attention.

3. Places (Distribution):
As the Company is new, it becomes very important that its product should be physically available to its customer in the very first interaction. Even for after sales services customer is seeking that company should have some designated place. Company also has to convince the distributors and dealers to make an extra effort to make their product notice. This marketing mix is also handled in a very mature way. Company follows 3 tier distribution having distributor, dealer and retailer which extends across 65 super distributers, 1500 micro distributors and over 100,000 retailers. To enhance brand cognizance and retail strength, Micromax has a chain of exclusive retail outlets, own by third party. They are also able to get advance payments from distributors by giving them more margins around 10-15% while the industry average is around 6-8%. This also helps in motivating the distributors for increasing the sale of company’s handset.

4. Promotion:

Company has to make its presence in the market and make people aware about its brand. Initially to approach rural market, they use hoardings and television advertisements that focused on the fundamental/unique offering. After showing its presence in the rural market, Company’s focus is urban market for which they follow the 360 degree advertising approach and allocate a budget of Rs. 100 crore for above the line and below the line advertising. Some general approaches adapted by Micromax for promoting are: * Place hoardings near to colleges, schools, offices, crowded places, busy traffic routes with latest products and updates. * Advertise their products through heavy user online websites like facebook, twitter, rediff, yahoo etc. and also through blogs that are discussing mobile and electronic. * Advertise through television commercials referring to time slots and channels that their target customer generally tends to watch. As they show advertisement for woman based handset during prime time and on channels like Star Plus, Sony, for youth they generally show during cricket matches and similarly they follow same strategy for other products. * Contract with Akshay Kumar as a brand ambassador. This helps in connecting with the youth in a better way. * Tie up with MTv to determine and satisfy with needs of multimedia (especially music) users. This also helps in connecting with the customers. * Tie up with telecomm service provider bsnl and mtnl. This enhances the image of brand. * Spent considerable amount of money in sponsoring international cricket series of Indian team. Also, sponsor IIFA, international award function of bollywood. This promotion strategy gives positive response to the brand and help in connecting with the youth. Most of their customer segments able to recognize Micromax as a brand through this move. * Give 2 year warranty for their product while industry trend is 1 year. This also helps in creating positive image for the brand. * Participating in social causes event also help in creating awareness for the brand.

VII. Analysis and Recommendation:

Market share of Micromax falls by 14% (in terms of revenue) in 2011-12. It is not a big issue as overall market falls by 5%. But still there must be some problems with the strategy of the company. We did market analysis using primary as well as secondary data, identify the problems and recommend for the same.

a) Using Secondary Data:
Based on information from existing sources we try to determine strength, weakness, opportunity, threat (SWOT) for Micromax and suggest accordingly.

Strength * Innovative Products and lot of first products under its name * Cheap, for the same features Micromax is charging half the price its competitors are charging * Strong Distribution network * Manufacturing base in India * Strong presence in rural market * Strategic Alliances with BSNL, MTNL, MTV etc * Effective promotion strategy | Weakness * Weak Brand Image in upper middle class and urban areas * Perception of alternative to Chinese mobile with warranty * Poor after sales service * User Interface is not for Tech savvy people, it is quite rusty. | Opportunity * Increase penetration in urban market. Revenue share from urban market is negligible for Micromax * Lot of scope in International market * As a secondary mobile for upper middle class * Due to shift of biggies focus towards smart phones. Micromax has a chance to dominate low range handsets | Threat * Chinese Mobiles * Lower range handsets of big companies like Samsung Guru series and dual SIM series of Nokia * Other Companies following same business model like Karbonn, Max, Lava, Lemon etc |

b) Using primary Data:
We used very small and to the point survey to determine the perception of potential customers and recommended on the basis of analysis of responses obtained. We got total 101 responses. Majority of our respondents lie in range of 18-30. Most of the respondents belong to metro and Tier-1 cities. Other belongs to Tier-2 and Tier-3 cities.

Results reflect the very same picture as we analyze using secondary data. It is quite evident from the responses that people perceive Micromax phones as low quality (49%) and alternate of Chinese Mobile with Warranty (55%). 22 % of respondents said Micromax offers good features. It can also be found that Micromax is not able to establish itself as a brand; only 14% consider it as a brand. Even people not aware of innovative products Micromax offers (only 10%). Most of the people not aware of Micromax market position. They still assume it as secondary brand. Almost 45 % of respondents think that Micromax is not in top 5 brands. Market awareness (23%) and poor brand image (72%) are major barriers customers find while purchasing. User interface, technology (54%) and poor after sales service (33%) is also a major concern among customers.

Recommendations:
On the basis of above analysis from primary and secondary data, few suggestions that can help the company in establishing as a brand and in increasing its market share.
Basic fundamental is focus on your strength, cover your weakness, grasp the opportunity and keep an eye on threats. * Invest more in R&D for more innovative products. It will help in product differentiation. * Increase production in India: It positively impacts the pricing as well as availability of product. Even it helps in synchronization between other factor (income, government policies, legal aspects etc) that can impact the demand and supply of the product in the market. * Keep track of its competitors: Company should be aware of what its competitors are offering and what is in their pocket. Company should always be ahead of market trends. * Make the user interface more sophisticated and simple. * They can explore more International markets. It requires lot more capital and effort. It can be a very tricky move, so it should be done with proper strategy. * Company should improve its after sales service. Company has very less authorized service centre. After sales service is crucial factor in current market. They should work on the strategy of establishing efficient and effective service centre model across the market. * They can also try to shift in wireless data card market. * They can also raise funds by issuing an IPO. * Increase sale of smart phones in rural market. As big players are targeting the metro and Tier-1 cities. So Company has a scope in Tier-2 and Tier-3 cities for smart phone market. They are trying it with campaign like “I ^can’t afford Iphone”. * Focus of big players is towards Smart phones. This is the best opportunity for Micromax to dominate the low range handset market. They have the products in their portfolio to dominate. They are dominating in rural market. But to capture urban market. They need to reposition their brand. * Increase penetration in urban market and upper middle class. Major barrier in this is poor brand image. So it becomes very important for Micromax to reposition its brand to increase share in urban market.

* Strategy for Brand repositioning:
Micromax has confused positioning error in the urban market. This is a situation in which customers have confused opinion of the brand. Urban people treat Micromax as Chinese mobile offering warranty. Micromax needs to overcome this perception and position as trusted and preferred brand. * In order to achieve this, Micromax recently launch new punch logo in which it tries to present a single, powerful and unified face to their customers around the world. Punch logo is a true reflection of the Micromax brand which is young, innovative, dynamic, bold, extrovert and fun * Micromax ropes in industry biggies like Khaja Muzaffarullah & Ajay Sharma to boost growth * Micromax should try to advertise in such a way that consumers should understand what the brands stands for, and not just what it’s not. Most of the people are not aware of company’s innovative products and its Market standings. So they can highlight it. * Its TV commercials can be more sophisticated and should match the frequency of urban consumers * Company should avoid cheap publicity to gain rural customers as it impacts urban market negatively * Micromax can promote it as a secondary mobile for the urban users. Highlighting the extraordinary features it offers like acting as a remote, gaming device etc * In bollywood movies (especially that have well known star cast, good production house), Micromax should try to highlight that its mobile handsets has been used by urban people as well as upper middle class * Company should try to establish in a market as if it has two ranges of product. One range is for rural customer and other is for urban customer. For urban people, company should start brand positioning from the scratch. Even they can name it as Micromax-Executive or something like that. It should be able to distinguish two categories

With a great portfolio, strong branding, strong marketing actions, a great distributing partner and some minor modifications, Micromax can capture more market share and make a strong market recall amongst the customers.

VIII. Appendix:
Survey used for analysis and recommendation:
Micromax Mobile Phone Survey

* Required
Top of Form

Your Age: * * <18 * 18-23 * 24-30 * >30

You consider Micromax as: * * Alternate of Chinese Mobile with Warranty * Brand * Provide Innovative products * Low quality * Provide Good features

According to you, What is the current standing of Micromax in Indian Market (in terms of revenue) ? * * 2 * 3 * 4 * >4 * Other:

To increase its market share, Micromax should focus on: * * Pricing * Market Awareness * Looks, user Interface and features * After sales service * Brand Image * Other:

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